Commons Sitting of 18 May 1988

Preamble
The House met at half-past Two o'clock
PRAYERS
[MR. SPEAKER in the Chair]
DEATH OF A MEMBER
Mr. Speaker: I regret to have to inform the House of the death of Sir Brandon Meredith Rhys Williams, Baronet, Member for Kensington, and I desire, on behalf of the House, to express our sense of the loss we have sustained and our sympathy with the relatives of the hon. Member.
MESSAGES FROM THE QUEEN

  SUMMER TIME
  THE VICE-CHAMBERLAIN OF THE HOUSEHOLD reported
  Her Majesty's Answer to the Address, as follows:
  I have received your Address praying that the Summer Time Order 1988 be made in the form of the draft laid before your House.
  I will comply with your request.

  TAXATION
  THE VICE-CHAMBERLAIN OF THE HOUSEHOLD reported
  Her Majesty's Answer to the Address, as follows:
  I have received your address praying that the Double Taxation Relief (Taxes on Income) (Venezuela) Order 1988, and the Double Taxation Relief (Taxes on Income) (Turkey) Order 1988 be made in the form of drafts laid before your House.
  I will comply with your request.

Oral Answers to Questions
  ENVIRONMENT

    Vacant Council Houses
    Mr. Fallon: To ask the Secretary of State for the Environment how many council houses are vacant but available for letting in the northern region according to the latest figures.
    The Parliamentary Under-Secretary of State for the Environment (Mrs. Marion Roe): Housing investment programme returns indicated that 2,702 local authority dwellings in the northern region were empty and available for letting at 1 April 1987, the latest date for which figures are available.
    Mr. Fallon: Is not the real scandal not that more than 2,000 homes are empty but that no one seems to be doing anything about it? I have asked this question every year for the past five years. Will my hon. Friend consider legislating either to allow young homeless couples to homestead in these empty council properties or to improve letting procedures by providing for compulsory auction of any council homes that are not relet within, say, three months?
    Mrs. Roe: Following discussions in Committee on the Housing Bill we are considering measures to reduce the number of local authority empties. My hon. Friend the Minister for Housing and Panning is to make a statement on the subject at the Report stage of the Housing Bill. I am not convinced, however, that compulsory disposal along the lines suggested is necessarily the most effective means of making housing available to those in greatest need.
    I support the principle of encouraging homesteading. My Department encouraged it in circular 12/85. Homesteading depends on low sale prices and purchasers getting improvement grants. The ball is clearly in the local authorities' court. For our part, we are considering changes to the improvement grant regime, to be contained in new legislation.
    Mr. Cousins: Will the Minister bear in mind her own splendid example? When 15 houses run by the Property Services Agency in my constituency had been derelict for more than a year the Government gave Newcastle city council £300,000 to bring those derelict houses back into use. Is that an example for the Minister in this case?
    Mrs. Roe: One must remember Government empties that are held for operational reasons. My Department does not collect data on reletting times. However, the Audit Commission estimates that if the national average relet period could be reduced by two and a half weeks by better management and by streamlining the reletting procedures, an extra 20,000 dwellings could be occupied. The commission recommends a maximum three-week reletting period. The London borough of Greenwich manages that, but the average time for the borough of Southwark is 24 weeks. That puts 1,800 dwellings out of commission—enough for all its homeless households for a year.
    Mr. Soley: Are there operational reasons that lead to the Government's having 6·9 per cent. Of their properties

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    empty? In average terms, that is three times as many as the number held by a local authority. Why does the Minister have to rely on people such as myself and other Opposition Members going to Government Departments, in the way that I went recently to the Home Office, to get the Government to put back into use houses and flats that have been empty for as long as nine years? When will she do something about Government Departments that have hundreds of thousands of empty houses and flats all over Britain?
    Mrs. Roe: Government empties are regularly reviewed and Departments are strongly urged to sell surplus stock. Reduction targets agreed by the Treasury are also set. Where disposal is not practicable, Departments are encouraged to let empties temporarily to local authorities or to housing associations for use by homeless people. The Ministry of Defence has arranged 275 such lettings.

    Single People (Housing)
    Mrs. Dunwoody: To ask the Secretary of State for the Environment whether he has any new proposals to deal with housing need among single people.
    The Secretary of State for the Environment (Mr. Nicholas Ridley): The Government's housing policies—and in particular the proposals in our Housing Bill—will assist all categories of housing need.
    Mrs. Dunwoody: The Secretary of State's answer will come as a considerable surprise to most people. Would he like to live in cardboard box under Waterloo bridge? If not, what will he do to rehouse people who are living like that?
    Mr. Ridley: I imagine that the hon. Lady will strongly support the Housing Bill, which introduces assured tenancies, amended rules on shorthold, and fair rent tenancies to encourage more private landlords to come forward. It also encourages building societies by giving them extra powers to provide accommodation for rent, and encourages the housing association movement to build large numbers of social houses to rent, with Government subsidies to keep those rents low. In the light of that tremendous effort to help the housing shortage, I am surprised that the hon. Lady asked such a stupid question.
    Mr. Heddle: I acknowledge the enormous initiatives in the Housing Bill, but does my right hon. Friend agree that many of the single homeless could be adequately housed in pubic sector properties that are currently too large for their tenants? Does he also agree that perhaps many local authorities are not using the tenants' charter provisions of a previous Act to best effect for the single homeless?
    Mr. Ridley: Yes, Sir. There are well over 100,000 empty council houses and well over 500,000 empty private dwellings. The Government's policy is to bring the maximum number into use to ease the housing shortage.

    Pollution
    Mr. Ieuan Wyn Jones: To ask the Secretary of State for the Environment if he will outline those measures taken by Her Majesty's Government to reduce the incidence of pollution in United Kingdom offshore waters.
    The Parliamentary Under-Secretary of State for the Environment (Mr. Colin Moynihan): A wide range of measures exist to control pollution in United Kingdom waters and recent quality status reports for the Irish and North seas show that they are generally in good condition. Substantial programmes are well under way to achieve improvements in water quality. In addition, a range of further initiatives were included in the ministerial declaration following the North sea international conference chaired by the United Kingdom last November.
    Mr. Jones: I am grateful to the Minister for that reply. I am sure that he is aware of public anxiety about pollution levels, particularly in the Irish sea, and of the effect of such pollution not only on the environment but on important industries such as fishing, tourism and agriculture. Is it not time for a major Government initiative aimed at drastically reducing what many people regard as unacceptably high pollution levels? Such an initiative would go a considerable way to allay that genuine public worry.
    Mr. Moynihan: It was for those very reasons that the Government supported the conference declaration to reduce the input of dangerous substances into rivers, because that is a major source of pollution in coastal waters. That declaration aimed to reduce such pollution by 50 per cent. by 1995 by stopping the dumping of harmful industrial wastes into the North sea by the end of 1989. It is also intended to ensure that there will be no increase from 1987 levels of inputs of contaminants and sewage sludge.
    Mr. Gale: Will my hon. Friend study carefully the report on the protection of the North sea against pollution, which was carried unanimously by the Council of Europe on 6 May? Will he consider the effect that the dumping of waste has on the north Kent coastal resorts such as Margate and Herne Bay in my constituency? Will he consider carefully the implementation of recommendation c.i. in the report? It recommends:
    "ensuring that ships' waste is stored and treated in port, and that any discharge of such waste at sea is severely punished".
    Mr. Moynihan: Full consideration is being given to the report and, as my hon. Friend will know, it is precisely because of the sort of worry that he has expressed that we are committed to substantial expenditure through the water authorities of up to £70 million per annum, to seek improvements in the quality of coastal waters and a reduction in bacteriological levels. As to my hon. Friend's point about shipping, he will know that we are committed to working through the International Maritime Organisation to improve controls on pollution from ships.
    Mr. Allan Roberts: The Minister referred to the ministerial declaration from the second international conference on the protection of the North sea, but how will the Government implement the recommendations to which they put their name? What dangerous substances going into our rivers will be reduced by 50 per cent.? The Government have not given us any idea of what those substances are. How will they reduce the contamination of sewage sludge by persistent toxic and accumulable materials when the amount of sewage sludge that needs to be dumped in the North sea is increasing? When will the

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    Government respond to the assurance given by the Secretary of State for the Environment in the House? He said:
    "I am certainly considering whether to create nitrate protection zones and I expect soon to come to a decision."—[Official Report, 2 December 1987; Vol. 123, c. 916].
    When are we to have the decision, or is the row with the Ministry of Agriculture, Fisheries and Food continuing indefinitely?
    Mr. Moynihan: The hon. Gentleman will know that we shall he publishing the red list of substances in connection with river quality objectives and the pollutants that are of specific concern to the Government once we have finalised the list. As to the range of other issues, I would encourage the hon. Gentleman to read in detail the 46 proposals on exactly how the Government intend to put into practice the recommendations agreed at the second international conference on the protection of the North sea.

    Regional Assistance
    Mrs. Maureen Hicks: To ask the Secretary of State for the Environment which areas have received Government assistance under the urban regeneration grant and urban development schemes in the last six months.
    The Parliamentary Under-Secretary of State for the Environment (Mr. David Trippier): Thirty two urban development and urban regeneration grants totalling £36·4 million have been approved since November 1987, including one urban development grant of £529,000 in my hon. Friend's constituency. I have made arrangements for a list of the areas receiving assistance to be placed in the Library.
    Mrs. Hicks: I am grateful to my hon. Friend for the substantial urban development grant that he has recently given to Wolverhampton. Is he convinced that the new city grant that has replaced it will be even more attractive to developers?
    Mr. Trippier: I am convinced that the new city grant will be more attractive. We have cut out a considerable amount of bureaucracy that was attached to the former grant regime. We have streamlined the process, giving the private sector direct access to the Department of the Environment. I have given an undertaking that a decision on the applications will be made within a shorter time scale than hitherto.
    Mr. Steen: Is not the most important problem to which urban regeneration grant should be directed getting rid of the 100,000 acres of public derelict, vacant but under utilised land on the register? Although my hon. Friend has made some steps towards getting rid of the land, more land is coming in because of the planning process. At the present rate it will be at least 1,000 years before we get rid of all the land on the register.
    Mr. Trippier: I agree with the thrust of my hon. Friend's question. I draw his attention to the fact that almost half the public land registered last year was directed by the Department of the Environment to be sold. The problem is not confined to local authorities, but occurs in Government Departments as well, and as a result of the
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    initiative in the "Action for Cities" presentation by my right hon. Friend the Prime Minister we are taking further steps in that direction.

    Cluttons (Contracts)
    Mr. Campbell-Savours: To ask the Secretary of State for the Environment what contracts have been awarded to Cluttons by his Department over the past seven years.
    The Parliamentary Under-Secretary of State for the Environment (Mr. Christopher Chope): Ten contracts have been awarded to Cluttons in the past seven years. Five were for the sale of surplus property, four for valuations and one for dealing with noise compensation claims.
    Mr. Campbell-Savours: Is it not true that Cluttons was paid £40,000 for valuing Richmond Terrace and that the same work could have been done in-house for £2,000? Is the Minister aware that that information comes from civil servants within the PSA? So that we may get at the truth, will the Minister publish the comparative costing documentation within the PSA and place it in the Library? This is a time bomb ticking away under his appointment as a junior Minister in the Department of the Environment, and we will get at the truth in the end.
    Mr. Chope: There was never any question of the valuation being carried out in-house. The decision was taken to employ experts. [HON. MEMBERS: "Why?"] Because they are experts in valuation. [Interruption.]
    Mr. Speaker: Order.
    Mr. Chope: It was the first time that there had been a new freehold in Whitehall for valuation. We considered it best to get the most expert advice and for that advice to be based on the best evidence available. It is important in valuations to have evidence of comparables. The firm that we chose to carry out the valuation employs experts in that work.
    Mr. Harry Barnes: Is this not a case where privatisation has clearly failed and has led to an increased bill for the taxpayers, only because of the Government's obsession with privatisation? The fee amounts to 70 or 80 people's poll tax payments for a year.
    Mr. Chope: I do not know that the Government are obsessed with privatisation. We are convinced that privatisation is a sensible policy and it is being pursued vigorously by the Government where it is most appropriate.

    British Olympic Association
    Mr. Menzies Campbell: To ask the Secretary of State for the Environment when he last met the chairman of the British Olympic Association; and what subjects were discussed.
    Mr. Moynihan: I had a private dinner with the chairman of the British Olympic Association on 19 April. I last met him formally on 13 January. We discussed my open letter of 19 November 1987 to John Smith, chairman of the Sports Council, about the future direction of our sports policies.
    Mr. Campbell: When the Minister next meets the chairman of the British Olympic Association, will he

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    impress on him the importance of the British Olympic Association assisting the elimination of the taking of drugs—particularly anabolic steroids—by sportsmen in the United Kingdom? Does the Minister share my worry about the possible effects—[Interruption.]
    Mr. Speaker: Order. I am sorry to interrupt the hon. Member. Private friendly conversations across the Chamber do not help at Question Time.
    Mr. Skinner: It is the Ladbroke's man.
    Mr. Speaker: Order. It would be helpful if the hon. Member for Bolsover (Mr. Skinner) and the hon. Member for Langbaurgh (Mr. Holt) kept quiet.
    Mr. Campbell: I shall not start again from the beginning. Does the Minister share my anxiety about the extent to which the use of such drugs appears to be prevalent? May the House take it that he is as keen as the 179 hon. Members who signed an early-day motion recently to see that the taking of such drugs is eliminated?
    Mr. Moynihan: I share the hon. Member's anxiety about the use of anabolic steroids to enhance performance in sport. For that reason, the subject of anabolic steroids has been referred to the advisory council to consider whether the Misuse of Drugs Act 1971 controls are appropriate. The BOA wholly supports the recommendations of the inquiry that I undertook with Sebastian Coe, and the Sports Council has now implemented them. The BOA is committed to testing being undertaken by independent sampling officers, to the random selection of competitors and, most important, to testing outside Olympic competition—[Interruption.]
    Mr. Speaker: Order. It would help us all if the hon. Member for Langbaurgh would keep quiet.
    Mr. John Carlisle: When my hon. Friend meets the chairman of the British Olympic Association, will he express to him the extreme anger of British sportsmen and sportswomen at the treatment afforded to Miss Zola Budd, who was hounded out of this country by Left-wing political extremists? Does he agree that those bigots and hypocrites have no place in sport or the Olympics? I hope he agrees that the time has come to return sport to the sportsman and not to the politician.
    Mr. Moynihan: My hon. Friend will be aware that that is a matter not for the BOA but for the International Amateur Athletic Federation and the British Amateur Athletic Board. Having said that, my hon. Friend will be aware that there are millions of people outside the Chamber who share the strength of his opinions.
    Mr. McCartney: Would the Minister care to express a view on the fact that amateur rugby league in this country is not being provided with the same resources as other amateur sports? Is he prepared to meet the parliamentary group to discuss the future investment in the sport at amateur level and at school and university level? Given the nature—
    Mr. Speaker: Order. The question is about the Olympics, not about football.
    Mr. McCartney: I understand that. To get to Olympic standard, the sport needs resources at amateur level and at school and university level. I would be pleased if the Minister would give some indication of his support.
    Mr. Moynihan: The hon. Gentleman will know that I am a great fan of rugby league. There have been some outstanding performances this year at amateur level and the sport is deserving of considerable support at both local and national level. The hon. Gentleman will need to direct his comments not just to International Olympic Committee delegates and the BOA, but to other countries, if he is to achieve his aim of seeing rugby league played as an Olympic sport.
    Mr. Hayward: Will my hon. Friend consider asking the chairman of the BOA to convey internationally the efforts of the Sports Council to put a stop to the use of drugs and convince other countries, for example, the United States, which is a major offender in sports in terms of taking drugs?
    Mr. Moynihan: My hon. Friend is absolutely right. This is not just a national but an international problem. It is for that reason that I have had meetings with the president of the IOC, Juan Samaranch, as well as the president of the IAAF. We had a major breakthrough during bilateral discussions with the German Democratic Republic, when we reached an agreement over the exchange of personnel and further developments in this area, which we hope will come to fruition in the not too distant future.
    Mr. Denis Howell: As the IOC and representatives of every one of the 26 Olympic sports long ago decided that no one connected with South African sport should be involved in the Olympic movement and that the spirit of that undertaking should be observed by international athletes, does the Minister not think that his remarks a few moments ago were wholly out of place and outwith the interests of British sport?
    As the Minister is meeting the chairman of the IOC about his letter to John Smith, why has he not yet met formally either the chairman or any other member of the executive of the Central Council of Physical Recreation—which comprises the governing bodies of British sport—which he did not see fit to invite to address his conference on Monday, although there were 18 speakers? Does he realise that he can make progress with British sport only if he respects the voluntary and democratically elected nature of British governing bodies of sport?
    Mr. Moynihan: If the CCPR was that keenly interested in the conference, one would have thought that the two invitations sent to it would have been accepted for the whole day. Only one person turned up, and he left at lunchtime.
    As for my comments to my hon. Friend the Member for Luton, North (Mr. Carlisle), I should say that the Government are totally committed to the Gleneagles agreement and remain so. The answer that I gave my hon. Friend, which can be read in tomorrow's Hansard, was that there can be no doubt that millions of people outside the House share the strength of the sentiments expressed by my hon. Friend.
    Mr. Harry Greenway: Does my hon. Friend agree that politics could be the death knell of the Olympics and all sports? Is it not high time that politics was taken out of sport in all lands, altogether?
    Mr. Moynihan: In an ideal world nobody would disagree with my hon. Friend. However, I regret to say that there are too many people who use the sporting

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    playing fields and arenas to focus their political attentions. That is to the detriment of sport and, therefore, the thrust of what my hon. Friend has said meets with complete agreement from me.

    Homelessness
    Mr. Simon Hughes: To ask the Secretary of State for the Environment if he will give figures for the number of households accepted as homeless in Greater London in 1979 and in 1987; and what is Her Majesty's Government's policy for reducing homelessness in London.
    Mr. Ridley: Acceptances in 1979 and 1987 were 16,650 and 30,000 respectively, I should emphasise that these figures represent households qualifying as homeless under the terms of the Act. It is likely that most had some form of accommodation before applying.
    Mr. Hughes: Do the Secretary of State and the Government not stand condemned by those figures, which show that under the Tory Government homelessness in London has doubled to 30,000 families a year, while the number of rented properties has diminished by 13 per cent., or 200,000? Is not the only solution for the Government to realise that affordable rented accommodation is required to meet the needs of the homeless? Is not the only immediate prospect of that an amendment to the Housing Bill on Report next month to ensure that in London, as in the rest of Britain, we have affordable rented housing for those who would otherwise have inadequate housing or no housing at all?
    Mr. Ridley: No, Sir. The failure lies very much with the local housing authorities, which are responsible for housing. I am glad to say that the category that really counts—those in bed-and-breakfast accommodation—has grown smaller. The figures fell from 8,000 at the end of the first quarter of last year to 7,000 at the end of the year. That 7,000 is almost one fifth of the number of council-owned void and squatted properties, which stands at 33,000, so there are almost five times as many houses as people in bed-and-breakfast accommodation. The hon. Gentleman mentioned money. I point out that this year more than £800 million is available for housing capital works in the London boroughs, so it can hardly be said that the boroughs do not have the resources, given that most of the repairs necessary cost less than £15,000 per unit.
    Mr. Bowis: I do not underestimate the need to look for solutions to the genuine problems of homelessness, but does my right hon. Friend agree that the definition of homelessness needs to be kept under constant review? In the light of his answer to the hon. Member for Southwark and Bermondsey (Mr. Hughes), does he recognise the need to introduce measures to cajole, if not force, Labour authorities sitting on empty or squatted properties to put them to good use to help homeless people?
    Mr. Ridley: Yes. We should always keep all these matters under close review. I agree with my hon. Friend that we must prevail upon local authorities to bring more of their properties back into occupation. I would add that the Housing Bill will definitely greatly increase availability
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    in London because of the large number of empty private properties that may by released by removing the Rent Act restrictions.
    Mr. Tony Banks: How dare the Minister blame local authorities in London for the homelessness crisis? Is he aware that there are between 30,000 and 40,000 people in 600 bed-and-breakfast hotels in Greater London? It is absolutely insufferable for the Minister to stand there in his complacent fashion and blame someone else. Why do the Government not accept responsibility for the scandal and crisis of homelessness in London? Why does the Secretary of State not do something positive for once? Why does he not call together the leaders of all the local authorities in London, Tory and Labour alike, for a conference to try to find some way of working the problem out together?
    Mr. Ridley: The hon. Gentleman's last suggestion that I should call the leaders of the London boroughs together makes my point, that it is the responsibility of the London boroughs to deal with homelessness. Parliament has placed that responsibility on local authorities. Half the time I am told not to interfere with local authorities—except when Opposition Members try to make a political point.
    I would add that the money available to local authorities—as I said to my hon. Friend the Member for Battersea (Mr. Bowis)—for repair and restoration of houses is £800 million a year. There is plenty of opportunity for authorities to put the problem right. Furthermore, the figure that the hon. Gentleman gave is not the figure that I have for those in bed-and-breakfast hotels, which was 7,000 households—not 30,000—at the end of last year.
    Mr. Nicholas Bennett: Does my right hon. Friend recall the parliamentary answers that he gave at the beginning of the year concerning empty properties nationally and in London, and rent arrears, showing that the constituency borough of the hon. Member for Newham, North-West (Mr. Banks) had the highest number of empty properties anywhere in London and that the borough council of the hon. Member for Southwark and Bermondsey (Mr. Hughes) had 1,800 empty properties and took six months to relet them?
    Mr. Ridley: The figures for Newham show that at the end of 1987 there were 2,764 void dwellings and 575 households in bed-and-breakfast accommodation. The answer to the problem is perfectly clear—those homeless people could have been housed in the empty properties in Newham.—[Interruption.]
    Mr. Speaker: Order. It would be helpful to the whole House if Members' questions could be confined to the Minister and not asked of each other across the Chamber.
    Dr. Cunningham: How can the Secretary of State deny responsibility for London's housing problems or those of the country as a whole when the Government have deliberately and systematically cut local authority housing investment programmes by more than 70 per cent. in real terms during their period in office? Does the Minister agree with his right hon. Friend the Member for Henley (Mr. Heseltine), who, in addressing himself to this problem, said

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    that he was far from persuaded that building more and more houses which fewer and fewer of our children could afford to buy would solve the problem of homelessness?
    Mr. Ridley: The hon. Gentleman has always failed to realise that, on top of capital allocations, 20 per cent. of receipts is available to local authorities to spend. That amounts to a record figure of £6,000 million for capital investment.
    The hon. Gentleman quoted my right hon. Friend the Member for Henley (Mr. Heseltine), who I wish was with us. I shall quote exactly what he said.
    Dr. Cunningham: I have his words here.
    Mr. Ridley: I have them too. My right hon. Friend said:
    "If there is an assumed right of the newly created family, the newly separated single family or the pensioner living longer to have a home in the south-east, then we are effectively abandoning the south to an inevitable and irreversible erosion of the very qualities that are today so prized by those who live there."
    That is the view of my right hon. Friend. What he means is that surplus people should be transported.

    Housing Stock
    Mr. Patchett: To ask the Secretary of State for the Environment whether he has any proposals to prevent the deterioration of the housing stock in England and Wales.
    Mr. Ridley: Proposals for the improvement of the housing stock in both the private and public sectors were included in last September's White Paper "Housing: The Government's Proposals".
    Mr. Patchett: Given the present housing crisis, will the Minister allow local authorities to spend at least some of the moneys accrued from the sale of council houses on making improvements, to meet the basic needs of existing council tenants?
    Mr. Ridley: I said earlier that local authorities may spend 20 per cent. of their housing receipts per year, which means that they can spend money, but over a period of time. That sum, together with the allocations, results in the high total of about £6 billion a year for local authority capital investment. I do not believe that the hon. Gentleman has noticed that both figures should be added to give the real total.
    Mr. McLoughlin: Will my right hon. Friend consider forcing local authorities that have empty houses to ensure that those properties that have been empty for longer than six months go on to the housing market for homesteading purposes? One of the problems of public sector housing is that many properties on housing estates become dilapidated. Young people would like the opportunity to buy those properties at prices they could afford, for the purpose of doing them up themselves.
    Mr. Ridley: I agree with my hon. Friend. There is every possibility of homesteading taking place. I have listened to the pressure from my hon. Friends that we must do something more with empty council houses, and I certainly take their comments seriously.
    Mr. Rooker: Does the Minister agree that the rate of renovation and new building when taken together should at least equal the rate of deterioration, otherwise, whatever figures the Minister may quote at the Dispatch Box today,
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    matters will only get worse? Will he dismiss and completely repudiate the comments of his hon. Friend the Member for Mid-Staffordshire (Mr. Heddle) talked of people—and he must have meant the elderly—under-occupying their homes, saying that they ought to be chucked out to make room for others?
    Mr. Ridley: It is for my hon. Friend to look after himself, as I am sure he can do very ably. I can tell the hon. Gentleman, however, that if he adds together allocations and the amount spent from receipts he will find that the total is running at a very high level. Furthermore, it has been increased because of the success of the right-to-buy policy, which has produced more receipts.
    Mr. David Nicholson: Is my right hon. Friend aware that we await firm decisions on the future of improvement grants with some concern? First, such proposals would, we hope, minimise the invasion of the statutory and non-statutory green belt. Secondly, I hope that they would help the owners of Woolaway homes in my constituency, about which I have corresponded with the Minister of State and which face severe deterioration as a result of non-traditional building methods.
    Mr. Ridley: I can tell my hon. Friend, first that proposals to reform the system of improvement grants will be the subject of legislation at the earliest possible opportunity, so that money can be concentrated on the cases of greatest need.
    Secondly, considerable extra allocations have been made for defective housing, and a further £20 million has recently been released for the very purpose of trying to gain ground against the large number of defective houses that need to be put right. Most councils with such houses will find that they have recently received a large new allocation.

    Housing Corporation
    Mr. Geraint Howells: To ask the Secretary of State for the Environment what is the number of people employed by the Housing Corporation; and by what percentage he expects the number to rise over the next three years.
    Mrs. Roe: As at 1 April 1988 the number of staff employed by the Housing Corporation in England whose costs are met from my Department's programme was 573. Future staffing requirements are currently being assessed in the light of the functions to be conferred on the Housing Corporation under the Housing Bill now before Parliament and the proposed establishment of separate bodies which will carry out the corporation's functions in Wales and Scotland.
    Mr. Howells: I thank the Minister for that very thoughtful reply. It is well known in the House that she is a staunch devolutionist, and I am delighted with the news that Wales will have its own Housing Corporation. In view of the large guango that is building around the Housing Corporation in England, will she bring forward proposals to devolve power to the various regions of England?
    Mrs. Roe: As I have already said, we announced that amendments to the Housing Bill would be brought forward to transfer the Housing Corporation's functions in Wales to a new body, Housing for Wales. The Housing

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    (Scotland) Bill currently before Parliament also provides for the Housing Corporation's functions in Scotland to be transferred to a new body, Scottish Homes, the constitution and staffing of which are matters for my right hon. and learned Friend the Secretary of State for Scotland.

    Council Housing and Home Ownership
    Mr. Pike: To ask the Secretary of State for the Environment what was the total subsidy to council housing for the year 1980–81 and for the year 1987–88; and what was the total level of support for home ownership for each of the same two years.
    Mr. Ridley: Housing subsidy up to 1980–81 was paid under a different system, so I am using 1981–82 as the base year for this reply. Council houses in receipt of Exchequer subsidy and contributions from general rate funds received an average of £265 in 1981–82; those similarly supported in 1987–88 received an average of £271. In addition, housing benefit was available to those who qualified. Owner-occupiers receiving mortgage interest tax relief in 1981–82 obtained an average of £514 and in 1987–88, £576.
    Mr. Pike: Is it not a fact that over the past nine years there has been a reduction of 1 million in the number of properties available for rent, and that more than half are in the private rented sector? Is it not true to say that the number of properties to rent will continue to decline until the Government give those who want to rent a fair deal comparable to that available for those who wish to purchase their homes?
    Mr. Ridley: First, the figures that I have given to the hon. Gentleman are not really comparable, because subsidies to council house tenants are not comparable with mortgage tax relief as the subsidy to council housing is calculated on the historic cost of building the house, whereas mortgage relief goes to people who have paid market values for their homes. If it were calculated on a comparable basis, the subsidy to the council tenant would be very much higher. Secondly, I hope that the hon. Gentleman will support the Housing Bill, which aims to bring forward more social housing to rent on a large scale.
    Mr. Ashton: On a point of order, Mr. Speaker. The Minister is misleading the House. He has been asked for total subsidies, not individual house subsidies.
    Mr. Speaker: Order. Ministers do not deliberately mislead the House and I am not responsible for their answers.
    Mr. Dykes: Does my right hon. Friend agree that the increase in home ownership under this Government is one of the Government's greatest success stories? Does he further agree that, in the outer London boroughs, a paradoxical effect is beginning to develop whereby very tight planning controls are needed to have a dampening effect on developers with strong financial power because they are impinging too much on a particular area and preventing first-time buyers making their first purchase?
    Mr. Ridley: I entirely agree with my hon. Friend that the policy of encouraging people to buy their own homes has been one of immense success and satisfaction to the over 1 million tenants who have exercised their rights.
    944
    With regard to my hon. Friend's other point, as he knows, we consider all planning applications and policies with the greatest of care and I am fully aware that in some parts of the London suburbs there is a feeling that they are being asked to take too great a density to relieve pressure elsewhere.
    Ms. Armstrong: May I invite the Minister to answer the question that was tabled? If he cannot deal with the total subsidy to council housing nationally, perhaps he will tell the House what is the differences in housing allocation for the north of England, in terms of Government subsidy to council housing, between 1980 and today?
    Mr. Ridley: I would be happy to give the hon. Lady the global figures, but they mean little unless one directs them to the number of houses to which they are applicable. The total figures for Exchequer contributions to council housing in 1981–2 was £1·3 billion and in 1987–88, £0·8 billion. [Interruption.] There were many fewer houses. Mortgage tax relief cost £2·7 billion in 1981–82 and £4·3 billion in 1987–88, when there were many more houses. Housing benefit amounted to £1·7 billion in 1981–82 and £3.5 billion in 1987–88.
    Mr. David Shaw: Is it not true that the amount of private housing now being built is back to the 1973 level, which was the highest for some years? Is it not also true that people want to buy and live in private, rather than public, sector housing? Is it not further true that much public sector housing has deteriorated badly in recent years, with massive maintenance being required after about eight years, and often complete rebuilding within 30 years? Is it not therefore true that the best value for money over the past 30 years has been private sector housing?
    Mr. Ridley: I cannot be absolutely sure, without notice, of the figure that my hon. Friend quoted, but it is certainly true that last year was the best year for house construction for many years. With regard to the relative merits of owner-occupation and renting, there is a need for supply in both markets, for people to buy and rent houses. That is why we are taking action through the Housing Corporation and the Housing Bill to provide more social housing to rent.
    Mr. Soley: Why is the Minister so ashamed to admit to the figures that were eventually wrenched out of him by the Opposition? Why will he not accept that there are 1 million fewer homes available for rent in this country since 1980, over half of them from his much loved private rented sector? Why do Conservative local authorities use council rents to subsidise ratepayers when, at the same time, we are prepared to use taxpayers' money to subsidise the private sector? Why can he not get his act together and make sure that there is a proper subsidy for people who seek to rent in both the public and private sectors.
    Mr. Ridley: The question asked for figures which would have been misleading because, obviously, subsidy must be related to the number of houses to which it is applied, not to the total figure irrespective of the number of houses. My later point, which the hon. Gentleman did not deny, was that because council house subsidies and rents are based on historic costs the true cost of the subsidy of those houses is represented by the cost of disrepair, because enough money has not been put by to repair them and eventually replace them when that is necessary. These

    945
    figures are not similar, and I made my best efforts to give the hon. Member for Burnley (Mr. Pike) the figures for which he asked.

    Crown Suppliers
    Mr. Dalyell: To ask the Secretary of State for the Environment, pursuant to the answer of 20 April, Official Report, columns 817-18, what criteria he intends to use in assessing the public interest in the proposed privatisation of the Crown Suppliers.
    Mr. Chope: I shall ensure that the public interest is taken into account by having regard to wider Government policies, including those for privatisation, procurement, value for money and the maintenance of adequate security.
    Mr. Dalyell: Does the House of Commons have the clearest, unambiguous assurance that before any moves to privatise the Crown Suppliers there will be legislation? Or is Parliament to be bypassed?
    Mr. Chope: It is not my practice to comment on press speculation about advice requested from or given by officials. I am considering the details of the package for the Crown Suppliers' activities which will be offered for sale to the private sector and the arrangements for the staff of the Crown Suppliers. It is certainly not my intention to bypass this House as yesterday's articles in The Guardian and The Independent suggested.
    Mr. Holt: In his consultations and deliberations on privatising the Crown Suppliers, did my hon. Friend recognise the recent experience of Langbaurgh council when it put lighting maintenance out to contract and its in-house tender of £450,000 was beaten by a private sector tender by £150,000? As a consequence, the ratepayers are that much better off and, more important, workers who had their jobs transferred to the private sector are now earning £40 a week extra.
    Mr. Chope: My hon. Friend's latest evidence from his local authority area of the massive savings that can be made from privatisation are being replicated in other areas as the Local Government Act 1988 is implemented. There is no doubt that billions of pounds can be saved for local authorities by going out to competitive tender.
    Mr. Boyes: Is the Minister aware that his treatment of the loyal and skilled work force of the Crown Suppliers is seen as high-handed and downright insulting? Does he recall that a petition given to him on his visit to Hastings and signed by 99 per cent. of the work force condemned privatisation and his handling of the situation, and called for staff transfer on a voluntary basis? Why does he not give the Hastings' work force, and, indeed, the entire Crown Suppliers' work force some straight answers, instead of treating them as objects to be flogged off at an auction?
    Mr. Chope: The hon. Gentleman does a disservice to himself and to the loyal employees of the Crown Suppliers. It is certainly the intention of management to use its best endeavours to meet staff preferences, but I cannot give assurances that all staff who do not wish to work for the privatised Crown Suppliers can be found jobs within the Civil Service.

    European Football
    Mr. Pendry: To ask the Secretary of State for the Environment when he will next meet the chairman of the Football Association to discuss the future of English participation in European football.
    Mr. Moynihan: I met the chairman of the Football Association on Saturday 14 May, together with the president of UEFA and the president of the Football League. It was agreed that the decision on the re-admittance of English clubs was for UEFA and that it would take it in the light of my report of the domestic season and events during the European championships finals.
    Mr. Pendry: When the Minister next meets the chairman of UEFA, will he give him, and all of us, some good news? Will the Minister tell him that he intends in future to speak up for our national game and highlight the successes of English football over the past three seasons? In particular, will the Minister praise those who attended last night's match when Manchester United, which would be returned to Europe should the ban be lifted, played the Italian champions AC Milan in front of a crowd of 37,392 and there were no arrests inside or outside the grounds? As this is not an isolated occasion, why is the Minister not being positive and saying that we should be back in Europe? Or will he continue to chicken out?
    Mr. Moynihan: I will always speak up for success and I will always speak out against hooliganism. For that reason I have been determined throughout the whole season to put in place a package of measures to deter hooliganism. As for the European championships in West Germany in June, I hope that the comprehensive approach to tackling the problem, particularly through police intelligence and co-ordination, will be successful. Of course I praise games where there have been no arrests, but I hope that the day will come when I need not comment on there being no arrests, because there never should be arrests at sporting venues.
    Mr. Ashton: Is the Minister aware that his record in supporting the application of British teams has been despicable this season? Why should innocent people who have committed no offence see their teams barred because of the antics of a few National Front supporters, who will be judged on their behaviour in Germany this summer? When will the Minister start backing British teams and praising British crowds for their good behaviour over the last three years?
    Mr. Moynihan: I recognise that the vast majority of football fans go along to enjoy the game and do not want to have anything to do with hooliganism. It is fair to say that the hooligan element is not a football fan element but a criminal element. Regrettably that criminal element has done enormous damage to our national game and to our reputation, not least at Heysel. I am determined to take every possible measure to ensure that the innocent are protected and that at every opportunity we bring to book the criminals—[Interruption.]—who have caused so much trouble for our national game.
    Several Hon. Members rose—
    Mr. Speaker: Order. I do not know what it is about Environment questions that always lead to an excited atmosphere.
    Mr. John Carlisle rose—
    Mr. Speaker: Order. I endeavour to call hon. Members on a fair basis. The hon. Gentleman has had one supplementary question. I decide the order in which Members are called.
    Mr. Carlisle: I am very grateful to you, Mr. Speaker. Does my hon. Friend accept from me, as vice-chairman of the all-party football committee, that he has the full support of the Tory Benches in his determination to make the Football Association, the Football League and the European football authorities responsible for their own behaviour and that of their clubs? Does he agree that if more clubs had followed the example of Luton Town football club, worthy winners of the Littlewoods cup, in banning away supporters, with the result that there were no problems of hooliganism this season, all British clubs would be readmitted to Europe?
    Mr. Moynihan: I appreciate. recognise and support what Luton has done. It is deserving of support from both sides of the House. As my hon. Friend will know, the package of measures required to tackle hooliganism varies from ground to ground and circumstance to circumstance. It was for that reason that we took police advice on the level of membership schemes appropriate to deter hooligans at each and every ground in the Football League.
    Mrs. Margaret Ewing: Has the Minister monitored the increasingly good behaviour of Scottish football fans, which has meant that no Scottish football teams have been banned from European competition, unlike their English counterparts? Therefore, we should not be talking about British teams in this context. Will he join the chief constable of Strathclyde in congratulating the football crowd at the Scottish cup final on Saturday on their good behaviour, in spite of the provocation of some unusual spectators?
    Mr. Moynihan: In regard to the UEFA decision, I have always referred specifically to the readmission of English clubs, because that is what we are talking about. However, because of the record of previous years it has been necessary to put in place exceptional measures in preparation for the game on Saturday. I hope that those measures and the recognition by Scottish as well as English fans of the importance of having a trouble-free game on Saturday will he borne in mind, especially as we are on trial when it comes to UEFA's decision later this season.
    Mr. Favell: Will my hon. Friend take it from me that, contrary to the impression given by Opposition Members, the vast majority of people support him entirely in his view
    948
    that, until he is satisfied that British football fans can behave, under no circumstances should they be allowed to go abroad and bring shame and disgrace to this country?
    Mr. Moynihan: I am grateful to my hon. Friend for his support. There will never be a time when the Government can guarantee the behaviour of fans in Europe. However, I hope that the comprehensive package of measures to deter hooliganism will result in UEFA recognising that there has been a satisfactory improvement in our national game. [Interruption.]
    Mr. Speaker: Order. We are not on the football terraces here—[Interruption.] Order. The hon. Member for Langbaurgh (Mr. Holt) does not help with his continual shouting across the Chamber.
    Mr. Denis Howell: We shall be playing added time, I take it Mr. Speaker.
    The Minister is correct to describe the evil people attached to football grounds here and abroad as criminals. However, if that is the case, why are the Government expecting football clubs to police those criminals and to pay the bill? Why are football clubs paying for the policing of their grounds if, as the Minister says, the problem has nothing to do with football clubs? Why does he expect the Football Association to have any control over evildoers abroad? That is something that it should not be expected to do. If this is the Government of law and order, when will their law and order policies bring peace to football?
    Mr. Moynihan: I have never said that the problem has nothing to do with football clubs. On the contrary, the package of measures requires decisive action by football clubs to deter the hooligans. The importance of the clubs providing the police inside their grounds is reasonable, as they are going into private property. Outside the football grounds the Government, through the police authorities, pay for extensive policing from the public purse. There is no doubt that the determination shown by the Government in association with the football authorities is absolutely essential if we are to solve these problems. We have to continue with such determination in the future.

    BILL PRESENTED
      ENGLISH CHURCH
      Mr. Tony Benn, supported by Mr. Eric S. Heller, Mr. Jeremy Corbyn, Mr. Bill Michie, Mr. Bernie Grant, Mr. Tony Banks, Mr. Bob Cryer, Mrs. Alice Mahon, Mr. Dennis Skinner, Ms. Mildred Gordon, Mr. Chris Smith and Mr. Bob Clay, presented a Bill to disestablish the Church of England: And the same was read the First time; and ordered to be read a Second time tomorrow and to be printed. [Bill 156.]

"The House Magazine"
3.31 pm
Mr. David Winnick: On a point of order, Mr. Speaker. Has The House Magazine any official status in the House? I ask this question because the article by the right hon. Member for Shropshire, North (Mr. Biffen) in the current edition does not apparently include all that he wrote. What has been deleted?
Mr. Speaker: That is not a matter for me. I am not responsible for The House Magazine. I cannot answer the question that the hon. Gentleman is about to put to me. He should raise it with the editor.
Mr. Winnick: On this point—
Mr. Speaker: No, I cannot answer a question like that. The hon. Gentleman now knows perfectly well the content of that article. He would not expect me to make any comment upon it. Nor do I think it is appropriate for him to raise it in the Chamber.
Mr. Tam Dalyell: You will recollect, Mr. Speaker, that on a previous occasion an article was written in a review of a book by a professor of journalism, a former business editor of The Times, about a correspondence and contact between a Grand Companion of the Bath, Sir Robert Armstrong, and a Companion of the Bath, Sir Brian Hayes. As a result of that article, the whole issue of The House Magazine was pulped.
There is cause for reflection by the Chair, because outside the House, whether we like it or not, The House Magazine is seen to have the imprimatur of Parliament. If the magazine has nothing to do with the House, why does it have the portcullis all over it? It must be one thing or the other. This review by a respected journalist caused embarrassment to 10 Downing street. Now embarrassment has occurred again for the same reason.
Mr. Speaker: The House Magazine is nothing to do with me. It is nothing to do with a point of order. It is a private publication, and a number of hon. Members sit on the editorial board. I cannot answer questions about it in the Chamber. It has nothing to do with me.
Mr. David Harris: Further to that point of order, Mr. Speaker. I heartily endorse everything that you have said. As somebody who has an article in the current issue of The House Magazine, which was cut and overwritten, may I say that the points of order that have been raised by Opposition Members are completely bogus?
Several Hon. Members rose—
Mr. Speaker: Order. I am not prepared to answer any questions about The House Magazine. It is absolutely nothing to do with me— [HoN. MEMBERS: "What about the portcullis?"] That matter should be drawn to the attention of the appropriate authorities. I am not responsible for that either.
Mr. Dennis Skinner rose—
Mr. Dalyell rose—
Mr. D. N. Campbell-Savours rose—
Mr. Richard Holt rose—
Mr. Speaker: Order. I call Mr. Holt.
Mr. Holt: During questions today, Mr. Speaker, you had occasion to reprimand me. I have no reason to cause you any aggravation and I respect this House very much. You know and I know, because we have had a private conversation on this matter—[HON. MEMBERS: "Oh."]—that I will continue to shout, "Shut up, Skinner," as long as—[Interruption.]
Mr. Speaker: Order. It would be unwise if private conversations were exposed in the Chamber because then they would hardly be private. I must advise the hon. Gentleman—[Interruption.] Order. I say to the House that it is a great disservice while the Chair is seeking to concentrate—a high level of concentration is required at Question Time—if hon. Members continually seek to cause distractions. [Interruption.] I must advise the hon. Member that every time that he comes in and does that it causes a disturbance. I ask him to refrain from doing it in future.
Mr. Dalyell: On a point of order, Mr. Speaker.
Mr. Speaker: Order. No further point of order arises.

WELSH AFFAIRS
Ordered,
That the matter of Education and Training for Employment in Wales, being a matter relating exclusively to Wales, be referred to the Welsh Grand Committee for its consideration.—[Mr. Peter Lloyd.]

EUROPEAN COMMUNITY DOCUMENTS
Ordered,
That European Community Documents Nos. 7658/ 86 + COR 1 and 9928/87 on the protection of workers from the risks related to exposure to chemical, physical and biological agents, 10662/87 on the protection of workers from the risks related to exposure to carcinogens at work, and 4544/88 on the marketing and use of certain substances and preparations be referred to a Standing Committee on European Community Documents.—[Mr. Peter Lloyd.]
Mr. Speaker: We now come to the ten-minute Bill.
Mr. Campbell-Savours: On a point of order, Mr. Speaker.
Mr. Dalyell: On a point of order, Mr. Speaker.
Mr. Speaker: Order. I am not taking further points of order on that matter.
Mr. Campbell-Savours rose—
Mr. Speaker: Does it concern The House Magazine?
Mr. Dalyell rose—
Mr. Speaker: Order. I called Mr. Campbell-Savours.
Mr. Campbell-Savours: Could you advise me, Mr. Speaker, about whom one should approach regarding the misuse of the portcullis?
Mr. Speaker: The Serjeant at Arms.
We now come to the ten-minute Bill. I call Mr. John Battle.
Mr. Dalyell: On a point of order, Mr. Speaker.
Mr. Speaker: Order. I am not prepared to take his point of order and the hon. Gentleman knows the reason. I ask him to obey the Chair.

Statutory Minimum Wage
3.37 pm
Mr. John Battle: I beg to move,
That leave be given to bring in a Bill to introduce a statutory minimum wage to be paid in all industries and services as a requirement on employers.
I have been asked why I have chosen this opportunity to bring before the House a Bill about a statutory minimum wage. My answer is that it is my first opportunity to do so. First, I represent an area of west Yorkshire in which low pay is the primary cause of family poverty. Secondly, this could not be a more apt time to introduce the Bill because, when our Budget debates have to the national average male wage of £244 per week in Britain, it does not seem to me that there is widespread awareness of how little many people have to live on week by week.
The primary aim of my Bill, therefore, is to eradicate poverty by tackling a primary cause—the persistence, even in what is heralded by the Government as a booming economy, of low pay. My Bill will bring forward a framework for the introduction of a statutory minimum wage in Britain, built on the establishment of a basic level of two thirds of the average wage, with a procedure for regular revision of that figure, and monitoring and enforcement provisions by a new minimum wages inspectorate.
First, I shall address the question whether there is a need for the Bill. West Yorkshire has been traditionally renowned as an area of Britain which pays lower wages than elsewhere. In the heart of my constituency of Leeds, West, which is a traditional textile and engineering manufacturing area, is the Bramley jobcentre.The jobs that are on offer at that jobcentre are predominantly in the service sector and are part-time, temporary and low-paid. One of the best jobs on offer is a general catering assistant post at the princely rate of £2·10 an hour. There are five cleaning jobs featured in the jobcentre window with hourly rates that range from £1·70 an hour. For those who cannot do the arithmetic, that works out at £68 for a 40-hour week. There is a job for a play scheme leader, who needs to have experience and references, at a wage of £55 a week. One can apply for a job as a security guard at a rate of £1·50 an hour for a basic 60-hour week.
This means that there are many working for much less than £2·50 an hour, or £100 a week, which is well less than half the national average of £244 that has been cited in the Budget debates. That is well below the Council of Europe's decency threshold of £3·50 an hour, or £135 a week, which has been fixed for the whole of Europe. In reality, about 9.4 million adult workers in Britain earn less than the Council of Europe's decency threshold of £135 for a week's work. That is one in three of male manual workers in Britain.
The new earnings survey, to which I shall refer briefly without citing figures, spells out the fact that many workers in west Yorkshire are on less than £100 a week.
952
Many workers in Yorkshire, both manual and non-manual—these are predominantly women—earn significantly less than the decency threshold, or half the accepted national average.
Some may say that the remnants of the wages councils remain to deal with the issue. In 1987, 23 per cent. of the establishments checked by the councils were found to be paying less than the set levels. The clothing industry is one of the lowest of the low-paid industries, yet the Minister has been petitioned to abolish the wages council that sets wages in that industry and its hourly rate is £1·98 an hour.
A new minimum wages inspectorate is needed to replace the voluntary approach which has been tried and has failed. If the view is presented that most low-paid workers are women who do not need the money they earn—the so-called pin-money argument—and that home workers, who number about 250,000 in Britain, and piece-rate workers should not be counted, I shall press the argument for economic justice in our society by using the following quotation:
"Just remuneration for the work of an adult who is responsible for a family means remuneration which will suffice for establishing and properly maintaining a family and for providing security for its future."
I suggest that that should be our baseline approach. To generate a low-wage economy for a large minority in our society alongside the current economic boom for the rest of us is grossly unjust. It is pricing people into work at the expense of their families.
I shall use what little time remains to me to argue that a statutory minimum wage will not jeopardise the economy but will increase its efficiency. I could press the case that a national minimum wage operates effectively in many other countries. I could further ask, with the move to an integrated European labour market in 1992, what more opportune moment could there be to prepare for it by adopting the Council of Europe's decency threshold as the statutory minimum wage`' Without a commitment to a national minimum wage, we perpetuate the conditions that manufacture poverty in our society alongside the wealth of others.
The Bill offers an opportunity to change those conditions and to introduce a basic cornerstone that will enable us to tackle poverty in our society. The way to prevent poverty is to pay decent wages and not force families into the benefit system. I hope that the Bill will gain the support of the House.
Question put and agreed to.
Bill ordered to be brought in by Mr. John Battlle, Mr. Frank Cook, Mr. Derek Fatchett, Ms. Clare Short, Mr. Chris Smith, Mr. Tony Blair, Mrs. Alice Mahon, Ms. Harriet Harman, Mr. Torn Clarke, Mr. Kevin Barron, Mr. Ian McCartney and Mr. Doug Henderson.

Statutory Minimum Wage
  STATUTORY MINIMUM WAGE
  Mr. John Battle accordingly presented a Bill to introduce a statutory minimum wage to be paid in all industries and services as a requirement on employers: 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 168.]
Orders of the Day
  British Steel Bill
  As amended (in the Standing Committee), further considered.
  British Steel Bill
    Clause 1

      VESTING OF PROPERTY ETC. OF BRITISH STEEL CORPORATION IN A SUCCESSOR COMPANY
      3.45 pm
      Mr. John Maxton: I beg to move amendment No. 10, in page 2, line 13, at end insert
      (7) The Secretary of State shall, after consultation with the appropriate trade unions, nominate to the board of the successor company two directors in the employee interest.'.
      In Committee, my hon. Friend the Member for Great Grimsby (Mr. Mitchell) moved two new clauses to ensure the appointment to the board of the new company of directors selected by the trade unions who represent workers in the steel industry. The new clauses tried to obtain a large representation for such directors on the board. I believe that one of the new clauses tried to establish that one fifth of the board should be worker directors or appointed by the trade unions. The new clauses were rejected by the Government, with their Tory majority, one because the Government claimed it was otiose, and the other on a matter of principle.
      This amendment is more modest. It does not suggest that the appointment should be made by the trade union movement. It proposes that the Government should appoint two directors to the board of the successor company after consultation with the appropriate trade unions. So in theory, if not necessarily in practice, the directors may not be members of the trade union. They may not work in the steel industry or even be the people suggested by the trade unions. We know that all Governments, and particularly this one, do not necessarily accept the advice of those they consult. To be honest, there is no reason why they should. Consulting does not necessarily mean taking the advice given.
      The only clear criterion that we are seeking to lay down for these two directors is that they should be appointed to represent the interests of the employees. Obviously, our amendment had to be different for procedural reasons. If it had been the same as the new clauses I doubt whether it would have been selected for debate. We hope that our more limited proposal will attract the support of the Government. It meets at least some of the objections that the Under-Secretary made during his rebuttal of our new clauses in Committee. He referred, as did my hon. Friend the Member for Motherwell, South (Dr. Bray) to the problems that arose when worker nominees were appointed to the steel board after nationalisation in the 1960s. In this case, however, the Government have the right to veto trade union nominees and to suggest their own names.
      During the debate in Committee the Under-Secretary of State, the hon. Member for Preston—
      The Parliamentary Under-Secretary of State for Industry (Mr. Robert Atkins): South Ribble.
      Mr. Maxton: I apologise.
      The hon. Member for South Ribble (Mr. Atkins)—I thought that was a bus company—said:
      "I hope seriously that the Committee will not consider my next remark as patronising, but I am aware from experience in my own large and industrial constituency"—
      the Minister kept claiming that he was a powerful trade unionist—
      "that workers do not want to be directors involved on a daily basis with the management of the company. I have spoken to employees in Leyland Vehicles, British Aerospace and BTR. Employees want to make certain that their views can be heard. The complaint has always been about the channels of communication rather than about active participation in the direction of the company."
      That is exactly what our amendment seeks to do. It does not seek, as the new clauses sought, to put on the board worker directors appointed by trade unions. It says that we need two directors who will listen to the problems of the workers and will put those problems to the board. It meets exactly the point made by the Minister in Committee and creates a channel of communication between the employees and the board of directors. I hope that the Minister will note that.
      I accept that the amendment does not overcome the Minister's more basic objection, that the Government do not wish to put statutory restraints on a new company. That brings us to the basic philosophical divide between the Government and the Opposition. In Committee, the Minister said:
      "a director's responsibility is, first and foremost, to the company collectively … rather than to a specific electorate".—[Official Report, Standing Committee D, 28 April 1988; c. 815-17.]
      He was trying to suggest that all directors would maintain an interest in the employees of the company and that there was no need to appoint special directors for that purpose. I think that it was my hon. Friend the Member for Motherwell, South who told the Minister that a company is defined in law as the shareholders. Thus the sole responsibility of directors is to the shareholders and not in any way to the employees or to the community in which the company is based.
      The Government and their supporters believe that a company must be run to ensure the maximum profit for those who invest in it. They have little or no concern for the work force or for the rest of the community in which a company is based. If profits can be increased by so-called rationalisation, which as we all know is the polite word for closure, or if losses can be minimised by such a move, it is the interests of the shareholders which will be taken into account by the board of directors. They will not take account of the interests of the work force, those who have invested their labour, time and effort in the company. If profits can be increased by keeping down wages or by altering the conditions of employment, the directors have a responsibility and a duty to ensure that that happens. That is because their first responsibility is the profit of the shareholders.
      Employees who have perhaps given their whole working life to a company have a much greater investement in it than do some shareholders who have moved money in for profit and will move it out without a thought if that is the best way to get an increased return. They will sell the shares to whomever will give them the biggest price, whatever the nationality of the purchaser or his motives for buying.

      955
      The work force has more right to a say than the shareholders, because the very livelihood of workers depends on the success of the company. Directors from the work force may have a great deal more expertise about the running of the company than some non-executive directors. Such directors may he appointed by an insurance company or other institutional shareholders whose only interest is in ensuring profits for the company and who may have no knowledge whatever of the steel industry.
      In Committee, the Minister suggested that the right to purchase shares that the Government would give employees would give them the stake in the company that we are seeking, and that would lead to the appointment of worker directors. However, the Government's proposal for shareholdings for employees is so limited that it is highly unlikely that, even if all employee shareholders were to vote en masse, from top management down to labourer, they would have a voting share large enough to ensure a director on the board. I shall have further questions for the Minister about that.
      The Labour party does not believe that this modest amendment will give the work force any real power. In Committee, we repeatedly made it clear that we are opposed to privatisation, and that we believe that the steel industry would be best left in public hands, perhaps with changes that would give the work force a greater share and a greater say in how the company is run. Privatisation is bad for the British economy and for those who work in the steel industry. However, given that the Government majority will push it through, as well as opposing the Bill, we have a responsibility to ensure that if it becomes law, the employees in the industry are protected as best we can in difficult circumstances.
      Our two directors might be outvoted when the board suggests closure, but at least there would be someone to give the views of the workers and obtain some concessions from the board. Perhaps I am being over-optimistic in thinking that the Government might accept the principle of this proposal, but I live in hope.
      Mr. Michael Fallon: It would be churlish of the Conservative party not to recognise that the amendment is at least much more moderate than that tabled in Committee, and that the Labour party has come a long way from the days of Bullock and worker directors—the direction in which we were heading in the late 1970s. Although it is modest, the amendment is as flawed as the previous one because it assumes that the employees' interest is necessarily distinct and separate from the interest of the shareholders or the interest of the company as a whole.
      The hon. Member for Glasgow, Cathcart (Mr. Maxton) gave the game away when he said that the other directors would be interested only in profits. That is a misleading view of the duties, responsibilities and interests of the directors of a public company. A director of a public company is interested not simply in profits but in the success of that company and that enterprise, and that embraces the well-being of those who work for it.
      As well as being fundamentally flawed in principle by its reference to "employee interest", the amendment, if it were carried, would be defective in practice. Far from strengthening the channel of communication, as has been suggested, it would cut clean across it. For example, what would be the relationship between the two directors and
      956
      the local steel union convenors, or the national trade union committee, when it came to putting forward the employee interest? Who would be speaking for the employees—the trade unions or the two worker directors?
      Secondly, the amendment is defective in practice because it assumes, through its reference to "employee interest", that different directors have different interests and that there can be a specialist director—not simply one who is in a full-time or part-time capacity or is an executive or non-executive member, but specialist in the view that he takes of the duties of a director. It seems to me that those in the new category of worker director would be placed in the impossible and invidious position of weighing their general duties to the company and their general obligations to the shareholders against the particular interest that they should have in regard to their employees. I believe that that would place them in an impossible position and would be no recipe for the smooth running of an important public company. For those reasons, the amendment should be resisted.
      4 pm
      Mr. Barry Jones: Notwithstanding the cogency of the argument of the hon. Member for Darlington (Mr. Fallon), he will not be surprised when I say that I support my hon. Friend the Member for Glasgow, Cathcart (Mr. Maxton), who made a very reasonable case.
      I consider that the British Steel Corporation work force, which is highly successful and co-operative, deserves extended rights to information, consultation and representation. I do not consider that any work force should be kept in the dark, especially because individual workers in the steel industry often devote their whole working lives to the industry. My hon. Friend, in proposing the amendment, made a strong case for a channel of communication.
      Ordinary working people should be involved at every level—on the shop floor through their trade unions. Certainly, the leadership of the trade unions at BSC Shotton would acknowledge that. The work force has earned the ability to get to the heart of the company now proposed. The steel industry has suffered closures, cuts and almost perpetual demanning. Throughout the 1980s, the work force of BSC has broken records and has given the company exemplary co-operation and immense loyalty. It deserves the facility proposed in the amendment.
      The amendment does not ask for a great deal. At a major turning point in the history of the industry in Britain, it will help to dispel suspicion and to promote co-operation. I recollect the worker-director scheme as it operated in the 1970s. At divisional level, the worker director of BSC Shotton, Mr. Jack Leonard, played a heroic role, and was the means of expressing the shop floor's views to the managing director. At main board level, the status of the director in the employee interest was very considerable. He could relate directly to the TUC's iron and steel committee and each union then disseminated information to its menbership in each steel works throughout the country.
      I urge the Government to accept this modest amendment, given that their proposals represent a turning point in the history of the industry.
      Mr. Elliot Morley: If the Government are serious about involving employees in any industry, they should accept the amendment, which relates to worker directors. We have heard about the valuable role of such a position in steel companies and how it has been a link between the work force, giving their trade unions a direct say on the board.
      If we are to make progress with industrial democracy, we should include such measures which have been pioneered by BSC and not go backwards, which is what the Government are doing, by throwing out of the window all the work in industrial democracy that has been done within BSC. The amendment would allow the reformed company to become a modern, progressive company, striving to compete in the steel market, and trying to set a model for industrial democracy and the involvement of its work force.
      If the work force is meaningfully involved in decision making, as well as the end product, the company will work better and more efficiently and the work force will have a greater commitment to it if the employees feel part of the company and their views are heard and taken into account.
      I have worked in industries where much of the manufacturing plant was designed as a result of suggestions from the work force, the people at the sharp end of production who often see ways of making production more efficient, cheaper and more cost-effective. Such progress is best brought about by direct involvement which does not give people a few pounds as a reward for their suggestions, but gives those who work in the industry a real say in decision-making and genuine involvement.
      Mrs. Margaret Ewing: In supporting the amendment, I reflect the views of my party, which firmly believes in employee participation as being a vital factor in improving industrial relations. The amendment concerns the steel industry, a vast, complex and significant industry for economic and social life. The vastness and complexity of the industry produces even stronger arguments for ensuring that employee directors are appointed to the new board. That would ensure that no part of the industry was seen in isolation from the rest of the industry and that there were clear channels of communication from the work force to the management, ensuring that full information about decisions is disseminated and fully comprehended by everyone. That would be a sounder basis for progress.
      The hon. Member for Darlington (Mr. Fallon) put forward rather a strange argument when he suggested that employee directors would in some way be at odds with other directors. It seems to me that they would have interests very similar to those of other directors. After all, employee directors would be concerned about the success of the steel industry, as they would be only too well aware that on that success hinged the future security and work prospects of a vast number of people. Therefore, they would participate fully, and would make sure that their views were heard and that any decisions would be to the advantage of everyone in the industry.
      This modest amendment gives the Government an opportunity to show the work force in British Steel, and those who will be employed in the steel industry after privatisation, that there is genuine concern to ensure that all aspects of the industry are explained and discussed by all those who consider that the industry will have a vital
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      impact on their future. That future surely includes the employees, and the Government have an ideal opportunity to express their commitment to the work force.
      Mr. Stuart Bell: The hon. Member for Darlington (Mr. Fallon) said that this was a modest amendment compared with what the Labour party and the Labour movement had in mind in the 1970s with the Bullock report. I well remember the report of Mr. Bullock, which was a great venture to bridge the terrible gap that had existed for a century between capitalism and labour. The ideas in the Bullock report originally came from General de Gaulle, who, from his lofty vision, wanted to find some way of achieving worker participation. He believed that workers ought to participate in the affairs of their companies, other than simply by selling their labour.
      In the 1970s, my right hon. Friend the Member for Chesterfield (Mr. Benn) pointed out that a working man invests most of his time, apart from his sleeping time, in the factory or the firm in which he works, and that that investment should have some return, other than simply a wage. De Gaulle had the idea of worker participation, which was taken up by Mr. Bullock in the 1970s and for which we had great hopes at that time.
      I remember a conversation with Lord Callaghan who was the Prime Minister of the time. We were discussing ways of getting the Bullock report on to the statute book. He pointed out that with no majority in the House it was impossible. Following the election in 1979, events turned away from the concept of involving workers in their factory other than through the sale of their labour.
      When General de Gaulle introduced worker participation, he also introduced a system in France with two sets of books. One set was for the workers on the board and one was for the other directors. When the Italians introduced worker participation, they had three sets of books—one for the directors who were not workers, one for the workers and a third for the tax man. That shows how things were done differently in Italy and France from the way we envisaged worker participation in Britain.
      I remember an incident in the 1970s when there was a worker participation experiment in Birtley. A trade unionist on the board of a company in Birtley went to a meeting with the management and came back at 5 o'clock with the management proposals. He told the workers that those proposals ought to be accepted by the workers. The workers tied him to a chair an kept him there all night. They said, "That is what we do with those who come here as worker directors with proposals from the management." Therefore, that experiment came to a sorry end and again we failed to convince the work force that there was an interest for them in having proper participation.
      As the hon. Member for Darlington said, this is a modest amendment and one which reflects the fact that the Opposition are unable to make progress other than by way of persuasion. We cannot take on the massed battalions of Tory Members in the Division Lobby. Therefore, we are seeking to persuade the Government that it is an appropriate amendment, worthy of consideration and acceptance.
      We must bear in mind the long tradition in the steel industry of worker directors. In the 1960s the steel industry pioneered the idea of worker directors. A series of worker directors over many years were successful in linking the work force of BSC with the management in the best interests of the company and the country. Therefore, we

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      have seen successful worker participation in the steel industry and that is why we have tabled the amendment, however modest it may be. We wish to see continued involvement of the work force at board level with BSC or its successor company and prior to privatisation.
      I make those comments in the interests of my constituents on Teesside who work within the British Steel Corporation. In 1979 there were some 25,000 workers in the steel industry on Teesside and that has been reduced to about 7,000. Many thousands receive a British Steel Corporation pension and they were rudely surprised to learn that under the new social security measures introduced by the Government they were net losers. Taking into account their BSC pension, they were to lose some of the state benefits to which they had become accustomed prior to the change in legislation. As my right hon. Friend the Member for Chesterfield said, those men and some women—although not many—invested their working lives in the steel industry and now see their pensions cut by the Government. That is a great disappointment to those people, as it was to others, who had seen the steel industry as a bastion of the economy on Teesside.
      We do not wish to see a privatised steel industry without the worker participation that we desire. We do not wish to see the links between workers and management cut so that they are adrift and we return to a society of "them and us".
      The 7,000 or so who continue to work in the steel industry on Teesside look forward to the future of British Steel on Teesside in their interests as workers and as part of the local economy. They wish to see their representatives on the board of the company. We do not know whether the massive takeover of BSC will be followed by the setting up of regional boards with regional input, but if that happens there may be directors on those boards. Certainly, the workers want an opportunity to have their voices heard through worker directors. We ask the Government to take the amendment seriously and to consider it in the best interests of co-operation between labour and capital in the future.
      4.15 pm
      Mr. Atkins: The substance of the debate is reminiscent of the "them and us" mentality that has characterised the Labour party's industrial relations policy for many years. In many respects, it harps back to the days when that sort of tokenism caused some difficulties. Labour Members, particularly as the party is presently constituted, always assume that the Government and the Conservative party are somehow anti-union and opposed—[Interruption.] As the House will recall, at the previous election and the election before that a substantial number—in the 1983 election, a majority—of trade union members voted Conservative rather than for the parties represented by Opposition Members. In those circumstances, Opposition Members have to be cautious in making the assumption that the Government are anti-union.
      Far be it from me to remind the hon. Member for Glasgow, Cathcart (Mr. Maxton) that, like him, I am a member of what was the Association of Scientific, Technical and Managerial Staffs and is now Manufacturing, Science, Finance. I suspect that I have done as much work in my union activities as he has. I also suspect that that work has been more effective, as I am in
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      government and he is not. To that extent, I am not unfamiliar with or unsupportive of trade union activities. The hon. Gentleman will know that, as we discussed the matter in Committee.
      The experience of the past, as represented by the difficulties experienced by Sir Charles Villiers and others, with worker directors was that the divisions caused within the trade union movement and with the worker directors was such that they did not want to continue to do the job with which they were faced. I can do no better than repeat what I said in Committee:
      "directors have Companies Act responsibilities, as well as moral and industrial responsibilities for their employees' quality of life—for example, concerning pension funds, industrial relations and so on".— [Official Report, Standing Committee D, 28 April 1988; c. 819-20.]
      The hon. Gentleman will know that Jack Eccles, who is on the board now, does a remarkable job. He does so because of his experience, knowledge and understanding and not simply because he is a trade unionist, albeit a distinguished one.
      It is worth recording that the Government and, more especially in this context, the company recognise the important contribution that has been made by the trade unions in the British steel industry over the years, particularly through the trying and difficult times that it has experienced in recent years. They respect trade unions and understand their requirement to represent their members' interests. They wish that to continue after privatisation. I have no reason to suppose that the excellent relationships between the chairman and the various trade unions representatives as well as other members within the company will not continue to be as good as they were in the past.
      The directors of the successor company will be appointed by the company in conformity with the provisions of the Companies Act. The Secretary of State will have a role in that process to the extent that he is a shareholder. As I have said, such matters are governed by the Companies Act and it is not our intention that the Secretary of State should have any additional powers of the sort proposed by the amendment. The successor company should not be subject to any more statutory intervention than other Companies Act companies. It will appoint directors on their merits and it would be inappropriate to provide for statutory intervention by the Secretary of State.
      Mr. Maxton: As the Minister said, the Secretary of State will be the only shareholder in the company when it is first set up. Does he intend to appoint two trade union representatives to the board at that stage? If the Minister was prepared to say that, it might make some difference to our vote.
      Mr. Atkins: The Secretary of State may or may not appoint various people, but he will appoint individuals on their merits, and not because they are trade unionists or anything else.
      Mr. Bryan Gould: It is relevant.
      Mr. Atkins: Of course it is relevant; the hon. Gentleman makes the point that he made in Committee. Of course trade unions have a part to play. I speak as a trade unionist myself, and I understand the contribution that trade unions have to make. However, as my hon. Friend the

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      Member for Darlington (Mr. Fallon) put it so eloquently, we do not believe in tokenism, because we believe that the time for that has passed.
      The issue of worker directors was discussed at considerable length in Committee, and we had a particularly interesting debate on it. We concluded that there was a philosophical divide. I emphasise that, at least on my part—and I suspect on that of my hon. Friends who served on the Committee—there was no anti-trade union bias. There was simply a difference of attitude. Conservative Members believe that management should manage and trade unions should represent the interests of the employees.
      Mr. Gould: As the Minister said, we had an interesting debate in Committee. On that occasion, he appeared to take the view that the fact that a person represented the work force disqualified him from having the objectivity that might be required of a director. Is that still his view?
      Mr. Atkins: As I recall, I said that all directors had a Companies Act responsibility for everything that went on in the company, which includes matters related to employees. If a group of people were elected or selected—whatever phrase we use—directors to represent a particular interest, that would, by definition, conflict with their Companies Act responsibility, which is to represent interests wider than those of a specific group. That is why it is vital that directors should be selected on their merits rather than specifically to represent a particular group of people.
      Mr. Maxton: I find that slightly surprising. Is the Minister saying that, if one of the banks finishes up with a major shareholding in one of the companies, that bank will not insist on having a nominee on the board to represent its own interests rather than those of the whole company?
      Mr. Atkins: Not necessarily. I do not see how the hon. Gentleman's question conflicts with my last point. I emphasised that we select on merit. I have already said that someone like Jack Eccles—[Interruption.] That does not destroy the point. Hon. Members must not make sedentary interventions that disprove their own point. I have emphasised that Jack Eccles, with his experience and expertise, has contributed greatly to the affairs of the board and the company. He was selected on merit and I hope that that policy will continue, rather than the tokenism that Opposition Members persist in advocating merely because they believe that they are the only people who represent the trade union movement, which is clearly not the case.
      Mr. Morley: Part of the problem in the past was that on occasions worker directors were used to apologise for hostile company action threatening the work force. However, the amendment could be used to take a new and imaginative direction in industrial relations. For example, in the share offer the total equity given to the work force could be 25 per cent. The Government could hold a 50 per cent. golden share and 25 per cent. could be sold on the open market. The work force would then have a direct involvement and we could have radical and progressive attitudes to industrial democracy rather than what is in the Bill.
      Mr. Atkins: I do not agree that the approach is new and imaginative. As I said, I think that it is a very old-fashioned approach, which has been tried in part and did not work. Our belief in employee participation is based largely on the fact that we believe that employees should be owners of their companies in the sense of being shareholders. Many trade unions have already suggested that they believe that they can exert pressure on the direction of the company—guiding the board of directors—by virtue of having a portion of the shares to give them the right to influence events and as shareholders. That is what we would prefer.
      I emphasise yet again that it is a mistake for Opposition Members to think that the amendment would protect the interests of trade union representatives and employees. We believe that argument to be fundamentally flawed.
      Mr. Morley: The Minister may have missed what I said. Although the share issue has already been announced, the percentage has not been announced. I suggested that the amendment could be linked to giving 25 per cent. of the total share issue to the work force, which force would then have not only a direct involvement through the share issue but a more meaningful involvement through the worker director arrangements.
      Mr. Atkins: Employees will have the chance to buy shares under what will be one of the more generous schemes in the privatisation process with which the Government have been associated. I can speak only from personal experience. I have a semi-industrial constituency and I know people in companies such as Leyland, British Aerospace and others who are actively involved in the day-to-day running of large concerns. The view of my constituents—except those whose politics are extreme in either direction—is, broadly speaking, that management is there to manage and trade unions are there to represent employees' interests. That view is also held by many trade unionists.
      Communication is the most important aspect of the day-to-day running of a company. Much of the criticism arises not because employees want someone on the board to represent their interests but because they would prefer to know what is going on on a more regular basis so that they can participate through their negotiating procedures and through the structure of the trade union as it is involved in pay bargaining, conditions of employment and so on. Employees would prefer not to be involved as directors in the day-to-day management of the company.
      There was a philosophical divide on that between Conservative and Labour Members in Committee. I urge the hon. Member for Glanford and Scunthorpe (Mr. Morley) to read the relevant debate. While he is clearly more likely to agree with his hon. Friends, I think that he will find the debate interesting. I return to the point that I have been making all along. The directors are there to look after the interests of all those involved in the company. The Government are not hostile to trade unions, because we believe strongly that they have the right to exist, to negotiate and carry out their day-to-day activities on behalf of their members. However, we believe that tokenism as represented by the amendment is an old-fashioned process rather than a modern one.
      Mr. Gould: The Minister is being characteristically generous in giving way. It is important that we should get on record the essential divide between us. As I understand

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      it, the Minister is saying that whoever the shareholders are and however temporary and short-lived their interests, they are entitled to have those interests represented and protected on the board and therefore to have control over the direction of the enterprise. The work force, whose members are so much more closely involved, as their lives and livelihoods depend on the enterprise, are apparently disqualified by that fact alone from representation and from having their interests protected. Is that what the Minister is saying?
      Mr. Atkins: We share the desire to ensure that employees are represented in the day-to-day running of the company. However, it is a legal requirement of the Companies Act that a director should have at the centre of his decisions and concern the interests of all those in the company, whatever their involvement. We do not believe that worker directors are necessary, and such arrangements have failed in the past. In those circumstances—as I have tried to indicate on a personal basis if no other—my understanding and experience suggest that most people involved in a company's day-to-day activities prefer to get on with the job in hand. They want to know what the company is about and to understand through communication and a variety of other ways where the company is heading and to know of its successes and problems.
      They also want to know what the future holds and how they may best improve their work processes, and so on. However, they do not want to be involved at board level. If the hon. Gentleman asked many people working in industry, he would find that such a view is generally held. Perhaps it is not held by trade union activists, who may wish to become members of the board and are probably prejudiced.
      4.30 pm
      Mr. William Powell: It has been suggested to my hon. Friend that shareholders may have only a short-term interest in the company whereas an employee is likely to have a long-term interest. Will he confirm that a shareholder is just as likely to have a long-term interest as an employee, and that an employee is just as likely to have a short-term interest in the company as a shareholder?
      Mr. Atkins: My hon. Friend, who is an authority on these matters, speaks with considerable truthfulness. He represents a steel constituency, and he understands the work force at Corby, albeit residual, better than most. He is in a position to speak knowledgeably. Many trade union pension funds are involved, on a day-to-day basis, in share ownership. Opposition Members may themselves be shareholders in that way.
      We have explored this issue at great length. Opposition Members have tried to suggest that the Government are opposed to trade unions and are not prepared to accept the amendment because we want to do trade unions down yet again. I have demonstrated, at least to the satisfaction of my hon. Friends, that such is not the case.
      Mr. Gould: What there are of them.
      Mr. Atkins: It is an indication that they are unconcerned by the threat which the hon. Gentleman purports to present, as would seem to be the case among Opposition Members, given the paucity of numbers on the hon. Gentleman's own Benches during the passage of what is, by the Opposition's own standards, a highly
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      controversial Bill. This matter was explored at length in Committee, in a debate which was worth hearing arid reading. I reject the essence of what is being proposed in the amendment and urge my hon. Friends to do so.
      Mr. Maxton: I am not surprised at the Minister's reply. I commented at the end of my opening remarks that I live ever in hope and that I am one of nature's born optimists—or so my wife is always telling me. However, obviously, I was wrong. It was inevitable that the Government would make their argument about token trade unionists. If we are to speak of tokenism, the Minister is clearly the Government's own token trade unionist on the Front Bench—there are not many others. As to his membership of ASTMS, now the MSF, to which we both belong, it actively campaigned to have me elected to the House, but I am not sure that it did the same for the Minister. I am rather convinced that it did the opposite.
      Mr. Atkins: The hon. Gentleman should be careful in suggesting that I am a token trade unionist. If he examines any of the records of Members' interests, he will discover that many Government Members are trade unionists. More important, an even greater number of Government Members were elected by the majority of trade unionists in their constituencies voting Conservative.
      Mr. Bob Cryer: Most of them are directors who are lining their pockets as fast as they can.
      Mr. Maxton: I shall not respond to my hon. Friend's sedentary intervention, but I shall sit down if he wishes to speak.
      Perhaps those on the Government Front Bench would like to declare their trade union membership—except for
      the hon. Member for South Ribble (Mr. Atkins). They might be rather pushed to do so—I do not imagine that Lloyd's is a trade union.
      The Minister made a smooth reply—I believe that one of my hon. Friends called it a smarmy reply—and made great play of his trade union membership and of the Government's belief in trade unionism and he spoke of the Government's wish to see active unions getting on with the job, yet they accuse us all the time of tokenism. We cannot win this argument. In Committee, we tabled a strong new clause suggesting that one fifth of the board should comprise trade union members appointed by the unions. We were then accused of extremism and of going over the top. When we make a more modest proposal, we are accused by the hon. Member for Darlington (Mr. Fallon) of backing off from our commitment to worker participation.
      We accept that the Tory party is the Government and that we have to work within their bounds, however much we may dislike them. That is why we made a reasonably modest proposal for trade union participation. Our commitment to involving the work force in company decisions is not token. It is not tokenism to have as members of a board people representing the trade union movement. Far from that being a backward step, it is a step forward. The backward step is that being taken by the Government in suggesting privatisation in the first place. It is the Government who are attempting to return industrial relations and the ownership of companies to the conventions operated in the 19th century, let alone the 1960s or 1970s.

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      It is astonishing that any Conservative Member should say that he supports unions and that the Government have not spent the past seven years attempting to destroy the trade union movement, when that is the Government's aim. The trade union movement is, quite rightly, linked to my own party. The Prime Minister has said that it is one of her prime objectives to destroy Socialism. In my view, that can only be achieved by destroying trade unions as well.
      In replying to the amendment, the Minister raised a number of interesting points. It is clear now that, once the Bill is enacted and the new Companies is established under the Companies Acts, there will be only one shareholder, the Secretary of State. Speaking in terms of the present Government, it will be the Chancellor of the Duchy of Lancaster who will be that single shareholder. It will be he who appoints the board of directors. Our view is that at least two of the directors, the Chancellor of the Duchy of Lancaster having discussed this matter with the steel unions, ought to represent the industry's workers and all the employees—not just those who work on the shop floor.
      The Minister has stated that he will appoint to the board people with appropriate qualifications. We have a right to know—and have not been told this at any stage—what qualifications will be required, who the Minister has in mind, and from what source those directors will be drawn. I presume that British Steel's present chairman, Sir Robert Scholey, and Jake Stewart may be among them, but who else?
      Mr. Atkins: Wait and see.
      Mr. Maxton: That is the trouble. That was the Minister's answer to almost every question put to him throughout the whole of the Committee stage. This is an enabling Bill designed to give the Government carte blanche to do whatever they damn well like with the steel industry once it has been privatised. That is what is wrong with the Bill. We do not know who will be on the board of directors that is to run the country's steel industry.
      What will happen when the flotation takes place? Will the new shareholders necessarily accept the board of directors appointed by the Secretary of State? Perhaps, although I consider it very unlikely. The employee shareholding will be such that the employee shareholders will say, "Hey, we are not accepting this board of directors. You can get rid of him, or her, for a start. We want our director in his place." What would be the Secretary of State's answer to that? Will a new board of directors be appointed immediately after flotation?
      I am afraid that the Minister is wrong. It seems highly likely that one of the big institutional investors will gain a large shareholding, as I do not believe that the average punter will buy many shares. If the company is to be sold at all, it will be sold to the big investment companies and share institutions, because that is the nature of the industry. If Barclays bank, the Bank of Scotland, the Royal Bank of Scotland or an insurance company obtains a large bulk of shares, it will probably insist that one of the directors represents it on the board, which is normal, standard practice in business. That person is there not to represent the whole company and look after its interests, but to represent that particular institution and ensure that its shareholding is looked after. He is interested in one of
      966
      two things: either a high return in profits, or boosting the share price so that he can sell at a good price and get out of the company altogether.
      Mr. Atkins: Why do the hon. Gentleman and many of his hon. Friends think that profit is a dirty word? Profit, after all, is the lubricant that makes the company expand, which is to the benefit of all those working in it—particularly the employees.
      Mr. Maxton: We do not believe that profit is a dirty word. We do, however, believe that profit generated by an industry should be used properly for the benefit of both the industry and the employees within it. That is not the track record of free-market capitalism, either in the past or in the present. We cannot guarantee that the unbridled profit motive will allow proper attention to be paid to the interests of employees, or the community in which industries are based. The company is interested primarily in making a profit for the shareholders. That is the law as it stands, and the Government have reinforced it continually. The shareholder is the company, and the interests of the shareholder—the profit of the shareholder—are inevitably the major concern of a company once it moves into private hands.
      Dr. John Reid: I have always understood, with my lack of economic knowledge, that in general terms profit is a return to an investor on a capital investment. Given that the thousands of millions of pounds invested over the past 10 years have been invested by the taxpayer, will my hon. Friend ask the Minister when the profit will be returned to them over the next five years, now that British Steel is in a healthy condition?
      Mr. Maxton: We asked that question time and again in Committee, and the Minister never gave us an answer. He may yet have an opportunity during the evening, or perhaps the Chancellor of the Duchy of Lancaster, as he was not on the Committee, may take the opportunity to answer it on Third Reading.
      However modest this proposal, I consider that it is realistic and would serve the interests of the work force. It is not tokenism, but a genuine attempt to ensure proper communications between work force and management, in which we believe. It is not we who believe in the "them and us" view of our industries; it is the Government, who have reinforced that attitude and made it worse over the past eight years. We believe in genuine co-operation, and good management in this country knows that such co-operation is the best way of achieving higher productivity. It is a great pity that the Government do not believe in it as well.
      I ask my hon. Friends to support the amendment.
      Question put, That the amendment be made:—
      The House divided: Ayes 192, Noes 244.

      Division No. 310]

      [4.44 pm

      AYES

      Abbott, Ms Diane

      Bell, Stuart

      Allen, Graham

      Benn, Rt Hon Tony

      Anderson, Donald

      Blair, Tony

      Archer, Rt Hon Peter

      Boateng, Paul

      Armstrong, Hilary

      Boyes, Roland

      Ashley, Rt Hon Jack

      Bradley, Keith

      Banks, Tony (Newham NW)

      Bray, Dr Jeremy

      Barnes, Harry (Derbyshire NE)

      Brown, Gordon (D'mline E)

      Barron, Kevin

      Brown, Nicholas (Newcastle E)

      Battle, John

      Bruce, Malcolm (Gordon)

      Beckett, Margaret

      Buchan, Norman

      Beith, A. J.

      Buckley, George J.

      967

      Caborn, Richard

      Janner, Greville

      Campbell, Menzies (Fife NE)

      John, Brynmor

      Campbell, Ron (Blyth Valley)

      Jones, Barry (Alyn & Deeside)

      Campbell-Savours, D. N.

      Kaufman, Rt Hon Gerald

      Canavan, Dennis

      Kennedy, Charles

      Carlile, Alex (Mont'g)

      Kinnock, Rt Hon Neil

      Cartwright, John

      Kirkwood, Archy

      Clark, Dr David (S Shields)

      Lambie, David

      Clarke, Tom (Monklands W)

      Leighton, Ron

      Clay, Bob

      Lestor, Joan (Eccles)

      Clwyd, Mrs Ann

      Lewis, Terry

      Coleman, Donald

      Livsey, Richard

      Cook, Frank (Stockton N)

      Lloyd, Tony (Stretford)

      Cook, Robin (Livingston)

      Loyden, Eddie

      Corbett, Robin

      McAllion, John

      Corbyn, Jeremy

      McAvoy, Thomas

      Cousins, Jim

      McCartney, Ian

      Cox, Tom

      McFall, John

      Crowther, Stan

      McKay, Allen (Barnsley West)

      Cryer, Bob

      McKelvey, William

      Cummings, John

      McLeish, Henry

      Cunliffe, Lawrence

      McTaggart, Bob

      Cunningham, Dr John

      Madden, Max

      Dalyell, Tarn

      Mahon, Mrs Alice

      Darling, Alistair

      Marshall, Jim (Leicester S)

      Davies, Rt Hon Denzil (Llanelli)

      Martin, Michael J. (Springburn)

      Davies, Ron (Caerphilly)

      Martlew, Eric

      Dewar, Donald

      Maxton, John

      Dixon, Don

      Meale, Alan

      Dobson, Frank

      Michael, Alun

      Doran, Frank

      Michie, Bill (Sheffield Heeley)

      Douglas, Dick

      Michie, Mrs Ray (Arg'l & Bute)

      Dunnachie, Jimmy

      Millan, Rt Hon Bruce

      Dunwoody, Hon Mrs Gwyneth

      Moonie, Dr Lewis

      Eadie, Alexander

      Morgan, Rhodri

      Eastham, Ken

      Morley, Elliott

      Ewing, Harry (Falkirk E)

      Morris, Rt Hon A. (W'shawe)

      Ewing, Mrs Margaret (Moray)

      Mowlam, Marjorie

      Fatchett, Derek

      Mullin, Chris

      Faulds, Andrew

      Murphy, Paul

      Fearn, Ronald

      Nellist, Dave

      Field, Frank (Birkenhead)

      O'Neill, Martin

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

      Orme, Rt Hon Stanley

      Fisher, Mark

      Parry, Robert

      Flannery, Martin

      Patchett, Terry

      Flynn, Paul

      Pike, Peter L.

      Foot, Rt Hon Michael

      Powell, Ray (Ogmore)

      Foster, Derek

      Primarolo, Dawn

      Foulkes, George

      Radice, Giles

      Fyfe, Maria

      Randall, Stuart

      Galbraith, Sam

      Redmond, Martin

      Galloway, George

      Rees, Rt Hon Merlyn

      Garrett, John (Norwich South)

      Reid, Dr John

      Garrett, Ted (Wallsend)

      Richardson, Jo

      Gilbert, Rt Hon Dr John

      Roberts, Allan (Bootle)

      Godman, Dr Norman A.

      Rooker, Jeff

      Golding, Mrs Llin

      Ruddock, Joan

      Gould, Bryan

      Sheerman, Barry

      Graham, Thomas

      Sheldon, Rt Hon Robert

      Grant, Bernie (Tottenham)

      Short, Clare

      Grocott, Bruce

      Skinner, Dennis

      Hardy, Peter

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

      Harman, Ms Harriet

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

      Hattersley, Rt Hon Roy

      Soley, Clive

      Haynes, Frank

      Spearing, Nigel

      Healey, Rt Hon Denis

      Steel, Rt Hon David

      Heffer, Eric S.

      Steinberg, Gerry

      Henderson, Doug

      Strang, Gavin

      Hogg, N. (C'nauld & Kilsyth)

      Straw, Jack

      Holland, Stuart

      Taylor, Mrs Ann (Dewsbury)

      Home Robertson, John

      Thomas, Dr Dafydd Elis

      Hood, Jimmy

      Thompson, Jack (Wansbeck)

      Howarth, George (Knowsley N)

      Vaz, Keith

      Howell, Rt Hon D. (S'heath)

      Wall, Pat

      Howells, Geraint

      Wallace, James

      Hoyle, Doug

      Walley, Joan

      Hughes, John (Coventry NE)

      Wareing, Robert N.

      Hughes, Robert (Aberdeen N)

      Welsh, Andrew (Angus E)

      Hughes, Roy (Newport E)

      Welsh, Michael (Doncaster N)

      Illsley, Eric

      Wigley, Dafydd

      968

      Williams, Rt Hon Alan

      Wray, Jimmy

      Williams, Alan W. (Carm'then)

      Young, David (Bolton SE)

      Wilson, Brian

      Winnick, David

      Tellers for the Ayes:

      Wise, Mrs Audrey

      Mr. Allen Adams and

      Worthington, Tony

      Mr. Adam Ingram.

      NOES

      Adley, Robert

      Fox, Sir Marcus

      Alexander, Richard

      Franks, Cecil

      Alison, Rt Hon Michael

      French, Douglas

      Allason, Rupert

      Gale, Roger

      Amos, Alan

      Gardiner, George

      Arbuthnot, James

      Garel-Jones, Tristan

      Arnold, Jacques (Gravesham)

      Gill, Christopher

      Ashby, David

      Goodhart, Sir Philip

      Atkins, Robert

      Goodlad, Alastair

      Atkinson, David

      Goodson-Wickes, Dr Charles

      Baker, Nicholas (Dorset N)

      Gorman, Mrs Teresa

      Batiste, Spencer

      Gorst, John

      Beaumont-Dark, Anthony

      Gow, Ian

      Bellingham, Henry

      Gower, Sir Raymond

      Bendall, Vivian

      Greenway, Harry (Baling N)

      Bennett, Nicholas (Pembroke)

      Greenway, John (Ryedale)

      Benyon, W.

      Griffiths, Sir Eldon (Bury St E')

      Biffen, Rt Hon John

      Griffiths, Peter (Portsmouth N)

      Biggs-Davison, Sir John

      Grist, Ian

      Blackburn, Dr John G.

      Ground, Patrick

      Blaker, Rt Hon Sir Peter

      Grylls, Michael

      Bonsor, Sir Nicholas

      Gummer, Rt Hon John Selwyn

      Boscawen, Hon Robert

      Hamilton, Neil (Tatton)

      Boswell, Tim

      Hannam, John

      Bottomley, Mrs Virginia

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

      Bowden, A (Brighton K'pto'n)

      Hargreaves, Ken (Hyndburn)

      Bowden, Gerald (Dulwich)

      Harris, David

      Bowis, John

      Haselhurst, Alan

      Boyson, Rt Hon Dr Sir Rhodes

      Hawkins, Christopher

      Braine, Rt Hon Sir Bernard

      Hayes, Jerry

      Brandon-Bravo, Martin

      Hayhoe, Rt Hon Sir Barney

      Brazier, Julian

      Hayward, Robert

      Brittan, Rt Hon Leon

      Heathcoat-Amory, David

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

      Heddle, John

      Bruce, Ian (Dorset South)

      Hicks, Mrs Maureen (Wolv' NE)

      Buchanan-Smith, Rt Hon Alick

      Hicks, Robert (Cornwall SE)

      Burns, Simon

      Higgins, Rt Hon Terence L.

      Butcher, John

      Hill, James

      Butler, Chris

      Hogg, Hon Douglas (Gr'th'm)

      Butterfill, John

      Holt, Richard

      Carlisle, John, (Luton N)

      Hordern, Sir Peter

      Carrington, Matthew

      Howard, Michael

      Carttiss, Michael

      Howarth, G. (Cannock & B'wd)

      Channon, Rt Hon Paul

      Howell, Ralph (North Norfolk)

      Chapman, Sydney

      Hughes, Robert G. (Harrow V/)

      Chope, Christopher

      Hunt, David (Wirral W)

      Churchill, Mr

      Hunt, John (Ravensbourne)

      Clark, Sir W. (Croydon S)

      Hunter, Andrew

      Clarke, Rt Hon K. (Rushcliffe)

      Irvine, Michael

      Conway, Derek

      Irving, Charles

      Coombs, Anthony (Wyre F'rest)

      Jack, Michael

      Coombs, Simon (Swindon)

      Janman, Tim

      Couchman, James

      Jessel, Toby

      Cran, James

      Johnson Smith, Sir Geoffrey

      Currie, Mrs Edwina

      Jones, Gwilym (Cardiff N)

      Davis, David (Boothferry)

      Jones, Robert B (Herts W)

      Day, Stephen

      Jopling, Rt Hon Michael

      Devlin, Tim

      Kellett-Bowman, Dame Elaine

      Dickens, Geoffrey

      Key, Robert

      Dorrell, Stephen

      Kilfedder, James

      Douglas-Hamilton, Lord James

      Kirkhope, Timothy

      Durant, Tony

      Knapman, Roger

      Dykes, Hugh

      Knight, Greg (Derby North)

      Evennett, David

      Knight, Dame Jill (Edgbaston)

      Fallon, Michael

      Knowles, Michael

      Farr, Sir John

      Knox, David

      Favell, Tony

      Lamont, Rt Hon Norman

      Fenner, Dame Peggy

      Lang, Ian

      Field, Barry (Isle of Wight)

      Lawrence, Ivan

      Finsberg, Sir Geoffrey

      Lennox-Boyd, Hon Mark

      Fookes, Miss Janet

      Lilley, Peter

      Forth, Eric

      Lloyd, Peter (Fareham)

      969

      Lord, Michael

      Renton, Tim

      McCrindle, Robert

      Rhodes James, Robert

      Macfarlane, Sir Neil

      Ridley, Rt Hon Nicholas

      Mac Kay, Andrew (E Berkshire)

      Ridsdale, Sir Julian

      Maclean, David

      Roe, Mrs Marion

      McLoughlin, Patrick

      Rossi, Sir Hugh

      McNair-Wilson, M. (Newbury)

      Rost, Peter

      McNair-Wilson, P. (New Forest)

      Rowe, Andrew

      Madel, David

      Rumbold, Mrs Angela

      Major, Rt Hon John

      Sackville, Hon Tom

      Malins, Humfrey

      Sainsbury, Hon Tim

      Mans, Keith

      Shaw, David (Dover)

      Maples, John

      Shaw, Sir Michael (Scarb')

      Marland, Paul

      Shelton, William (Streatham)

      Marlow, Tony

      Shephard, Mrs G. (Norfolk SW)

      Marshall, Michael (Arundel)

      Shepherd, Richard (Aldridge)

      Martin, David (Portsmouth S)

      Sims, Roger

      Mates, Michael

      Skeet, Sir Trevor

      Mawhinney, Dr Brian

      Smith, Tim (Beaconsfield)

      Maxwell-Hyslop, Robin

      Soames, Hon Nicholas

      Meyer, Sir Anthony

      Speller, Tony

      Mills, lain

      Spicer, Michael (S Worcs)

      Mitchell, Andrew (Gedling)

      Squire, Robin

      Moate, Roger

      Stanbrook, Ivor

      Monro, Sir Hector

      Stern, Michael

      Moore, Rt Hon John

      Stevens, Lewis

      Moss, Malcolm

      Stewart, Andy (Sherwood)

      Moynihan, Hon Colin

      Summerson, Hugo

      Mudd, David

      Taylor, John M (Solihull)

      Nelson, Anthony

      Taylor, Teddy (S'end E)

      Neubert, Michael

      Temple-Morris, Peter

      Newton, Rt Hon Tony

      Thompson, D. (Calder Valley)

      Nicholson, David (Taunton)

      Thorne, Neil

      Nicholson, Emma (Devon West)

      Thornton, Malcolm

      Onslow, Rt Hon Cranley

      Townend, John (Bridlington)

      Oppenheim, Phillip

      Townsend, Cyril D. (B'heath)

      Page, Richard

      Trippier, David

      Paice, James

      Waddington, Rt Hon David

      Patnick, Irvine

      Wakeham, Rt Hon John

      Patten, Chris (Bath)

      Walker, Bill (T'side North)

      Patten, John (Oxford W)

      Walters, Dennis

      Pattie, Rt Hon Sir Geoffrey

      Warren, Kenneth

      Pawsey, James

      Watts, John

      Peacock, Mrs Elizabeth

      Wheeler, John

      Porter, David (Waveney)

      Widdecombe, Ann

      Portillo, Michael

      Wilkinson, John

      Powell, William (Corby)

      Wilshire, David

      Price, Sir David

      Wood, Timothy

      Raffan, Keith

      Raison, Rt Hon Timothy

      Tellers for the Noes:

      Rathbone, Tim

      Mr. Richard Ryder and

      Redwood, John

      Mr. Kenneth Carlisle.

      Question accordingly negatived.

    Clause 2

      REDUCTION AND SUBSEQUENT EXTINGUISHMENT OF CORPORATION'S PUBLIC DIVIDEND CAPITAL
      Mr. Gould: I beg to move amendment No. 24, in page 2, line 16, leave out from 'by' to end of line 19 and insert
      'an amount equal to the accumulated historical cost losses on vesting day, thereby extinguishing those losses.'.
      Mr. Deputy Speaker (Sir Paul Dean): With this it will be convenient to take the following amendments: No. 3, in page 2, line 16, after 'amount', insert
      'not exceeding 10 per cent. of the total'.
      No. 25, in page 2, line 38, at end add—
      `(5) The Secretary of State shall direct that a public investment reserve be created of an amount equal to the reduction of public dividend capital under subsection (1) above which—

      (a) so long as it exists, ranks for dividends on the same basis as an equivalent nominal amount of share capital in the successor company which is held by the Secretary of State; and

      970

      (b) may be extinguished at any time by payment by the successor company to the Secretary of State of the then current market value of the equivalent nominal value of the share capital so extinguished'.

      No. 6, in page 5, line 6, leave out '("the statutory reserve")' and insert
      'which shall be known as the British Steel Investment Reserve and used exclusively for the purposes of investment in new plant and training.'.
      No. 7, in page 5, line 7, leave out subsections (2) to (4).
      No. 26, in page 5, line 7, leave out from 'reserve' to end of line 23 and insert
      'shall rank for dividends on the same basis as an equivalent nominal amount of share capital in the successor company which is held by the Secretary of State.
      (2a) The statutory reserve may be extinguished at any time by payment by the successor company to the Secretary of State of the then current market value of the equivalent nominal value of the share capital so extinguished'.
      No. 28, in page 5, line 14, leave out from 'applied' to end of line 16 and insert
      'to investment in plant or capacity or to sustain plants threatened with closure.'.
      Mr. Gould: The amendments bear upon clauses 2, 3 and 7 which are, in many respects, at the heart of the Bill. The Bill is, of course, principally concerned with the capital restructuring of the British Steel Corporation so that it can be prepared for privatisation and its assets and liabilities vested in the successor company in such a way as to comply with companies legislation.
      A way must be found of taking over a corporation that has accumulated considerable losses and has, accordingly, drawn substantially on taxpayers' financial support. That is essentially the problem faced by the Government, and it causes us great concern. We must find a way of taking account of that and of writing off a good deal of the indebtedness and losses so that the assets and liabilities can be put in a proper form to comply with company legislation.
      However, the Government appear to be trying to draw a line at the point where the corporation ceased to make losses and moved into profit and to provide that, until that point, those losses were the taxpayers' responsibility, but that after that point, any profits should be available to the new private owners. We are concerned about that aspect and wish to quiz Ministers about it.
      We are assured that none of this involves any subsidy of any sort. One understands exactly why that firm protestation should be made. Apart from any anxiety that might arise on this side, it would undoubtedly create slight difficulties with the EEC Commission if there were thought to be any element of subsidy. We are also told that there is no gift to the new private owners and no loss to the taxpayers. Ministers have made this clear on several occasions. Whenever these issues were debated in Committee, they have given us exactly those assurances.
      5 pm
      The Government have gone further than that in the valuable and welcome notes on clauses. In respect of clause 2, for example, the notes say that this is "solely an accounting transaction". Another passage states that there is
      "no forgiveness of debt or other liabilities."
      The guidance notes on clause 7 say:
      "The provision does not have the effect of giving money to the successor company."
      In picking out these remarks in the guidance notes, I do not mean to be churlish. They are extremely welcome and

      971
      valuable, and we are grateful to the Government for providing them. I hope that nothing I say will deter their production in future. But are these statements to be taken exactly at face value?
      It is not surprising that some sensitivity on this issue is displayed by the fact that these notes specifically took up these points and tried to give assurances. It is worth trying to unravel exactly what has happened to the financial structure of the British Steel Corporation and what the Bill proposes to do to change it. For reasons that are well understood, BSC traded at a loss over a long period. I would argue that this was for reasons that were at least primarily the responsibility of mistaken economic policies, not least to do with the exchange rate introduced by the Government in the early 1980s. Taxpayers were required, for good reason, to stump up a good deal of money to keep this vital British industry afloat.
      It was decided by the Government that the provision of that financial support should not take the form of an ordinary loan or some other form of repayable capital sum on which dividends or interest should be paid, but should be public dividend capital. In principle, even that public dividend capital, as its title suggests, should have produced a dividend for taxpayers. But as we established in Committee, except for an early period, in practical terms no dividend or other payment has ever been made to taxpayers.
      Perhaps the Minister would confirm that the public dividend capital totals more than £4 billion. It is worth adverting to a point that I raised on a couple of occasions in Committee, but which the Minister failed to answer. It is that no payment of any sort and no interest or dividend has been paid on that public dividend capital. That has strongly influenced the corporation's profitability over that period and today. When considering the future profitability of the corporation we must take into account the fact that the cost-free public dividend capital will not be available to the private owners.
      Does the Minister agree that the benefit to the corporation and the disadvantage to the future operation of the successor company could be quantified? It should be possible to make a calculation according to the then prevailing commercial interest rates—let us set aside the question of dividends and assume that the money was made available on ordinary commercial terms—of how much that dividend capital was worth year by year to the corporation, and its impact on the much touted level of profitability, on the basis of which the industry is now being offered for sale.
      We well understand that the level of profitability is the key to the price that the Government think they can achieve on the market. Clearly, they are basing their calculations on a projected level of profitability of about £400 million per annum. If that figure is to be written down to take account of the cost of the capital—the borrowing— which has not been taken into account, that will substantially affect what the Government could expect to receive in the market place. I hope that today the Minister can enlighten us on what that figure might represent, because it tells us a great deal about the price which might be expected.
      It is the taxpayers' misfortune that the Government decided that taxpayers should make that £4 billion contribution not in the guise of the ordinary creditor who could expect to be repaid—not only the capital sum but some return on the loan—but as public dividend capital.
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      Because of that, the taxpayer finds himself in a similar position to that of the equity holder. That is the closest analogy that I can draw. It is on that basis that the Government have treated public dividend capital when they have tried to subsume the corporation within the ordinary private sector company.
      Under clause 2, about hall the sum that taxpayers have paid—we are simply assuming a sum of £4 billion and I hope that the Minister can confirm its general accuracy—is simply to be written off to cover the accumulated losses that have been chalked up. As the guidance notes make clear, that is essential, if the corporation is to be privatised, to meet the Companies Acts requirement that a company cannot be floated if the assets do not match or exceed its capital and undistributable reserve. That may be a good argument from the Government's viewpoint. It would be impossible to privatise the corporation if the write-off did not take place. But that is not of much comfort to taxpayers, half of whose money is written off, and it begs the question whether privatisation is a necessary and desirable step.
      The Minister will then say, "Don't get too agitated about this because this is a perfectly normal transaction. It is purely an accounting procedure which a private company can do and it is specifically provided for in section 135 of the Companies Acts." But there are various safeguards for a private sector company operating under section 135. This must be provided for in the articles of association, and there must be a special resolution, and authorisation by the courts. The reason for all those safeguards is that the write-off, at least potentially, prejudices the interests of several people, not least the potential creditors of the company.
      Other than introducing this legislation and refusing to go into any detail of by way of explanation, have the Government taken any steps which would be equivalent to the formal and substantial steps which a private sector company would have to take to satisfy a court that this was a proper procedure? What consultations have been held, for example, with potential creditors? Because taxpayers are not technically in the position of creditors, they have the misfortune of not being regarded as creditors. They could well have been so regarded. They find that £2 billion of investment loan has simply disappeared. We want the Minister to answer those questions.
      The next step in the proceedings outlined in the Bill is that the remaining public dividend capital, having been reduced by about half, is extinguished. Any liability to the Secretary of State is extinguished. Under clause 3, part of it is converted into securities, which are then offered for sale. Under clause 7, the balance passes to a statutory reserve. The guidance notes are again helpful on the meaning of the procedure. They point out that the statutory reserve provided for by clause 7 is meant to act as a substitute for what, in the case of a private sector company, would be a share premium account. As there is unlikely to be any share premium, the statutory reserve is provided to fulfil that role.
      The difficulty for the Government is that the Companies Acts treat the share premium account in a special way—as being available only for certain purposes. That is right, and one understands why that should be so. The money in the share premium account is limited to particular purposes, such as the writing off of unrealised losses. Will the Minister estimate to what extent the money

      973
      which will pass to the statutory reserve will be devoted to that purpose? Will he also estimate what proportion of the extinguished public dividend capital will end up in the statutory reserve? It is difficult to debate the issues without indications from Ministers as to what figures should be put to the various categories into which the public dividend capital will fall.
      Let us go back to the equivalent of the share premium account. If the ordinary company rules were to apply to the share premium account, and if in essence it were regarded as undistributable, this would not meet the Government's book. As we know, the Government are anxious to present the books and the balance sheet of the corporation, and therefore of the successor company, in the most favourable light so as to emphasise the potential profitability of the successor company.
      If the money were to be tied up in a statutory reserve and were not distributable, it would dampen the ardour, one assumes, of those who might want to get their hands on it. Therefore, it is provided by clause 7(2)(b)—this is the provision which the Minister has to defend—that the Secretary of State may direct that some part of the statutory reserves
      "may be applied as if it were profits available for distribution".
      I am by no means an expert but, as far as I am aware, the Secretary of State is thereby taking a power which is not available in similar circumstances in a private sector company. Therefore, the argument that this is merely a technical adjustment or an accounting procedure which is exactly equivalent to that of a private sector company falls down at this point.
      I do not believe the Government claim that this is normal procedure. They claim that it represents the past profitability of the corporation and argue that if it had been a private company, it could have passed those profits to a reserve which would have been distributable. This merely makes our case that the Government are intent on drawing a line at the point at which the corporation became profitable and that their real purpose is to ensure that the losses are the responsibility of the public sector owner but the profits, as soon as they arise, will be money on which future private owners can get their hands. That is the essence of what the Government propose.
      Under clause 7(3), the power of the Secretary of State to make the direction is limited to the period in which the ownership of the successor company remains in the hands of the Crown. It is clear that the provision would not be in the Bill if the Secretary of State did not intend to make such a direction. I want the Minister to confirm that any direction that is thereby made will have consequences for the successor company. The disposition of capital into securities on the one hand and into the statutory reserve on the other, and the direction as to what part of the statutory reserve will be distributed, will be decided before the successor company is floated. Will the Minister confirm that that position will be inherited by the new private owners of the successor company, and that any sums which are declared to be distributable by a direction of the Secretary of State will remain distributable in the hands of the private owners?
      If that is so, notwithstanding all the technical arguments, we have a magical process by which a substantial sum of taxpayers' money, totalling over £4
      974
      billion, which stands as a debt owed by the corporation to the taxpayer, is converted, at least in part. into profits available to private owners. That is a remarkable procedure whereby debt owed to one group of people is transformed by the stroke of a pen into profits available to another group. It must be a wonderful feeling for people to have the law operating so benevolently and for them to be able to say that there is nothing unusual about it and that it just happens to enable them to get their hands on hundreds of millions of profit. Will the Minister confirm that that is the general effect of what is proposed in the Bill?
      5.15 pm
      There is a further objection to what is proposed. Not only does it do the taxpayer down and provide, in a sense, false profitability as a bait to private owners, but it is a reversion to the bad old days of private ownership in the steel industry when dividends were paid not out of trading profits but out of capital, and time after time the private owners bled the industry dry, ate the seed corn and paid dividends out of money which was desperately needed for reinvestment.
      The Government are laying down the guidelines whereby that process is to be renewed even before private ownership takes effect. Once again we see private ownership in the steel industry being encouraged to take its profits and dividends out of money that has been accumulated as capital and ought to be used for investment. We understand why the Government have been compelled to do this. The unseemly haste with which they tabled the legislation, for reasons which have yet to be properly explained, means that the Government have had to bring the industry to the market without a proper track record of profits. That is why they have had to make the peculiar arrangement whereby there is a built-in substitute for profitability. That substitute is the ability to lay hands on capital which was provided in the past by the taxpayer.
      That is unsatisfactory and an unfortunate indicator of the future of the industry under private ownership. Ministers can confirm that the industry requires substantial investment for the foreseeable future if it is to maintain its competitiveness. The best estimate of the required investment is about £300 million per annum. That investment will be required year in, year out, in good times and in bad, in an industry which is essentially cyclical, for all the reasons which we debated at length in Committee.
      If the Government are already not only permitting but encouraging private owners to pay themselves dividends out of capital, we can have little confidence that there is any long-term intention on the part of Government or of the new private owners to make the essential investment. Not only is the financial and capital restructuring a fraud on the taxpayer and a hidden gift to the new private owners, but we fear that it points the way to an uncertain future for the industry. That is why we have tabled amendments to clauses 2 and 7, which are designed at least in part to try to curb the excesses that the Government intend to permit.
      Our amendments will introduce a greater rigour in the degree to which capital can be written down. As provided by clause 2(1), there is less discretion for the amount by which the public dividend capital can be reduced. We have provided by our amendments Nos. 24 and 3 limits which will at least impose some discipline on the extent to which that writing down will take place. In the case of

      975
      amendment No. 24, they are limits which will, at least in part, enable the Government, even within the context of privatization—which we oppose—to meet the requirements of the Companies Acts.
      We have a second group of amendments which will retain for the taxpayer some interest in the future profits of the steel industry, if any profits are made, and some possibility of being repaid for the very substantial investment that the taxpayer has made. That is the purpose of amendments Nos. 25 and 26.
      The next group of amendments ensures that the capital which passes to the statutory reserve is retained, not to pay dividends from day one to private owners who have not done anything to earn them, but for investment in essential plant and equipment, which are important to the industry's future. That is the purpose of amendments Nos. 6, 7 and 28.
      I hope that the Minister will take these amendments seriously and will answer my questions in detail. Further, I hope that he will satisfy us that our fears about the irresponsibility of the Government in these matters are misplaced. I doubt that he can do that, but we shall listen with interest to what he has to say.
      In conclusion, our objections are to that essential "short-termism" which characterises all that the Government do for our industrial future. First, it is the Government who take a short-term view. They are so concerned to get shot of an industry at the best possible price that they are prepared to jeopardise its future by the way in which they restructure its capital. By giving this open invitation to the new private owners to rip off what remains of the taxpayer-provided capital, the Government are selling the industry in circumstances which are the least favourable to its proper and secure future.
      Secondly, there is the "short-termism" that we have seen before from the private owners in the steel industry and elsewhere. That is the "short-termism" which is now made possible, and indeed encouraged, by the Bill, and will encourage private owners to pay themselves dividends before they consider the investment that is needed to secure employment and output in the interests of the national economy. That is why we regard these amendments as important and the provisions of this bad Bill as unsatisfactory.
      Mr. Cryer: I want to speak especially to amendments Nos. 28 and 6. Amendment No. 6 provides for the statutory reserve to be used exclusively for the purposes of investment in new plant and training. Amendment No. 28 says that money may be applied.
      "to investment in plant or capacity or to sustain plants threatened with closure."
      Those two items are essential, beccause we are talking about privatising an industry which since 1979 has lost 134,000 jobs. Privatisation will be carried out by this Government on the backs of 134.000 people who are walking the streets, having mainly been sacrificed on the altar of the Government's economic policy of selling off our assets at knockdown prices. Those assets have been provided by the taxpayer for unlimited distribution in the way that my hon. Friend the Member for Dagenham (Mr. Gould) described.
      I want to draw attention to the problems of the steel industry and the way in which these two amendments will provide for training and the sustenance of plants threatened with closure. They are important because of the
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      steel industry's failure to provide training payments. As the Minister may know, I am also a member of the Common Market assembly. Some people call it a parliament, but I never give it much credit. I prefer to use the more accurate description of consultative assembly. In that capacity, I have come across a number of cases where former members of the steel industry are being retrained through a less than adequate scheme. These two amendments will ensure that, however the steel industry develops, it will make provisions for retraining within its own revenue sources rather than relying on external ones. There is a retraining scheme that is designed to train redundant steel workers for new jobs elsewhere.
      The Department of Trade and Industry likes to pretend that it is the sole arbiter of the iron and steel employee redundancy benefit scheme, which is called ISERBS for short. However, the truth is that it is not. The decision whether money shall be applied from the Common Market for retraining is not a decision of the Ministers, of the House, or of civil servants. It is a decision for a Commissioner. The Commissioner in this instance is Commissioner Marin.
      Nine ex-employees of Eaton and Booth in Sheffield have been waiting for a decision from the commissioner for 12 months. I wrote to the commissioner and begged him to give a decision which was confidently anticipated by the Department of Trade and Industry. I received a reply from the commissioner on 28 March stating:
      "The demand for readaptation aid under Art. 56 as a result
      of accelerated restructuring in both the coal and steel industries of the European Community had by the end of 1987 outstripped the available budget. Since the Council refused to make more funds available and bearing in mind the prospect of even lower budgetary resources in the future the Commission has been obliged to carry out a realignment of its strategy with respect to its readaptation commitments.
      The complex process of realignment is being carried out as rapidly as possible and I will shortly be informing the UK government of the allocations to be made in respect of their outstanding readaptation requests."
      The people who were the subject of those readaptation requests have been on retraining courses on the promise of readaptation payments being made. At the time of that letter they had been waiting for 10 months. They have now been on the course for over 12 months with the promise of finance. However, that finance is being held up by the commission.
      The Minister, who is a Member for one of the Ribble Valley constituencies—he has moved about a bit since he was elected for Preston. so I cannot pinpoint him precisely.
      Mr. Atkins: South Ribble.
      Mr. Cryer: The Minister said to me in a letter of 11 May:
      "I regret that the position has not changed since my letter of 30 April. My officials are still continuing to press the Commission for early decisions on the application for aid being held, but to date no progress has been made. As soon as the Commission do approve the applications for aid ISERB Scheme payments will be authorised."
      He concludes with the assurance that the people mentioned in his letter will be paid first. So they should be.
      Those amendments would help to deal with the position where civil servants and elected representatives have been entreating the Commission to make the payments, and where Ministers also, as I understand it, have been making representations to the Commission to make those payments, yet no payments have been made. That has gone on month after month. It enrages me because these

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      people have been made redundant from the steel industry, and in good faith have attended courses, yet month after month their home economies are devastated. They have to borrow money to sustain their existence. Meanwhile, some overpaid bureaucrat in Brussels is withholding his decision and keeping these ordinary people in suspense and penury. That is not good enough.
      I hope that the Minister can accept the amendments in the belief that it is necessary for the future that the Government have some insulation against the machinations of the Commission. I believe that that Commissioner is using those workers as pawns in the negotiations over the budget. That is a rotten and foul thing to do, but that is the conclusion that one reaches because of the implications of the Commissioner's letter to me.
      5.30 pm
      If the Minister cannot accept the amendments, I hope that he will say that, if the Commission will not pay, or continues to procrastinate as it has done for over 12 months, his Department will make the funds available to take those workers and their families—the innocent victims—out of the financial doldrums that they are in due to the machinations of that wastrel in the Common Market—Commissioner Marin. If the Minister has any sense, he will consider the amendments carefully because the industry needs better protection than it has obtained so far—both when in the private sector before nationalisation and under the protection that the Common Market is alleged to give it.
      Time after time, Commissioners and, indeed, Ministers in this House, cosily claim that the Commission's ISERBS payments protect steel workers when there is readaptation and rationalisation. Those words hide the grim reality of managers making decisions which put people on the dole. It is not adequate simply to rely on the Commission to provide support, because its words mean nothing. The cases that I have mentioned apply not only to Sheffield, but to Rotherham and south Wales. Alpha Steels is a case in point.
      The Minister should consider the amendments seriously so that in the future the Government have some right of independent action. The Minister is sitting at the Dispatch Box absolutely powerless. He is a pawn in the hands of the Commission. I regret that, because I would far rather be able to press the Minister for a decision, but at the moment he is powerless to give one. The amendments go some way towards redressing that terrible imbalance that the steel workers face.
      Mr. Barry Jones: Like my hon. Friend the Member for Bradford, South (Mr. Cryer), I rise to speak in support of amendment No. 6. I have recently had the honour of giving fifth-year high school leavers their record of achievement. That is an enlarged report on the last years of their school life. In meeting those excellent and hopeful young men and women, I have been struck by the large number who have opted to join the armed services. In conversation, it has become clear that they are enlisting because they will then have the most thorough apprenticeship grounding. There is no doubt that there is a shortage of apprenticeships locally on Deeside, throughout Wales and, I suspect throughout the United
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      Kingdom. That is partly the reason why those young men and women are seeking to join the armed forces on leaving school.
      As the House knows, since 1979 the industrial training boards have, by and large, been swept away and apprenticeships have declined as unemployment has risen. That cannot be good for Britain's prospects for the 21st century. We should invest more and more in training and apprenticeships. The investment reserve that we propose in our amendments could help Britain's economic future.
      Clause 7 is the financial heart of the Bill. It is the mechanism whereby the public dividend capital is done away with. In arguing for a British Steel investment reserve, we are urging the Government to recognise that steel is a strategic industry, which is vital for Britain's economic and military future. It is Britain's foundation industry. Without it, we have no reliable manufacturing base and an impaired defence capability.
      I want to speak briefly to amendment No. 6 regarding the need to spend more money from our proposed investment reserve on improved and enlarged training. The background is that in the 1980s Britain has lost nearly 2 million manufacturing jobs. As my hon. Friend the Member for Bradford, South has said, steel has suffered greatly. We lost as an industry in the great jobs shake-out of the 1980s. At BSC Shotton in my constituency, we lost 8,000 jobs in just three months. We lost our steel-making capability.
      The attention given to training and to providing apprenticeships declined, not unnaturally, during what was an industrial emergency. Before the major cuts in steel jobs and the large closure programme, virtually every British steelworks ran large, successful apprentice schools. That was certainly the case in my constituency. The standards of those apprentice schools were high and the places were much sought after. Any young man or young woman in receipt of such an apprenticeship knew that the world was his or her oyster if the course was completed. 1 want us to attempt to return to that position in at least some degree.
      When parents visit my surgeries to seek help in placing their teenage children in work, they always mention apprenticeships. The apprentices' schools in our steelworks at Shotton had a high reputation and there was heavy demand for its many places. Today there is huge competition for apprenticeship places at a steelworks such as Shotton or the nearby Aerospace factory. Hundreds apply for the dozens or for fewer than dozens of places and many young people are disappointed. That is a blow to the morale of young school leavers and to their families.
      I fear that, when a sustained upsurge in demand occurs in manufacturing generally, and in steel in particular—I hope that that upsurge is ahead—we shall be short of the required skills. Amendment No. 6 will help Britain's future. I do not want the steel industry to be caught short. I should like the British Steel investment reserve to be set up and its funds directed to training in particular.
      In today's world economic climate—in a climate of collapse and speculation and black Mondays—an enlarged and skilled work force in steel will be a priceless asset. The BSC's management and labour have recently been spectacularly successful in productivity and manning. They should now have the reassurance of knowing that they can carry enlarged apprenticeship schools at individual plants. Each steel plant and its surrounding

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      travel-to-work area could then have at its disposal a reservoir of recently trained potential labour. That is what I should like to see in my own area of Deeside.
      Quick profits and enlarged dividends can be the enemy of thorough high-class training. That is one of the dangers inherent in these privatisation proposals. Training is not only for school leavers. It can be for the existing work force also.
      I should like the Secretary of State for Wales to set up an economic planning council in Wales, which would enable trade unions, employers and Government agencies to work together to establish a strategy for economic recovery. At the top of the agenda for such a council, I should like education and training to be writ large. Perhaps the British Steel investment reserve could play an important part in such a steel industry and in that industry's training opportunities. That is why I support this batch of amendments.
      Dr. Reid: I take as my starting point the comment made by the Under-Secretary of State during the debate on the previous group of amendments. It seems that he is suffering from the misapprehension that Opposition Members always regard profit as a dirty word, even when it is applied to the steel industry. Profit, profitability and productivity are not dirty words to us. It is as well to make that clear at the outset.
      Opposition Members are pleased that Britain has a healthy, profitable and productive steel industry. We draw strength from and take pride in the fact that in the first two months of 1988 Scotland produced 46,700 tonnes of usable steel, compared with only 32,700 tonnes in the first two months of 1987. We are pleased that the weekly national output in February was in excess of 388,000 tonnes, the highest that has been achieved by the industry in many years. We are pleased that that is not far short, when projected, of the 21·5 million tonnes for which we have argued for Britain. The average weekly output for February would amount to 19·75 million tonnes for the year.
      Mr. Rhodri Morgan: In a leap year?
      Dr. Reid: It would be slightly more in a leap year.
      We are pleased that profits and productivity have risen in the British Steel Corporation, and we take this opportunity to express that pleasure and pay tribute to the management and workers who have made the achievement possible.
      That leads me to the amendments. All the signs confirm that the taxpayers' sacrifice over many years has been worth while. The signs confirm that the faith of the taxpayers in the industry has been well and truly vindicated. As that faith has been shown and as those sacrifices have been made over so many years, and now that we have a profitable industry, surely this should be the time to repay the taxpayers and to reward their sacrifices.
      What do we find instead of repayment and reward for the British people? We find contained in the Bill what my hon. Friend the Member for Dagenham (Mr. Gould) has described as a magic formula. My hon. Friend is a man of extensive vocabulary but moderate language. This afternoon he has pushed to the fullest extent both his vocabulary and his moderation in referring to the financial clauses as a magic formula.
      In Motherwell we have a simpler word that is picked from a less extensive vocabulary. That word is swindle.
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      The reality is that the sell-off of the corporation is the greatest con trick ever played on the British taxpayer. To paraphrase a cliche, never, even under this Government, have so many been swindled out of so much by so few with such little talent.
      Ministers, who have crowed constantly of value for money for taxpayers, have been prepared to write off millions of pounds of taxpayers' money to float the corporation. The Government, who boast constantly cif creating a share-owning democracy, have resolved to write down the taxpayers' public dividend capital to less than half its value to sell off the corporation to City institutions. Having written off the losses, the Government, who proclaim their aim to be a policy of fair taxation, will allow the already written-off losses to be offset against future profits in a tax bonanza for the new City shareholders of our steel industry.
      5.45 pm
      The privatisation of British Steel in its present form is a political scandal and a financial swindle. That is why the Opposition have tabled the amendments. The primary purpose of the amendments is the protection of those whom all of us in this House are supposed primarily to represent—the taxpayers. Secondly, they are aimed at the long-term protection of the steel industry, albeit in private hands.
      The amendments tackle the financial heart of the Bill, which contains a mechanism whereby the public dividend capital, as outlined by my hon. Friend the Member for Dagenham and others—it has financed the corporation since the mid-1970s—is to be extinguished and replaced by a share issue which, together with the new statutory reserve, will have the equivalent value. The mechanism will allow the new company to pay out of the reserve. To be technically correct, the statutory reserve will act as the platform and the justification for the payment of dividends to shareholders in future.
      The amendments seek in various ways to preserve the new company's capital and to divert the reserves for use as investment and to finance training and the refurbishment of old plants that will become necessary if recapitalisation and reinvestment is to be commensurate with the demands of a continuing and thriving steel industry.
      The amendments seek to protect taxpayers by transferring to the new company some consideration of the financial support that they have provided for many years to the corporation. It is amazing how little interest exists in the Bill for taxpayers, especially when we think of the huge debt that British Steel owes them. We have become familiar since Second Reading and our debates in Committee with the Government's tendency to deny access to the flow of financial information to Committee members and to the public generally. This has been justified under the cloak of commercial confidentiality. For whatever reason, the flow of information on financial matters has, to say the least, been stemmed by the Government. The same can be said of the financial implications for the taxpayer and the write-off of debt.
      We have been forced to look slightly further than the Government for academic support for our arguments. One of the best studies—it was referred to in Committee and it appears to have been ignored by the Government—is that which was undertaken by Bell, Findley and Oughton of the department of political economy of Glasgow university. The report states that British Steel's existing debt takes

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      two forms. The first form is public dividend capital, which has been defined as the aggregate of sums paid, or treated as paid, to the corporation under section 18 of the Iron and Steel Act 1982. This debt amounts to £3,980 million. The second form is the corporation's accumulated losses, which amounted by 1987—the last financial year—to £1,023 million.
      The Government maintain that the capital restructuring under this Bill involves no writing off of debt. Once again, the old magic formula plucked from the extensive vocabulary of my hon. Friend the Member for Dagenham could be applied to the Government's position. The Government insist that there is no writing-off of debt, which may be true according to the letter of the law but which is certainly not true according to the spirit of any possible definition of the writing-off of debt.
      We understand why the Government must be economic with the financial truth in these circumstances. We understand why they cannot admit to the House or to institutions outside it—perhaps on the other side of the Channel—that no debt has been written off. However, in economic terms and in the spirit of any reasonable definition of what constitutes the writing off of debt, large resources have been invested in British Steel throughout the 1970s and during the lifetime of the Government, and those resources are not to be returned to those who invested them in the first place.
      This leads me to the point that the Minister made about profits. I said during discussion of the previous group of amendments that, unskilled as I am in economic theory, my simple understanding of profit was always that profits were the return to investors on the capital they had invested. We are now left with a generation of profits that will clearly not be returned to the people who made the investment in the first place—the great British public.
      To disguise this sleight of hand, the Government argue that no debt will be written off under the Bill. But we contend, as we did on Second Reading and in Committee, that the massive subsidy given to the British Steel Corporation by taxpayers in recent years will not be repaid. Furthermore, we maintain that that subsidy may be written off by the Government's sleight of hand. They may pretend that it has disappeared through a hole in the floor of the stock exchange or of the House, but any ordinary non-skilled non-economist taxpayer will ask why, when profits have been generated after millions were invested, he is receiving no return from the now profitable corporation.
      It would help those of my hon. Friends who are as unskilled as I and who cannot countenance discussing these matters with the Minister's advisers if we considered the economic base of the British Steel Corporation as consisting of four shares, each valued at £1 billion. The Bill gives the Government the right to transfer those shares into ordinary equities which can then be traded in the same way as those of any publicly quoted company. The difficulty would arise when the equities were sold and the Government were forced under the Companies Act to set the nominal value of the shares at the sale issue price of the time of flotation.
      Let us suppose that the shares were valued by the market, as we have been led to believe they will be, at about £2 billion, which represents a price-earnings ratio of
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      eight, which we believe would be necessary to attract investment from prospective shareholders who were unfamiliar with the industry. There would be a clear discrepancy between the value of the public dividend capital and the sale value of the company.
      That would mean that the market value of the taxpayers' investment was expressed at half its worth. That is how the subsidy to the British Steel Corporation will come about—not through the technical writing-off of debt but through the halving of the capital asset paid back to the taxpayers.
      This is not a bagatelle or mere financial trifle. We are dealing, if future projections are correct, with about £2 billion of taxpayers' money, which will be written off by this mechanism. It will not be a publicly declared writing-off; it will be a halving of the share capital invested in the company.
      One further complication adds salt to the taxpayers' financial wounds. As has been said, the difference between the value of the public dividend capital and the sale value, which we expect to be about half of the public dividend capital, is to be put into what is called a statutory reserve. Subsequently, that statutory reserve could be used either to write off unrealised losses or to be distributed as profits, with the permission of the Treasury, to pay up unissued shares of the company. Not only is the public dividend of the company halved, therefore, but once halved, the half that mysteriously disappears is then used as the justification to pay out profits in future, not to the taxpayer who has invested and already lost, but to the new shareholders who have already purchased and reaped the benefits of the write-down in the dividend capital.
      If someone with even the most extensive vocabulary could find a phrase other than "financial scandal" to describe this, I should be grateful to hear it. The company will be compensated; the taxpayer will not. That is the first reason why we tabled the amendments. The accumulated losses of the company have been met by the taxpayer but they still exist on the corporation's balance sheet. They are to be treated as a one-off reduction in the capital base of the company or as an equivalent reduction in the public dividend capital.
      It is argued that the amount of capital shown on the balance sheet will more truly reflect the net assets of the company. Let us suppose that the value of that company is £2 billion and that the public dividend capital is reduced to £3 billion after the accumulated losses are deducted. That would leave £1 billion to be entered into the statutory reserve, which could be used subsequently to generate liquidity for the company or to justify the pay-out of profits.
      This outline shows the need for the amendments. Such a scheme, in any other circumstances, would be regarded as nothing less than a rip-off of the taxpayer. Is it fair? Would it be fair under any circumstances? Would it be fair in this context? Would it be fair in the context of a political world that increasingly demands attention for the small investor? Why should we raise a hue and cry when some City slicker gets involved in a massive fraud, but refuse to raise one because the slicker happens to sit around the Cabinet table?
      We have spent some time considering how this rip-off—let us give Cabinet Ministers the benefit of the doubt and say it is an unconscious rip-off—of the taxpayer will take place. Now it is worth reminding ourselves of the extent of the burden that the taxpayer has borne under this

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      Government since 1979. It is evident from all the figures available in the published material that until relatively recently the taxpayer has gone without dividends. The corporation has not paid one since 1975. The taxpayer has borne the heavy losses since the Conservatives came to office in 1979. Even allowing for the £400 million profit, about which we are all pleased and constantly told in the new advertisements that have appeared on television, which feature a shareholder working out in the morning and gloating over the prospect of increasing his BSC shares in the afternoon, there has been a loss to the taxpayer of almost £4·5 billion since 1979–80.
      The Prime Minister constantly speaks about taxpayers, and the Chancellor directs his attention to them—yet on this occasion they are to be cast aside, willingly and knowingly, because that suits the Government's purpose of channelling money from BSC into City investors. Those who bore the brunt of the subsidy to the BSC during the downturn in the market and the brunt of rationalisation in the steel industry are to receive nothing.
      We have always supported investment in the British steel industry on the precondition that, if taxpayers pay for investment, capitalisation and rationalisation, bear the brunt of redundancy payments and support losses during the lean years, when the fat years arrive they will receive some of the fat. That is the least that any reasonable Government should do. The Bill ensures that taxpayers will be cast aside just as the fat years are beginning to arrive.
      The Government cannot abandon their responsibility. They must maintain a degree of fairness. They used to argue that taxpayers wanted rid of the responsibility of the steel industry, but it is noticeable that that argument is no longer employed. The argument apparently applies only when the taxpayers suffer a loss. Ministers claim until they are blue in the face that when the British steel industry was making a loss taxpayers wanted to lose the British Steel Corporation and get rid of the need to subsidise it. Nowadays no one believes a Minister who says that the British taxpayer wants rid of a healthy, profitable steel industry and does not want in any circumstances to receive some repayment for his investment.
      6 pm
      Taxpayers deserve something better in return for their commitment and investment. The British Steel Corporation would have gone bankrupt twice, once in the mid-70s and once in 1979–80, if it had not been for taxpayers' support at a time when the demand for steel in a notoriously cyclical industry fell by about 50 per cent. For years, taxpayers have subsidised the industry and will receive no return on their investment. Common sense, public interest, decency and fairness demand that they do. The purpose of the amendments is to rectify the Bill and they should be supported by any hon. Member who shares that feeling of common sense, public interest and fairness to the taxpayer.
      Dr. Jeremy Bray: My hon. Friends have spoken about the massive giveaway in this privatisation. Such giveaways took place in previous privatisations and will take place in the biggest jumbo of them all—the privatisation of the electricity supply industry. It is a scandal of such outrageous proportions
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      that it will go down in history as financial swindling by the Government of the British people and will for eyer blight the name of the Conservative party.
      The country's assets are being sold at knockdown prices and that will obviously create problems for future Governments. People have been given wealth—assets for which they have not paid the proper price. They have acquired taxable capacity and the only possible course for future Governments is to tax those people and take that wealth away from them. The Government are ensuring higher future levels of taxation, not only under Labour Governments but under Conservative Governments. Income tax will be higher and there will certainly be a wealth tax, because to create a reasonable balance, future Governments—even a Conservative Government—will have to make good the swindling that has taken place under this Government.
      Another problem involves the viability of the financial structure that the Government are creating in the Bill for the British Steel Corporation. The treatment of past losses and the window dressing that has been carried out in recent years and which will continue to be carried out to prepare for privatisation have been well covered by my hon. Friends. How will the corporation survive with the financial structure that it is to be given?
      One would normally look at current cost accounts in order to assess prospects. Page 43 of the BSC accounts contains the notes to the current cost accounts and, contrary to normal accounting practice, the assets are valued at historic cost. That means that, if plant built a long time ago cost £1 million at that time, it would cost £2 million or £3 million to build today because we have to allow for inflation. Assets are valued at current cost to make sure that the value of the business is being preserved and that future depreciation is directly provided for.
      The figure of £1,928 million used for tangible fixed assets and recorded in the historic cost accounts is the same as that in the current accounts. Had the assets been revalued in accordance with proper accounting practice the figure would have been £3,294 million—higher by £1,366 million. Additional depreciation of £132 million a year should be charged on that in the current cost accounts. That means that, effectively, the current cost profits are being overstated by £132 million.
      That was picked up by the auditors and used to qualify the accounts. On page 23, the auditors say that in their opinion the historic cost accounts give a true and fair view of the state of affairs of the corporation, and that the accounts have been prepared to comply with the requirements of the Iron and Steel Act 1982 and the directions of the Secretary of State. On pages 42 and 43, the auditors, speaking about the current cost accounts that give the present picture, merely record that the accounts have been properly prepared in accordance with the policies and methods described in the notes thereto. The accounts do not purport to be true and fair or to have been prepared by any accounting standards other than those described in the notes.
      To justify that, the corporation says that its utilisation continues to be significantly below the installed capacity. That means that it has left out of the current cost valuation of its fixed assets items such as the big blast furnace a t Llanwern, the unused BOS vessel capacity at Port Talbot and so on. Effectively, the BSC has been stashing away plant for future use, and that plant has not been fully reported in the accounts. That may be a smart thing to do

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      and it may kid the investors when they read about the levels of recorded profits and apply the appropriate ratios. But the chickens will come home to roost in the long term when it becomes evident that the corporation has not been investing and will not in future invest adequately to maintain the value of its business.
      The consequence of that will not be immediately evident. For some years, the continuation of such policies will enable the corporation to report artificially high profits. That will only store up trouble for the future when the corporation begins to be seen to have failed to invest at the levels required to maintain the value of the business, the security of employment of the steel workers and an adequate supply of steel for British industry. It is not a very smart move by the corporation or Ministers in the Department of Trade and Industry and it will be added to the other squalid moves by which the Government have applied their industrial and economic policies.
      The Minister of State, Scottish Office (Mr. Ian Lang): We have had an interesting debate. The hon. Member for Dagenham (Mr. Gould), who is not in his place but no doubt may return, approached these issues in a more realistic, balanced and comprehending way than did some of his colleagues. I agree that clauses 2, 3 and 7 go to the heart of the Bill. I do not accept his suggestion that the Government are drawing a line from the time of profitability and that profits made thereafter will be made available to the new owners. That is not what we are about. We are preparing BSC for privatisation and are doing so against the background of a dramatic improvement in its results, leading to its move into profitability, without which privatisation would not have been easy to contemplate.
      I welcome the recognition from the hon. Member for Dagenham, if not from some of his hon. Friends, that what we are proposing does not include any writing off of debt or any measure of subsidy. I welcome the hon. Member back to his place. He will be glad to know that I have been agreeing with some of the things he has said.
      The debate has covered ground that will be familiar to members of the Standing Committee. The issues raised were discussed at great length in Committee on a number of occasions, but it might be helpful if I start by outlining briefly the operation of those parts of the Bill to which the amendments relate. I shall try to deal with most of the points that have been raised.
      Clause I provides that all the property rights and liabilities of the corporation will be vested in a successor company. The successor company will inherit all the corporation's undertakings, both assets and liabilities. After vesting has taken place, on a day appointed by order by the Secretary of State—that is, "appointed day"—British Steel will be a plc that is wholly owned by the Government. The successor company will require a capital structure compatible with the requirements of the Companies Act 1985, and clauses 2, 3 and 7 provide for that capital structure.
      The hon. Member for Dagenham identified as the starting point for our structural provisions the public dividend capital, and asked me to confirm the figure. As he will know, it is in BSC's accounts, and is shown as £3·98 billion at the end of the year 1986–87. He implied that the
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      development of public dividend capital was a recent phenomenon, but it has its antecedents in the 1978 White Paper of the Labour Government.
      The hon. Gentleman asked a question that he had already asked in Committee. I know that he had difficulties in Committee because he tended to ask a question and then leave the room because he was busy not so much in restructuring the steel industry as in restructuring his party's nationalisation policy—or rather, renaming it. At one time it was known as social ownership, which I characterised as being an upwardly mobile form of nationalisation or yuppie nationalisation, but I understand that that, too, has been dropped and the hon. Gentleman has had to go back to the drawing board.
      The hon. Gentleman asked me a hypothetical question about the extent to which BSC might have paid dividends or interest on its capital in the past. Althought it is possible to make theoretical calculations, it is not helpful to do so, and it does not enhance the discussion about the successor company structure. The BSC did not pay dividends because it had no retained earnings with which to do so. It did not pay interest on its capital because it was not interest-bearing.
      It is self-evident that, as the hon. Gentleman suggested, if interest or dividends had been paid, BSC's losses would have been correspondingly greater. One might speculate on what might have flowed from that; the return to profitability that we are seeing might have been that much more dramatic. The Labour Government recognised that had BSC been interest and dividend-bearing, its losses would have been correspondingly greater, and they did so in 1969, when they allowed BSC to convert £700 million into equity; and again in 1978, with the change from the national loans fund to the Exchequer capital funding and section 18 capital. We do not achieve very much by jobbing backwards in this way.
      Mr. Gould: If the Minister is unwilling to give the House such information, does he at least foresee that he may be required to meet an obligation to potential private investors? Presumably, he, or someone on his behalf, will have to make some statement on the subject in the prospectus when it is eventually published.
      6.15 pm
      Mr. Lang: Potential investors will be presented with a prospectus and with all the appropriate and necessary details, but I do not see it as part of the compilation of a prospectus to answer questions relating to events that did not occur and speculating what might have happened if they had occurred.
      Under clause 2(1), BSC's captial will be reduced, by an amount directed by the Secretary of State, to extinguish an amount of accumulated realised losses. The purpose of the capital reduction is to eliminate the deficit on its profit and loss account. The deficit is not a debt. I cannot stress that strongly enough. The corporation does not owe this money to anyone—it is simply a record of past trading losses. It reflects the erosion of the original capital base of the company through those trading losses. It is open to any Companies Act company to go to court and apply for a reduction of its capital to eliminate its accumulated losses. The BSC is unable to do this because of its status as a corporation. Therefore, we propose to proceed through

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      the Bill. It is not going to the court as a private company, but we are enabling it to happen through the High Court of Parliament.
      The amount of the capital shown in the balance sheet, will, following the capital reduction, better reflect the value of the net assets. It will not change the value—there is no subsidy involved. Under clause 2(3), the capital remaining after the reduction will be extinguished and replaced by shares or other securities issued to the Secretary of State or the Treasury under clause 3. No loss of taxpayers' money is involved in this process. The Secretary of State remains the sole owner of British Steel, which will be worth the same as a plc as it was a corporation.
      The hon. Member for Motherwell, North (Dr. Reid) raised an issue that he and I have already debated in Committee. He suggested that the reduction in capital would create benefits for the company, but not for the taxpayer. Even on the basis on which he puts that case, he seems to forget that the taxpayer owns the company. If he were right about the value accruing from the reduction in capital, it would accrue to the taxpayer at the time of the sale. As I have explained to him, the value of the company is unaffected by the restructuring exercise because the reduction is on both sides of the balance sheet. The reduction in public dividend capital is matched by an equal reduction in accumulated losses, so the net value is unchanged.
      Dr. Reid: I know that I have raised this point before, but does not the Minister recognise that it is not as easy as saying that this is just like a restructuring which can be carried out under the Companies Act? The difference is that, when a restructuring is carried out under the Companies Act, those who owned the company before the restructuring are almost always those who own it after the restructuring. Therefore, they gain any benefit. In this case, the people who own the company before the restructuring—the taxpayers—will not be those who own the company after the restructuring. It will be owned by the private investors. Therefore, the people who gain the benefits of the restructuring are different from the people who subsidised the losses before restructuring.
      Mr. Lang: No, the hon. Gentleman is wrong. The taxpayer owns the BSC and the taxpayer will own the public limited company that will be created by the restructuring. It is at the time of flotation that investors will place a value on the company and they will bid for it. The value that they place on it will take account of the condition of the company's balance sheet.
      The statutory reserve that is provided for under clause 7 will be the balancing item between the total nominal value of the shares and other securities issued to the Secretary of State or the Treasury, and the amount of the public capital extinguished. It is common practice in these circumstances for the sale price of shares to be greater than their nominal value, and the reserve partly reflects that difference, but it is essentially required to ensure that the balance sheet balances.
      Private sector companies generally have a mixture of share and loan capital and reserves. The process of restructuring the balance sheet of the corporation is complementary to the vesting provisions of the Bill. Instead of a nationalised corporation funded by public
      988
      dividend capital, the successor company will be a Companies Act company with capital and reserves, like other Companies Act companies.
      Amendments Nos. 3 and .24 seek to limit the capital reduction under clause 2 to a particular amount. That would not be acceptable to the Government, because, as I have explained, a limited company may, by a special resolution of its shareholders confirmed by the court, reduce its capital in any way, including a reduction to eliminate its trading losses. The provisions of clause 2(1) are equivalent to that procedure, which is not open to the BSC because it is not a limited company.
      The reduction will result in the writing off of an equal amount of accumulated realised losses from the balance sheet so that the capital more accurately represents the net assets. I must stress that there is no magic formula or mystery in that arrangement. It corresponds fully with the Companies Act 1985 and is purely a balance sheet transaction. It is required to ensure that the successor company can be registered as a plc and be able to pay dividends.
      We have not yet decided the capital structure of the successor company, and it would be premature to seek to take such decisions until the issues can be fully considered in the light of the BSC's audited accounts for the present year. The principle and purpose of the capital reduction are, however, clear and will be carried out entirely within the scope of existing company law.
      Amendments Nos. 6, 7 and 28 are concerned with the statutory reserve created under clause 7. I am sorry to say that amendments Nos. 6 and 28 are based on a fundamental misunderstanding of the nature of the statutory reserve that I explained. It was debated fully in Committee, and I hope that I have clarified it in this debate. A normal private sector company's balance sheet contains a mix of capital and reserves.
      Clause 7 provides for the creation of a reserve, called the statutory reserve. It will be equal to the difference between the nominal value of the securities issued to the Secretary of State under clause 3, and the amount of public dividend capital extinguished under clause 2. The nominal value of the securities issued under clause 3 will necessarily be less than the amount of capital extinguished—that is, the amount of capital after its reduction under clause 2(1). That is because a company cannot issue shares at a discount and, therefore, in order to have the ability to raise new capital at any future time, the market price of its shares needs to exceed their nominal value.
      The statutory reserve is similar to a share premium account, in that it may be applied in issuing fully paid bonus shares to its members. It may also be applied, however, to the extent that the Secretary of State directs, in writing off unrealised losses arising from a revaluation of the successor company's fixed assets, and as a distributable reserve. As I said in Committee, it has not yet been decided whether any revaluation will be undertaken, but if it is, it is not expected that there will be any material change to the basis on which British Steel's fixed assets are recorded.
      I was asked about the proportion and the amount of a revaluation. It is unlikely that the revaluation would have any material effect on BSC's total asset values. Any revaluation will have to be conducted by professional valuers and assess the value of all the company's fixed

      989
      assets to conform with section 275 of the Companies Act 1985 if it is to lead to an unrealised loss that subsequently can be written off against the statutory reserve.
      Dr. Bray: There is a note in the accounts to which I referred, saying
      "As their utilisation"
      of assets
      "continues to be significantly below installed capacity, the Corporation considers that it would be premature to anticipate that more than this value will be so recovered."
      In view of the very big increase in capacity utilisation during the past year, is the Minister saying that that will not be taken into account in the annual report this year?
      Mr. Lang: It has not yet been decided whether there will be a revaluation, but if there were to be a revaluation, it would not materially change the figures that are recorded in the balance sheet.
      Dr. Bray: In that case, is the Minister saying that he does not expect the huge increase in capacity utilisation that has taken place in the past year, which has brought extra capacity into use and has not been included in the accounts, to be taken into account? Is he saying that the accounts will not take account of that? If so, he is saying that the books have been rigged.
      Mr. Lang: I am not saying that; nor am I suggesting that the books have been rigged. I take this opportunity to correct the hon. Gentleman, who seemed to imply, if I understood him correctly—I shall read his words tomorrow—that the auditors have qualified the accounts of the BSC. That is not the case. The note that he read out was a clear and unqualified assessment of the company's account on an historic cost basis. In addition, a separate supplementary note within the accounts gave an historic cost basis.
      It is normal for private sector companies to have both distributable—revenue—and undistributable—capital—reserves. Any revenue reserve authorised under clause 7 will reflect the profits that the corporation has earned in recent years, with the result that the successor company's balance sheet is a more accurate depiction of the present position of the business. I should stress that the creation of reserves has no effect on the cash position of the company; the company receives no money from the Government. It is simply a matter of bringing the historical financial record, as shown in the balance sheet, up to date.
      Amendment No. 7 would delete subsections (2) to (4) of clause 7. These subsections define the uses to which the statutory reserve may be put, and which I have just described. It is normal practice for the functions of a statutory reserve to be defined by statute, so the subsections are necessary.
      The provision that the Secretary of State may direct, under subsection 2(b), that a specified amount of the reserve may be treated as if it were profits available for distribution is not the same as giving cash to British Steel. Most companies have a revenue reserve, which is a book-keeping record of accumulated realised profits. British Steel is now profitable and would have been able to credit its profit to a revenue reserve had it been able to apply to the court before now—as a private sector company certainly would have done—to reduce its capital, thereby eliminating its accumulated realised losses.
      990
      The BSC has not been able to do that because of its status as a public corporation. Its recent profits have therefore been set off against its accumulated realised losses. The Bill provides that the Secretary of State may direct that a part of the statutory reserve may be applied as if it were profits available for distribution. The successor company may thus be provided with a revenue reserve which reflects the company's recent profitability and therefore its true trading position. This is not a cash transaction; no money is being given to the company and no subsidy is involved.
      Amendments Nos. 6 and 28, to which the hon. Members for Bradford, South (Mr. Cryer) and for Alyn and Deeside (Mr. Jones) referred, provide for the statutory reserve to be used for investing in new capacity and training or to prevent plant closures. As I have said, the amendments are based on a fundamental misunderstanding of the nature of the statutory reserve. It is simply an accounting entry. It is not a pool of cash or a treasure trove that can be used in the ways that the hon. Gentlemen suggested. The successor company will have to generate profits to invest in new plant and equipment, as I am sure it will, and as the BSC does now. The investment policy of the privatised company must, in any case, be a matter for the company and not for the Government.
      Mr. Cryer: I was making the point that there are now problems through the non-payment of ISERBS payments by the Commission, and that it would be desirable for any new venture to be insulated against that. Will the Minister turn his mind to that and assure the House that he and his ministerial colleagues—one of them has had correspondence with me—will continue to press the Commission and bear in mind the desirability of that contingency being avoided in future?
      Mr. Lang: Although the hon. Gentleman's comments did not relate directly to the purpose of the statutory reserve, I intended to say that I have noted what he said about the need for help from the Commission for training and retraining purposes. One need only think back to earlier steel closures in the constituency of my hon. Friend the Member for Corby (Mr. Powell) to reflect on what can be achieved and what has been achieved. I know that my hon. Friend the Under-Secretary of State for Industry is taking a close interest in this matter and will have heard what the hon. Gentleman said.
      On amendments Nos. 25 and 26, it is clearly incorrect for Opposition Members to state that the public money paid to the BSC should he regarded as some form of debt to the taxpayer. The provisions in the Bill lead to no loss of taxpayers' money. The amendments are thus based on a complete misinterpretation of the position. It is wrong to assume that the BSC can somehow be valued solely in relation to the capital shown in its balance sheet. That is a book-keeping figure. A company's worth is a matter not of balance sheet arithmetic, but rather of its performance and prospects. I suggest that privatisation will provide a better return to the taxpayer than many years of dividend payments.
      The amendments are also unworkable. The hon. Member for Dagenham accused the Government of being too concerned with dividends and not enough with investments, but the amendments would land the successor

      991
      company with such a potentially crippling dividend burden that it would be unable to invest adequately in new plant and equipment for its future.
      What we have in mind in the proposals in the Bill is not, to use the phrase of the hon. Member for Dagenham, short-termism. The restructuring is not, as the hon. Member said, a fraud on the taxpayer; still less is it, as the hon. Member for Motherwell, North suggested, a swindle. It is a proposal to put the corporation on all fours with a Companies Act company. It reflects the recent trading position of the British Steel Corporation. It enables it to have a fair chance of a successful future, which I believe is in the best interests of the taxpayer and the industry. I urge the House to reject the amendments.
      6.30 pm
      Mr. Gould: When I moved the amendment, I posed a number of questions to the Minister about the capital restructuring provided for in the Bill. I asked him how much, in his estimation, had been saved by the non-payment of any dividend or interest on public dividend capital. He declined to answer that. I then asked how much of the public dividend capital would be written down. I asked what safeguards would be provided in the absence of the proceeding, on which he places great reliance, that would have been followed in the case of a private sector company where application to the court would be necessary. I asked him how much of the extinguished public dividend capital would be passed to the statutory reserve. I asked how much of that sum would be directed under clause 7(2)(b) to be deemed to be distributable. I asked whether that direction would apply to the successor company.
      We did not receive an answer to any of those questions, except, by implication, to the last, and there it was made clear—it is clear in the Bill—that any direction that the Secretary of State makes under that provision—it is intended to make such a direction—will inure to the benefit of the new private owners.
      In the light of the absence of answers and of the suspicions that we have about the purpose and effect of the capital restructuring, we are satisfied that what is proposed is not fair to the taxpayer and does not point the successor company in the appropriate direction. In other words, it encourages emphasis to be placed on the payment of dividends as a priority over and above the need for investment. We believe that that is the wrong direction for the British steel industry to take. For those reasons, we are extremely disappointed that the Government have not moved in the direction of the amendments and we intend to vote in support of them.
      Question put, That the amendment be made:—
      The House divided: Ayes 210, Noes 249.

      Division No. 311]

      [6.32 pm

      AYES

      Abbott, Ms Diane

      Barron, Kevin

      Allen, Graham

      Battle, John

      Alton, David

      Beckett, Margaret

      Anderson, Donald

      Beith, A. J.

      Archer, Rt Hon Peter

      Bell, Stuart

      Armstrong, Hilary

      Benn, Rt Hon Tony

      Ashdown, Paddy

      Bermingham, Gerald

      Ashley, Rt Hon Jack

      Blair, Tony

      Ashton, Joe

      Blunkett, David

      Banks, Tony (Newham NW)

      Boateng, Paul

      Barnes, Harry (Derbyshire NE)

      Boyes, Roland

      Barnes, Mrs Rosie (Greenwich)

      Bradley, Keith

      992

      Bray, Dr Jeremy

      Howell, Rt Hon D. (S'heath)

      Brown, Gordon (D'mline E)

      Howells, Geraint

      Brown, Nicholas (Newcastle E)

      Hoyle, Doug

      Bruce, Malcolm (Gordon)

      Hughes, John (Coventry NE)

      Buchan, Norman

      Hughes, Robert (Aberdeen N)

      Buckley, George J.

      Hughes, Roy (Newport E)

      Caborn, Richard

      Hughes, Sean (Knowsley S)

      Campbell, Menzies (Fife NE)

      Hughes, Simon (Southwark)

      Campbell, Ron (Blyth Valley)

      illlsley, Eric

      Campbell-Savours, D. N.

      Janner, Greville

      Canavan, Dennis

      John, Brynmor

      Carlile, Alex (Mont'g)

      Jones, Barry (Alyn & Deeside)

      Cartwright, John

      Jones, leuan (Ynys MÔn)

      Clark, Dr David (S Shields)

      Jones, Martyn (Clwyd S W)

      Clarke, Tom (Monklands W)

      Kaufman, Rt Hon Gerald

      Clay, Bob

      Kennedy, Charles

      Clelland, David

      Kinnock, Rt Hon Neil

      Clwyd, Mrs Ann

      Kirkwood, Archy

      Cohen, Harry

      l.ambie, David

      Coleman, Donald

      Leadbitter, Ted

      Cook, Frank (Stockton N)

      I.estor, Joan (Eccles)

      Cook, Robin (Livingston)

      Lewis, Terry

      Corbett, Robin

      Livsey, Richard

      Corbyn, Jeremy

      Lloyd, Tony (Stretford)

      Cousins, Jim

      Loyden, Eddie

      Cox, Tom

      McAllion, John

      Crowther, Stan

      McAvoy, Thomas

      Cryer, Bob

      McCartney, Ian

      Cummings, John

      McFall, John

      Cunliffe, Lawrence

      McKay, Allen (Barnsley West)

      Dalyell, Tarn

      McKelvey, William

      Darling, Alistair

      McLeish, Henry

      Davies, Rt Hon Denzil (Llanelli)

      Maclennan, Robert

      Davies, Ron (Caerphilly)

      McTaggart, Bob

      Dewar, Donald

      Madden, Max

      Dixon, Don

      Marek, Dr John

      Dobson, Frank

      Marshall, Jim (Leicester S)

      Doran, Frank

      Martin, Michael J. (Springburn)

      Douglas, Dick

      Martlew, Eric

      Dunnachie, Jimmy

      Maxton, John

      Dunwoody, Hon Mrs Gwyneth

      Meale, Alan'

      Eadie, Alexander

      Michael, Alun

      Eastham, Ken

      Michie, Bill (Sheffield Heeley)

      Ewing, Harry (Falkirk E)

      Michie, Mrs Ray (Arg'l & Bute)

      Ewing, Mrs Margaret (Moray)

      Millan, Rt Hon Bruce

      Fatchett, Derek

      Moonie, Dr Lewis

      Faulds, Andrew

      Morgan, Rhodri

      Fearn, Ronald

      Morley, Elliott

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

      Morris, Rt Hon A. (W'shawe)

      Fisher, Mark

      Morris, Rt Hon J. (Aberavon)

      Flannery, Martin

      Mowlam, Marjorie

      Flynn, Paul

      Mullin, Chris

      Foot, Rt Hon Michael

      Murphy, Paul

      Foster, Derek

      Nellist, Dave

      Foulkes, George

      O'Neill, Martin

      Fraser, John

      Orme, Rt Hon Stanley

      Galbraith, Sam

      Owen, Rt Hon Dr David

      Galloway, George

      Parry, Robert

      Garrett, John (Norwich South)

      Patchett, Terry

      Garrett, Ted (Wallsend)

      Pendry, Tom

      Gilbert, Rt Hon Dr John

      Pike, Peter L.

      Godman, Dr Norman A.

      Powell, Ray (Ogmore)

      Golding, Mrs Llin

      Radice, Giles

      Gordon, Mildred

      Randall, Stuart

      Gould, Bryan

      Redmond, Martin

      Graham, Thomas

      Rees, Rt Hon Merlyn

      Grant, Bernie (Tottenham)

      Reid, Dr John

      Griffiths, Nigel (Edinburgh S)

      Richardson, Jo

      Grocott, Bruce

      Roberts, Allan (Bootle)

      Hardy, Peter

      Rogers, Allan

      Hattersley, Rt Hon Roy

      Rooker, Jeff

      Haynes, Frank

      Ruddock, Joan

      Healey, Rt Hon Denis

      Sedgemore, Brian

      Heffer, Eric S.

      Sheerman, Barry

      Henderson, Doug

      Sheldon, Rt Hon Robert

      Hogg, N. (C'nauld & Kilsyth)

      Short, Clare

      Holland, Stuart

      Skinner, Dennis

      Home Robertson, John

      Smith, Andrew (Oxford E)

      Hood, Jimmy

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

      Howarth, George (Knowsley N)

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

      993

      Soley, Clive

      Wareing, Robert N.

      Spearing, Nigel

      Welsh, Andrew (Angus E)

      Steel, Rt Hon David

      Welsh, Michael (Doncaster N)

      Steinberg, Gerry

      Wigley, Dafydd

      Stott, Roger

      Williams, Rt Hon Alan

      Strang, Gavin

      Williams, Alan W. (Carm'then)

      Straw, Jack

      Wilson, Brian

      Taylor, Mrs Ann (Dewsbury)

      Winnick, David

      Taylor, Matthew (Truro)

      Worthington, Tony

      Thomas, Dr Dafydd Elis

      Wray, Jimmy

      Thompson, Jack (Wansbeck)

      Young, David (Bolton SE)

      Vaz, Keith

      Wall, Pat

      Tellers for the Ayes:

      Wallace, James

      Mr. Allen Adams and

      Walley, Joan

      Mr. Adam Ingram.

      NOES

      Adley, Robert

      Cran, James

      Aitken, Jonathan

      Currie, Mrs Edwina

      Alexander, Richard

      Davis, David (Boothferry)

      Alison, Rt Hon Michael

      Day, Stephen

      Allason, Rupert

      Devlin, Tim

      Amess, David

      Dickens, Geoffrey

      Amos, Alan

      Douglas-Hamilton, Lord James

      Arbuthnot, James

      Dover, Den

      Arnold, Jacques (Gravesham)

      Dunn, Bob

      Arnold, Tom (Hazel Grove)

      Durant, Tony

      Ashby, David

      Evans, David (Welwyn Hatf'd)

      Atkins, Robert

      Evennett, David

      Atkinson, David

      Fallon, Michael

      Baker, Nicholas (Dorset N)

      Farr, Sir John

      Baldry, Tony

      Fenner, Dame Peggy

      Banks, Robert (Harrogate)

      Field, Barry (Isle of Wight)

      Batiste, Spencer

      Fookes, Miss Janet

      Beaumont-Dark, Anthony

      Forsyth, Michael (Stirling)

      Bellingham, Henry

      Forth, Eric

      Bendall, Vivian

      Fowler, Rt Hon Norman

      Bennett, Nicholas (Pembroke)

      Fox, Sir Marcus

      Benyon, W.

      Franks, Cecil

      Bifien, Rt Hon John

      Freeman, Roger

      Biggs-Davison, Sir John

      French, Douglas

      Blackburn, Dr John G.

      Gale, Roger

      Blaker, Rt Hon Sir Peter

      Gardiner, George

      Bonsor, Sir Nicholas

      Garel-Jones, Tristan

      Boscawen, Hon Robert

      Gill, Christopher

      Boswell, Tim

      Goodhart, Sir Philip

      Bottomley, Mrs Virginia

      Goodlad, Alastair

      Bowden, A (Brighton K'pto'n)

      Goodson-Wickes, Dr Charles

      Bowden, Gerald (Dulwich)

      Gorman, Mrs Teresa

      Bowis, John

      Gorst, John

      Boyson, Rt Hon Dr Sir Rhodes

      Gow, Ian

      Braine, Rt Hon Sir Bernard

      Gower, Sir Raymond

      Brandon-Bravo, Martin

      Greenway, Harry (Ealing N)

      Brazier, Julian

      Greenway, John (Ryedale)

      Brittan, Rt Hon Leon

      Gregory, Conal

      Brooke, Rt Hon Peter

      Griffiths, Peter (Portsmouth N)

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

      Grist, Ian

      Browne, John (Winchester)

      Ground, Patrick

      Bruce, Ian (Dorset South)

      Gummer, Rt Hon John Selwyn

      Buchanan-Smith, Rt Hon Alick

      Hamilton, Hon Archie (Epsom)

      Budgen, Nicholas

      Hampson, Dr Keith

      Burns, Simon

      Hannam, John

      Butcher, John

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

      Butler, Chris

      Hargreaves, Ken (Hyndburn)

      Butterfill, John

      Harris, David

      Carlisle, John, (Luton N)

      Haselhurst, Alan

      Carlisle, Kenneth (Lincoln)

      Hawkins, Christopher

      Carrington, Matthew

      Hayes, Jerry

      Carttiss, Michael

      Heathcoat-Amory, David

      Chapman, Sydney

      Heddle, John

      Chope, Christopher

      Heseltine, Rt Hon Michael

      Churchill, Mr

      Hicks, Mrs Maureen (Wolv' NE)

      Clark, Sir W. (Croydon S)

      Hicks, Robert (Cornwall SE)

      Clarke, Rt Hon K. (Rushclitte)

      Higgins, Rt Hon Terence L.

      Colvin, Michael

      Hill, James

      Conway, Derek

      Hogg, Hon Douglas (Gr'th'm)

      Coombs, Anthony (Wyre F'rest)

      Howard, Michael

      Coombs, Simon (Swindon)

      Howarth, G. (Cannock & B'wd)

      Cope, John

      Howell, Ralph (North Norfolk)

      Couchman, James

      Hughes, Robert G. (Harrow W)

      994

      Hunt, David (Wirral W)

      Onslow, Rt Hon Cranley

      Hunt, John (Ravensbourne)

      Oppenheim, Phillip

      Hunter, Andrew

      Page, Richard

      Irvine, Michael

      Paice, James

      Irving, Charles

      Patnick, Irvine

      Jack, Michael

      Patten, Chris (Bath)

      Jackson, Robert

      Patten, John (Oxford W)

      Janman, Tim

      Pattie, Rt Hon Sir Geoffrey

      Jessel, Toby

      Pawsey, James

      Johnson Smith, Sir Geoffrey

      Peacock, Mrs Elizabeth

      Jones, Gwilym (Cardiff N)

      Porter, Barry (Wirral S)

      Jones, Robert B (Herts W)

      Porter, David (Waveney)

      Jopling, Rt Hon Michael

      Portillo, Michael

      Kellett-Bowman, Dame Elaine

      Powell, William (Corby)

      Key, Robert

      Raffan, Keith

      Kilfedder, James

      Raison, Rt Hon Timothy

      Kirkhope, Timothy

      Rathbone, Tim

      Knapman, Roger

      Redwood, John

      Knight, Greg (Derby North)

      Renton, Tim

      Knight, Dame Jill (Edgbaston)

      Rhodes James, Robert

      Knowles, Michael

      Ridsdale, Sir Julian

      Knox, David

      Rifkind, Rt Hon Malcolm

      Lang, Ian

      Roe, Mrs Marion

      Lawrence, Ivan

      Rossi, Sir Hugh

      Lee, John (Pendle)

      Rost, Peter

      Lennox-Boyd, Hon Mark

      Rowe, Andrew

      Lightbown, David

      Rumbold, Mrs Angela

      Lilley, Peter

      Sackville, Hon Tom

      Lloyd, Peter (Fareham)

      Sainsbury, Hon Tim

      Lord, Michael

      Shaw, David (Dover)

      McCrindle, Robert

      Shaw, Sir Michael (Scarb')

      Macfarlane, Sir Neil

      Shelton, William (Streatham)

      Maclean, David

      Shephard, Mrs G. (Norfolk SW)

      McLoughlin, Patrick

      Shepherd, Richard (Aldridge)

      McNair-Wilson, M. (Newbury)

      Sims, Roger

      McNair-Wilson, P. (New Forest)

      Smith, Tim (Beaconsfield)

      Madel, David

      Soames, Hon Nicholas

      Major, Rt Hon John

      Speller, Tony

      Malins, Humfrey

      Spicer, Michael (S Worcs)

      Mans, Keith

      Squire, Robin

      Maples, John

      Stanbrook, Ivor

      Marlow, Tony

      Stern, Michael

      Marshall, Michael (Arundel)

      Stevens, Lewis

      Martin, David (Portsmouth S)

      Stradling Thomas, Sir John

      Mates, Michael

      Summerson, Hugo

      Maxwell-Hyslop, Robin

      Taylor, John M (Solihull)

      Mayhew, Rt Hon Sir Patrick

      Taylor, Teddy (S'end E)

      Meyer, Sir Anthony

      Thorne, Neil

      Mills, lain

      Thornton, Malcolm

      Miscampbell, Norman

      Townend, John (Bridlington)

      Mitchell, Andrew (Gedling)

      Townsend, Cyril D. (B'heath)

      Moate, Roger

      Trotter, Neville

      Monro, Sir Hector

      Waddington, Rt Hon David

      Montgomery, Sir Fergus

      Waldegrave, Hon William

      Moore, Rt Hon John

      Walters, Dennis

      Moss, Malcolm

      Wheeler, John

      Moynihan, Hon Colin

      Widdecombe, Ann

      Mudd, David

      Wilshire, David

      Nelson, Anthony

      Wood, Timothy

      Neubert, Michael

      Young, Sir George (Acton)

      Newton, Rt Hon Tony

      Nicholls, Patrick

      Tellers for the Noes:

      Nicholson, David (Taunton)

      Mr. Richard Ryder and

      Nicholson, Emma (Devon West)

      Mr. Stephen Dorrell.

      Question accordingly negatived.

      Clause 3

        INITIAL GOVERNMENT HOLDING IN THE SUCCESSOR COMPANY
        6.45 pm
        Mr. Maxton: I beg to move amendment No. 9, in page 3, line 13, at end insert—

        995
        '(4A) One third of all Securities issued under this section shall he designated "employee shares" and held in trust for employees in the form of an Employee Share Ownership Plan with power to appoint directors'.
        Madam Deputy Speaker (Miss Betty Boothroyd): With this we may take amendment No. 11, in page 3, line 13, at end insert—
        '(4B) One tenth of all securities issued under this section shall be designated "pension shares" and shall be made available to former employees of the British Steel Corporation.'
        Mr. Maxton: The two amendments together deal with employee share ownership. It is nice to see the Secretary of State for Scotland here for this important debate, although if he is to be present, I hope that he will listen and not talk. He has not shown a great deal of interest in the Scottish steel industry so far—[Interruption.] He obviously does not intend to stay; I wonder whether he is going to Hampden.
        In an earlier debate, we raised the question of the involvement of the work force in the new company. The amendment represents a different way of ensuring such involvement, and the Under-Secretary of State for Industry, who replied to the debate, suggested himself that share ownership was the best way of involving the work force.
        I hope that we shall be able to debate a second matter. We shall, of course, be debating the amendment, but I hope that you, Madam Deputy Speaker, will give us some leeway and allow us some debate on the written answer yesterday in which the Government laid down their proposals for share ownership by employees. The House should know what the Government have in mind, and perhaps they will answer some questions—
        Madam Deputy Speaker: Order. I am afraid that we can deal only with the amendments on the Order Paper. We cannot deal with answers to questions unless they relate directly to these amendments.
        Mr. Maxton: I am sure that they do, Madam Deputy Speaker. The Government's proposals deal with employee share ownership, which is what this debate is about.
        The Government's proposals and ours are very different. We propose that one third of the shares should be designated as employee shares and held in trust for the employees in the form of an employee share ownership plan with the right to appoint directors to the board. That seems to us to be the best way of ensuring that the employees have a stake in the company, without the risks of direct personal ownership. They would have the right to make decisions and have a say in the future of the company in which they have already invested their labour, time and effort, without the possibility of losing their hard-earned money by investing directly in shares.
        I should have thought that that would allow exactly the sort of developments about which the Under-Secretary talked. That certainly cannot be called "tokenism"—the word used by Conservative Members to describe our plans for appointing two directors to the board. It cannot be called a "retreat"—the term used earlier by the hon. Member for Darlington (Mr. Fallon)—from our plans to involve workers directly in industry.
        Incidentally, it is surprising—for once, the Chancellor of the Duchy of Lancaster may agree—that in both the earlier debate on union representation on the board and
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        again now, when debating share ownership, representatives of the Social and Liberal Democratic party, which has always been an exponent of worker participation and share ownership, have not bothered to be present and to participate in the debate.
        We propose an innovative, imaginative and exciting way of ensuring the workers' involvement, even though that is not something the Government would like to see. We assume that those who will run the employees' share ownership plan will come, at least in part, from the trade union movement and will be nominated by employees through their trade unions. That would be the best way of involving the work force in share ownership and in directorships.
        It is worth comparing the Government's scheme with our own. In a written answer, the Chancellor of the Duchy of Lancaster explained exactly what will happen:
        "(i) employees will each be offered £70 worth of free shares plus a further £2 of shares for every year of service with the corporation. An employee with 15 years' service could therefore be eligible to receive, free of charge, £100 worth of shares;".
        One of the interesting points arising from the previous debate was that the Minister of State, Scottish Office said that the Government had no idea what would be the capital valuation of the new company. However, the Chancellor of the Duchy of Lancaster stated in his written answer:
        "All these arrangements will be subject to an overall limit of 10 per cent. of the shares on offer in the flotation."
        There are 52,000 employees in British Steel. If one takes the minimum £70 giveaway, its value will total about £3·5 million. If that sum represents 10 per cent. of the shares on offer, the minimum flotation value will be £35 million. I hope that the Chancellor intends that the figure should be higher than that. [Interruption.] He is prepared to concede £35 million, but the overall picture adds more to that. It appears to give some idea that, when the right hon. and learned Gentleman did his sums in terms of employee share ownership, he had some idea of what the final flotation structure and value would be. How could he arrive at his 10 per cent. limit otherwise?
        The Chancellor of the Duchy of Lancaster's written answer continued:
        "(ii) employees will also be offered 2 free shares for each one bought at the full share price on a matching basis, up to a maximum value in free shares of £330. An employee buying £165 worth of shares would thus receive shares worth in total £495;
        "(iii) employees will be able to buy shares, up to a maximum value of £2,200, at a discount of 10 per cent. on the full share price;
        (iv) employees and BSC pensioners applying for shares at the full share price, will be treated on a priority basis over the general public, up to a limit of £10,000 worth of shares"—
        presumably at the full share price—
        "per individual."—[Official Report, 17 May 1988; Vol. 133, c. 383.]
        I do not believe that many employees at Ravenscraig will take up more than their £70-worth of free shares plus £2 of shares for each year of service.
        The Government will have considerable difficulty in floating the British Steel Corporation, anyway. It will not be attractive to many investors in the market place and there is no reason why employees should risk their money by investing in it. The advantage of our scheme is that it would not put employees' money at risk. They would enjoy a shareholding through the plan, but their personal savings would not be at risk.

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        I know some members of the senior management of Ravenscraig, and I do not imagine that any of them have £10,000, or the maximum of £12,200, to spare for an investment that is as risky as the British Steel Corporation, unless it is for a short-term return—buying shares at the time of the flotation in the hope that there will be an upward movement in their price, with a view to making a quick profit by selling them shortly thereafter. It is not likely that large numbers of employees will invest in the company in the way that the Minister suggests.
        How many employees does the Minister expect will take up the various categories of share ownership? When he did his sums, he must have had some idea of the number of employees taking up even the £70 worth of free shares. Does the Minister expect them all to do so or only a certain percentage? How many employees does he expect will buy shares and then claim their entitlement to a further £2-worth of shares? How many employees does he expect will buy shares to the maximum value of £12,200 or £10,000?
        When the Chancellor of the Duchy of Lancaster prepared his written answer, he must have had some idea of the numbers involved. Otherwise how did he arrive at those figures? What was the premise of his information?
        Mr. John Home Robertson: Astrology.
        Mr. Maxton: I thought that it was my hon. Friend the Member for Carrick, Cumnock and Doone Valley (Mr. Foulkes), and not my hon. Friend the Member for East Lothian (Mr. Robertson), who was into astrology. However, judging by some of the answers we have received, astrology appears to have been the way by which the Government arrived at them. Perhaps this is another example of it.
        Having made all those calculations and arrived at an overall limit of 10 per cent. of the shares on offer, the Minister must have worked out what he considers should be the corporation's flotation value. If not, what will happen if, at the end of the year when he wishes to float the company, there is a slump in the share market? The share value may not be that which he anticipated but there may be the level of take-up which he expected from the employees. What will he do then? Will he downgrade the value of their shares? I am not sure whether the Chancellor of the Duchy of Lancaster nodded or whether it was only an involuntary movement of his head, but he appeared to nod, so it appears that, again, the offer he has made to the employees is not worth the paper it is written on. If there is a downward evaluation, the figures that he has produced will not materialise.
        I am sure that the House is more interested to hear what the Chancellor of the Duchy of Lancaster has to say about his scheme than in listening to me talking about our own, which we know the Minister will not accept.
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        Mr. Fallon: Some pretty curious amendments have been tabled by the Opposition, but amendment No. 9 is the most extraordinary so far. It is probably symptomatic of the Opposition's confusion about the whole concept of share ownership. For some years now they have been telling us that there is no demand for share ownership, either in the wider population or among those who work
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        for nationalised companies that have been privatised. That is what the Labour party has been telling us, and some of its members are still doing so. That is what the trade union leaders have been telling us.
        Mr. Maxton: As the hon. Gentleman accuses us of saying that there is no interest in share ownership, perhaps he would like to say who said it and when.
        Mr. Fallon: I do not think that I need to detail exactly who said it. [Interruption.] Every time that my hon. Friends have come to the House and proposed a piece of privatisation legislation, it has been the Opposition's view that the privatisation should not proceed and, in particular, that shares in the previously nationalised industries should not be offered. Yet what happens? We have found time and again—with British Telecom, and with British Gas—that employees respond in overwhelming numbers.
        Mr. Michael Brown: My hon. Friend is absolutely right. To illustrate the point that he has made about previous privatisation measures that have been brought before the House, the Opposition have reminded anyone who is thinking of becoming a shareholder that the shares would be confiscated, perhaps for very little value in return. Perhaps my hon. Friend would like to press the Opposition on what they will do to these shareholdings.
        Mr. Fallon: My hon. Friend must not tempt me too far along that line. Suffice it to say that thousands of individual shareholders in every constituency in the country now hold popular shares in formerly nationalised companies that have been privatised. That is probably why there are slightly more representatives on the Tory side of the House than there are on the Opposition side.
        The Opposition cannot have it both ways. They cannot say that there is no demand for share ownership, and then say that, if there is, the employees should have a third of the shares. That is nonsense. [Interruption.]
        Madam Deputy Speaker: Order. I can hear only one hon. Member at a time.
        Mr. Fallon: This suggests to me that some Opposition Members have learnt from the success of our privatisation programme, having seen the huge take-up by British Telecom and British Gas employees of the shares made available to them. They have had to cobble together this policy so that they can go back and say to those who work for British Steel, "We would have allocated you even more shares than the Government are proposing."
        We are bound to ask where that leaves the Opposition's share ownership policy. Will they revise the arrangements for British Telecom and British Gas to ensure that the work forces in those industries now have a third of the shares, as those in British Steel would have if the amendment were accepted? Will they revise the arrangements that the House has already put through, take shares from the public—indeed, from other trade unionists—and cobble them together in this extraordinary share ownership portfolio?The second reason I believe that Conservative Members should reject the amendment wholeheartedly is that the shares are not being offered to those who work for British Steel; they are being placed inside a trust. The employees will have no rights. They may in name have some claim to

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        a third of the share capital, but they will not have the right to buy more shares, to sell any of them, to hold them or to dispose of them as they wish. It is a very patronising approach to share ownership to say that the employees should have a third of the shares but that they should not he able to do anything with them—that the ownership and management of the shareholding should be confined to trustees.
        Who will those trustees be? We heard that the trade union barons would be the trustees of the scheme. That is not real share ownership. It is treating shareholders like children with pocket money—saying that they can have a third of the shares, but cannot do anything with them, and cannot have any rights. These will not be free shares in any real sense. In fact, they will be fake shares.
        Mr. Maxton: I wonder how the hon. Gentleman differentiates between that sort of share and unit trusts or investment accounts in banks? In those instances, people put in their money and then own shares as a result of investment made by the bank. But they have no direct say. The employees of British Steel will have considerably more say.
        Mr. Fallon: A unit trust is not controlled by the trade union leaders involved in the industry. It is perfectly possible for any individual to acquire more units in the trust or to dispose of them, as the case may be. The individual has some rights. But under amendment No. 9 the British Steel employee would have no rights whatever.
        This is a bogus amendment. It cannot be confused with any real extension of wider share ownership; nor can it he called "exciting", which was how the hon. Member for Glasgow, Cathcart (Mr. Maxton) described it. He said that the whole point of the share ownership proposal that he was advocating was to take out the risk so that not only would the shares not go down, but they would not go up. Those who work for British Steel would have no opportunity to benefit from their investment and their commitment to this new dynamic private company. They would have no real interest.
        In relation to an earlier amendment, the hon. Gentleman specifically spoke about employee interests. The employees would have no interest in these paper shares. They would not be able to benefit from increased productivity or the better performance of the company as a whole, nor would they be able to sell their shares, or acquire more, if they wanted to do so.
        This is a bogus share ownership proposal, and as such it should be treated with the contempt that it deserves.
        Mr. Morley: The hon. Member for Darlington (Mr. Fallon) displays the Tory party's attitude to share ownership, and demonstrates the original idea of what share ownership was all about. The original idea was to invest capital in a firm to help that firm to prosper, and to take a return from the profits in the form of dividends. But what is happening now, in Mrs. Thatcher's Britain—
        Madam Deputy Speaker: Order.
        Mr. Morley: I apologise, Madam Deputy Speaker.
        What is happening now is that shares are being used as some kind of casino economy. The City is becoming an up-market bookie: people are making money on the actual transaction of shares without having the slightest interest in the investment in the company or in the company itself.
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        The amendment gives a direct interest to those who have earned their rights to share ownership by the efforts that they have put into the company over the years, and the help that they have given it.
        We also feel that 10 per cent. should go to the pensioners who have worked all their lives in the industry. It is a shame that those who deal in shares are held. in higher esteem than, for instance, steel workers who have spent all their working lives in often appalling conditions and back-breaking work. They do not seem to receive the same esteem as people who sit in an office, press a button and transfer huge sums in shares in companies in which they have no interest and of which they have no knowledge. The amendment gives the people who have earned that stake some direct control of the company—a say in it, and a share and involvement in it. I am surprised that the Government should argue against that if they genuinely believe in any kind of shareholding democracy.
        We talk about the desire of people to buy shares, and the so-called success of the Government's policy in selling them. If people are offered a deal whereby they give £5 and are given back £10, of course they will jump at the chance. But the number of small shareholders in British Telecom and British Gas is not increasing; it is decreasing rapidly, as people take their profits and get out.
        Although many small investors had their fingers burnt in the October crash, it is worth remembering that the large institutions will still make money whether the stock market is booming or declining. Many of the small punters who were encouraged by the Government into the shareholding market have lost a great deal of money as a result. I do not see the Government shedding many tears about that. That is why it is right that the shares should be given to the steel workers. They have earned those shares through their labour, productivity and commitment to the industry.
        Mr. Morgan: I am grateful for the opportunity to contribute my sixpen'orth to the debate because the amendments concern some important issues about which there are strong feelings among the steel workers as to who should own what share of the industry.
        I listened aghast to the ignorance displayed by the hon. Member for Darlington (Mr. Fallon) about share ownership after privatisation. He appears to believe that the Government's privatisation programme completely excludes employee share ownership plans. He should be made aware that such plans have played a significant role over the past few years in privatisation involving parts of the bus and motor car industry.
        The two largest employee share ownership schemes in Britain have both followed privatisation. The first is operated by the Portsmouth bus company, which, I understand, has about 4,000 employees and was privatised through a management and worker buy-out with the workers' part of that buy-out being operated through a employee share ownership scheme. The second scheme is operated by Llanelli Radiators, which employs about 1,500 workers and was privatised as part of the sell-off of the fringe parts of the British Leyland and, later, Austin Rover empire. Those workers found themselves faced with the choice of closure or having to assist in funding a buy-out and chose to opt for an employee share ownership scheme.
        That was an extremely large company in manufacturing terms, certainly in Wales, and was privatised with no more

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        than one quarter of the employees taking part. Nevertheless, it is still a new concept that has not been immediately embraced by everyone. An employee share ownership plan, such as we are proposing here, was adopted and helped to save 1,500 jobs, which are like gold in the Llanelli area as they are elsewhere in south Wales.
        If the hon. Member for Darlington wants to exclude employee share ownership plans from privatisations, he has a considerable amount of retrospective work to do as a result of the Government's policy over the past four years. If he wants to defend the exclusion of the steel industry from such a scheme, he must explain why it is acceptable for the motor car components manufacturing industry and the bus industry to have such a scheme. Some extremely substantial privatisations have taken place in those industries with the assistance of employee buy-outs through employee share ownership plans.
        Our proposals are no different, although they are on a larger scale. Although it is true to say that scale can sometimes be a killer argument, as it is not always easy to scale up to a firm with 52,000 employees, the position with British Steel does not differ greatly from that of the National Freight Consortium management and worker buy-out. The employees were very much in the driving seat in that company, with about two thirds of the shares owned by one third of the employees. That firm is halfway between the Portsmouth bus company or Llanelli Radiators and the British Steel Corporation and has well over 20,000 employees, of whom one third participate in share ownership. That buy-out took place through a scheme similar to an employee share ownership plan.
        The Government must explain their reasons for rejecting the amendment, if they decide to do so, in spite of our best efforts to persuade them to support us. Why cannot such a scheme be set up in the steel industry when similar schemes have been set up in industries that are almost as large?
        7.15 pm
        Mr. Fallon: The hon. Gentleman referred to the example of the National Freight Consortium. The key difference between that share ownership scheme and the proposal that we are discussing is that the employees of the National Freight Consortium were free to buy as many shares as they wanted. As I understand the wording of amendment No. 9, the employees of British Steel will not have the freedom to buy as many or as few shares as they wish.
        Mr. Morgan: The hon. Gentleman introduces the philosophical and dogmatic flavour that characterises his contributions to our debates. He is in favour of a proposal, if someone is economically free to implement it, but, if there is an element of planning, he is against it, regardless of whether it helps to achieve wider share ownership and greater employee involvement.
        The hon. Gentleman is right to say that we accept that the Government have gone too far down the road towards the flotation of the successor company to involve the employees in majority share ownership in National Freight style. When the company had a low value, about a third of the employees would have come into the scheme and seen the value of their shares appreciate twentyfold, as has happened in the five-year period since the National
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        Freight Consortium was bought out by management and workers. That is not possible as the BSC is now a profitable company. The NFC was a highly unprofitable company when the arrangement was made and the shares bought by workers were therefore extremely cheap. Only they and the management had the faith, with a small number of venture capitalists backing them, to buy in cheap and watch the company appreciate. As the BSC has now returned to profit, that option is no longer available and an employee share ownership plan is more logical.
        It is a minor objection to claim that the Government could reject the proposal because it involves only one third of the shares or because it is compulsory to specify a figure of one third. If the Government wish to incorporate a flexible element in the scheme, we would be willing to discuss it with them. We want to ensure that, as far as possible, the firm's employees, including senior and middle management was well as shop-floor employees, should be in the driving seat.
        One of the primary reasons why the employees of the BSC and of Allied Steel and Wire are extremely interested in acquiring shares in the industry is the fear of being ripped off by speculators. They see employee share ownership as one way of warding off control by speculators and the financial community. They want to ensure that they have the maximum amount of elbow in the industry after privatisation to ensure that the industry is not taken over by speculators, companies which are primarily interested in shrinkage and sell-off of spare assets or foreign companies interested in further rationalisation.
        Some of those fears may be dealt with by the Government's announcement regarding a golden share. Following the experience with Britoil, the Government must accept that many employees of industries that were protected by golden shares do not have the same confidence in the golden share as a method of warding off takeovers as they did before the curious handling of the BP-Britoil takeover saga, in which the golden share was finally negotiated away by the Treasury.
        Obviously, there will be the attractions of a dividend. It is difficult for Opposition Members to recommend the prospect of capital growth, because it is greatly influenced by currency patterns. Within the past month the senior management of the next largest steel company to the BSC, United Engineering Steels, warned that the rising pound was already hitting its profits and performance. One imagines that, if the flotation were not in the offing, the management of BSC and Allied Steel and Wire would have said exactly the same. The steel industry by its nature is highly sensitive to the changing relationship between the pound, the deutschmark and the dollar.
        Those are all reasons why an employee share ownership plan is of great importance and why its structure is convenient to the industry, suspended as it is in a state of profitability, but with that profitability likely to be severely affected by currency changes, which are already upon us, and possibly by the changes which could occur on 30 June if quotas are not renewed and if dumping steel in the back gardens of other steel producers in Europe sets in as a way of removing surplus capacity, since that does not seem to be possible by negotiation.
        Employee share ownership plans have the great advantage that they achieve a greater measure of control. I hope that the hon. Member for Darlington agrees that a curious feature of share ownership is that, despite the

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        massive number of share owners in British Telecom, for example—I understand that the employees own no more than 1 per cent.—they have no control over the company. They have the ability to buy or sell, but that is not a measure of control, nor is it what we are seeking for BSC employees. We are seeking a measure of control and I implore the hon. Gentleman to understand that that is what BSC' employees are looking for. We intend to help them to achieve that.
        The Government have offered conventional share ownership on slightly preferential terms in this absolutely repellent form of tokenism, which might result in as many as 3 or 4 per cent. of the shares landing up in the hands of employees. That is three times what BT employees have, but it is still nowhere near what we are trying to achieve. That does not achieve control. If British Steel has 52,000 employees, of whom 10,000 buy shares because they can afford to, and if they are backed up by a certain number of steel industry pensioners—the BSC is one of those curious industries which we now have in Britain in which there are twice as many pensioners as workers—how do they get together to exert any influence over the broad strategy that management is pursuing? They cannot.
        An employee share ownership plan with the shareholders' power being exercised through proxy votes vested in trustees, who could be from trade unions—obviously those chosen to exercise proxy votes could be changed—means that a considerable amount of power is hands of employee or pensioner shareholders. That is the advantage.
        Shareholders in British industry simply act as sleeping shareholders and in the end their only power is to sell shares and move on. That is not an option which employees would ever want. They invest their careers in the industry and their families depend on it. There is no way that they can share that in-out attitude towards the industry in which they work. They want to exercise some sort of control and influence over the management, and they can do that only through and ESOP-type structure.
        That is how they will get together. Some will live in Scunthorpe and some on Teesside. The steel industry operates in the outer circle of the United Kingdom—in Wales, Scotland, the north-east and the east midlands. It is not all grouped together in one convenient region, so it is difficult for 10,000 shareholder employees to influence management's strategic decisions or to change the management if they think that its policy has deteriorated severely. Under the amendment, that can be done through proxy voting through the structure of an ESOP. That is why we commend it strongly as the best available option for maximising, not just share ownership but property control.
        How does the provision of an ESOP relate to the golden share aspects that the Government announced in their proposals for preferential access to share purchase and to the temporary five-year anti-takeover provision? A company with an anti-takeover clause is attractive to its employees. They would be worried about buying shares in a company which might be taken over. Therefore, an employee share option plan goes along with an anti-takeover provision.
        The Government have offered us temporarily a golden share of the classic kind. We are asking them also to consider the advantages of an ESOP proposal, such as we have here, which can incorporate not just the golden share for a temporary period, but a poison pill mechanism
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        against the devices which in recent years the shadier end of the finance capital industry has developed in both Wall street and the City of London. A poison pill defends, not so much against takeover as against the dawn raids which are of doubful virtue, but which have not yet been made illegal.
        Under the poison pill mechanism, additional shares will immediately be created if a dawn raid is carried out. If a dawn raid or concert party results in 15 per cent. of shares landing up in one pair of hands, it would be possible instantaneously, by articles of association and the relationship between the ESOP and the overall share of the company, to create an additional number of shares equal to that which landed up in the hands of the predator.
        I understand that the alternative to the poison pill defence against dawn raids is called the Pac-Man alternative. In that, additional voting rights can be conferred on the shares in the proposed ESOP. In the event of any owner acting on his own or through a concert party and landing up with 15 per cent. or more of the shares, instantly additional voting rights are temporarily conferred until the takeover bid is warded off. They last simply while the crisis lasts. That is made much easier by the ESOP proposal. I hope that the Government will realise how much more attractive employee share ownership is to the employees of an industry such as British Steel if it can incorporate one of those two variants.
        In that way, when the Government's golden share proposal expires, the ESOP can be used to achieve anti-takeover protection or semi-legal anti-takeover protection, against the dawn raid or concert party which we have seen so much of engendered by the wilder fringes of the financial community. That is simply not the kind of world in which potential employee share owners want to become involved. The ESOP proposal can be used constructively to maximise, not just employee share ownership, but long-term employee share ownership and an appropriate degree of control, so that if employees finish up with one third of the shares, they can wield one third of the power in the corporation. That is how it should be.
        It is no good simply saying, "If you wish to dispose of your shares you should be free to do so." That is not what employee share ownership is. about. It is an expression of the fact that employees have given their life's blood to the industry and wish to remain committed to it so long as they are employed there.
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        Yesterday we made an unsuccessful attempt to encourage employee share ownership in Allied Steel and Wire. We asked that an employee trust fund, similar to an employee share ownership proposal, should be set up. According to my information, the Minister, no doubt inadvertently, misled the House. I am sure that he would like to take this opportunity to correct what he said yesterday in reference to my speech:
        "I am attracted by the idea that the employees of Allied Steel and Wire Ltd. should have a stake in the company. Once again, the hon. Gentleman's chosen method, contained in amendment No. 32 … is generous but it goes over the top somewhat. Most of the employees already have a stake in the company".—[Official Report, 17 May 1988; Vol. 133, c. 834.]
        My information, from the trade union representing the employees, is that they do not have a stake in the company. What they took out last October was a £1 option which

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        could be converted into shares when the flotation was announced. That option cost them a nominal amount. The workers may or may not exercise the option.
        I offer amendments Nos. 9 and 11 to the House in the same spirit as I proposed the amendment yesterday. I am sure the Minister will take the opportunity later to correct the misinformation he gave the House yesterday, according to what I have heard from Cardiff, where Allied Steel and Wire has its headquarters. We are keen to encourage employee share ownership which does not exist yet in Allied Steel and Wire, although the Minister said yesterday that it did. We believe that employees require further encouragement towards share ownership. Amendment Nos. 9 and 11 would achieve that.
        Mr. Kenneth Clarke: I accept that the hon. Gentleman may be more up to date and more closely informed about Allied Steel and Wire than I was yesterday. I will check what he has said. The workers' shareholding in the company may take the form of options to be exercised in the flotation. I am grateful to the hon. Gentleman for pointing that out to the House.
        The amendments ought not to lead to too great a divide between us. It appears that we start roughly at the same place. We are now all in favour of the employees of companies that are being privatised having shares in those companies. Certainly the Government have never had any doubts about the desirability of encouraging employee share ownership in major companies. We have demonstrated that over and over again, because employee share ownership schemes have been a standard feature of almost every privatisation that the Government have carried out, although the exact terms have varied from case to case.
        We are also clear about why we put forward these offers to employees. We think that it is important that people should be rewarded for the contribution that they have made, in the case of British Steel by turning the corporation around from being a chronic loss maker to a profitable company that is ready for the market place again.
        It is right that, as far as possible, people's rewards in industry should be linked to the performance of the industry. Therefore, we are impressed when people take a stake in the industry and are prepared to look forward to gaining personally out of whatever improvement in performance they can contribute to. Obviously, it tends to reduce the divisions in industry if employees feel that they have a direct financial stake in the company for which they work.
        Over the last seven or eight years of our economic revival, we have seen a change of opinion. Most people realise that their interest as employees is identical with the interest of the company for which they work and that anything that underlines that is to be welcomed. For that reason, we have always made it clear that we proposed to make special arrangements for employees of the British Steel Corporation and its subsidiaries to take shares in the flotation that we are planning.
        Yesterday, in response to a parliamentary question from my hon. Friend the Member for Hertfordshire, South-West (Mr. Page), I gave details of what we propose. Employees will each be offered £70-worth of free shares, plus a further £2 of shares for every year of service with the corporation. That means that an employee with 15 years'
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        service could be eligible to receive free of charge £100-worth of shares. Employees will also be offered two free shares for each one that they buy at the full share price on a matching basis, up to a maximum value in free shares of £330. So an employee buying £165 worth of shares would receive shares worth in total £495.
        Employees will also be able to buy shares up to a maximum value of £2,200 at a discount of 10 per cent. of the full share price. Finally, employees and British Steel Corporation pensioners applying for shares at the full share price will be treated on a priority basis over the general public up to a limit of £10,000-worth of shares per individual. That is one of the most generous arrangements that we have proposed in a privatisation flotation. I hope that many employees will take advantage of it.
        So far, so good. While I am grateful to receive the support of the Opposition for the principle of share ownership, I find, as my hon. Friend the Member for Darlington (Mr. Fallon) said, that they still have not sorted out exactly what form of share ownership they favour. The bland assertion of the Labour party that it has always been in favour of workers' shares is an assertion which I greet with the same incredulity as my hon. Friend the Member for Darlington.
        I think I remember correctly—but I have not checked it—that the hon. Member for Dagenham (Mr. Gould) went to the last Labour party conference in a spirit of revisionism to lead the party back from the abyss into which it had fallen in June. He made a speech in which he was unwise enough to point out to fellow members of his party that he had found that many workers in industry were attracted by the idea of workers' shares. He was repulsed; he was rebuffed.
        It is all very well for Labour spokesmen to say how much they favour employee shares, but the attendance of Opposition Members is not much better than the attendance on the Government side for the debate. If some of the hon. Member for Dagenham's hon. Friends from below the Gangway were to hear these ringing remarks about the desirability of encouraging workers to take shares, I think that the hon. Gentleman would be in trouble again. I think he would find that his party has a long way to be led on the issue.
        Mr. Maxton: If my hon. Friend the Member for Dagenham (Mr. Gould) was repulsed, as the right hon. and learned Gentleman suggests, how was it that the constituency section of the Labour party elected my hon. Friend to the national executive of the Labour party so overwhelmingly?
        Mr. Clarke: I note that the constituency section also elected the hon. Member for Bolsover (Mr. Skinner) to the national executive. It seems that he does not intend to give us the benefit of his views on workers' shares this evening, but I suspect that they are dramatically different.
        Given that I am addressing the revisionists in the Labour party, having heard their amendment and the case which they put for it, I fear that they have not yet got the point of workers' shares. I have explained why we favour employee shares; we want to give employees a share of the reward that arises from the improved performance of the company and to lessen the divisions within industry.
        The Opposition have suddenly thought that workers' shares give the opportunity of worker control; at least, that is what I thought they were in favour of. The hon.

        1007
        Member for Glasgow, Cathcart (Mr. Maxton) said that they would not give the workers influence over the company, but that the trade unions would act as the workers' trustees and would ensure that the workers' interests were looked after by the route of worker share ownership. That explains the generosity of their amendment.
        So enthusiastic are the Opposition about workers' shares that when we come forward with our reasonable proposals they outbid us; they try to steal our clothing. They say that we should give a third of the entire equity to the workers. That is curious coming from hon. Members who have complained about that hard deal which the taxpayer is getting. Now they say that the taxpayer should see a third of the equity given to the workers. However, it would not actually be given to the workers because they would not be allowed to sell their shares. They would not be allowed to behave as shareholders because the shares would be held in trust by the trade union, which would make sure on their behalf that suitable influence was exercised over the management of the company to put the new democracy in place.
        Mr. Gould: I find that passage of the Minister's speech encouraging. After a long journey of incomprehension, he has at last grasped the point. Even he has been able to put in his own words, not quite accurately but just about right, the essential distinction which I and my hon. Friends have always maintained between the tokenism which he is offering to individual share owners and the rather doubtful investment which he is encouraging British Steel employees to make. There is a difference between that proposition and the idea, which has a long Socialist history, that worker share ownership held collectively is a means by which workers can exercise some control over their own destiny as workers in that enterprise. I am delighted that at long last the Minister has grasped that point.
        Mr. Clarke: I think that I have always grasped the point. We are both defining carefully the distinction that still lies between us. The Government favour wider share ownership among the general public and employees. We see it as a way of distributing wealth and rewarding performance in industry. We believe in a property-owning democracy and that employees who have shares should be entitled to get the same benefit and have the same influence over them as any other investor and use them as they wish.
        The Labour party, having discovered that it has been defeated in the general public argument of privatisation, employee shares and wider share ownership, has decided to return to all the old nostrums of worker control. I thought that workers' control was a very Left-wing part of the Labour party, but it seems to be winning new recruits tonight. The Labour party is not interested in every man being a capitalist and employees entering the property-owning democracy. If the Labour party cannot have state-owned nationalised industries, it is interested in having trade union-dominated industries by "giving" a third of the equity to the work force so that the trade unions can exercise control over it.
        It may be that it is not in the amendment and this is not the occasion to go into further detail but, if that is the Labour party's intention, I am not completely against the idea of ESOPs and workers' co-operatives even, if they operate in the market economy and on a sensible basis. I
        1008
        do not think that using them as a cloak for trade unionism control or as an anti-takeover device is one of their attractions. I am familiar with ESOPs. Russell Long was the chap who started ESOPs in the United States. I have corresponded with and met Russell Long. We have looked at the possibilities of extending ESOPs in this country.
        I agree with the hon. Member for Cardiff, West (Mr. Morgan) that the Portsmouth bus company is a good example of an experiment with an ESOP. As a Minister, I was involved in the privatisation of the National Freight Corporation, which was a successful example of employees taking shares. As my hon. Friend the Member for Darlington said, that privatisation led to an extremely successful company being formed. I might say that it was formed in the teeth of the opposition of the Labour party which, I recall, fought it night after night in Committee, because it did not want the employees to have shares. It wanted the company to be nationalised and loss-making and to stay as it was. Nevertheless, there is not need for us to have a deep divide over all these areas—increased worker involvement in industry, workers' ownership of shares and so on.
        There is a fundamental difference between us. We believe that our proposal is an attractive offer to the employees of British Steel to participate as shareholders in the future success of the company. What is being offered by the Opposition is an apparently generous offer of trade union control.
        Mr. Peter Hardy: The Minister is obviously enjoying himself, but he should realise that we are entitled to ask the Government to be consistent. Some of the shares that have accrued to workers in past privatisations have been given without voting rights. That does not tally with the suggestion that the Government are being generous to the steelworkers. When British Gas was privatised, the value of the free shares given to the employees was less than the cost incurred by the Government in promoting llts privatisation in the United States of America. We are perhaps seeing inconsistency in the Government's approach tonight.
        7.45 pm
        Mr. Clarke: The precise offers that we have made have varied from case to case. 1 am not sure, but I think the proposal that we announced yesterday for employees of British Steel is the most generous offer of shares that we have made so far. It is certainly one of the most generous and there is no question of non-voting shares or anything of that kind.
        We have made offers to the workers in every privatisation that the Opposition have fought. These offers have become increasingly popular with the employees. That is why Labour Members no longer get up during these discussions and flatly attack the idea of employees owning shares. Instead, they come up with alternatives of their own which are not quite the gift-wrapped presents that they seem to be.
        A third of the equity to be given to the workers is not an option which I or my hon. Friend the Member for Darlington find acceptable. The Government have met the underlying desire—apparently of both sides of the House—to give the employees a stake in this company. I ask the House to accept our proposals and to reject the amendments.
        Mr. Stan Crowther: I had no intention of intervening, but as the Minister is not prepared to give way, I must put this important point quickly. As far as I know, the Chancellor of the Duchy has no objection to institutional ownership of shares. I do not think that he will say that he objects to pension funds and insurance companies buying shares in the BSC. If that is the case, why cannot he be consistent enough to accept that an institution which represents the employees should also be entitled to hold shares? It is a simple point which I would like the Minister to answer.
        Mr. Kenneth Clarke: I have no objection to trade unions owning shares; many of them do. I expect that trade union pension funds will take a substantial stake in this privatisation, as they have in others. That will be after the Opposition, to which many unions are affiliated, have fought the privatisation tooth and nail. I do not mind the trade union institutions holding shares as investors, but I dislike the idea that the workers will be given a large number of shares and that the power over the management—which is what interests the Opposition—will be exercised by the trade unions on their behalf.
        Mr. Maxton: The hon. Member for South Ribble (Mr. Atkins)—in whose constituency is that famous bus company—attacked the Opposition earlier for tokenism. I have heard of tokenism, but, by God, the Chancellor of the Duchy's speech was the best piece of tokenism that I have heard from any Minister. [HON. MEMBERS: "It was robust tokenism."] I accept that it was robust tokenism, but it was still tokenism.
        The way that the Minister made his scheme out to be the most generous ever is quite remarkable. He did not answer any of my questions about what percentage of the total share ownership he expects to be owned by employees or how many employees he expects to take up the various aspects of the scheme. Perhaps my hon. Friend the Member for East Lothian (Mr. Home Robertson) was right when he said that all these figures were down to astrology and have little to do with realism.
        It is a generous offer of share ownership for employees, because the Chancellor of the Duchy knows that nobody else will take the shares. Of course he will try to get rid of as many of them as possible to the employees. That will get the shares on the market and enable him to say that the Government are getting rid of some of the shares. That is why, on the surface, the offer is so generous. However, many employees will not take up the share offer. He knows that the steel industry employees, like ordinary people and institutions buying shares, will not consider it to be a particularly worthwhile investment.
        One reason why our scheme is designed to give power and responsibility to workers in the industry, as opposed to giving individual workers a small stake in the industry, is that people—especially those who live and work at Ravenscraig—know that privatisation puts their jobs at risk. However, if they own one third of the company, they will have a say in whether Ravenscraig should close. Under the Government's proposals they will have no say in the matter even if they buy the shares.
        In fact, far from having a say, an employee at Ravenscraig who takes up his allotted number, or perhaps buys more than his allotted number, of shares under the Minister's scheme will be declared redundant, either because of a partial rundown at Ravenscraig or its closure.
        1010
        Then the DHSS will expect him to make a profit of 20 per cent. on each of those shares and will take that profit into consideration before it pays the redundant worker any income support that he may be entitled to. I do not know whether the Minister expects British Steel to pay a dividend of 20 per cent. on its shares. I think that that is rather unlikely, but perhaps he will tell us whether that is the case.
        People will not buy the shares, because they will not give them any protection against the threat of unemployment. Therefore, there is a major difference between the Opposition and the Government. The individual share ownership tokenism in which the Minister is indulging does not give the workers any directors, or any power, and gives them only a small bonus. The Minister has said that workers are entitled to some return for the hard work that they have put in to help turn the British Steel Corporation round. However, if a man has worked for 30 years in that company, his bonus for doing all that work to turn it round and make it a profitable organisation is the princely sum of £130. What a bonus to offer the employees.
        As there are other debates to come and although the Government are indulging in tokenism, as we accept that they will not take on board our genuine and imaginative approach to share ownership in the company, and as there comes a point at which it ceases to be enjoyable to bang one's head against a brick wall, I beg to ask leave to withdraw the amendment.
        Amendment, by leave, withdrawn.

        Clause 16

          CONSEQUENTIAL AMENDMENTS, REPEALS AND TRANSITIONAL PROVISIONS
          Mr. Atkins: I beg to move amendment No. 15, in page 9, line 39 after 'make', insert—
          '(a)'.
          Madam Deputy Speaker: With this, it will be convenient to take Government amendment No. 16.
          Mr. Atkins: Although we are dealing only with amendments Nos. 15 and 16, those amendments, together with amendments Nos. 17, 18 and 20 are consequential on the detailed investigations that have been carried out by my officials to ensure that no necessary provisions have been overlooked in terms of maintaining the status quo when the changes take place. Therefore, they are technical amendments.
          The small extension to clause 16(2)—provided in amendments Nos. 15 and 16—seeks to ensure that the subsection provides a comprehensive safeguard, in case we have omitted or overlooked some necessary provisions in relation to one of the very many pieces of subordinate legislation that affect the corporation.
          Mr. Gould: The Minister spoke, in effect, to all five of the Government amendments. He will want to move the second group formally when the time comes, but I can say straight away that we do not have a problem with that. However, there is a small question mark in our minds about the first group of amendments.
          The addition to clause 16 seems a widely drawn provision. For that reason, I should like to ask the Minister what precedents there are for such a provision.

          1011
          For example, I notice that in clause 83 of the Airports Act 1986, which is often prayed in aid by the Government as establishing the precedent for various provisions in the Bill, follows more or less the structure of clause 16 and that there is no equivalent provision to the addition that is proposed in the Government amendments. Perhaps the Minister owes us a slight explanation of why the amendment is required, given that, as I have said, it is drafted so widely.
          We should also like to know the limitations on the ability that the Secretary of State would be given by that provision. For example, does the Secretary of State's ability extend to the ability to amend primary legislation or is the omission of any reference to that point deliberate? What is the time limit? One assumes that the purpose of the provision is to provide for the possibility of exercising that power after the appointed day—and that power goes on for ever. It is certainly true that the provision, as drafted, speaks in terms of saving or transitional amendments. However, that may not be a substantial safeguard against what appears to be a widely drawn power.
          Therefore, while we do not believe that any great issue of principle is at stake, we should like a slightly fuller explanation of why the additional provision was thought necessary.
          Mr. Atkins: The hon. Gentleman has asked several specific questions. At this juncture, I can only tell him that this follows the precedent of a number of other Acts. I shall endeavour to find out the detail of all the Acts to which he refers, but, as he will understand, there are probably many.
          Mr. Maxton: That means, "Wait and see."
          Mr. Atkins: The hon. Member for Glasgow, Cathcart (Mr. Maxton) makes a sedentary intervention. He should recognise the amount of technical work done by officials to review all the possible loopholes. He is making suggestions, conveniently while he is not in a position to know exactly what his hon. Friend the Member for Dagenham ( Mr. Gould) is asking, let alone what I am about to reply. That does not help us to get to the point.
          The simple answer to the question is that this provision follows the precedent of other Acts. My officials have spent considerable time combing through all the legislation on which orders are made and which protects the position—
          Mr. Brian Sedgemore: It is coming—the information is coming.
          Mr. Atkins: Yes, all the officials have been working extremely hard to ensure that every possible loophole is filled. It is amazing what one can do if one tries. The relevant legislation is section 58(4) of the Merchant Shipping Act 1988, section 34(4) of the Dentists Act 1983 and section 13(5) of the Anatomy Act 1984. Those are the precedents for this provision. I hope that that will reassure the hon. Member for Dagenham.
          Mr. Gould: I am grateful to the Minister for his recital of that largely meaningless list of precedents. Can he now tell us what the provision is about? What is it meant to achieve?
          Mr. Atkins: I can answer those questions. The hon. Gentleman will be aware that under most Acts there are
          1012
          provisions for statutory instruments. We have to ensure that in the event of something being missed—I do not anticipate that anything will have been missed, judging by the amount of work that officials have put in, as they always do, in combing through all the legislation that is affected by enabling legislation such as this—we can save a statutory instrument that has been repealed inadvertently by virtue of an Act being amended, consequent upon this legislation. That is the precedent that we have followed previously and we shall endeavour to do so here.
          The hon. Member for Dagenham was right to spot that there is nothing particularly exotic about the amendment. It is a technical amendment. As ever, he has bowled a quick one, I have flashed and, I hope, not snicked the ball.
          Amendment agreed to.
          Amendment made: No. 16, in page 9, line 44, at end insert—
          '(b) such transitional or saving provision as appears to him to be necessary or expedient in connection with the coming into force of any provision of this Act; and any provision of an order made under this subsection after the appointed day may be made so as to have effect as from that or any later day.'.—[Mr. Atkins.]

          Schedule 1

            PROVISIONS SUPPLEMENTARY TO S/
            Mr. Atkins: I beg to move amendment No. 20. in page 11, line 41, leave out 'and' and insert'(2)'.
            Madam Deputy Speaker: With this, it will be convenient to take Government amendments Nos. 17 and 18.
            Mr. Atkins: Opposition Members will be pleased to know that these amendments bring about a small improvement in the Bill. They ensure that where, for pension purposes, a period of employment with another company is to be deemed as a period of employment with the corporation, that arrangement is not disturbed by the vesting under clause 1, but continues to apply with the successor company substituted for the corporation. This may be relevant, for example, for the purpose of calculating the pension entitlement of a corporation employee who was, prior to 1967, employed by a private sector steel company that was subsequently nationalised.
            Amendment agreed to.
            Amendments made: No. 17, in page 11, line 42, after 'day', insert—
            '(a)'.
            No. 18, in page 11, line 43, after second 'Corporation', insert
            ',and
            (b) any period of employment which would, immediately before that day, have been treated as such employment for the purposes of any such agreement or arrangement,'.—[Mr. Atkins.]
            8 pm
            Mr. Maxton: I beg to move amendment No. 8. in page 11, line 45, at end insert—
            '3A. There shall be no reduction in the value in real terms of the pensions, allowances and gratuities which the successor company becomes liable to pay under section 1 above.'.
            Madam Deputy Speaker: With this it will be convenient to take Government amendment No. 21.
            Mr. Maxton: I reiterate that the Opposition remain adamantly opposed to the concept of the privatisation of

            1013
            British Steel. We believe it to be bad for the economy and bad for the employees. However, as well as opposing, we have a responsibility to ensure that the best protection is available to employees if the privatisation goes ahead.
            Existing employees and past employees now retired are concerned about what will happen to their pensions. Those who are already retired want to ensure that the pensions that they are receiving will continue to be paid to them and will continue to be meaningful in real terms. Those who are paying into the scheme, with the employer paying in as well, want to know that the value of their contributions will remain the same under privatisation.
            We have tabled the amendment in an attempt to draw from the Government the exact nature of their plans. Since then, the Government have tabled amendment No. 21, which is considerably more detailed than our amendment No. 8. The Government have hard-working advisers who can give them help which, unfortunately, we do not have.
            I am happy to keep my remarks brief and invite the Minister to explain the Government's amendment.
            Mr. Morley: I appreciate that the Government have tabled an amendment that in some respects strengthens the protection of the pension fund. However, many British Steel workers in my constituency are worried about the future of the pension fund. In other companies there have been attempts to use pension funds as part of investment programmes. In some instances there has been a great deal of discontent and disagreement about the way in which the pension fund should be used.
            When the BSC is floated, the Government will have no involvement or control. I appreciate that the Government have responded to some of the fears that have been expressed for some time about the future of the pension fund, but I hope that the Minister will give some reassurances that I can pass on to my constituents to the effect that the value of the fund will be protected. I seek also some safeguards on the way in which the fund will be used in future.
            Mr. Atkins: Amendment No. 21 fulfils the promise that I made in Committee. The purpose of the amendment is to ensure that the repeal of schedule 3 to the Iron and Steel Act 1982 does not affect the continuation in force of any pension scheme, or any person's rights or liabilities in relation to any pension scheme, or the rights of any dependants, that derive from regulations that have effect as if made under that schedule. As I said in Committee, the amendment safeguards the continuity of the pension scheme after the appointed day, when schedule 3 to the 1982 Act is repealed.
            The hon. Member for Dagenham (Mr. Gould) placed great weight in Committee on the power in paragraph 2 of schedule 3 to the 1982 Act to enable regulations to amend or repeal pension schemes provided that persons affected are not placed in any worse position. That provision does not, however, provide the general guarantee that he suggested. The BSC's present pension scheme is the responsibility of the corporation and the trustee, within the terms of the trust deed. I can assure the House that the corporation's firm intention, as I think I predicted in Committee, is that its present pension scheme will go forward unchanged into the private sector. Pensions should therefore continue to be provided subject to, and in
            1014
            accordance with, the present trust deed, at least as far as present employees and pensioners are concerned. I understand that the corporation will shortly be making the position clear to all its employees.
            The imposition of a statutory requirement on the successor company and the trustees of the pension scheme of the sort proposed by amendment No. 8 is unacceptable to the Government. There is no such statutory constraint on the corporation at present. It is the terms of the trust deed that govern the corporation's pension scheme at present, and should continue, in our view, to apply to the successor company. That provides a very substantial assurance to all British Steel's pensioners and employees that their rights will be looked after.
            As I said in Committee, there are 28 directors of the trustee committee, of whom 14 represent the work force. The trustees are bound both by the provisions of the trust deed and by a substantial body of trustee legislation to act at all times in the interests of the trust's beneficiaries. That is the overriding consideration affecting the activities of all trustees. The ability of British Steel plc to alter its pension scheme will therefore be heavily circumscribed.
            British Steel's pensioners and employees have the assurance that all their present pension rights will pass unchanged to the successor company, and British Steel's clear intention is that they will continue unchanged into the private sector. Of course, I cannot offer absolute guarantees about the future any more than I could if British Steel were to remain a nationalised industry, but both the Government and British Steel are very well aware of the importance of this issue and fully understand the concerns that have been expressed.
            Mr. Morgan: The Minister has said that 14 of the 28 trustees of the corporation's pension fund represent the work force. I take it that he means that the 14 were appointed through the representative trade unions of the work force, as is common in nationalised industries. Given the remarks of the Chancellor of the Duchy of Lancaster about employee share ownership schemes—the right hon. and learned Gentleman poured much derision on the idea that trade unions might represent the work force in terms of proxy voting through their shareholdings—does the right hon. and learned Gentleman envisage any changes in the rights of the work force to have 50 per cent. trustee representation on the pension fund? Is that to be altered in any way so that trade unions will not be permitted to act through their general secretaries or other officers as the trade union half of the trustees of the successor company's pension fund?
            Mr. Atkins: The hon. Gentleman makes as convoluted a point now as he made in Committee when we discussed this issue at length. I promised in Committee that we would seek to persuade British Steel—British Steel seemed to have been persuaded—to maintain the same trust and pension fund when it became a privatised company as that which had applied in the past. The detailed arrangements of the constitution of the trust and the alterations to the trust are doubtless familiar both to the trade unions and the board of British Steel as it is now and as it will be. If there are to be amendments, they will be discussed through the normal channels within the company. If alterations have to be made, they will follow.
            The position will be the same in future, as near as we can guarantee, as it is now. We cannot give absolute

            1015
            guarantees, because the position under a privatised company or a nationalised company cannot be guaranteed absolutely. For example, I cannot predict whether the world will end tomorrow.
            All the signs are that, while the position of the pension fund is being reviewed, the liabilities will be adequately provided for. I understand the reasons that led to the tabling of amendment No. 8, but given the detailed spelling out of the meaning of amendment No. 21, which confirms the position as was and as will be, I hope that the Opposition will withdraw their amendment and support amendment No. 21.
            Mr. Maxton: I think that we would all like a slightly fuller explanation of the scheme. I understand that the Minister cannot give absolute assurances on the future of the pension scheme, and I am grateful to him for putting into the Bill some form of control over the new private company, but I should like to know whether the corporation is saying that, if someone joins the privatised company, he or she will be offered the pension scheme that we are discussing along with existing employees who will continue with it. Will someone who joins the company get the same pension scheme? I am not entirely clear about the relationship between British Steel's pension scheme and other public sector pension schemes. Will it have the same transferability rights as other pension schemes? Will people be able to pay into it and take out of it as they move?
            Mr. Atkins: The hon. Member knows that there is considerable precedent for this in other privatisations. I said, when I served on my first Standing Committee discussing British Aerospace, that pensions were one of the most important elements in any privatisation, and they still are. I undertook to bring forward on Report—as I have done—the Government's view on what the future pension scheme would be in relation to the past one, and I have explained that.
            It is for the company to make a detailed statement to employees in the near future—I am not sure exactly when. The future pension scheme for new employees will be spelt out, but I cannot say at this stage exactly what its terms will be, largely because it is still being worked out. It would be folly to suggest what might be in it.
            Pensioners and employees in the company will have a pension scheme that is, to all intents and purposes, exactly the same as the present one—except that I cannot give a guarantee about it, for the reasons I have given.
            Mr. Maxton: I suppose that it is pleasant to end the Report stage on a note of amicable accord, because we welcome the Minister's guarantee, although it is not as absolute as we would have hoped. We wish that privatisation was not taking place and that the employees could remain in the public sector. Given that they cannot, this is about as good an assurance from the Government as we are likely to get, and I welcome it as such.
            Accordingly, I beg to ask leave to withdraw the amendment.
            Amendment, by leave, withdrawn.

          Schedule 3

            TRANSITIONAL PROVISIONS AND SAVINGS
            Mr. Atkins: I beg to move amendment No. 19, in page 16, line 18 at end insert
            'any sum by virtue of paragraph 3 above or'.
            The amendment puts right a minor omission in the Bill and ensures that the Secretary of State remains under a duty to account for any outstanding Government loans made to the corporation before the appointed day that vest in the successor company.
            Amendment agreed to.
            Amendments made: No. 21, in page 16, line 19 at end insert—
            'Pensions and compensation payments
            7A.—(1) The repeal by this Act of Schedule 3 to the 1982 Act (pension rights of employees shall not affect—

            (a) the continuation in force of any pension scheme subsisting immediately before the appointed day in accordance with any regulations which then had effect as if made under that Schedule, or

            (b) any person's rights or liabilities then subsisting in relation to any pension scheme by virtue of any such regulations.

            (2) In sub-paragraph (1) above "pension scheme" means a pension scheme within the meaning of Schedule 3 to the 1982 Act.
            7B.—(1) Any provisions of the Iron and Steel (Pensions) (Dependants) Regulations 1969 having effect immediately before the appointed day as if made under Schedule 3 to the 1982 Act shall continue in force (subject to the following provisions of this paragraph) notwithstanding the repeal by this Act of that Schedule.
            (2) Any reference to the Corporation in those provisions shall have effect, as respects anything falling to be done or occurring on or after the appointed day, as if it were a reference to the successor company.
            (3) Those provisions may be amended or revoked in like manner as if Schedule 3 to the 1982 Act had not been repealed (but the reference to the Corporation in paragraph 4(2) of that Schedule shall be construed as a reference to the successor company).
            7C.—(1) Where—

            (a) any regulations made under section 24 of the Iron and Steel Act 1953 (compensation to employees of certain nationalised companies or of the Iron and Steel Corporation), or

            (b) any regulations having effect as if made under paragraph 2 of Schedule 4 to the Iron and Steel Act 1975 (compensation to employees of certain nationalised companies or of the Iron and Steel Board).

            are in force immediately before the appointed day, any such regulations shall continue in force (subject to the following provisions of this paragraph) notwithstanding the repeal by this Act of paragraphs 7 and 8 of Schedule 6 to the 1982 Act (saving for compensation regulations etc.)
            (2) Any reference to the corporation (including any reference which fell to be construed as such a reference immediately before the appointed day) in any regulations continued in force by virtue of sub-paragraph (1) above shall have effect, as respects anything falling to be done or occurring on or after that day, as if it were a reference to the successor company.
            (3) Any regulations continued in force by virtue of sub-paragraph (1) above may be amended or revoked in like manner as if the provision mentioned in paragraph (a), or (as the case may be) paragraph (b), of that sub-paragraph had not been repealed (but any reference in that provision to the Iron and Steel Holding and Realisation Agency or to the Corporation shall, unless the context otherwise requires, he construed as a reference to the successor company).'.—[Mr. Atkins.]
            Mr. Atkins: I beg to move amendment No. 22, in page 16, line 19, at end insert—
            'Savings in connection with transfers to the Corporation
            7D. The repeals made by this Act shall not affect—

            1017

            (a) any document or other thing which has effect immediately before the appointed day subject to any modifications prescribed by the Steel Companies (Vesting) Order 1970, or

            (b) anything not falling within sub-paragraph (a) above (other than an enactment) which then has effect or is continuing subject to, or to modifications in consequence of, the substitution of the Corporation for any other person or body;

            but, as from the appointed day, anything falling within sub-paragraph (a) or (b) above shall be further subject to such of the provisions of paragraphs 1 to 3 of Schedule 1 to this Act as are applicable.'.
            This amendment is a technical provision designed merely to ensure that the statutory vesting under clause 1 and the subsequent repeal of the 1982 Act do not disrupt existing arrangements or entitlements.
            Amendment agreed to.
            Mr. Atkins: I beg to move amendment No. 23, in page 16, line 30, leave out 'during that period, shall' and insert 'which is relevant to the making of that distribution, shall accordingly'.
            This is a technical amendment that follows precedence in earlier Acts. If the hon. Member for Glasgow, Carthcart (Mr. Maxton) wants me to spell it all out again I shall have to seek advice.
            Amendment agreed to.
            Order for Third Reading read.
            Motion made, and Question proposed, That the Bill be now read the Third time.
            8.14 pm
            Mr. Crowther: No one in the steel industry, whether employed directly by the BSC or working for a firm in which it has a substantial shareholding, can view the future with anything but great trepidation. Throughout the debates on this Bill, my hon. Friends have tried to introduce changes which would have improved the security of the industry and its work force in various ways. We welcome the minor provisions on pensions, but it seems unfortunate that the Opposition had to press the Government to make even those small concessions. The Government should have thought of them themselves.
            Otherwise, the Government have conceded nothing. They are throwing the BSC naked back into the private sector jungle from which it had to be rescued in 1967. The Bill is ideological—nothing else: so much is clear at the end of all these debates. Not the slightest commercial justification for the privatisation of British Steel has been advanced throughout the debates. The Government say only that it belongs in the private sector. Why does it belong there? No one has given us a good reason.
            If the BSC belongs in the private sector, why did not the Conservative Government who were returned to power in 1970 put it back there? Why did not this Government put it back in 1979, or in any of the eight subsequent years? We, and they, know the answer. They knew that the industry needed investment on a scale that the private sector could not or would not provide. So they brought in Mr. MacGregor to preside over the destruction of 111,000 jobs, the financial costs of which had to be met by the taxpayers and the social costs of which are still being suffered in steelmaking areas such as mine, where massive unemployment is still the order of the day.
            1018
            Now, because of these measures and because BSC now has modern plant—thanks to public investment—a greatly reduced work force and a high level of productivity, it is making a bit of profit—but not a lot. So the BSC has to go back to the private sector, which was so disastrous for the industry in the past. It is returning to that sector with no assurance that adequate resources will be available for new investment or that all its present plant will remain open. It returns with no assurance that it will continue to be profitable under the burden of increased electricity charges and the adverse exchange rates that are now beginning to affect it; and with no assurance that it will not be gobbled up by its ruthless foreign competitors. So, an industry which has been brought back to a state of high productivity and efficiency because by public ownership is being thrown back into the jungle. This is a sad day for the British steel industry and all who are associated with it.
            8·17 pm
            Mr. Kenneth Clarke: I am grateful to the hon. Member for Rotherham (Mr. Crowther) for starting the debate. I am not sure whether he moved the Third Reading—it is unlikely in the light of his comments—
            Mr. Crowther: On a point of order, Madam Deputy Speaker. You will recall that no one appeared anxious to make a contribution until I got on my feet. If the Minister had been present, he could have moved the Third Reading.
            Madam Deputy Speaker: I confirm that the hon. Member for Rotherham (Mr. Crowther) was the only one who rose at that time.
            Mr. Clarke: We all wait for the words of the hon. Member for Rotherham about the steel industry, and I am glad to have conceded the first word to him.
            I agree with the hon. Member for Rotherham that the issue we are debating is whether the British Steel Corporation should be owned by the state and remain in the public sector. This is an enabling Bill, to enable the corporation to be turned into a Companies Act company in which the Government will own all the shares for a short time before we proceed to flotation at the end of this year, at the earliest—or as soon thereafter as possible, if that does not prove possible.
            The Opposition remain opposed to the whole principle and we have one last opportunity to talk about whether a giant and important manufacturing company such as British Steel will do best as a state-owned company or whether it should be returned to the private sector. The hon. Member for Rotherham said that the company belongs in the state sector. I assume from the gist of most of the Opposition comments during the hours of debate on the Bill that they will restate their preference for state ownership. I have listened to the nuances of the debate during the course of protracted exchanges, and questions arise in my mind about exactly what ground now stands between us and the Opposition.
            I am not quite sure why the Labour party continues to prefer state ownership. I am no longer at all clear what form of state ownership the present day Labour party wants. I have listened to the debates but I still do not know what alternative future the Opposition propose for the industry. The hon. Member for Dagenham (Mr. Gould) vehemently refuses to say what any future Labour Administration would do if we proceed to privatisation and return the company to the private sector.
            Mr. Gould rose—
            Mr. Clarke: At this late stage, the hon. Member for Dagenham is about to tell us whether the steel industry would be renationalised by a future Labour Government.
            Mr. Gould: It may be a late stage for the Chancellor of the Duchy of Lancaster, because he was not a member of the Committee and was not present at any of the Committee sittings. If he had attended, and certainly if he had taken any interest in the proceedings, he would have discovered that, repeatedly, day in and day out, we made very clear our preference for public ownership. We also made clear our view that the status quo has served the British steel industry extremely well. Any mystery that remains in his mind could have been dispelled if he had bothered to listen to or read the many speeches that I and my hon. Friends made in Committee.
            Mr. Clarke: Once again, the hon. Gentleman has evaded the question that I put to him. Of course I understand that he has consistently stated a preference for public ownership. By its vote later tonight, the Labour party will be expressing its preference for the status quo. Whether that means that the Morrisonian corporation is in the opinion of the Opposition a desirable and permanent future status for the steel industry is very doubtful.
            The Opposition are not clear what form of state ownership they want, and the question that the hon. Gentleman rose to answer is one that he has consistently declined to answer. Given that he and all his hon. Friends know that we will return the corporation to the private sector, will he tell the House whether the Labour party would renationalise it? The Opposition have declined to answer that question. There are considerable difficulties in understanding what the Labour party means by a state-owned industry, and we do not know whether it is still wedded to the Morrisonian corporation, which, by their vote, the Opposition will appear to defend at the end of this debate.
            As the hon. Gentleman said, I was not a member of the Committee, but I studied its proceedings. I noted in particular that the hon. Member for Great Grimsby (Mr. Mitchell) who has been very active throughout proceedings on the Bill, although he is not in the Chamber at the moment, said in Committee when discussing a new form of public ownership:
            "Perhaps we should have thought of it earlier, because I concede that there are disadvantages to the Morrisonian corporation which has been the traditional form of nationalisation. The Labour party is thinking actively and strenuously about new varieties of ownership, involving the workers and making commercial returns and imperatives available to nationalised industries."—[Official Report, Standing Committee D, 14 April 1988; c. 524.]
            That sits oddly alongside the commitment to vote for the retention of the Morrisonian corporation whose existence the Government are about to bring to an end.
            I shall try again from another quote. The hon. Member for Great Grimsby said that the amendments that the Committee was discussing
            "propose that British Steel should demonstrate a track record before privatisation.
            We are not standing in the Government's way and saying, 'Thou shalt not privatise'. We are saying that we should privatise taking into account all the sense and virtues that the Government tell us are to be found in the Conservative party—the feeling of financial markets, financial rectitude and financial responsibility—by establishing a track record before
            1020
            this important national asset is launched on an uncertain sea."
            —[Official Report, Standing Committee D, 10 March 1988; c.59–60.]
            Both those quotations might leave the thought in some people's minds that the meaning is not altogether clear. Given that we are debating the principle of state ownership, the opportunity should be taken to make the meaning clear about the Labour party's position and the vote that it intends to cast.
            These curious excursions by the hon. Member for Great Grimsby match some of the statements by the Labour party's allies in the trade union movement. Mr. Roy Evans, the general secretary of the Iron and Steel Trades Confederation, said in the ISTC journal of February 1988:
            "In a highly competitive industry, the most efficient companies will survive and prosper. The industrial relations structure in steel must be rationalised to avoid any possibility of obstacles in the way of efficiency … The road to privatisation is not going to be easy, but we cannot present it without closing down the industry and putting all our jobs at risk. So we should use the opportunity to play a constructive role in creating a modern, profitable and humane industry able to provide guarantees of well-paid jobs for ourselves and our children."
            That leads us to the problem of the Labour party telling the House only that it prefers public ownership. All it will do is vote against the Bill in an attempt to retain the status quo. We know that that is not an alternative to the policy contained in the Bill and it leads us to a great problem. The Government say that this company will flourish and will be managed better, will perform better and will give a better future to its employees and certainly to its customers in the commercial arena as a private sector company. What is the Labour party saying? It is a listening party and will not have an industrial policy for a couple of years after the next election. The Opposition are in no position to cast a calculated vote for anything.
            Dr. Reid: Such is the Minister's grasp of the flexibility with which the Opposition are approaching the whole question of social ownership that I would be tempted to vouch for him as a future Minister in a Labour Government, except that in my hon. Friend the Member for Dagenham (Mr. Gould) we have a better candidate.
            The Minister finds it difficult to understand how we can oppose the principle of privatisation while in Committee we suggested ways in which it could he carried out in a better form than the way in which the Government propose to carry it out. May I quote to the Minister the parable that he has not read in Hansard and which I had to give to the Under-Secretary? We are opposed to violence but would rather be slapped in the face than shot through the head. The manner in which the Government are privatising the industry is a shot through the head for the industry, its workers and the taxpayer. We are suggesting within the privatisation format ways in which the Government could improve their approach to privatisation if they are intent on sticking to it.
            Mr. Clarke: With respect to the hon. Member for Motherwell, North (Dr. Reid) that is all very well for amendments when the Opposition can claim that they accept privatisation because it is forced upon them and they are seeking to improve it. At the end of the debate, they will vote on the principle of the Bill and will vote for public ownership. I am talking about the flexibility of the hon. Member for Dagenham and wondering where this flexible reasoning is leading the Labour party.

            1021
            These questions are crucial to Motherwell and elsewhere. What is the future of the steel industry and what do the Labour party propose? The Opposition defend nationalised industry, but what kind of nationalisation do they contemplate? The hon. Member for Dagenham is nodding and I am sure that he will speak on Third Reading. This is my best opportunity so far to discuss the matter with him, and where better than across the Dispatch Box? I thought that I would be discussing it with him on "Newsnight" on 9 May.
            The hon. Gentleman emerged as the author of a Labour party document on the future of public ownership and he and I were invited to have a discussion. However, the hon. Member for Dagenham made representations to the BBC and would not discuss the matter with me.
            Mr. Michael Foot: On a point of order, Mr. Deputy Speaker. We are all fascinated by the fantasies of the right hon. and learned Gentleman, but is it not a convention of the House, preceding even the presence of the right hon. and learned Gentleman in high office, that Third Readings should be devoted to discussing what is in the Bill? It is very different even from Second Reading. When does the right hon. and learned Gentleman intend to come to order?
            Mr. Clarke rose—
            Mr. Deputy Speaker (Sir Paul Dean): Order. I am grateful to the right hon. Member for Blaenau Gwent (Mr. Foot). I have only just come to the Chair and I am getting the distinct impression that both Front Benches are probably not keeping to the straight and narrow. May I remind the House that Third Reading speeches must be confined to the contents of the Bill?
            Mr. Gould: On a point of order, Mr. Deputy Speaker. The Opposition Front Bench has not yet risen to take part in the Third Reading debate.
            Mr. Deputy Speaker: I was going by my impression of the atmosphere of the House, and I am looking to both Front Benches to set a good example to assist the Chair.
            Mr. Clarke: I accept your guidance, Mr. Deputy Speaker. I have the greatest respect for the right hon. Member for Blaenau Gwent (Mr. Foot), so if I talk about his seniority, it is not out of disrespect. The old Labour party has risen to the rescue of the new. It may be—I accept your ruling, Mr. Deputy Speaker—that protracted discussion about the position of the Labour party is as impossible on this occasion as it proved to be on "Newsnight". Nevertheless, it is relevant to the content of the Bill and to whether or not the Bill will receive the support of the House that we should know what is the Labour party's view of public ownership.
            I am sure that it is not beyond the ingenuity of the hon. Member for Dagenham to help us, although I know that he and his hon. Friends have avoided this question for at least 80 hours in Committee and many more on the Floor of the House. The Labour party has the opportunity—I am sure that it can slip it in within the rules of order—to give us some enlightenment about what kind of nationalised industries it now favours and what kind of nationalised industry it is seeking to defend.
            1022
            I shall revert to order. The right hon. Member for Blaenau Gwent wishes to know about the Bill. It is an enabling Bill, which will enable the Government to transfer the status of British Steel from a public corporation to a Companies Act company in which the Government will own all the shares. The Government intend to sell the shares at an appropriate time, thus returning British Steel to the private sector—the right and proper place for it. The Bill does not dictate the timing or manner of privatisation, but as I have told the House, it is our intention to privatise British Steel as soon as is practical and as a single entity in its present configuration.
            The essence of the Bill is that all the property, rights and liabilities of the corporation will vest in a successor company. That company will be a Companies Act company, limited by shares that will be wholly owned by the Government. Therefore, while there will be a change in the legal status of British Steel, from corporation to plc, there will be no material change in its commercial activity or the extent of its assets and liabilities.
            The successor company will require a capital structure compatible with the requirements of the Companies Act. Therefore, the Bill makes provision for the necessary financial restructuring of the corporation. These provisions constitute simply a rearrangement of the balance sheet and are not a write-off of liabilities or a subsidy. We discussed this at length on Report. No money changed hands at any stage. The first step is to reduce the corporation's public dividend capital in order to write off past trading losses so that the capital shown in the balance sheet will accurately represent the value of the assets. This process is not a write-off of debts. Past trading losses are not debts—they are a record of past losses which have been incurred, accounted for at the appropriate time, and recorded in the balance sheet. They represent public money that is lost and gone for ever, during the record of the company as a nationalised company.
            It is not true to say, as Labour Members, including the hon. Member for Rotherham, have tried to imply throughout our debates, that the taxpayer will receive a raw deal either from the capital reduction or from the privatisation. It is a completely unrealistic estimate of what the taxpayer ought to receive to say that he should receive back all the money that he has put into the corporation in the past. That money has been used to fund past trading losses. It represents the cost of keeping uneconomic capacity going for too long and it also met the costs of rationalisation. That money is lost and gone. It represents in large measure the cost of imposing decisions on the business that often did not accord with commercial realities, and it is unrealistic to suggest that the money should be repaid.
            If the Opposition were to win the vote this evening, that money would never, and could never, be repaid. The corporation has not paid a dividend since 1975. Even with the payment of a large and regular dividend from now on, the corporation could never repay to the state what it has received from it, and it is unrealistic to think otherwise. The taxpayer will get the best available terms through privatisation, because whatever value is realised from the proceeds of the sale would be considerably greater than whatever is realised in many years of dividend payments.
            That is the essence of the Bill, and that is in order. The House is riveted by a speech that is in order on Third Reading, but I hope that my minor excursion earlier will arouse a somewhat wider response from the hon. Member

            1023
            for Dagenham. He shares with me the view that this is a vital industry, and we wish British Steel and those who work in it great success in the future. When the hon. Member was talking about the importance of such utilities on the programme to which I inadvertently returned earlier, he said:
            "When you see the document you will see we set out our broad approach, which certainly talks about the general and unique importance of the major utilities as servants of the economy, as deliverers of services to consumers, as providers of essential facilities to the national economy. And that leads us to certain conclusions. But we don't, by any means, rule out, indeed we specifically recognise that in some instances some form of ownership, or control, in addition to the regulation that we initially refer to, that some form of ownership or control may well be required."
            He then set out some options. He continued:
            "But we have yet to do the work which will enable us to decide exactly what form that should take, and in what instances."
            That is his policy. Ours is the one that I have described and that is embodied in the Bill, and ours is a tribute to the success of the corporation and its work force.
            We recognise the enthusiasm and commitment of the management and the work force, which have turned around the performance of the corporation. That is why the package of benefits that I have described will be available to the employees on flotation. We anticipate that, on its return to the private sector, BSC will continue to thrive. It will be better able to respond quickly and flexibly to the market conditions. It will not be subject to the control of the Treasury or Ministers. It will not, thank heavens, be subject to the trade union control that the Opposition were urging upon us as an improved form of private sector ownership.
            The BSC is now one of the most profitable steel producers in the world. Its record of achievement in recent years is impressive and the results are plain for all to see. It has continued to invest in its business and to improve efficiency and productivity. We believe that British Steel's future is best assured in the private sector, subject to no more and no less a degree of Government regulation than any other private sector company.
            The Bill enables the Government to set in motion the transformation from nationalised corporation to private sector plc. We know what we want. We have an extremely clear policy. We believe that this policy is backing the BSC and all who work in it, and offering them a better future. I do not believe for one moment that the Opposition have the slightest idea of what they propose to do with the steel industry or any other major industry, yet they are about to cast a vote that clings to the old Morrisonian corporation because they cannot think of anything better and they certainly cannot agree among themselves on anything better. As we have a clear policy, taking forward the logic of our position, I commend the Third Reading of the Bill to the House.
            8.37 pm
            Mr. Gould: I suppose I should find it flattering that the Chancellor of the Duchy of Lancaster tried so hard, even though it meant that he strayed out of order, to deal with remarks that I have made on television rather than trying to explain the Bill. However, I will not follow him in that course because I propose to stay in order and devote my brief remarks to the Bill. After all, the Government have
            1024
            introduced this Bill and we must respond to it. I hope that the Chancellor will be satisfied by the end of my speech, and that he will realise that our position is clear.
            The Bill began with the statement that the right hon. and learned Gentleman made on 3 December, but it began with a mystery. We tried to unravel that mystery in Committee, in a process that took many hours, during which we had to do without the help and assistance of the Chancellor. Despite our hard work, we got nowhere near unravelling the mystery of why the Bill was introduced at this time. We learned a little more about the Bill, but not much. Ministers were not very forthcoming about the reasons for its introduction and were extremely shy about answering one specific question. It may be that, now we have the Chancellor here, I will be able to do what he could not, and ask a question that is in order. Why was the Bill suddenly introduced when it had not been presaged by any reference to it either in the Conservative party manifesto or in the Queen's Speech?
            We found that puzzling. Rather fruitless efforts were made by some Ministers in Committee to assure us that all sorts of footling little measures might be slipped through without being mentioned in the Queen's Speech, but that is not a good answer. We thought that that answer did not attach sufficient importance to this measure. If, as we suspect, the Government regard it as an important measure, it would have been reasonable to expect some reference to be made to it in the Queen's Speech.
            Of course, as the Chancellor knows, reference was there none. We are interested to know why, between drawing up the Queen's Speech and the Conservative party manifesto and the statement on 3 December, there was some sudden change of heart and some reason was considered to be sufficiently pressing to induce the Chancellor and his Department to bring forward the Bill. We received no answer in Committee, but I hope that the Minister will now offer us an explanation.
            Mr. Kenneth Clarke: I am sure that the hon. Gentleman will recall that statements from Conservative Ministers that the aim of the policy of this Government was to return the British Steel Corporation to the private sector as soon as it was practicable and reasonable to do so go back to well before the last election. It is true that there was no specific reference to it in the manifesto, but there was in speeches, and there certainly was in the campaign guide produced by the Conservative party, which I am sure is consulted as regularly by those at the headquarters of the Labour party as it is by those at the headquarters of the Conservative party.
            In the course of the year, British Steel's recovery became so fast and so strong that it was quite obvious—certainly when we received the half-yearly results—that its performance had reached a stage at which it was ready to return to the private sector, and therefore we proceeded. It was trailed in the Gracious Speech by the words
            "Other measures will be laid before you."—[Official Report, 25 June 1987; Vol. 118, c. 40.]
            Other measures were.
            Mr. Fallon: Will my right hon. and learned Friend give way?
            Mr. Clarke: If the Government can move so steadily and purposefully towards our stated intentions, why does

            1025
            it take the Labour party so long to decide whether it will renationalise the company once we have returned it to the private sector?
            Mr. Gould: I am surprised that the Chancellor should follow the faltering footsteps of his junior ministerial colleague, as that is exactly what he told us in Committee. We found it pretty unconvincing; the whole Committee found it pretty unconvincing. Judging by the attempt of the hon. Member for Darlington (Mr. Fallon) to intervene in the Minister's intervention, I suspect that he too found it pretty unconvincing.
            Mr. Fallon: I intervened to help not the hon. Gentleman but my right hon. and learned Friend. There is a much clearer and more obvious text than that rather dubious phrase from the Queen's Speech. If the hon. Member for Dagenham (Mr. Gould) will look closely at the 1987 Conservative manifesto, he will find a sentence reiterating the Government's commitment to returning all state industries to the private sector. The British Steel Corporation is a state industry; therefore, it is being returned to the private sector.
            Mr. Deputy Speaker: Order. I hope that we shall not spend too long on manifestos. We should be discussing the Third Reading of the Bill.
            Mr. Gould: I am very happy to do so, in the comfortable knowledge that the hon. Member for Darlington has agreed that the reason advanced by the Chancellor is pretty dubious. We are all agreed on that.
            The origins of the Bill go back not just the few years to which the Chancellor referred, but perhaps 25 years. That is as long as Conservative Ministers have promised to privatise the steel industry. The very generality of the commitment, as the hon. Member for Darlington explained, and its long history lead us still to be puzzled about why the Bill was brought forward with so little fanfare and so little notice. That mystery remains unresolved.
            A possible explanation which, to some degree, is borne out by what the Chancellor has just said is that it suddenly occurred to the Chancellor, the Secretary of State and his Department, that a window of opportunity had opened. That window of opportunity was based entirely on the current, but possibly short-lived, profitablity of the British Steel Corporation. With their very sensitive regard for the competitiveness and profitability of British industry, they knew that that window of opportunity would close very shortly. Perhaps they knew last year that the Prime Minister would win the famous battle over the exchange rate, and that the pound would rise to the dizzy heights of DM3·18, or whatever it stands at today, and that that would place a very large question mark over the prospects of the steel industry and the corporation.
            For all those reasons—one can picture the scene—those very wise and clever people who sat with us throughout the passage of the Bill in Committee and who are present in the box today said to the Minister and to the Secretary of State, "It looks good for the moment, but if you want to privatise it and get some sort of price from the market, you had better do it in a hurry." That is why the Bill was suddenly rushed forward.
            1026
            As my hon. Friend the Member for Rotherham (Mr. Crowther) made clear, once one has unravelled the mystery, the Bill is clearly born of ideology. There is all the familiar rhetoric of liberalisation, competition and the drive for efficiency, but none of that hangs together. The hon. Member for Darlington and I probably agree that yesterday we established that none of that could apply, since privatisation had nothing to do with liberalisation. In this instance, it was the very careful preservation of monopoly. Therefore, there is no reason to expect a privatised British Steel Corporation suddenly to feel the full force of market pressures because nothing will change, except that this time, instead of being publicly accountable, the industry and the corporation will be answerable only to those who want to make an immediate profit.
            Throughout the Committee, and again yesterday, the astonishing doctrine was advanced that we need not worry too much about the monopoly which was being enshrined in this form of private ownership because British Steel, even in its new privatised form, would be kept under control by the market pressures exercised by imports. By implication, we were asked to conclude that the level of imports and the penetration of imports in the British market—no doubt that applies across the board to cars, ships and manufactured goods—is nothing to worry about. Indeed, it is to be applauded as a great success of Government policy.
            As the tide of imports washes over British industry, closes down British firms and throws British workers on the dole, as the level of import penetration rises for virtually every manufacturing industry, it is to be regarded as a great triumph as part of the Government's much touted but extremely elusive competition policy. They do not have much else by way of a competition policy. We look in vain for the criteria which they might wish to apply. Ever-rising imports are the Government's competition policy. That is an extraordinary doctrine, which certainly is rejected by the Opposition.
            Stripped of all the rhetoric and dogma about competition, efficiency and liberalisation, as the right hon. and learned Gentleman made clear in his speech, there is the simple belief, unsustained by any evidence—a gut feeling, no doubt—that it is right for the industry to be in private hands and that the concept of private ownership and the search for private profit, whether it produces better or worse performance, or whether it increases efficiency, do not matter; the mere fact of private ownership and private profit is ipso facto a good thing.
            The Minister and his right hon. and hon. Friends are entitled to that view, but we are entitled to ask for a little more evidence. We are not convinced by that simple assertion of faith by Ministers, because we are prepared to look at the experience of the ownership of the industry. We know, and Ministers know, that, historically, the private ownership of the industry has been a disaster. Time and again, private owners have not been prepared to make the long-term commitment and investment in an industry which is essentially cyclical.
            It is in the nature of private ownership and private owners and the drive for private profit which is so admired by Ministers, it is in the nature of that attitude towards industrial ownership, that when the going gets rough one bails out, closes down capacity, and abandons the industry. That pays no attention whatsoever to the national economic interest, to the rest of the industry or to

            1027
            the work force whose livelihoods depend on that industry. That is in the nature of private ownership. Because there is no match between the short-term interests of private owners and the long-term need of the industry for a commitment and an investment pattern to carry on through the troughs as well as the peaks, private ownership has consistently failed the steel industry. That is why we are in no doubt that the Bill must be opposed. We believe that it jeopardises the future viability of an essential British industry.
            If the industry were placed at risk, as we believe that it is by this measure, it would matter considerably to the British economy. The Minister recognizes—at least, he mentioned it in his speech—the importance of the industry. There were occasions in Committee—we had long debates on this sort of issue—when Ministers and others suggested that the industry has a certain importance but that they can take it or leave it. They seem to think that it is no different from any other industry and that if it went down a little it would not matter. We do not take that view. We believe that it is a strategically important industry. It is perhaps not at the commanding height that it once was because we recognise that new technology and new production methods have introduced new materials and so on. However, it is still an industry of major strategic importance.
            There was some debate in Committee as to what was meant by the word "strategic". Effort was made to limit its meaning to its military sense. Of course there is a military sense in which steel is strategically important; I accept that. However, it is strategically important in a wider sense. It is one of the foundations and sinews of our industrial economy. If we were to have a substantially weakened steel industry by virtue of the failures of private ownership, I am certain that we would be dealing a mortal blow to much of our industrial economy.
            The Government may be willing to get shot of the industry on almost any terms for reasons of their own ideology. They may be prepared to take that sort of risk with our industrial future. We do not believe that that risk is justified. For the avoidance of doubt—there have been occasions during the passage of the Bill when doubts have been expressed by Conservative Members—let me make it clear—I have the authority to speak on behalf of the trade unions as well—that we are opposed to privatisation. That is why we will vote against the Bill.
            It is true that, while repeatedly and firmly making our opposition to privatisation clear, we have also been realistic enough—when we are not realistic enough we are criticised, and quite rightly—to recognise that, with the Government's present majority, it is likely that the Bill will reach the statute book. As well as expressing firmly our reasons for opposing the principle of the Bill, our duty and obligation has been to try to ameliorate its bad effects as best we can. I am sorry to say that we have had little success in doing that, partly because the Bill concentrates on the relatively narrow objective of restructuring the British Steel Corporation, but partly because Ministers simply rejected any argument on the basis of a simple ideology which we reject.
            We have tried to ameliorate the short-termism built into the Bill. We object to the emphasis on private profit, the emphasis on profitability now and in the immediate future. We object to the fact that that means that attention is diverted from the investment that is so badly required. We have tried repeatedly in various ways to ensure that
            1028
            investment is recognised as an obligation of the new owners, whoever they may be. The Minister and the Government have resolutely resisted those attempts.
            We have been extremely concerned for employee representation in varying ways. The concept of worker directors, which has worked extremely well in the British Steel Corporation until now, is to be lost. Ministers have expressed little concern about that. We believe that that is important and would have been an important amelioration of the Bill.
            We are extremely concerned about the inadequate protection against takeovers, particularly foreign takeovers. It is true that the Government brought forward a limited provision on a special share. However, they found themselves constrainted by the requirements of the EEC Commission, and the protection offered is extremely limited and is time-limited as well. Therefore, we do not believe that that is adequate.
            Virtually no attention is paid to the pressing and specific problem of Ravenscraig. We have taken the opportunity at every stage during the passage of the Bill to express our concern for the future of that great steel plant. Nothing in the Bill enables us to tell our constituents and those in Scotland who voted for us that Ravenscraig's future is assured. All the evidence and logic is that privatisation is simply a means of shuffling off responsibility for the decision as to Ravenscraig's future and that that decision will be disowned by the Government, when and if the time comes.
            There is much to object to in the Bill. As I have said, our attempts to ameliorate it have been largely unsuccessful and that is why we return to the principle. The Government simply do not recognise the obligations of this great industry to the national economy. The Government, for ideological reasons, are blind to the evident risks that are run by handing it over to private owners who have so often failed the industry in the past. We believe that the best future for the industry is in public ownership and that is why we oppose the Bill and will vote against Third Reading.
            8.56 pm
            Mr. William Powell: I congratulate my right hon. and learned Friend the Chancellor of the Duchy of Lancaster and my hon. Friend the Under-Secretary on successfully piloting the Bill through Second Reading, the Standing Committee, of which I was privileged to be a member, Report and Third Reading. The Bill is of considerable importance to the country and will enable the British Steel Corporation to operate without the shackles that the state has so often imposed upon it.
            The hon. Member for Dagenham (Mr. Gould) talked about private ownership being a disaster for the steel companies in the old days. Those of us who served on the Standing Committee will never forget the speech of the hon. Member for Motherwell, South (Dr. Bray) in moving the first of his amendments. I am delighted to see that he is in the Chamber. The hon. Member moved a number of amendments and always made interesting contributions to our proceedings. However, none of his contributions was more interesting than the speech he made on the first set of amendments he proposed. The hon. Gentleman has experience in such matters and he talked about the relationship that existed between the chairman of the

            1029
            British Steel Corporation and Labour Governments of which he was a member or with which he was closely associated.
            I invite all hon. Members and members of the public to read our proceedings and I should like them to refer particularly to the proceedings in Committee. They should look closely at the speech of the hon. Member for Motherwell, South because it was a seminal speech. It set out the reasons why nationalisation and the relationship between Ministers and the BSC was so disastrous both for Ministers and the corporation. It explained why it is necessary that Parliament should pass a measure that will mean that such things will never occur again. I am fully aware that the hon. Gentleman thought that he was advancing a case in favour of public ownership, but no Conservative Member who heard his remarks will have identified them as anything other than a classic illustration of the reasons why nationalisation has been a disaster for the British Steel Corporation. The Bill will end that once and for all.
            I have the privilege to represent a constituency which still has a residual steel interest. My constituents remember with nostalgia the days of Stewart and Lloyd, whose operations in Corby made a profit every year. They are less impressed by the fact that British Steel's operations in Corby have made a loss every year since nationalisation. They recall—how could they ever forget?—that the coupling of Stewart and Lloyd's tube works with the British Steel Corporation led to industrial catastrophe in the late 1970s.
            Lest Opposition Members feel that restructuring in the steel industry occurred under a wicked Conservative Government, I remind them that the important day for Corby was 3 March 1979—some two months before the general election that brought this Government to power. It was on 3 March 1979 that British Steel announced that it would close the Corby steelworks. Restructuring has taken place under Conservative and Labour Governments alike.
            I do not accept Opposition Members' contention that private ownership has been a disaster for the steel industry—far from it. Private ownership worked, and worked well, in Corby and in many other places. I am certain that when British Steel is privatised, its work force—in Corby or elsewhere—and its shareholders will find that it works much more successfully than it has with the intervention and interference that have been such disfiguring features of nationalisation.
            I welcome the Bill, and my constituents will welcome it. I have listened with interest to the Opposition's case against privatisation. I have fought two general elections in a steel constituency—one of them less than a year ago. I never sought to hide the fact that I was in favour of privatisation. Privatisation was not a great issue between my Labour opponent and myself a year ago, although my opponent was a distinguished and popular official of the ISTC. We did not argue about the merits of privatisation. There was considerable discussion of the terms for British Steel pensioners after privatization—and quite right too. There was considerable concern to ensure that those who work in the industry are given the best possible opportunity to acquire a stake in the industry—and quite right too. However, the fundamental question whether the
            1030
            industry should be in the public or the private sector was not a matter of great party political controversy in my constituency.
            I respect the fact that Opposition Members, the ISTC and other unions would prefer the industry to remain in state hands. Nevertheless, I am in no doubt that under the Bill the future prosperity of those who work in the industry will be more assured than it could ever be in the state sector where it would be dependent on all the factors that govern state financing and the public purse.
            As I said, I welcome the Bill and I wish it fair speed. I hope that it will receive substantial approbation in another place. All being well, it will reach the statute book before the summer recess and in a few months the steel industry will be returned to the private sector, like so many other industries and with the same success. There is nothing to fear and everything to look forward to in that prospect. The industry can continue to build on the restructuring on which Ministers have insisted in the past few years. With a tried and trusted leadership and an experienced work force, knowing that it has a good future, the prospects for British Steel have never been better.
            9.3 pm
            Mr. Foot: I may have caused the Chancellor of the Duchy of Lancaster some inconvenience by intervening on a point of order in his speech. I do not necessarily apologise for that, but I should like him to appreciate my excellent reasons for doing so, it seemed to me that he thought that he was appearing on the "Newsnight" programme rather than in the House of Commons, and I thought it courteous to draw his attention to that misapprehension. It is not because I dislike him in any sense, either in the House of Commons or on television. I prefer him to some of his colleagues—particularly the right hon. Member for Chingford (Mr. Tebbit). I do not want to pay the right hon. and learned Member any reckless compliments, but I much prefer him to his right hon. Friend.
            I return to that part of the Chancellor of the Duchy's speech that was in order. He referred to the achievement of the steel industry, and he was right to do so. It was one of the factors that led to the presentation of the Bill. On the figures given in recent months, there have been considerable achievements at the British Steel Corporation. Sir Robert Scholey deserves considerable credit for that; he should have been appointed to his current position some time ago, because he was doing most of the real work. He has had the assistance of those who have been prepared to confront the industry's appallingly difficult transformation, which has imposed huge burdens upon the communities involved, such as my own. It is because we in the steel communities know the difference between public and private ownership that we are so bitterly opposed to the Bill, despite the industry's achievements over recent months.
            Those considerable achievements would not have been possible, as my hon. Friend the Member for Dagenham (Mr. Gould) so skilfully underlined in his speech, had it not been for the different forms of investment, the greater foresight and the long-term planning which public ownership offers an industry such as steel. I can cite my own constituency by way of illustration. Had it not been for the £70 million or £80 million invested in the tin plate and finishing plant in Ebbw Vale in 1978 and 1979, it

            1031
            would not have had the slightest chance of surviving into the late 1980s as it has done. I hope that it will carry on for the next 10 or 20 years.
            That investment would not have been made—I am certain that the same applies to Ravenscraig and to other places—and carried through, partly under a Labour Government and partly under their successors, at a time when many European steel industries were being knocked out altogether, had it been in private ownership. Yet that investment allowed it to survive and has enabled the Chancellor of the Duchy to talk about a prosperous steel industry.
            It was not only that long-term investment which was important to the steel industry. There was all the accompanying investment necessary to carry through the change from the older industries to the new. It is false to make the charge sometimes made against the Labour party, that it was not in favour of those changes. We understood that they were needed in many areas, such as Corby and Ebbw Vale. However, we said that the pace of that change should be one that the communities involved could absorb, and that the rundown should be accompanied by the introduction of new industries in a planned way. I will not say that we carried out that philosophy perfectly, but we undertook it on an intelligent and planned basis, whereby the steel industry itself provided special investment in many of the new industries introduced into those areas.
            The Labour Government invented the British industries enterprise scheme. We introduced it as part of the effort to ensure that the rundown of the steel industry should go forward only as we were bringing in new industries. It was all part of our scheme to ensure that the balance was kept and that we should not be thrust through such a change with 25 per cent. unemployment, which is what we have had since 1979–80. It is bad enough to have to try to carry through a change on that scale with the 5, 7 and even 12 per cent. unemployment that existed before 1980, but there is a considerable difference between carrying out such a process on the basis of 12 per cent. unemployment and doing so on the basis of 20 or 25 per cent. unemployment, which is what we have had ever since 1979–80.
            We had a much better idea of how the change should be carried through. Part of it was that the money allocated to the steel industry, and part of the investment programme, should be accorded to the planning. I remember Mr. MacGregor coming in with all his brilliance and foresight and saying, "We cannot have anything to do with this. It is not the Government's business to provide the other industries. We must concentrate solely on the market." That was the only test that he was able to provide. We stopped him doing it then, and even the present Government stopped him applying the same doctrines to the coal industry a little later. He did enough damage in many other directions, but we checked much of the damage at that time.
            If the Chancellor of the Duchy of Lancaster had studied these matters a little more carefully, he would never have brought forward a Bill which does not take into account all the other aspects of the effect on the steel communities and the communities that still have to carry through many of these changes. We will oppose the Bill bitterly and will vote against it, which will not surprise the right hon. and learned Gentleman. When a new Labour Government come in—which I trust will happen very soon—one of
            1032
            their major objectives will be, I am sure, to restore to our communities which have been so ravaged by the right hon. and learned Gentleman and his friends the compassionate, intelligent, long-term planning that only public ownership can provide in such great industries.
            9.12 pm
            Mr. Fallon: First, let me clear up the misapprehension on the Opposition Benches that the contents of the Bill were not foreshadowed in the Conservative manifesto. The quotation from the manifesto—I am trying to help my right hon. and learned Friend the Chancellor of the Duchy—runs as follows:
            "We will privatise more state industries in ways that increase share-ownership, both for the employees and for the public at large."
            Let there be no doubt on Conservative Benches that the Bill is fully consistent with the aims of our manifesto. I know that my right hon. and learned Friend prides himself on being on the more radical wing of our party, and he may think that he is in advance of that manifesto, but the plain fact is that the proposals to privatise British Steel are fully consistent with our manifesto and do not result from any last-minute decision during the autumn.
            Mr. Gould: I am grateful to the hon. Minister—[laughter.] I am grateful to the hon. Gentleman—he may well become a Minister. As he seems so much more familiar with the hidden meaning of the opaque words that he has just read out, perhaps he could enlighten us on what other specific industries not yet mentioned in any Queen's Speech, or figuring in any legislation, that form of words now covers. Clearly, he can enlighten his right hon. and hon. Friends on his own Front Bench as well as the rest of the Chamber.
            Mr. Deputy Speaker: Order. I have allowed every hon. Member a preamble, and I hope that the hon. Gentleman, if he is going to respond, will do so briefly.
            Mr. Fallon: The hon. Member for Dagenham (Mr. Gould) will have observed—certainly, he will have done so by 10 pm—that the number of state industries is diminishing. All that I will say is that it ought to be further diminished.
            We are now reaching the end of Report and Third Reading, and I feel that we are entitled to wonder yet again at the generosity of my right hon. Friend the Leader of the House in allocating two full days to the Report stage. I appreciate that there may have been some embarrassment on the Opposition Benches about the meagre part played by Opposition Members in Committee, as a result of which we have had to stretch out the proceedings over two days. Barely half a dozen Opposition Members have been present and they have presented a string of muddled and inconsistent amendments.
            Opposition Members said, first, that they opposed privatisation. Then they tabled an amendment calling For a Celtic steel company comprising the Ravenscraig and Welsh plants. They then complained that the British Steel Corporation would be a monopoly, yet, a few hours later, they moved an amendment requesting that it be protected from competition and takeover. They then said that there was no demand for shares. yet, a few hours ago, they moved an amendment suggesting that one third of all the shares should be given, in trust, to the work force That is a wholly inconsistent and muddled approach.

            1033
            I do not want to labour the Labour party policy, because that would stretch the rules of order on Third Reading. This is not simply a debate between the Front and Back Benches. The steel workers in my constituency will study the Bill carefully when it is passed. The first question that will occur to them is what will happen to the Act if a Labour Government ever come to power again. Will it be repealed? What will be the policy of an incoming Labour Government? I appreciate the difficulties of the hon. Member for Dagenham in completing his series of speeches, listening to the New Zealand Minister for Finance and working on his economic review, but he owes it to the steel workers in my constituency to leave them in no doubt that the industry will not be renationalised if a Labour Government come to power.
            As my hon. Friend the Member for Corby (Mr. Powell) well illustrated, the BSC work force is now in much better shape than Her Majesty's Opposition. The work force understands the requirements and is looking forward to being a great private British company.
            There will be no greater welcome for the change than on Teesside. It should not be forgotten that many of the steel plants are in areas of high unemployment and assisted areas in Scotland, Wales and the north. For far too long, those areas have depended on the decisions taken by politicians in London which have then been overruled by Treasury Ministers or civil servants. Why should not people in those areas and working in those industries have the same freedom and opportunities to progress, to manage their businesses and to make a success of those industries, free from bureaucracy and control?
            The Bill is part of that process, and clauses 1 and 10 have implications for a company in my constituency, which is a perfect illustration of why the corporation should now pass into private ownership. Darlington and Simpson rolling mills is a major company, half owned by British Steel and half owned by Norcros, a company that enjoys the benevolent chairmanship of my hon. Friend the Member for Wokingham (Mr. Redwood).
            That half-and-half ownership means that all the key decisions on investment, management, exploring new markets and developing new technologies have to be referred to two different owners and two different managements. It is impossible for the management and work force of that company to be in charge of their own destiny. When the Bill is enacted, that company will be free to build up its own sales, to explore new markets and to develop new technologies without being partly answerable to state bureaucrats in London.
            The Bill is important for the regions and, above all, for our economy and for those who work in the steel industry. Had I been told even in 1983 that within five years the BSC would be passing on to the open market I might have had my doubts. It is an enormous achievement. It is a testimony to the strength of the economy, the strength of our commitment to free enterprise, and above all, to the Department of Trade and Industry, the Department for enterprise, that in a single parliamentary Session, with the passage of the Bill, the BSC will join parts of British Shipbuilders and the Rover Group in the market sector. Places that we thought were trapped for ever in the
            1034
            dependency culture—Longbridge, Govan and Ravenscraig—will now be free-standing parts of successful companies.
            It is an achievement not only for Ministers, but, above all, for the work force. The BSC work force made the transformation possible. The improvements that it has succeeded in making in productivity and performance, the necessary job losses that it had to accept and its commitment and enthusiasm are the best possible guarantee of the success of the sale of this corporation.
            Conservative Members salute that achievement in passing the Bill. It is a crying shame that Opposition Members cannot likewise salute our British steelworkers.
            9.20 pm
            Mr. Hardy: The Treasury Bench will be grateful to the hon. Member for Darlington (Mr. Fallon), but I do not know whether the steel workers of Darlington will be. The hon. Gentleman told the House what he would say to them, and he asked us what we would say to our constituents who may be adversely affected by this measure.
            I wonder whether he will tell his steelworkers—I shall certainly tell mine—that the Bill offers serious disadvantages to them and perhaps to Britain. For example, the Bill's horizon is five years and there is no certainty beyond that. There is no certainty about investment, or the future of research and development or ownership. The hon. Gentleman may be happy to see others come and buy his steelworks and make his workers dependent on those who may not have this country's interests at heart, but we are certainly not.
            My hon. Friend the Member for Rotherham (Mr. Crowther) and I are anxious about the future of United Engineering Steels' Rotherham works. I recall, as my hon. Friend, who was then the mayor, will recall, the considerable demonstration of co-operation between management and workers when we set up the Thrybergh bar mill and broke world records, which are still held, for production and the speed of commissioning. That was not achieved because we had some peculiar owner who was not even identifiable. It was done because workers and management together recognised that they could make a substantial contribution to the national interest. Where will that motivation be when this Bill becomes law and the BSC has been privatised?
            The hon. Gentleman may feel that he is doing the workers a favour by offering them £70-worth of shares free. My workers in the Thrybergh bar mill in Aldwarke and those working in Concast in my hon. Friend's constituency would prefer to know that investment would continue and be aware that management would be responsible to them and the nation rather than to some foreign interest which may not even want the British steel industry to survive. That fear may well not be compensated for by £70 of free shares.
            Ministers have sought to distract our attention by asking what the Labour party policy is. I hope that it will continue to be a commitment to ensure that the United Kingdom creates wealth. That must be the priority of my party. That aim has been sadly neglected throughout the 1980s. The Government and the Conservative party have been eager not to give priority to the creation of wealth,

            1035
            but to give rewards and recognition to those who shift money about. In my area, we do not have much money to shift about.
            The hon. Member for Brigg and Cleethorpes (Mr. Brown), who was smiling a moment ago when I referred to the need to create wealth, may be seeking in his way to undermine the capacity of areas like mine to maintain their wealth. I notice that he removed himself rapidly from a steel constituency at the general election. His footwork may be admirable, like that of many other practising politicians on the Conservative Benches, but the commitment and wisdom which they have revealed, and continue to reveal in the Bill, will ensure that the steelworkers in their constituencies, or in his case in the constituencies nearby, will realise that the Government have no commitment to Britain. to wealth, to markets, to research and development or to ownership and very little commitment to anything which we regard as a necessary long-term consideration of this essential industry.
            9.25 pm
            Mr. Tim Janman: Like my hon. Friend the Member for Corby (Mr. Powell), I served as a member of the Standing Committee and I add my congratulations to the Chancellor of the Duchy of Lancaster and to the Under-Secretary of State for guiding the Bill through Second Reading, Committee and now Third Reading.
            It was an interesting Committee to take part in, not just because there were many occasions on which a new Member like myself could observe how Opposition Members tested the Chairman's patience as to how far they could extend the elasticity of the remit of the matter under debate.
            Another interesting aspect was that a high proportion, if not 100 per cent., of the New Zealand contingent of the British parliamentary Labour party were members of the Committee. In the light of the recent speech of the Finance Minister for New Zealand, and because of the general drift of the policies of the Labour Government of New Zealand over the past few years, throughout the Committee we hoped that part of the enlightenment which has got through to the Socialist Administration in New Zealand would reach the heads of the Opposition Front Bench spokesmen. Alas, we still wait.
            Mr. Michael Brown: I can give my hon. Friend some help. There is a rumour that the hon. Member for Great Grimsby (Mr. Mitchell), who entertained us well in Committee, is about to go to New Zealand. Perhaps he will find out how things should be done and come back with the correct solution.
            Mr. Deputy Speaker: Order. Every hon. Member has been allowed a little preamble, but I remind the House that we are dealing with the Third Reading of the British Steel Bill in the United Kingdom, not with anything in New Zealand.
            Mr. Janman: I thank my hon. Friend the Member for Brigg and Cleethorpes (Mr. Brown) for his intervention. I hope that when the hon. Member for Great Grimsby (Mr. Mitchell) comes back he will reflect on the statement which he made in the House last night, that the Opposition remained totally opposed to denationalisation of the British steel industry. If the Opposition are honest with themselves, with us and with the country, they should continue to make it clear that in their gut they are still
            1036
            totally committed to nationalisation of the key core industries. Because they know that the vast majority of the electorate understand that nationalisation has been a recipe for complete economic failure, they dress it up with fancy terminology to try to hide from the electorate the fundamentals of their industrial policies.
            Mrs. Margaret Ewing rose—
            Mr. Janman: I will not give way, because time is short and other hon. Members wish to speak.
            It is not the Government who are ideological. We believe in the natural way of doing things. The use of economic resources should be dictated by customers, investors, shareholders and the people who manage industry in recognition of the competitive forces and the profit motive that guide them. We are not the party that is ideological. We do not believe that these key industries should be run by politicians and bureaucrats, with decisions being made for short-term political gain rather than long-term economic considerations and prosperity.
            The point has often been made in this debate that in some ways the steel industry is different: it is a large industry; it is too big for the private sector to run it efficiently and effectively. What drivel. Many industries throughout the world have major private companies within them and they are being run very successfully—for example, the aircraft, motor vehicle, and computer industries. There are British examples in all those industries.
            I welcome the Bill and add my support to it. It will enable the British Steel Corporation to be added to the long list of privatisation successes that this Government have to their name. The quicker that privatisation takes place, the better.
            9.30 pm
            Mrs. Margaret Ewing: I am grateful for the opportunity to speak on Third Reading. I apologise to the House for the fact that I was not able yesterday to attend the first day of the Report stage as I was recovering from an illness. I have listened with interest to some of the comments made on Third Reading. I am concerned that there appears to have been little movement by the Government on the future of the steel industry since Second Reading.
            The Government claim that they are listening to the views of the population, but it seems that in this case they have not listened very carefully, and certainly have not been seen to act. There is little recognition of the significance of the steel industry, not just in Scotland, but throughout the United Kingdom economy. Although I speak from a Scottish perspective, I understand the significance of the steel industry to many hon. Members' constituencies in England and Wales. I have listened to their views with respect.
            There is a symbolism about the steel industry which is perhaps difficult for many people to take on board. Symbolism may be something which many people do not accept should be argued in the House. However, the symbolism of British Steel is something that we should understand. If the Prime Minister talks of particular items of legislation as being flagships, she is talking in symbolic terms. When we talk about this industry, why cannot we place a similar emphasis on the symbolism of it to many parts of the United Kingdom?

            1037
            I do not speak as a sycophantic follower of the idea of public ownership. My party has always stood for a combination of private and public ownership. Over the years, when there has been nationalisation and centralisation of various public assets within the United Kingdom, too often they have been at the expense of places such as Scotland, Wales or the north of England.
            We are seeing almost the reverse of that coin in the privatisation of the steel industry, when I believe we shall see a continuation of centralisation. There is little doubt in my mind that privatisation will mean that the steel industry will fall into the hands of the people with money in this country—the people in the south-east of England. After all, that is the money centre of the economic world. The Government are more concerned with profits than with people. But we are talking about the future of the people employed in the steel industry.
            I have not heard throughout the Second Reading, Committee, Report or Third Reading stages anything from the Government that convinces me that the interests of the people working in the steel industry are being taken to their heart. We are almost playing a Monopoly game, where the Government are saying to the workers in the steel industry, "This is a Monopoly game. Do not pass go; do not collect your shares; go directly to the unemployment benefits office." That is not the sort of message that should come from this House. Many people who work in the steel industry fear that the privatisation of the industry will mean further unemployment. We heard earlier that 134,000 people have been made redundant in the steel industry since 1979. How many more people's jobs will be lost as a result of this legislation?
            In all seriousness, I advise Conservative Members to remember what happened in the wake of the closure of Gartcosh in Lanarkshire. One of the more senior members of their party, a former chairman of their parliamentary candidates committee, resigned. He was also the proponent of the idea that Conservative policies should be expounded more seriously and effectively in Scotland. However, he resigned because of the closure of the Gartcosh steel works. That man was lain Lawson who, together with the hon. Member for Motherwell, North (Dr. Reid) and many other people, walked to Downing street to argue against the closure of Gartcosh.
            The kind of arguments that have been put forward by Conservative Members during the passage of this legislation will ensure not only that people of the calibre of Iain Lawson will resign from the Conservative party and join the Scottish National party, but that the Conservative party will not revive in Scotland. I am sure that the hon. Members for Motherwell, North and for Motherwell, South (Dr. Bray), who have spoken so eloquently in all the stages of this legislation, have echoed the sentiments of many people in Scotland that the Conservative Government are not holding out any hope for the steel industry in Scotland.
            As I have said, I am not taking a sycophantic approach to the idea of public ownership. However, I believe that the steel industry in Scotland did have a future in public ownership and that, by putting it into private ownership, the Government are tolling its death knell. For that reason, my colleagues and I will vote against the privatisation of the industry and against the Bill because
            1038
            we have heard nothing in the last few months to give us any confidence that the Government are holding out hope for people in the Scottish steel industry.
            9.37 pm
            Mr. Geoffrey Dickens: It is important that hon. Members remind themselves that before the Conservative Government came to power there was no hope for the continuation of the British steel industry. The industry was uncompetitive. It took about seven man days for every tonne of steel produced, compared with three man days for South Korea and Japan. People who sought to win competitive orders from around the world sought to buy their steel from British Steel. They asked British Steel to sharpen its pencils and get the price right so that they could buy from it, only to find that British Steel could never match the prices that could be obtained abroad.
            British Steel was on a slippery slope. The taxpayers were, if I remember correctly, putting about £600 million a year into the steel industry in subsidies. That was unfair to the private steel industry, which was having to compete against the subsidised national steel industry.
            As a commercial director, I have personal experience of trying to buy many thousands of tonnes of steel from British Steel. I wished to place my orders with British Steel, but I found that it could not match foreign prices. I had to win international contracts abroad against fierce international bids. We won those contracts, but we had to get the steel at the right price to meet the bid price with which we had won the contract. Until Mr. MacGregor was appointed and sorted out the steel industry, British Steel had no hope of survival.
            I remember the day when we voted £75 million to help soften the blow of redundancies and to enable proper entitlements and rewards to be given to those who had lost their jobs. We could not afford to have overmanning and restrictive practices, because they would not allow us to compete with the rest of the world.
            Opposition Members have short memories. When I first became a Member of this place I remember that the Chamber was packed when there was a steel debate. On those occasions the Opposition Benches were full. Since then the credit of Opposition Members has been lowered and we have only a handful of Opposition Members in their places for this important debate.
            I want to be fair to the Opposition because they have the next business and I am aware that if I detain the House I shall be losing them precious time. I wish to be brief, but the clear message must be issued that if it had not been for a Conservative Government there would have been no hope for our steel industry. The industry now has a rosy future. There is staff security, and steel is being delivered at the right quality and standard and at the right price. That is accompanied by a good after-sales service. All these elements are now right because a Conservative Government came to power and had the guts to ensure that the industry was sorted out. It has been sorted out to such advantage that it is ready for privatisation. Let there be some entrepreneurs and risk takers moving into British Steel. Let us give the workers a better future, along with the industry and the country, by voting for the Third Reading.
            9.42 pm
            Mr. Bell: It is always a pleasure to be called to speak after the hon. Member for Littleborough and Saddleworth (Mr. Dickens), a future Prime Minister, has spoken. I shall follow with great interest the hon. Gentleman's career over the next few years.
            It is right that the authentic voice of Teesside should be heard this evening. The hon. Member for Darlington (Mr. Fallon) represents the authentic voice of Durham. I want the authentic voice of Teesside and Middlesbrough to be heard so as to echo the roar from Ayresome park as the play-off takes place for the first division. As extra time is being played in Middlesbrough, so we come to the final in our debates on the Bill.
            We have had an interesting debate, but it seems that the Chancellor of the Duchy of Lancaster and Conservative Back Benchers wish to speak about Opposition policies and how the Opposition will run the economy when we come to power rather than direct attention to the real reason behind the Bill. Although we have not had it explained to us by the Chancellor of the Duchy of Lancaster or Conservative Back Benchers, the Bill is before us so that the Government can secure another £2,000 million to assist the British economy and to keep the public sector borrowing requirement in credit rather than deficit. The Government have announced tonight that the PSBR is £925 million in credit, and their rush to get the Bill on the statute book reflects their desire to obtain another £2,000 million next year so that the books can be balanced.
            I am reminded of the occasion when ICI's Sir John Harvey-Jones came to Middlesbrough when a local bank opened a new branch. When I asked, "What are you doing here?" he said, "I am here for the same reason as you, except that my overdraft is bigger." The British Government run no overdraft and ICI has an overdraft of about £5,000 million. A successful company is prepared to borrow to invest in its future, but the Government sell their assets and the shares of the British people to make money for those in the City, not for those who invest in industry on Teesside.
            People on Teesside are interested in the Bill. The hon. Member for Corby (Mr. Powell) said that during the last election there was no discussion about the privatisation of the steel industry except for pension rights, but there is deep concern and anxiety on Teesside about the consequences of privatisation.
            I remember going to the United States many years ago and seeing what had happened to the steel town of Birmingham, Alabama and the steel towns of Pennsylvania. There was no investment by the state, and the steel industry was left to run its own affairs as a private industry. Japanese competition came in and laid low those steel towns, decimating the industry and making thousands unemployed.
            The hon. Member for Darlington referred to the possibility of greater private sector participation in steel in Darlington, but my hon. Friend the Member for Wentworth (Mr. Hardy) asked what would happen if the growth did not come about. Steel is a cyclical industry, and there would certainly be more redundancies. What will happen if a multinational firm buys this global outpost in Darlington and decides to close it down when the next recession arrives?
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            It is not true that people in the steel industry are asking what a future Labour Government will do; they are asking how they will fare under privatisation. What will happen when the investment does not come? What will happen to their jobs, their investment in their work and their future? Those are the questions being asked on Teeside and such concerns were never alleviated in Committee, when we never had a straight answer to a straight question from a Minister. Ministers read the briefs that had been prepared for them but made no positive statements to explain, highlight or illuminate the contents of the Bill.
            I associate myself with the Opposition Front Bench. We shall oppose the Bill and bring forward our own common ownership proposals at the next general election. We shall see how our industries should be governed and run when the European single market arrives. We shall examine the future with some reflection and certitude and put people in the industry first, not the City slickers who are waiting for the shares to come on the market.
            9.47 pm
            Mr. Morley: Tonight we have heard no justification for selling British Steel, because British Steel stands wholly justified as it is. If it is compared with any private steel company in Europe or the rest of the world, it can be seen to be out-performing them. It is making more profit and is more productive than any of its rivals. How can Conservative Members argue that public ownership has been a failure, when the BSC is a monument to the success of public ownership? It is so because it was given the investment that it needed.
            The reward for people who work in the BSC is a patronising pat on the head to show them how well they have done and a tip of £70 as they are shown the door to an uncertain future. While it remains in public ownership, the BSC has a guaranteed future, and so do the people who work in it. The supply of steel to our industry is guaranteed, as is long-term planning for industry. Now we are faced with uncertainty.
            No Conservative Member can give any guarantee that the BSC will prosper as a privatised company. That is the BSC's reward for reaching profitability. Why throw it all away? It is wrong for the Chancellor of the Duchy of Lancaster to dismiss the £5 billion that have gone into British Steel as money that is to be forgotten and cannot be recovered. While the BSC remained in public ownership, that money would have been recovered because the taxpayers would have received the return on their investment that has been wiped out by the Government.
            The case for public ownership has been proved and the Government have failed to make their case for throwing the industry into uncertainty. I point out to the hon. Member for Corby (Mr. Powell) that the argument about privatisation was very much an issue in my election. That is why Scunthorpe has a Labour Member of Parliament after eight years of Tory control. The people of Scunthorpe saw a Labour Member of Parliament as more likely to protect their interests and their future. They are not wrong and I am glad to be here arguing to protect their long-term interests because the Government do not care.
            9.50 pm
            Mr. Morgan: Conservative Members have presented us with a series of wondrous paradoxes. There has been an

            1041
            almost obsessive interest not in the purpose of the Bill but in what the response of the Opposition will be at the next election. Conservative Members seem to have invented a new principle. They seem to say that, since they did not put this measure in their manifesto, they have a right to claim that we must put some measure about steel in our next manifesto.
            The hon. Member for Darlington (Mr. Fallon) said that in the steelworks in his constituency, the Darlington and Simpson rolling mills, one of the consequences of privatisation will be that his steelworkers will be able to govern themselves up north and will no longer have to refer to an overweight corporate bureaucracy in London. He told us that a 50 per cent. share in the Darlington and Simpson rolling mills was owned by Norcros. He also told us with great pride that the chairman of Norcros is the hon. Member for Wokingham (Mr. Redwood). When his steelworking employees want to see their chairman and do not want to see anybody from an overweight bureaucracy down south, they will merely have to come to London. In between his demanding duties as an hon. Member and his duties for Rothschilds, the hon. Member for Wokingham may be able to spare five minutes of his time. That is a wonderful example of UDI for the north of England.
            We had a wonderful last-minute intervention by the hon. Member for Littleborough and Saddleworth (Mr. Dickens). He was not seen in the earlier part of the debate and was not in the Committee, but he wanted to demonstrate his expertise in how to make corporate bodies lean and hungry. His eagerness to do that was more than I am prepared to speculate.
            Mr. Dickens: I have a great affection for the hon. Member for Cardiff, West (Mr. Morgan), particularly as he gave way. The hon. Gentleman mentioned his hon. Friend the Member for Workington (Mr. Campbell-Savours) but I think that he meant my right hon. Friend the Member for Woking (Mr. Onslow) I would not like to steer the hon. Gentleman in the wrong direction.
            Mr. Morgan: The right hon. Member for Woking (Mr. Onslow) sits on the Government side and my hon. Friend the Member for Workington (Mr. Campbell-Savours) normally sits behind me and I was perfectly clear on identity.
            The Chancellor's speech was the most paradoxical of all the speeches about the purpose of the Bill. He said that its purpose is to stop politicians interfering incompetently in the industry. We realise what he meant and it was perfectly clear from his speech that he takes no interest in this industry. The Fe content of his speech was about 30 per cent. He attempted, as all good lawyers do when they have a lousy case, to use the ad hominem argument. He simply attacked the Opposition and attempted to demonstrate his new-found desire to be the Vinny Jones of the Government Front Bench.
            The Minister spoke about the steel industry for about one third of the time. It is obvious from that that the Government are not interested in the steel industry. They are saying that they will be happy to get rid of it now and that it bores them. They do not want to know about it and if they can get any kind of return for it they will get shot of it. They say that, even though it was not in the Queen's
            1042
            Speech or in the manifesto, they want to get rid of it now. They are saying that the industry does not interest them in the long, short or medium term.
            9.53 pm
            Dr. Reid: As my hon. Friend the Member for Cardiff, West (Mr. Morgan) has said, we have seen some extraordinary spectacles in the debate. When the hon. Member for Littleborough and Saddleworth (Mr. Dickens) rose I assumed that a witches' coven had been formed at Ravenscraig, because I do not remember him making a contribution or showing an interest at any earlier stages in the steel debate.
            An even greater revelation was the hon. Member for Darlington (Mr. Fallon), who attempted to shroud his support for the Bill in calls for decentralisation, devolution and at one stage workers' participation. He stopped just short of all power to the Soviets. None of those reasons will be accepted by the Opposition as the real reason for the Bill. No reason at all for it was to be found in the Minister's speech. I was looking for a word to describe the Minister's speech. "Vacuous" sprung to mind, but I thought it was a little too substantial. There was nothing in that speech to justify privatisation of steel, and, as my hon. Friend the Member for Cardiff, West said, the Minister spent three quarters of his speech searching for solutions to the future problems of the industry by demanding answers from my hon. Friend the Member for Dagenham (Mr. Gould).
            The Minister claimed that the Bill was well thought out, despite the fact that he did not know how the company was to be floated, when it was to be floated, what price would be asked or to whom it was to be sold. The process of the enabling Bill was described by my hon. Friend the Member for Dagenham as a mystery. That was a gross understatement. The Bill fulfils every criterion of Churchill's definition of the Soviet Union. It is a mystery within an enigma, wrapped up in a riddle. That applies to both the reasons and the process for the sale of British Steel.
            The Minister told us that there was no write-off of debt, but a trading loss; but no write-down of the taxpayers' capital, but a restructuring. I thank the Minister for his advice. Tomorrow morning, I will phone up the hire purchase company to say that I do not have a debt, I merely have a continuing trading loss and I shall discuss with my bank manager the fact that I would like a restructuring of my mortgage to ensure that it is written off.
            A more simple and straightforward word was used earlier. The Bill is a swindle. It represents half the public dividend capital value, a write-off of debts and a snub to the taxpayer. It is the product of prejudice and dogma, not of good, long-term policy thinking. It was not in the manifesto or in the Queen's Speech. The only justification for it was the Minister quoting a colleague saying, "At some stage, somebody once said it."
            We also had the offer that one phrase in the Queen's Speech refers to "other measures". As far as we can make out, that would justify the declaration of war tomorrow by the Government, on the basis that it was in the Queen's Speech. The Bill is the Government's responsibility. They have refused every amendment. Should the predictions

            1043
            about Ravenscraig or the steelworks in Lanarkshire come true, the responsibility will rest fairly and squarely on the Government.
            9.57 pm
            Dr. Bray: In their different ways, both sides of the House want to he rid of the Bill, but it has some lessons for us. We need to give more attention to monopoly and competition policy and their effect on jobs and output as well as on profit. For the industry, the lessons are that it needs to give continuing attention to the rapid changes that are still taking place in the market, technology and the national and international economic environment and, above all, to give more attention to its people and the communities in which it lives.
            The Minister and the House need to give more attention to our relations generally with the industry. It is a misapprehension to suppose that the mere act of privatisation discontinues that relationship. It is like supposing that a floating exchange rate abolishes foreigners. Even if the Chancellor of the Duchy of Lancaster shuts his door, his eyes and his ears, he will find that the chairman of BSC and his successors will come along to knock on his door about a dozen issues. This will not be the last steel Bill that comes to the House. Whatever the results of the next election, if only to win another 22 years before the next major steel Bill, I urge the House to reject the Bill.
            9.58 pm
            Mr. Atkins: We have had an interesting debate, and I suspect that the House will not wish me to detain it for long. I am rather sad that one of the Opposition Members who participated at some length in our Committee debates—the hon. Member for Great Grimsby (Mr. Mitchell)—cannot be here today. I am sure that he has a good reason for that. He would have enlivened the Third Reading debate in the way that he enlivened the Committee debates, largely by the number of fairy stories with which he regaled us. Members of the Committee may recall and the House may be interested to know about Godzilla and about the bardic steamroller to which he referred. That just about sums up the quality of the debate offered by the Opposition.
            We have heard from the Motherwell mafia, the hon. Members for Motherwell, North (Dr. Reid) and for Motherwell, South (Dr. Bray), the harbingers of doom who last night, finding themselves pushed to a Division by the SNP, had to abstain on their own amendment. Such is the commitment and the concern about the so-called controversial issue. We heard about capitalism and labour from the hon. Member for Middlesbrough (Mr. Bell)—
            It being Ten o'clock, the debate stood adjourned.

            BUSINESS OF THE HOUSE
            Ordered,
            That at this day's sitting, the British Steel Bill may be proceeded with, though opposed, until any hour.—[Mr. Ryder.]
            Question again proposed, That the Bill be now read the Third time.
            Mr. Atkins: We also heard from the hon. Member for Dagenham (Mr. Gould) about the designer Socialism which he is seeking to create for the Labour party. In the context of the debate on the enabling Bill for the British
            1044
            Steel Corporation, he did not tell us exactly what the Labour party will do for the future. We have had to admire him, because he has talked about everything except the issue. We have not heard whether the Labour party will renationalise the BSC, and the House is aware of that fact. [HON. MEMBERS: "Long speech."] If Opposition Members seek to provoke me, I could refer to a great deal more. Since they well know that their prayer follows this debate and that Scottish Labour Members have delayed my winding up, they had better be very careful.
            There were interventions from my hon. Friends the Members for Darlington (Mr. Fallon) and for Corby (Mr. Powell), both of whom know what they are talking about—one was a member of the Committee, and the other represents a constituency which contains a steel-processing plant. Conservative Members will agree that their contributions were a succinct summary of why we believe that the Bill is the right way to go.
            Above all, the speech that sums up the Opposition was from the right hon. Member for Blaenau Gwent (Mr. Foot), an extremely distinguished Member. At least we know where we stand with him. The traditional View of old-fashioned Socialism rules supreme. Nothing changes; steel must always be nationalised and must be in public ownership. However, as hon. Members will remember, steel had its problems in his day. Does the right hon. Gentleman not remember the closures at Ebbw Vale when he was Secretary of State for Employment which made him somewhat unpopular because of the difficulties faced by the steel industry at that time?
            Steel has had its difficulties in public ownership and doubtless will in future. However, we have brought the Bill to the House, we have been through Committee and have reached Third Reading, because we believe that the future is very bright indeed.
            Mr. Tim Devlin: Just before my hon. Friend finishes, does he agree that the Bill will be extremely good for regions such as mine in the north-east, because it will give the competitive management on Teesside a great deal more scope for its imagination in the years to come, and provide wider share ownership in a region which needs further encouragement for enterprise and weaning from the bosom of the state?
            Mr. Atkins: Like my other hon. Friends, my hon. Friend the Member for Stockton, South (Mr. Devlin) makes his point extremely well.
            We look to the future and seek to give British Steel the means to secure lasting success for itself, for employees and for shareholders, and in so doing to contribute to the national interest. The company must have the freedom to make rapid decisions and to adapt to a changing market. I am confident that, as a private sector company, British Steel will do the nation proud. The Bill marks the first step in the privatisation process, and I commend it to the House.
            Question put, That the Bill be now read the Third time:—
            The House divided: Ayes 263, Noes 199.

            Division No. 312]

            [10.04 pm

            AYES

            Adley, Robert

            Amess, David

            Aitken, Jonathan

            Amos, Alan

            Alexander, Richard

            Arbuthnot, James

            Alison, Rt Hon Michael

            Arnold, Jacques (Gravesham)

            Allason, Rupert

            Arnold, Tom (Hazel Grove)

            1045

            Ashby, David

            Franks, Cecil

            Atkins, Robert

            Freeman, Roger

            Atkinson, David

            French, Douglas

            Baker, Rt Hon K. (Mole Valley)

            Gale, Roger

            Baker, Nicholas (Dorset N)

            Gardiner, George

            Baldry, Tony

            Garel-Jones, Tristan

            Barnes, Mrs Rosie (Greenwich)

            Gill, Christopher

            Batiste, Spencer

            Goodhart, Sir Philip

            Beaumont-Dark, Anthony

            Goodlad, Alastair

            Bellingham, Henry

            Goodson-Wickes, Dr Charles

            Bennett, Nicholas (Pembroke)

            Gorman, Mrs Teresa

            Benyon, W.

            Gorst, John

            Biffen, Rt Hon John

            Gow, Ian

            Biggs-Davison, Sir John

            Gower, Sir Raymond

            Blackburn, Dr John G.

            Greenway, Harry (Ealing N)

            Blaker, Rt Hon Sir Peter

            Greenway, John (Ryedale)

            Bonsor, Sir Nicholas

            Gregory, Conal

            Boscawen, Hon Robert

            Griffiths, Sir Eldon (Bury St E')

            Boswell, Tim

            Griffiths, Peter (Portsmouth N)

            Bottomley, Peter

            Grist, Ian

            Bottomley, Mrs Virginia

            Ground, Patrick

            Bowden, A (Brighton K'pto'n)

            Gummer, Rt Hon John Selwyn

            Bowden, Gerald (Dulwich)

            Hamilton, Hon Archie (Epsom)

            Bowis, John

            Hamilton, Neil (Tatton)

            Boyson, Rt Hon Dr Sir Rhodes

            Hampson, Dr Keith

            Braine, Rt Hon Sir Bernard

            Hannam, John

            Brandon-Bravo, Martin

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

            Brazier, Julian

            Harg reaves. Ken (Hyndburn)

            Brittan, Rt Hon Leon

            Harris, David

            Brooke, Rt Hon Peter

            Haselhurst, Alan

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

            Hawkins, Christopher

            Bruce, Ian (Dorset South)

            Hayes, Jerry

            Buchanan-Smith, Rt Hon Alick

            Hayhoe, Rt Hon Sir Barney

            Budgen, Nicholas

            Hayward, Robert

            Burns, Simon

            Heathcoat-Amory, David

            Burt, Alistair

            Heddle, John

            Butcher, John

            Hicks, Mrs Maureen (Wolv' NE)

            Butler, Chris

            Hicks, Robert (Cornwall SE)

            Butterfill, John

            Higgins, Rt Hon Terence L.

            Carlisle, John, (Luton N)

            Hill, James

            Carlisle, Kenneth (Lincoln)

            Hordern, Sir Peter

            Carrington, Matthew

            Howard, Michael

            Carttiss, Michael

            Howarth, G. (Cannock & B'wd)

            Cartwright, John

            Howell, Ralph (North Norfolk)

            Cash, William

            Hughes, Robert G. (Harrow W)

            Chapman, Sydney

            Hunt, David (Wirral W)

            Chope, Christopher

            Hunt, John (Ravensbourne)

            Clark, Sir W. (Croydon S)

            Hunter, Andrew

            Clarke, Rt Hon K. (Rushcliffe)

            Hurd, Rt Hon Douglas

            Colvin, Michael

            Irvine, Michael

            Conway, Derek

            Irving, Charles

            Coombs, Anthony (Wyre F'rest)

            Jack, Michael

            Coombs, Simon (Swindon)

            Jackson, Robert

            Cope, John

            Janman, Tim

            Couchman, James

            Jessel, Toby

            Cran, James

            Johnson Smith, Sir Geoffrey

            Currie, Mrs Edwina

            Jones, Gwilym (Cardiff N)

            Davis, David (Boothferry)

            Jones, Robert B (Herts W)

            Day, Stephen

            Jopling, Rt Hon Michael

            Devlin, Tim

            Kellett-Bowman, Dame Elaine

            Dickens, Geoffrey

            Key, Robert

            Dorrell, Stephen

            King, Rt Hon Tom (Bridgwater)

            Douglas-Hamilton, Lord James

            Kirkhope, Timothy

            Dover, Den

            Knapman, Roger

            Dunn, Bob

            Knight, Greg (Derby North)

            Durant, Tony

            Knight, Dame Jill (Edgbaston)

            Dykes, Hugh

            Knowles, Michael

            Emery, Sir Peter

            Knox, David

            Evans, David (Welwyn Hatf'd)

            Lang, Ian

            Evennett, David

            Lawrence, Ivan

            Fallon, Michael

            Lee, John (Pendle)

            Farr, Sir John

            Lilley, Peter

            Fenner, Dame Peggy

            Lloyd, Sir Ian (Havant)

            Field, Barry (Isle of Wight)

            Lloyd, Peter (Fareham)

            Finsberg, Sir Geoffrey

            Lord, Michael

            Fookes, Miss Janet

            Luce, Rt Hon Richard

            Forsyth, Michael (Stirling)

            Lyell, Sir Nicholas

            Forth, Eric

            Macfarlane, Sir Neil

            Fowler, Rt Hon Norman

            MacGregor, Rt Hon John

            Fox, Sir Marcus

            MacKay, Andrew (E Berkshire)

            1046

            Maclean, David

            Raffan, Keith

            McLoughlin, Patrick

            Raison, Rt Hon Timothy

            McNair-Wilson, M. (Newbury)

            Rathbone, Tim

            McNair-Wilson, P. (New Forest)

            Redwood, John

            Madel, David

            Renton, Tim

            Major, Rt Hon John

            Rhodes James, Robert

            Malins, Humfrey

            Ridsdale, Sir Julian

            Mans, Keith

            Roe, Mrs Marion

            Maples, John

            Rost, Peter

            Marlow, Tony

            Rowe, Andrew

            Marshall, Michael (Arundel)

            Rumbold, Mrs Angela

            Martin, David (Portsmouth S)

            Ryder, Richard

            Mates, Michael

            Sackville, Hon Tom

            Mawhinney, Dr Brian

            Sainsbury, Hon Tim

            Maxwell-Hyslop, Robin

            Shaw, David (Dover)

            Mayhew, Rt Hon Sir Patrick

            Shaw, Sir Michael (Scarb')

            Meyer, Sir Anthony

            Shelton, William (Streatham)

            Miller, Hal

            Shephard, Mrs G. (Norfolk SW)

            Mills, lain

            Shepherd, Richard (Aldridge)

            Miscampbell, Norman

            Sims, Roger

            Mitchell, Andrew (Gedling)

            Smith, Tim (Beaconsfield)

            Moate, Roger

            Soames, Hon Nicholas

            Monro, Sir Hector

            Speller, Tony

            Montgomery, Sir Fergus

            Spicer, Michael (S Worcs)

            Moore, Rt Hon John

            Squire, Robin

            Moss, Malcolm

            Stanley, Rt Hon John

            Moynihan, Hon Colin

            Stern, Michael

            Mudd, David

            Stevens, Lewis

            Neale, Gerrard

            Stradling Thomas, Sir John

            Nelson, Anthony

            Summerson, Hugo

            Neubert, Michael

            Taylor, John M (Solihull)

            Newton, Rt Hon Tony

            Thompson, D. (Calder Valley)

            Nicholls, Patrick

            Thornton, Malcolm

            Nicholson, David (Taunton)

            Thurnham, Peter

            Nicholson, Emma (Devon West)

            Townsend, Cyril D. (B'heath)

            Onslow, Rt Hon Cranley

            Twinn, Dr Ian

            Oppenheim, Phillip

            Vaughan, Sir Gerard

            Owen, Rt Hon Dr David

            Waddington, Rt Hon David

            Page, Richard

            Walker, Bill (T'side North)

            Paice, James

            Walters, Dennis

            Patnick, Irvine

            Widdecombe, Ann

            Patten, Chris (Bath)

            Wiggin, Jerry

            Patten, John (Oxford W)

            Wilshire, David

            Pawsey, James

            Wood, Timothy

            Peacock, Mrs Elizabeth

            Porter, Barry (Wirral S)

            Tellers for the Ayes:

            Porter, David (Waveney)

            Mr. David Lightbown and

            Portillo, Michael

            Mr. Alan Howarth.

            Powell, William (Corby)

            NOES

            Abbott, Ms Diane

            Caborn, Richard

            Adams, Allen (Paisley N)

            Campbell, Menzies (Fife NE)

            Allen, Graham

            Campbell, Ron (Blyth Valley)

            Alton, David

            Campbell-Savours, D. N.

            Anderson, Donald

            Canavan, Dennis

            Archer, Rt Hon Peter

            Carlile, Alex (Mont'g)

            Armstrong, Hilary

            Clark, Dr David (S Shields)

            Ashley, Rt Hon Jack

            Clarke, Tom (Monklands W)

            Ashton, Joe

            Clay, Bob

            Banks, Tony (Newham NW)

            Clelland, David

            Barnes, Harry (Derbyshire NE)

            Clwyd, Mrs Ann

            Barron, Kevin

            Cohen, Harry

            Battle, John

            Coleman, Donald

            Beckett, Margaret

            Cook, Frank (Stockton N)

            Beith, A. J.

            Cook, Robin (Livingston)

            Bell, Stuart

            Corbett, Robin

            Benn, Rt Hon Tony

            Corbyn, Jeremy

            Bermingham, Gerald

            Cousins, Jim

            Blair, Tony

            Cox, Tom

            Blunkett, David

            Crowther, Stan

            Boateng, Paul

            Cryer, Bob

            Boyes, Roland

            Cummings, John

            Bradley, Keith

            Cunliffe, Lawrence

            Bray, Dr Jeremy

            Dalyell, Tam

            Brown, Gordon (D'mline E)

            Darling, Alistair

            Brown, Nicholas (Newcastle E)

            Davies, Rt Hon Denzil (Llanelli)

            Bruce, Malcolm (Gordon)

            Davies, Ron (Caerphilly)

            Buchan, Norman

            Dewar, Donald

            Buckley, George J.

            Dixon, Don

            1047

            Dobson, Frank

            Howell, Rt Hon D. (S'heath)

            Doran, Frank

            Howells, Geraint

            Douglas, Dick

            Hoyle, Doug

            Dunnachie, Jimmy

            Hughes, John (Coventry NE)

            Dunwoody, Hon Mrs Gwyneth

            Hughes, Robert (Aberdeen N)

            Eadie, Alexander

            Hughes, Roy (Newport E)

            Eastham, Ken

            Hughes, Sean (Knowsley S)

            Ewing, Harry (Falkirk E)

            Illsley, Eric

            Ewing, Mrs Margaret (Moray)

            Ingram, Adam

            Fatchett, Derek

            Janner, Greville

            Fearn, Ronald

            John, Brynmor

            Field, Frank (Birkenhead)

            Jones, Barry (Alyn & Deeside)

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

            Jones, Martyn (Clwyd S W)

            Fisher, Mark

            Kennedy, Charles

            Flannery, Martin

            Kirkwood, Archy

            Flynn, Paul

            Lambie, David

            Foot, Rt Hon Michael

            Lamond, James

            Foster, Derek

            Leadbitter, Ted

            Foulkes, George

            Lestor, Joan (Eccles)

            Fraser, John

            Lewis, Terry

            Galbraith, Sam

            Livsey, Richard

            Galloway, George

            Lloyd, Tony (Stretford)

            Garrett, John (Norwich South)

            Loyden, Eddie

            Garrett, Ted (Wallsend)

            McAllion, John

            Gilbert, Rt Hon Dr John

            McAvoy, Thomas

            Godman, Dr Norman A.

            McCartney, Ian

            Gordon, Mildred

            McFall, John

            Gould, Bryan

            McKay, Allen (Barnsley West)

            Graham, Thomas

            McKelvey, William

            Grant, Bernie (Tottenham)

            McLeish, Henry

            Griffiths, Nigel (Edinburgh S)

            McTaggart, Bob

            Grocott, Bruce

            Madden, Max

            Hardy, Peter

            Marek, Dr John

            Healey, Rt Hon Denis

            Marshall, Jim (Leicester S)

            Heffer, Eric S.

            Martin, Michael J. (Springburn)

            Henderson, Doug

            Martlew, Eric

            Hogg, N. (C'nauld & Kilsyth)

            Maxton, John

            Holland, Stuart

            Meale, Alan

            Home Robertson, John

            Michael, Alun

            Hood, Jimmy

            Michie, Bill (Sheffield Heeley)

            Howarth, George (Knowsley N)

            Michie, Mrs Ray (Arg'l & Bute)

            1048

            Millan, Rt Hon Bruce

            Skinner, Dennis

            Moonie, Dr Lewis

            Smith, Andrew (Oxford E)

            Morgan, Rhodri

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

            Morley, Elliott

            Soley, Clive

            Morris, Rt Hon A. (W'shawe)

            Spearing, Nigel

            Morris, Rt Hon J. (Aberavon)

            Steel, Rt Hon David

            Mowlam, Marjorie

            Steinberg, Gerry

            Mullin, Chris

            Stott, Roger

            Murphy, Paul

            Strang, Gavin

            Nellist, Dave

            Straw, Jack

            O'Neill, Martin

            Taylor, Mrs Ann (Dewsbury)

            Orme, Rt Hon Stanley

            Taylor, Matthew (Truro)

            Parry, Robert

            Thompson, Jack (Wansbeck)

            Patchett, Terry

            Vaz, Keith

            Pendry, Tom

            Wall, Pat

            Pike, Peter L.

            Wallace, James

            Powell, Ray (Ogmore)

            Walley, Joan

            Randall, Stuart

            Wareing, Robert N.

            Redmond, Martin

            Welsh, Andrew (Angus E)

            Rees, Rt Hon Merlyn

            Welsh, Michael (Doncaster N)

            Reid, Dr John

            Williams, Rt Hon Alan

            Richardson, Jo

            Williams, Alan W. (Carm'then)

            Roberts, Allan (Bootle)

            Wilson, Brian

            Robinson, Geoffrey

            Winnick, David

            Rogers, Allan

            Worthington, Tony

            Rooker, Jeff

            Wray, Jimmy

            Ruddock, Joan

            Young, David (Bolton SE)

            Salmond, Alex

            Sedgemore, Brian

            Tellers for the Noes:

            Sheerman, Barry

            Mr. Frank Haynes and

            Sheldon, Rt Hon Robert

            Mrs. Llin Golding.

            Short, Clare

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

  Community Charge (Students)
  Mr. Speaker: We now come to the prayer on community charges in Scotland. I remind the House before we start that the debate must end at 11.30 pm, and there is great pressure to take part. May I ask for brief contributions from both the Back Benches and the Front Benches.
  10.19 pm
  Mr. Donald Dewar: I beg to move,
  That an humble Address be presented to Her Majesty, praying that the Personal Community Charge (Students) (Scotland) Regulations 1988 (S.I., 1988, No. 632), dated 28th March 1988, a copy of which was laid before this House on 30th March, be annulled.
  These are deceptively simple regulations, which define the categories of students who will qualify for a poll tax rebate. They do, however, raise many questions and problems which I believe will haunt those collecting the tax for many a long year.
  First, there is the problem of how to define students. The regulations set out to try. We are told that a student is someone who is studying at an educational establishment and attends it for 24 weeks or more during the year, or someone who is studying at a further education or teacher training college and working there for 21 hours in the week, again for a minimum period of 24 weeks.
  The first general question that I must ask the Minister is whether he is satisfied that those definitions are precise and comprehensive. Perhaps, when he is addressing himself to that, he will tell us whether students on sandwich courses are likely to be treated differently. After all, many students on this kind of course meet the requisite number of weeks, but only if we include the practical placements which are an integral part of their qualification, and many of those are not within the normal academic year. That seems to raise substantial problems of definition.
  Then is the problem of foundation courses. I have experience of this in my own family. People go for two years to an institution, but the only qualification that they obtain is the right to enter a degree course. They do not get any qualification per se. It is not clear to me, at least, that they will be entitled to the rebate.
  There is also the problem of bridging courses. There may be a relatively short course when someone is converting from one discipline to another. When that is completed, there is an automatic right to proceed to the second course. It is not clear whether that is taken as a complete entity, and whether the person will be covered by the definition.
  I should also like the Minister to say a word or two about non-degree courses. We are told very precisely in regulation 3(a)(iii) that those people will have to undertake a period of study averaging at least 21 hours a week. I stress the words "of study". I should like to know whether that includes placements which are part of, for example, a social work or teacher training course, or indeed a sandwich course. How is it compatible with 3(c), which seems to contradict and run counter to it?
  Having looked at the schedule, I believe that there may be difficulties, particularly in regard to further education, for people following, for instance, hairdressing or
  1050
  secretarial courses. I am not entirely satisfied—perhaps the Minister can reassure me—that they are all covered. He might also deal with the question of nursery nurses and English courses for overseas students. Overseas students will have to pay the poll tax even if they are not on the present electoral register. There is a ragged fringe around the edge of the definitions which may well cause problems.
  I also ask the Minister to calculate, or give an estimate of, how many students in Scotland are likely to qualify for a rebate. A parliamentary question some time ago suggested around 70,000.
  The Minister of State, Scottish Office (Mr. Ian Lang): At this early stage in the debate it might be helpful to point out that we are not talking about rebates; we are talking about exemptions.
  Mr. Dewar: That is a nice semantic point. As I understood it, we are talking about the 80 per cent.—
  Mr. Jeff Rooker: It is automatic rebate.
  Mr. Dewar: I called it a rebate. I take the point. I mean the reduction in the poll tax charge to 70 per cent. I am asking the Minister how many students in Scotland are likely to qualify. Is the figure 70,000—which I think was mentioned earlier—or 100,000, as the National Union of Students has suggested?
  I also ask the Minister to say a word or two about the impact on local government. Obviously, if a local authority is losing 80 per cent. of the poll tax that would normally be paid by an adult, in the case of students there is a substantial loss.
  As I understand it, it was originally intended that students would pay the full poll tax and a compensatory award would be made to them. I appreciate the benefits of the approach that has now been adopted, but what guarantees are there for local authorities? An amendment was tabled in Committee in the other place by Lord Ross of Marnock. The then Minister, Lord Glenarthur, said that the point would be taken into account in setting the rate support grant. That is the equivalent of, "Your cheque is in the post," and will inspire no confidence among Scottish local authorities. I calculate that the sum involved is likely to be about £25 million, or about 1 per cent. of RSG. The Minister should give an assurance that that will be properly covered when the calculations are made.
  Mr. John Butterfill: Does the hon. Gentleman agree that this does not apply only to students? There are many other cases, such as holiday populations, that equally give rise to concern about the level of RSG and the factors that should be taken into account in assessing it.
  Mr. Dewar: That is no doubt true, but we should keep to the subject of students.
  When the category of students has been defined, the problem arises how to establish individuals' claims. Perhaps the Minister will take this convenient opportunity to comment on the vital matter of verification and on the state of the art and say how, when students are registered, they will establish their claim to the reduction to 20 per cent. which is at the heart of the scheme. For example, is it intended that universities and colleges will supply lists of those qualified to the registration officers in their areas? If so, a great deal of work is involved for the universities

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  because the definition of a student for the purposes of the regulations cuts across many other definitions that are used at present in the universities. The category applicable in this case would have to be teased out from the general student body.
  If universities are to have that duty, what sanction will there be if they fail to comply? After all, a responsible person has a legal duty placed upon him and faces a financial penalty if he does not carry it out. Would that sanction apply in respect of such institutions, if that approach were to be adopted? Have the views of vice-chancellors been sought on the matter? The Minister will be aware that many civil rights issues involving the denial of individual responsibilities would arise. Many of us take the view that such information should not be supplied by the university or college without the permission of the individual student concerned.
  Another possibility is simply that the onus should be on the student to apply for the exemption and to prove his or her entitlement. Perhaps we could have a composite solution in which the onus should be on the student to apply and the registration officer then had the power to check with the university or college. The Minister must comment on that tonight and give an indication of the Government's thinking.
  I very much want an assurance that we shall not go down the road taken by the Department of the Environment south of the border. I have here a letter from the hon. and learned Member for Folkestone and Hythe (Mr. Howard) who, I understand, is the Minister for Local Government, to my hon. Friend the Member for Copeland (Dr. Cunningham) which announces that the first step that will be taken in England to deal with the problem
  "is a requirement that universities and colleges should issue certificates to full-time students confirming their status. These certificates will make it straightforward for students to claim the student discount".
  That looks unpleasantly and uncommonly like an identity card thinly disguised as a certificate to establish a student's status for poll tax purposes. That is totally unacceptable to Opposition Members. It should be ruled out now, and I invite the Minister to do exactly that.
  It is clearly desirable that students should receive any possible remission from the burden of poll tax. I am in favour of that, as are my hon. Friends, but that does not mean that we must not be satisfied that there is confidence in the system and that it is workable and equitable. Even with the discount it is worth remarking that few, if any, students look forward in any sense to the arrival of the poll tax. They have many and manifold worries. Perhaps the Minister could do himself some good by giving assurances and addressing himself to some of the problems.
  There is, for example, the matter of the rent levels paid by students. As the Minister knows, these are often set on the basis that the landlord will pay a substantial rates bill. The rates bill will disappear for the landlord, and students will shoulder perhaps £60 or £70 a year or more as their 20 per cent. of the normal poll tax in the area. Yet, so far as I am aware, there is no machinery for ensuring that the rents are adjusted to a lower level to compensate for this change. It is important that the Minister says a word or two about that during the debate. That is essential because students are hard pressed—no doubt in all parts of the United Kingdom, but I can speak from personal experience of Scotland only.
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  Students have suffered from the falling value and purchasing power of the grant over many years and from the failure to rate properly against inflation. They will suffer from changes in housing benefit, perhaps not so dramatically as some of my constituents, but nevertheless significantly and substantially. In the long term they will suffer from the Government's determination to end all support for students from the benefit system. In those circumstances it is absolutely vital that we have some assurance that efforts will be made to adjust those rents to ensure that students do not bear an additional burden which few of them can afford,.
  We want the best possible protection for students, but we do not believe that these regulations are properly thought out. They are full of gaps, distortions and anomalies. It is a case of doubtful means being employed to achieve a thoroughly undesirable end. The House should reflect the anger and vehement opposition of students to the poll tax in every part of Scotland. We intend to vote against the regulations and the tax. The regulations are part and parcel of an unsound, unpopular scheme, which we believe is essentially unworkable.
  10.32 pm
  Mr. Bill Walker: I am happy to speak about the community charge regulations as they apply to students. I declare an interest because some members of my family are students and will obviously benefit from the 80 per cent. rebate.
  I am worried about the way in which the community charge is being presented to the people of Scotland, including students. Only this week I received through my letter box The Tayside Digest—not one of my favourite pieces of reading material—which is issued by Tayside regional council. The digest advises us that an estimated £1,775,000 will be required for additional staff to operate the community charge, together with about £300,000 more for property costs, about £580,000 extra for administration costs, about £2 million for temporary office accommodation and about £4·5 million for permanent offices. The way Tayside is proceeding gives rise for anxiety. The council seems determined to spend money regardless. In those curcumstances students must he concerned about the 20 per cent. that they will be required to pay.
  Kept at present levels and without escalating costs, the charge will be equivalent to a colour television licence fee. I should have thought that, for the value to students, certainly in my family, of libraries and other facilities, that is a small contribution towards the cost of local government. Non-students would pay substantially more for the recreational and other facilities that students use extensively. So is is good value, but it will remain good value only if my hon. Friend the Under-Secretary keeps a careful note of how much Tayside and other regions spend on collection. For instance, Tayside has opted for an NCR system, and I wonder whether it is paying extra for that equipment.
  I am also worried about the misinformation which is being put out about the community charge, its likely cost and the way it will be administered. During the local government election recently the Scottish National party, true to form, put out its usual bunch of lies in my

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  constituency. [Interruption.] It does that all the time in my constituency and I am sure it does the same in others, including Labour constituencies.
  The community charge will be affected by the way in which local authorities deal with housing. One lie put out by the Scottish National party was:
  "The Government is determined that local authority housing should be sold off to the highest bidder…Council housing as we know it today will disappear and the only beneficiaries will be faceless city investors."
  All that will affect the community charge and will worry students. I am worried about the downright lies that have been circulated to students and others by the Scottish National party in my constituency, and I welcome the opportunity to ask my hon. Friend the Minister to note that.
  Because I have been asked to be brief, I will not deal with the other aspects of the regulations. I repeat that students will get marvellous value for what they pay. As I said, I have students in my family; they will enjoy the benefits, provided my hon. Friend keeps a close eye on the cost of administering the charge.
  10.37 pm
  Mr. Thomas Graham: Some time ago I asked a question to which the answer was one of the most sinister that I have heard in Britain for many a day. I asked whether the Minister was suggesting that petitions would be used for the purpose of gathering names and addresses for the register. He said yes. That is incredible in Britain, where we have a history and tradition of using petitions to petition the Queen or the Government. There has never before been any suggestion that a Government would use a petition as a source of information. Now the Government intend to use petitions as a source of information to complete the disastrous poll tax register.
  It is a sinister move. Students who are on the threshold of life and who are trying to get an education will be frightened to put their names to anti-poll-tax campaigns because the Government may use the information to compile the register. What else could the Government use the information for? They could use it for many other purposes. The Minister must tell the House and the country how the Government will use petitions. [Interruption.]
  I know that other hon. Members wish to speak, so I do not want to take up too much time. I believe that the 20 per cent. is a tax on education. It is a tax on young people who cannot affort to pay it. We have recently seen in the House the push for Scottish Homes. The Opposition know that that will cause rents to escalate. On top of that, young people will need to find 20 per cent. of the poll tax. Does the hon. Member for Tayside, North (Mr. Walker) believe that £70 is chickenfeed? Seventy pounds buys £70-worth of books. The Government will punish young people who can ill afford their education. They will drive young people away from further education.
  The Government are on the road to stifling free speech. They cannot be allowed to use petitions in this way. The Minister should make it clear to the House that the Government have no intention of changing the traditions and values of this country and that they will use petitions for their proper purpose. It is disgraceful that any
  1054
  Minister, especially a Scottish Minister, should take away from the Scottish people the right to sign a petition, and the petition they sign should be used only for its proper purpose. It should not be used for any sinister means thought up by the registration office.
  10.41 pm
  Mr. Alistair Darling: We are discussing those lucky students who will be exempted from paying the full amount of the community charge and will only pay 20 per cent. of it. One of the objections to the regulations is that they exclude many people who, in any sense of the words, are students or trainees. However, they will not be exempted from paying the full amount, as are students of universities, colleges and so on.
  It is worth noting that students who become liable to pay poll tax in their first year of education will have no allowance made in their student grants. That is because no adjustment will be made to the student grant until poll tax is payable throughout the whole of the United Kingdom. In other words, students attending Scottish universities and colleges will be disadvantaged.
  Why is the group eligible for the allowance so narrow? Why does it not include part-time students, who attend universities and colleges for less than 21 hours a week? What about trainees? Are they not students? We constantly see advertisements that are paid for by the taxpayer and promoted by Lord Young, telling us that there will be more training and more students, yet those people are not to be included.
  Student grants this year amount to £38 a week if one is living away from home, or £28 a week if one is living at home. If one compares those figures with the amount paid to YTS trainees— £29 a week in the first year and £35 a week in the second year—one sees that there is not much
  difference between the payments. Yet the students attending universities or colleges have to pay only 20 per cent. of the poll tax—I do not grudge them that—and trainees on, for example, YTS will pay the full amount if they do not come within the very restrictive benefit scheme. Although there is little difference, the Government are treating the YTS trainees differently. We suspect that that is because they are attempting to buy off the parents of the students attending colleges and universities.
  One of the major anomalies involves student nurses. Why are they not included? What have the student nurses done to offend the Government so much? Why will they not be entitled to pay only 20 per cent. of the poll tax? What about the young unemployed?
  Mr. Ian Bruce rose—
  Mr. Darling: I hope that hon. Members will forgive me, but I am reluctant to give way to hon. Members who have shown little interest in the poll tax legislation for Scotland. We see them only when they are brought in to filibuster on behalf of the Government.
  Mr. Tim Devlin: Will the hon. Gentleman give way?
  Mr. Darling: No, I shall not give way.
  The House must consider the double standards that are being applied—on the one hand, to students at colleges and universities, and on the other, to those who are on YTS and to student nurses.

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  For people on YTS, the poll tax may account for as much as £7 a week out of a weekly income of £29. On top of that, the unfortunate individual also has to pay for rent, food and rising electricity prices.
  As my hon. Friend the Member for Glasgow, Garscadden (Mr. Dewar) said, who will guarantee that student rents will come down when rates are abolished? In too many cases, what is likely to happen is that rents will stay exactly the same and the landlords will pocket the difference and, on top of rent, the student will have to find the money for the poll tax.
  If the Minister refers to the rebate system in his reply, let no one be fooled. We have already seen, in the benefit changes, students being hit time and again along with thousands of others. The rebate system has been restricted, which will result in many people who wish to improve themselves by undergoing further education losing out, together with those who want to train and those who want the advantages to which they are entitled.
  The regulations are full of inconsistencies—that is typical of the legislation as a whole. The one thing that is certain is that the Minister will say nothing to justify it, because there is no justification. Once again, he will mumble his way through the brief. People in Scotland, and in the United Kingdom, have every right to be worried about what is coming their way. The Government will pay the penalty for that. The regulations typify the double standards and unjust nature of the poll tax and that is why we shall vote against them.
  10.46 pm
  Sir Hector Monro: It seems strange that after a year the Opposition have still not got away from their yah-boo attitude to the House. They refuse to treat it as a debating Chamber, or to observe the normal courtesy of giving way. All they do is make a lot of noise without ever considering the issue at stake. The sooner they realise that they are the "feeble 50" and have a singularly incompetent year's work behind them, the better.
  This is a good scheme to help whole-time students to deal with the community charge. The 80 per cent. reduction is significant and worth while and will be well received by the students concerned, bearing in mind that if everything is fair there will be a significant reduction in the rates that they are already paying.
  Opposition Members have spent the past year giving out misinformation. They have totally ignored the rebate scheme for the community charge and have put the fear of God into people when that cannot be justified in any way. The misinformation in some of the documents that have been produced since the last election must make the consciences of Opposition Members turn even redder.
  Mr. Tam Dalyell rose—
  Sir Hector Monro: They have put in some— [HoN. MEMBERS: "Give way."] Of course I give way to the hon. Gentleman.
  Mr. Dalyell: Why is it, then, that the vice-chancellors should have expressed so many anxieties on behalf of the students?
  Sir Hector Monro: I am afraid that they have been misled by the Labour party. When the vice-chancellors read the Minister's reply, they will realise that they were
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  ignorant of the facts. That is why they have put out more misinformation than the hon. Gentleman's party in recent months.
  There is no doubt that the Labour party—the Scottish National party is even worse—and the social democrats have been putting the most fearful and totally incorrect information before the people of Scotland. All Opposition Members, especially those in the Scottish National party, should apologise to the people of Scotland for the way in which they have behaved during the past year over the community charge.
  Mr. Bill Walker: Another interesting aspect of the position of the Scottish National party is that the Scottish National party provost in Perth and Kinross and nationalist councillors in Angus are telling people to live within the law and obey the law, which is contrary to the nonsense that we hear from Opposition Members.
  Sir Hector Monro: Indeed. Those who follow the advice of the SNP will be remarkably few. The majority will realise that it is far better to keep within the law, which is what most citizens of Scotland have done for generations.
  My hon. Friend the Minister has brought forward regulations that will help whole-time students and will be well received by them. I hope that the prayer is rejected.
  10.50 pm
  Mr. Menzies Campbell: I doubt whether I can attain the lofty forensic heights of the hon. Member for Dumfries (Sir H. Monro), but I shall do my modest best. In the houses of the vice-chancellors—we prefer to call them principals in the Scottish universities—it will be noted that it is the hon. Gentleman's view that the robust Scottish education tradition is so lacking in vigour that the principals have been deluded by Ministers of the Scottish Office. I have no doubt that that will ring loudly in their ears.
  Sir Hector Monro: I should be grateful if the hon. and learned Gentleman would refer accurately to what I said. I said that the vice-chancellors have been misinformed by the Labour party, not by Ministers.
  Mr. Campbell: That can be only because they have not accepted the alternative views of Ministers at the Scottish Office. It is unconvincing to suggest that the vice-chancellors are so unreceptive to good argument that they cannot distinguish between what is right and what is wrong. No doubt they will regard the hon. Gentleman's judgment of their inability to distinguish between what is right and what is wrong as a measure of the importance that the Government attach to higher education in the United Kingdom.
  In the interests of brevity I do not propose to repeat many of the observations so pungently made by the hon. Member for Glasgow, Garscadden (Mr. Dewar). However, I invite the Minister to give some consideration to the position of overseas students. As a result of the Government's policies, the university of St. Andrew's, which lies within my constituency, has had to make the attraction of students from overseas an important part of its economy. Anything which operates as a disincentive to such students to come to St. Andrew's might have serious repercussions for the financial stability of that institution. I hope that the Minister will make clear precisely what the position is on overseas students.

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  We are concerned this evening not with the principle of the community charge but with its consequences. The regulations are offensive for what they contain and what they do not. The imposition upon students of even 20 per cent. of the community charge is deeply offensive because since 1981 the real value of student grants has fallen by about 21 per cent, and there is to be no increase in the grants in Scotland in the first year for which the community charge is payable. I know of students at St. Andrew's university who genuinely face hardship as a result of the low level of grants on which they are now forced to exist—[Interruption.] If they were present, they would give those who are interrupting from a sedentary position a clear account of their difficulties.
  The imposition of even 20 per cent. of the community charge will add to the hardship of many students. It is nothing but an illustration of the lack of regard that the Government have for higher education and the opportunities that it offers for our young people that they should adopt such a policy.
  I am interested that there are so many English Members present in the Chamber for the debate. I welcome their attendance, because the debate will give them an opportunity to prepare themselves for the onslaught in their constituency surgeries when constituents realise what the consequences are for their children when the community charge is imposed.
  Mr. Devlin: English Members are already seeing their constituents in their surgeries on this issue. During my surgery at Stockton-on-Tees on Saturday I was met by half a dozen pensioners who wanted to know why the local council was organising a petition against the poll tax and I was not organising a petition in its favour. They told me that if I were to organise such a petition, they would be enthusiastic to sign it.
  Mr. Campbell: I think, Mr. Deputy Speaker, that that intervention taxed your tolerance of what is relevant to a debate on regulations that determine the position of students.
  The regulations are offensive for what they do not contain. They fail to recognise the position of student nurses and of apprentices and trainees, who are necessarily engaged in full-time training or education and are poorly rewarded for that, not having the opportunity to take vacation jobs—
  Mr. Ian Bruce: The hon. and learned Gentleman cannot have looked at the regulations. He must surely know that all the people on low wages whom he has described could well be entitled to a full 80 per cent. rebate. Students automatically get it, and do not have to go through the paperwork to do so.
  Mr. Campbell: That is correct. It may be a measure of the importance that the Conservative party attaches to nurses that it thinks it reasonable to pay them a level of remuneration that results in their receiving an 80 per cent. rebate.
  Mr. Butterfill rose—
  Mr. Campbell: I shall not give way. I have done my best so far to bring knowledge to the ignorant, and do not propose to permit further interruptions.
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  The regulations are an illustration of the flawed principle upon which the community charge is based. They are therefore inherently flawed themselves, which is why the House should have no hesitation in wholly rejecting them.
  10.57 pm
  Mr. Harry Ewing: I want to take up a point about student nurses that was made by my hon. Friend the Member for Edinburgh, Central (Mr. Darling) and reinforced by the hon. and learned Member for Fife, North-East (Mr. Campbell). Before doing so, however, I want to answer the point made by the hon. Member for Dumfries (Sir H. Monro), who accused the Labour party in Scotland of having successfully persuaded the people of Scotland to oppose the poll tax by generating misinformation about it. I take that as something of a compliment.
  What has been done to advise people in Scotland about the poll tax? At great expense to the taxpayer, the Scottish Office produced a glossy book that was delivered to every household in Scotland by the much maligned Scottish Post Office. At great expense, the Scottish Conservative party employed a former information officer from the Scottish Office to generate what it considered to be correct information about the poll tax.
  All these efforts have failed to convince the people of Scotland of the value of the poll tax. They have chosen instead to believe the explanation given by the Scottish Labour party. The hon. Member for Stockton, South (Mr. Devlin) fairly described how, at his surgery on Saturday, he was confronted by six old-age pensioners, who chastised him for not organising a petition in favour of the poll tax.
  There are 10 Tory MPs in Scotland. I challenge one or all of them, or the Scottish Conservative party, which does not amount to many more than 10 members, to organise a petition and see how many signatures they can get in Scotland in favour of the tax. My guess is that they could be contained on the two sides of an A4 sheet, with enough room left over on it to write the address of the House of Commons.
  To return to the point raised by my hon. Friend the Member for Edinburgh, Central about student nurses, I do not think that the Government—I notice that the debate has been graced with the presence of the Minister of State responsible for Scottish health—have fully appreciated the impact on nurse training in Scotland that the imposition of the poll tax will have, four years before it is applied in England and Wales.
  At its annual conference in the Scottish exhibition centre in Glasgow last year, the Royal College of Nursing went on record as saying that it will advise student nurses not to train in colleges of nursing and midwifery in Scotland while the poll tax legislation is being implemented in Scotland and not implemented south of the border.
  Mr. Butterfill rose—
  Mr. Ewing: The hon. Member for Bournemouth, West (Mr. Butterfill) is desperate to make a point and I shall give way to him so that he may sleep peacefully.
  Mr. Butterfill: Does the hon. Gentleman not agree that it is for the nurses' review body to decide what will be necessary to compensate nurses for the liability that the

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  hon. Gentleman talks about? Does he not also agree that the Government have implemented the review body's recommendations in full?
  Mr. Ewing: Nurses in Scotland will be worse off to the extent of the poll tax than their counterparts in England and Wales. We now have two views from Tory Members—the one expressed by the hon. Member for Bournemouth, West and the one expressed by the hon. Member for Dorset, South (Mr. Bruce). The hon. Member for Bournemouth, West says that it is for the review body to consider the remuneration of student nurses. The hon. Member for Dorset, South said that nurses received such low pay that they might well qualify for an 80 per cent. rebate.
  Mr. Ian Bruce rose—
  Mr. Ewing: I propose to finish on this point and I hope that the Minister will take it on board. Whatever may be said about the Under-Secretary of State for Scotland, he believes in what he says. I do not dispute that for a moment.
  Mr. Ian Bruce: On a point of order, Mr. Deputy Speaker. The hon. Member for Falkirk, East (Mr. Ewing) has misquoted me. I clearly said that the income of those classes of people would be looked at and that they could receive a rebate of 80 per cent.
  Mr. Deputy Speaker (Sir Paul Dean): That is a matter for debate and not a point of order for the Chair.
  Mr. Ewing: Sometimes I think that the Under-Secretary of State for Scotland is a fair person. I have to be personal here and I hope that he does not take offence. I am sure that he sees the total unfairness and injustice in the fact that student nurses whom he represents in Stirling royal infirmary and in other Health Service establishments in his constituency are faced with the possibility of the imposition of the poll tax while he will save £1,200 a year. There is simply no justice in that and student nurses training in Scotland will suffer as a result. That will be on the shoulders of Conservative Members.
  11.3 pm
  Mr. Dick Douglas: I shall be extremely brief and have no intention of giving way.
  What concerns me about the regulations is the way that they affect education and universities not only in Scotland but elsewhere. Universities are collegiate organisations and a family. I watched with some interest the smirks on the faces of Conservative Members when my hon. Friend the Member for Glasgow, Garscadden (Mr. Dewar) suggested that part of the thrust of the regulations was to invite universities to issue to students what is tantamount to an identity card. Many Conservative Members said, "Why not?"
  Most universities have some form of identification, for libraries and so on, because it bestows on the students some privilege. If the regulations bestow a privilege, they go against the thrust of the poll tax and accountability. Although it goes partly along the lines of ability to pay, the main thrust of the poll tax is to impose burdens on people so that those burdens will be reflected in their voting behaviour.
  The Secretary of State and the proponents of the tax argued at first that the students should pay the whole tax
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  and get rebates, remission or exemptions. That is a range of words, but the Minister used the word "exemptions" because the students get grants from the Scottish Office. I want an assurance from the Minister, because I predict that there will be enormous difficulties in determining who is a student. I suspect that when the Scottish Office is faced with that problem it will go to its central records of those who apply for student grants. [HON. MEMBERS: "Why not?"] Why not? If that is not an infringement of civil liberties, I do not know what is. For the first time, we have an admission that if parents of students freely give information for one purpose, when the Secretary of State or those who desire to impose on young Scots a head tax with no real basis in ability to pay cannot get their way, they will use any device to hand.
  If the Minister does not deny that, the suspicion will lie. People will not apply for student grants because they will not want to pay the poll tax. Students will not pay even the 20 per cent.; parents will. Tory Members are smirking. We want more children from working class backgrounds to go in for higher education, but their parents will not be able to pay the tax. It will be a further imposition and a further—
  Mr. Devlin: Will the hon. Gentleman give way?
  Mr. Douglas: I have made it plain that I shall not give way, and I shall certainly not give way to hon. Members who have scant regard for what is being proposed in Scotland.
  The regulations have an extremely eclectic definition of students. We have had some debates about the future of Newbattle Abbey. Do students attending that college qualify under the regulations? As far as I know, they will have to pay the poll tax, although they will be in the college for periods of 24 hours or 21 hours. What will happen to Scottish students who go to organisations such as the college I went to—the co operative college at Loughborough—not necessarily to take degrees, but for some other educational qualification?
  We have no information as to the cost of imposing these regulations. I have made it plain that this is a monstrous tax that the people of Scotland want nothing to do with. I have warned my colleagues and I shall warn the Government. The Prime Minister may be doing us a good turn by visiting Scotland—and I do not mean the electoral chances of the Tory party. The more she tries to thrust down the throats of Scottish people what she thinks is good for them, the more the Scottish people will reject it. Come 1 April 1989, the revulsion that will be displayed by the Scottish people towards the poll tax will rock the unity of the United Kingdom.
  11.9 pm
  Mr. Roy Beggs: The community charge, or poll tax, which comes into effect in Scotland in 1989 and in England and Wales from 1990 onwards, will affect students from Northern Ireland studying at mainland universities. Like other students, they will be required to pay 20 per cent. of the tax. They will be registered for collection at their term-time addresses in Great Britain.
  Is the Minister aware that students from Northern Ireland studying at English, Welsh and Scottish universities—
  Mr. Tony Marlow: On a point of order, Mr. Deputy Speaker. You will be well aware of

  1061
  the fact that Conservative Members who have been present throughout the debate have tried to get involved in the debate—[Interruption.]
  Mr. Deputy Speaker: Order. The hon. Gentleman must not question the judgment of the Chair in calling hon. Members to speak. Mr. Beggs.
  Mr. Marlow rose—
  Mr. Deputy Speaker: Order. I have dealt with the hon. Gentleman's point of order and I ask him now to reflect upon what I said. Mr. Beggs.
  Mr. Marlow: On a point of order, Mr. Deputy Speaker. I seek your advice— [Interruption.]
  Mr. Deputy Speaker: Order. I am not taking another point of order from the hon. Gentleman. Mr. Beggs.
  Mr. Beggs: This has gone a little too far. It is quite unnecessary.
  Is the Minister aware that students from Northern Ireland at English, Welsh and Scottish universities—
  Mr. Barry Porter: On a point of order, Mr. Deputy Speaker.
  Mr. Deputy Speaker: Order. This is a very short debate and the House must leave it to the discretion of the Chair as to who should be called to speak. I appeal to hon. Members, whose frustration I fully understand, not to rise on points of order which are questioning the discretion of the Chair.
  Mr. Beggs: Is the Minister aware that students from Northern Ireland who study at mainland universities will be adversely affected by the poll tax? Their parents are already paying domestic rates—
  Mr. Barry Porter: On a point of order, Mr. Deputy Speaker. As an English Member, I have listened with great interest to the debate, and to some extent I understand how you have exercised your honest discretion in calling Scottish Members. Equally, this is a matter for the United Kingdom, and it is difficult to understand why, after four Opposition Members have spoken consecutively, you have called an hon. Member from the Province, and my hon. Friend the Member for Northampton, North (Mr. Marlow) has not been called. We have a right to be heard.
  Mr. Deputy Speaker: Of course I understand the frustration of hon. Members on both sides of the House when they do not have the opportunity to be called in debates, but the whole House knows very well that that is one of the discretions—and it is a very difficult discretion—which the House has given to the Chair. I am exercising that discretion to the best of my judgment.
  Mr. Beggs: Parents of students attending mainland universities are already paying domestic rates at the same level as is paid in Humberside. When the poll tax is introduced in Humberside, Northern Ireland ratepayers will pay domestic rates at the same level as the poll tax levied in Humberside. Those parents will then be required to provide additional financial assistance for their sons or daughters attending mainland universities. I understand that that could amount to as much as £70—[Interruption.]
  Mr. Nigel Griffiths: On a point of order, Mr. Deputy Speaker. Opposition Members are keen to listen to contributions to the debate, but we are unable to do so because of squabbling and speaking between Government Whips and Conservative Members. If the Government Whip cannot control the hon. Members, they should leave the Chamber and carry on—
  Mr. Deputy Speaker: Order. There is little time left in the debate and I ask the House to listen quietly to the hon. Member who has the Floor.
  Mr. Beggs: I am sure that there is no intention to discriminate against me. I hope that there is no intention by the Government to discriminate against those Northern Ireland students who are attending universities on the mainland, who have taken the initiative to seek places and have been awarded courses appropriate to their needs.
  Will the Minister undertake to discuss the problem with his colleagues in the Northern Ireland Office and request that consideration be given urgently to increasing student grants for Northern Ireland students at universities in Britain? Such students are already badly penalised by the high costs of travel to and from the mainland and we all know that travel assistance has been cut.
  Will the Minister also bear in mind the fact—this is important and I hope that the Minister will understand and be sympathetic—that Northern Ireland is a low-wage economy? We have high unemployment. The future prosperity of Northern Ireland is dependent on our students getting the best education possible. We do not want anything that will dissuade them from seeking courses at mainland universities.
  The additional burden of the poll tax puts at risk for many of those students the possibility of attending mainland universities. I hope that the Minister can inform us whether, taking account of the low incomes, such people will be entitled to a rebate of 80 per cent. of the 20 per cent. being levied or whether they will qualify for benefit to help pay the 20 per cent. that is expected from them.
  It would appear that the cost of collecting that small amount of poll tax from our students may far outweigh the value of the money collected. It should be dropped altogether. Students should be exempted.
  11.18 pm
  The Minister of State, Scottish Office (Mr. Ian Lang): From the tone of this evening's debate one would not have thought that the proportion of gross domestic product going on student maintenance in this country is higher than in any other Western country, that student incomes overall have risen by 5·5 per cent. in real terms since 1982 and that there are more students than ever before.
  Mr. Alex Salmond: On a point of order, Mr. Deputy Speaker. Given the respect with which the Chair treats the rights of minority parties in the House, it cannot have escaped your notice that the Scottish National party has again not been allowed to make a contribution to this debate on an important issue facing Scotland. That is particularly surprising given that the SNP emerged as the second party in Scotland in terms—
  Mr. Deputy Speaker: Order. I must say to the hon. Gentleman—as I have just said to Conservative Members—that this is a matter for the discretion of the Chair.
  Mr. Lang: As the Scottish National party does not support the rule of law, I do not see why they should seek its protection in this House.
  The regulations embody a generous and sensitive response to students' status in the application of the community charge. The hon. Member for Glasgow, Garscadden (Mr. Dewar) asked me whether I was satisfied that the definitions are precise and comprehensive, to which I answer yes, and I shall come to details of that in due course.
  Mr. Salmond rose—
  Mr. Lang: No. I shall not give way to the hon. Gentleman.
  First, however, I should like to answer some points arising from the debate. The hon. Member for Garscadden asked me about the number of students. In 1986–87, 81,600 full-time and sandwich course students were engaged in higher education in Scotland, the great majority of whom would qualify for the 20 per cent. concession. In general, students on short courses and bridging courses leading to entry to higher courses but not producing qualifications in themselves would not be eligible for the 20 per cent. concession, although they will, of course, be eligible for rebate. The definition of term time at regulation 3(c) provides for sandwich course students to attend their courses
  "at such place or places as the educational establishment may specify or approve."
  That covers sandwich courses. Provided that students undertaking sandwich courses or practical placements meet the requirements of the regulations, they will be liable only for the reduced rate of personal community charge throughout their course.
  The hon. Member for Garscadden asked me about the financial implications for local authorities in the context—
  Mr. Marlow rose—
  Mr. Lang: No, I am very sorry. If my hon. Friend will forgive me, I have very limited time. I apologise; on another occasion I would happily give way to my hon. Friend.
  I assure the hon. Member for Garscadden that account will he taken of the number of students in each area in the distribution of the revenue support grant. The hon. Gentleman and his hon. Friend the Member for Renfrew, West and Inverclyde (Mr. Graham) estimated that the cost of the community charge to students in Scotland would be £70. The hon. Member for Renfrew, West and Inverclyde asked whether that was chickenfeed. I point out that my hon. Friend the Under-Secretary of State for Education and Science has been conducting a survey of student expenditure, which discloses that 60 per cent. of students already pay something towards rates in their rent payment. The average payment is between £70 and £80. I hope that that puts the matter in context. [Interruption.]
  The hon. Member for Strathkelvin and Bearsden (Mr. Galbraith) asks whether rent will go down. If they do not already have a registered rent, which is, of course, exclusive of rates, those who are already tenants will be able to apply to the rent officer for a rent to be registered if they are not satisfied that their landlord has reduced the amount that they pay to reflect the abolition of domestic rates. I acknowledge that that protection is not available to some students at present. 'The Rent Act has never sought
  1064
  to impose control on certain kinds of lettings, such as those where board is provided. In other cases—for example, where there is a resident landlord—the control is much less.
  Any attempt to disentangle landlords' liability for rates from their other overheads would be impossible and would not necessarily lead to a reduction in what people pay. In that sector of the market, landlords charge what the market will bear rather than building up a charge based on the separate identification of rent and rates. In future, people in such accommodation may very well be offered short assured tenancies under the proposals of the Housing (Scotland) Bill. In those circumstances, they will be able to apply for the determination of a rent which would not include rates and therefore have the assurance that the total amount that they were called upon to pay was not excessive in the light of prevailing market conditions in the area. So Opposition Members' fears are not justified.
  The hon. Member for Edinburgh, Central (Mr. Darling) and the hon. and learned Member for Fife, North East (Mr. Campbell) referred to student nurses. Students differ from student nurses and other trainees in two important respects. First, their financial situation is different. A student nurse's salary is considerably higher, for example, than even the highest student grant. The student grant outside London is under £2,000, whereas the starting salary for a first-year student nurse is £4,825 and for a third-year student nurse is £5,575. The average earnings of a student nurse in Scotland are about £5,500, which is about two and a half to three times what a student gets.
  We shall take no lessons from members of the Labour and Liberal parties, as, under the last Labour Government, supported by the Liberals, nurses' pay fell by 40 per cent. whereas under this Government it has risen by an average of 44 per cent. in real terms. The crucial difference is that students will not be eligible ('or community charge rebates whereas trainees on low incomes will be eligible for rebates and other help through the social security system.
  The hon. Member for Edinburgh, Central asked about the young person with an income of £29 per week, suggesting that he would have to pay £7 per week community charge. That, as the hon. Gentleman must be aware, is totally misleading and inaccurate, as it takes no account of that person's entitlement to rebate.
  The rebate details have not yet been published—[HON. MEMBERS: "Oh!".] However, on a rough calculation and based on present allowances, a single person having the income and of the age mentioned by the hon. Gentleman would enjoy a rebate of between £4.50 and £5.
  Mr. Darling rose—
  Mr. Lang: No, I will not give way to the hon. Gentleman.
  The hon. Member for Falkirk, East (Mr. Ewing) suggested that nurses in training in Scotland would suffer a four-year disadvantage. He must be aware that the English community charge will be introduced in 1990 and only in parts of London will there be transitional arrangements beyond 1990.
  Mr. Dewar rose—
  Mr. Lang: I am sorry, but I must press on; I have a number of points still to answer.
  We have always intended that there should be a special community charge registration regime for students, in the sense that they should be deemed to be mainly or solely resident at their term-time address. That is a matter of administrative practicality, as it will ensure that students having a term-time address different from their home address will not have to be deregistered and then re-registered up to six times a year, at the beginning and end of each vacation.
  It was the Government's original intention that, as far as possible, payment of the personal community charge by students—
  Mr. Dewar: What about identity cards?
  Mr. Lang: I hope to deal with that point later.
  As to the payment of the personal community charge, students—like all other adults—will be liable to pay the full charge, but assistance will be made available through the student awards system. During the passage of the Abolition of Domestic Rates, Etc. (Scotland) Bill through the House of Lords, it was agreed that a 20 per cent. proportion with an 80 per cent. reduction was a more appropriate system.
  A number of Opposition Members raised questions about the registration process as it affects students. I am informed that the hon. Member for Garscadden held a press conference in Scotland today at which he characterised the registration process as going badly, simply because the Government have not claimed that it is going well. I assure him that we have, and it is. Registration for the community charge is proceeding smoothly and as planned. [HON. MEMBERS: "Rubbish!"] We are still only one quarter of the way through the registration period provided for drawing up the first registers, but it is already clear from press reports that return rates of higher than 75 per cent. are being achieved generally in the initial canvass, approaching 90 per cent. in some areas.
  That is substantially better than would be expected from the first stage of the traditional canvass process for electoral registration. It leaves those who have been trying to disrupt the registration process looking as ridiculous as they are contemptible.
  The hon. Member for Garscadden asked about identity cards. We are considering the possibility of inviting the university authorities to co-operate in the matter of registration, as our English colleagues have already made plain that they are doing. We have had a consultation process and are considering the outcome. We shall make our announcement shortly.
  The hon. Member for Garscadden claimed great success for the campaign to send forms back. People have been sending them back—completed. It is clear that registration officers throughout Scotland are finding no insuperable difficulties in completing the tasks given to them by statute. Those who decided to adopt a postal canvass have almost completed the first stage. Lothian and Strathclyde, the two most populous regions, are well on track to completing the canvass by the end of June, as they planned to do.
  Not only is the Labour party failing in its campaign—and there is nothing new about failure where Labour is concerned—but it is also demeaning itself by lending
  1066
  support to a campaign that encourages people to disregard their civic obligations. I regard Labour Members' posture of nudging the people of Scotland towards disruption and law-breaking as a squalid and demeaning exercise. It is undemocratic and unprincipled, and hon. Gentlemen know that. But they underrate the Scottish people, who are obeying the law, returning the registration forms and rejecting the Labour party's cyhical blandishments. The result will be a fairer and more broadly based means of contributing to the cost of local government through the community charge. The regulations bring that system closer, and I commend them to the House.
  Mr. Brian Wilson (Cunninghame,North)rose—
  It being half-past Eleven o'clock, MR. DEPUTY SPEAKER put the Question, pursuant to Standing Order No. 15 ( Prayers against statutory instrumunt, &c. ( negative procedure)):
  The House divided: Ayes 190, Noes 304.

  Division No. 313]

  [11.30

  AYES

  Abbott, Ms Diane

  Dewar, Donald

  Adams, Allen (Paisley N)

  Dixon, Don

  Allen, Graham

  Dobson, Frank

  Alton, David

  Doran, Frank

  Anderson, Donald

  Douglas, Dick

  Archer, Rt Hon Peter

  Dunnachie, Jimmy

  Armstrong, Hilary

  Dunwoody, Hon Mrs Gwyneth

  Ashton, Joe

  Eadie, Alexander

  Banks, Tony (Newham NW)

  Eastham, Ken

  Barnes, Harry (Derbyshire NE)

  Ewing, Harry (Falkirk E)

  Barron, Kevin

  Ewing, Mrs Margaret (Moray)

  Battle, John

  Fatchett, Derek

  Beckett, Margaret

  Faulds, Andrew

  Beggs, Roy

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

  Bell, Stuart

  Fisher, Mark

  Benn, Rt Hon Tony

  Flannery, Martin

  Bermingham, Gerald

  Flynn, Paul

  Blair, Tony

  Foot, Rt Hon Michael

  Blunkett, David

  Foulkes, George

  Boateng, Paul

  Fraser, John

  Boyes, Roland

  Galbraith, Sam

  Bradley, Keith

  Galloway, George

  Bray, Dr Jeremy

  Garrett, John (Norwich South)

  Brown, Gordon (D'mline E)

  Garrett, Ted (Wallsend)

  Brown, Nicholas (Newcastle E)

  Gilbert, Rt Hon Dr John

  Bruce, Malcolm (Gordon)

  Godman, Dr Norman A.

  Buchan, Norman

  Golding, Mrs Llin

  Buckley, George J.

  Gordon, Mildred

  Caborn, Richard

  Graham, Thomas

  Campbell, Menzies (File NE)

  Grant, Bernie (Tottenham)

  Campbell, Ron (Blyth Valley)

  Grocott, Bruce

  Campbell-Savours, D. N.

  Hardy, Peter

  Canavan, Dennis

  Haynes, Frank

  Carlile, Alex (Mont'g)

  Healey, Rt Hon Denis

  Clark, Dr David (S Shields)

  Heffer, Eric S.

  Clarke, Tom (Monklands W)

  Henderson, Doug

  Clay, Bob

  Hogg, N. (C'nauld & Kilsyth)

  Clelland, David

  Holland, Stuart

  Clwyd, Mrs Ann

  Home Robertson, John

  Cohen, Harry

  Hood, Jimmy

  Coleman, Donald

  Howarth, George (Knowsley N)

  Cook, Frank (Stockton N)

  Hoyle, Doug

  Cook, Robin (Livingston)

  Hughes, John (Coventry NE)

  Corbett, Robin

  Hughes, Robert (Aberdeen N)

  Cousins, Jim

  Hughes, Roy (Newport E)

  Cox, Tom

  Hughes, Sean (Knowsley S)

  Crowther, Stan

  Hughes, Simon (Southwark)

  Cryer, Bob

  Illsley, Eric

  Cummings, John

  Janner, Greville

  Cunliffe, Lawrence

  John, Brynmor

  Dalyell, Tarn

  Jones, Barry (Alyn & Deeside)

  Darling, Alistair

  Jones, Martyn (Clwyd S W)

  Davies, Rt Hon Denzil (Llanelli)

  Kaufman, Rt Hon Gerald

  Davies, Ron (Caerphilly)

  Kennedy, Charles

  1067

  Kirkwood, Archy

  Rees, Rt Hon Merlyn

  Lambie, David

  Reid, Dr John

  Lamond, James

  Richardson, Jo

  Leadbitter, Ted

  Roberts, Allan (Bootle)

  Lestor, Joan (Eccles)

  Robinson, Geoffrey

  Lewis, Terry

  Rogers, Allan

  Lloyd, Tony (Stratford)

  Rooker, Jeff

  Lofthouse, Geoffrey

  Ruddock, Joan

  Loyden, Eddie

  Salmond, Alex

  McAllion, John

  Sedgemore, Brian

  McAvoy, Thomas

  Sheerman, Barry

  McCartney, Ian

  Sheldon, Rt Hon Robert

  McFall, John

  Short, Clare

  McKay, Allen (Barnsley West)

  Skinner, Dennis

  McKelvey, William

  Smith, Andrew (Oxford E)

  McLeish, Henry

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

  McTaggart, Bob

  Smyth, Rev Martin (Belfast S)

  Madden, Max

  Soley, Clive

  Marek, Dr John

  Spearing, Nigel

  Marshall, Jim (Leicester S)

  Steel, Rt Hon David

  Martin, Michael J. (Springburn)

  Steinberg, Gerry

  Martlew, Eric

  Stott, Roger

  Maxton, John

  Strang, Gavin

  Meale, Alan

  Straw, Jack

  Michael, Alun

  Taylor, Mrs Ann (Dewsbury)

  Michie, Bill (Sheffield Heeley)

  Taylor, Matthew (Truro)

  Millan, Rt Hon Bruce

  Thompson, Jack (Wansbeck)

  Moonie, Dr Lewis

  Vaz, Keith

  Morgan, Rhodri

  Wall, Pat

  Morley, Elliott

  Wallace, James

  Mowlam, Marjorie

  Walley, Joan

  Mullin, Chris

  Wareing, Robert N.

  Murphy, Paul

  Welsh, Andrew (Angus E)

  Nellist, Dave

  Welsh, Michael (Doncaster N)

  O'Brien, William

  Williams, Alan W. (Carm'then)

  O'Neill, Martin

  Wilson, Brian

  Parry, Robert

  Winnick, David

  Patchett, Terry

  Wray, Jimmy

  Pendry, Tom

  Young, David (Bolton SE)

  Pike, Peter L.

  Powell, Ray (Ogmore)

  Tellers for the Ayes:

  Randall, Stuart

  Mr. Nigel Griffiths and

  Redmond, Martin

  Mr. Adam Ingram

  NOES

  Aitken, Jonathan

  Brandon-Bravo, Martin

  Alexander, Richard

  Brazier, Julian

  Alison, Rt Hon Michael

  Bright, Graham

  Allason, Rupert

  Brittan, Rt Hon Leon

  Amery, Rt Hon Julian

  Brooke, Rt Hon Peter

  Amess, David

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

  Amos, Alan

  Browne, John (Winchester)

  Arbuthnot, James

  Bruce, Ian (Dorset South)

  Arnold, Jacques (Gravesham)

  Buchanan-Smith, Rt Hon Alick

  Arnold, Tom (Hazel Grove)

  Budgen, Nicholas

  Ashby, David

  Burns, Simon

  Atkins, Robert

  Burt, Alistair

  Atkinson, David

  Butcher, John

  Baker, Rt Hon K. (Mole Valley)

  Butler, Chris

  Baker, Nicholas (Dorset N)

  Butterfill, John

  Baldry, Tony

  Carlisle, John, (Luton N)

  Banks, Robert (Harrogate)

  Carlisle, Kenneth (Lincoln)

  Batiste, Spencer

  Carrington, Matthew

  Beaumont-Dark, Anthony

  Carttiss, Michael

  Bellingham, Henry

  Cash, William

  Bendall, Vivian

  Chalker, Rt Hon Mrs Lynda

  Bennett, Nicholas (Pembroke)

  Channon, Rt Hon Paul

  Bitfen, Rt Hon John

  Chapman, Sydney

  Blackburn, Dr John G.

  Chope, Christopher

  Blaker, Rt Hon Sir Peter

  Churchill, Mr

  Body, Sir Richard

  Clark, Sir W. (Croydon S)

  Bonsor, Sir Nicholas

  Clarke, Rt Hon K. (Rushcliffe)

  Boswell, Tim

  Colvin, Michael

  Bottomley, Peter

  Conway, Derek

  Bottomley, Mrs Virginia

  Coombs, Anthony (Wyre F'rest)

  Bowden, A (Brighton K'pto'n)

  Coombs, Simon (Swindon)

  Bowden, Gerald (Dulwich)

  Cope, John

  Bowis, John

  Couchman, James

  Boyson, Rt Hon Dr Sir Rhodes

  Cran, James

  Braine, Rt Hon Sir Bernard

  Currie, Mrs Edwina

  1068

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

  Jones, Robert B (Herts W)

  Davis, David (Boothferry)

  Jopling, Rt Hon Michael

  Day, Stephen

  Kellett-Bowman, Dame Elaine

  Devlin, Tim

  Key, Robert

  Dickens, Geoffrey

  King, Rt Hon Tom (Bridgwater)

  Dorrell, Stephen

  Kirkhope, Timothy

  Douglas-Hamilton, Lord James

  Knapman, Roger

  Dover, Den

  Knight, Greg (Derby North)

  Dunn, Bob

  Knight, Dame Jill (Edgbaston)

  Durant, Tony

  Knowles, Michael

  Dykes, Hugh

  Lamont, Rt Hon Norman

  Eggar, Tim

  Lang, Ian

  Emery, Sir Peter

  Lawrence, Ivan

  Evans, David (Welwyn Hatf'd)

  Lee, John (Pendle)

  Evennett, David

  Lennox-Boyd, Hon Mark

  Fallon, Michael

  Lightbown, David

  Farr, Sir John

  Lilley, Peter

  Favell, Tony

  Lloyd, Sir Ian (Havant)

  Fenner, Dame Peggy

  Lloyd, Peter (Fareham)

  Field, Barry (Isle of Wight)

  Lord, Michael

  Finsberg, Sir Geoffrey

  Luce, Rt Hon Richard

  Fookes, Miss Janet

  Lyell, Sir Nicholas

  Forsyth, Michael (Stirling)

  McCrindle, Robert

  Forth, Eric

  Macfarlane, Sir Neil

  Fowler, Rt Hon Norman

  MacGregor, Rt Hon John

  Fox, Sir Marcus

  MacKay, Andrew (E Berkshire)

  Franks, Cecil

  Maclean, David

  Freeman, Roger

  McLoughlin, Patrick

  French, Douglas

  McNair-Wilson, M. (Newbury)

  Gale, Roger

  McNair-Wilson, P. (New Forest)

  Gardiner, George

  Madel, David

  Goodlad, Alastair

  Major, Rt Hon John

  Goodson-Wickes, Dr Charles

  Malins, Humfrey

  Gorman, Mrs Teresa

  Mans, Keith

  Gorst, John

  Maples, John

  Gow, Ian

  Marland, Paul

  Gower, Sir Raymond

  Marlow, Tony

  Greenway, Harry (Baling N)

  Marshall, Michael (Arundel)

  Greenway, John (Ryedale)

  Martin, David (Portsmouth S)

  Gregory, Conal

  Mawhinney, Dr Brian

  Griffiths, Sir Eldon (Bury St E')

  Maxwell-Hyslop, Robin

  Griffiths, Peter (Portsmouth N)

  Mayhew, Rt Hon Sir Patrick

  Grist, Ian

  Miller, Hal

  Ground, Patrick

  Mills, lain

  Grylls, Michael

  Mitchell, Andrew (Gedling)

  Gummer, Rt Hon John Selwyn

  Moate, Roger

  Hamilton, Hon Archie (Epsom)

  Monro, Sir Hector

  Hamilton, Neil (Tatton)

  Montgomery, Sir Fergus

  Hampson, Dr Keith

  Moore, Rt Hon John

  Hannam, John

  Morris, M (N'hampton S)

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

  Morrison, Hon P (Chester)

  Hargreaves, Ken (Hyndburn)

  Moss, Malcolm

  Harris, David

  Moynihan, Hon Colin

  Haselhurst, Alan

  Mudd, David

  Hawkins, Christopher

  Neale, Gerrard

  Hayes, Jerry

  Needham, Richard

  Hayward, Robert

  Nelson, Anthony

  Heathcoat-Amory, David

  Neubert, Michael

  Heddle, John

  Newton, Rt Hon Tony

  Hicks, Mrs Maureen (Wolv' NE)

  Nicholls, Patrick

  Higgins, Rt Hon Terence L.

  Nicholson, David (Taunton)

  Hill, James

  Nicholson, Emma (Devon West)

  Hogg, Hon Douglas (Gr'th'm)

  Onslow, Rt Hon Cranley

  Holt, Richard

  Oppenheim, Phillip

  Hordern, Sir Peter

  Page, Richard

  Howard, Michael

  Paice, James

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

  Parkinson, Rt Hon Cecil

  Howarth, G. (Cannock & B'wd)

  Patnick, Irvine

  Hughes, Robert G. (Harrow W)

  Patten, Chris (Bath)

  Hunt, David (Wirral W)

  Patten, John (Oxford W)

  Hunt, John (Ravensbourne)

  Pattie, Rt Hon Sir Geoffrey

  Hunter, Andrew

  Pawsey, James

  Hurd, Rt Hon Douglas

  Porter, Barry (Wirral S)

  Irvine, Michael

  Porter, David (Waveney)

  Jack, Michael

  Portillo, Michael

  Jackson, Robert

  Powell, William (Corby)

  Janman, Tim

  Price, Sir David

  Jessel, Toby

  Raffan, Keith

  Johnson Smith, Sir Geoffrey

  Raison, Rt Hon Timothy

  Jones, Gwilym (Cardiff N)

  Rathbone, Tim

  1069

  Redwood, John

  Thompson, D. (Calder Valley)

  Renton, Tim

  Thompson, Patrick (Norwich N)

  Rhodes James, Robert

  Thorne, Neil

  Ridley, Rt Hon Nicholas

  Thornton, Malcolm

  Ridsdale, Sir Julian

  Thurnham, Peter

  Rifkind, Rt Hon Malcolm

  Townend, John (Bridlington)

  Roe, Mrs Marion

  Townsend, Cyril D. (B'heath)

  Rost, Peter

  Tracey, Richard

  Rowe, Andrew

  Tredinnick, David

  Rumbold, Mrs Angela

  Trippier, David

  Ryder, Richard

  Trotter, Neville

  Sackville, Hon Tom

  Twinn, Dr Ian

  Sainsbury, Hon Tim

  Vaughan, Sir Gerard

  Scott, Nicholas

  Waddington, Rt Hon David

  Shaw, David (Dover)

  Wakeham, Rt Hon John

  Shaw, Sir Giles (Pudsey)

  Waldegrave, Hon William

  Shaw, Sir Michael (Scarf)

  Walden, George

  Shelton, William (Streatham)

  Walker, Bill (T'side North)

  Shephard, Mrs G. (Norfolk SW)

  Walker, Rt Hon P. (W'cester)

  Shepherd, Richard (Aldridge)

  Walters, Dennis

  Shersby, Michael

  Wardle, Charles (Bexhill)

  Sims, Roger

  Warren, Kenneth

  Skeet, Sir Trevor

  Watts, John

  Smith, Tim (Beaconsfield)

  Wheeler, John

  Soames, Hon Nicholas

  Whitney, Ray

  Speller, Tony

  Widdecombe, Ann

  Spicer, Michael (S Worcs)

  Wiggin, Jerry

  Stanbrook, Ivor

  Wilkinson, John

  Stanley, Rt Hon John

  Wilshire, David

  Steen, Anthony

  Winterton, Mrs Ann

  Stern, Michael

  Wolfson, Mark

  Stevens, Lewis

  Wood, Timothy

  Stewart, Andy (Sherwood)

  Woodcock, Mike

  Stokes, John

  Yeo, Tim

  Stradling Thomas, Sir John

  Younger, Rt Hon George

  Sumberg, David

  Summerson, Hugo

  Tellers for the Noes:

  Tapsell, Sir Peter

  Mr. Robert Boscawen and

  Taylor, John M (Solihull)

  Mr. Tristan Garel-Jones.

  Question accordingly negatived.

  WELSH GRAND COMMITTEE
  Ordered,
  That, during the proceedings on the matter of Education and Training for Employment in Wales, the Welsh Grand Committee have leave to sit twice on the first day on which it shall meet, and that, notwithstanding the provisions of Standing Order No. 88 (Meetings of standing committees), the second such sitting shall not commence before Four o'clock nor continue after the Committee have considered that matter for two hours at the sitting.—[Mr. David Hunt.]
  11.43 pm
  Mr. Barry Porter: On a point of order, Mr. Deputy Speaker. On the Welsh order, in view of what has happened this evening, I understand that only Welsh and Irish Members will be called to represent—
  Mr. Deputy Speaker (Sir Paul Dean): Order. We cannot debate the matter now. The House has passed the motion.

  Mr. Patrick McManus
  Motion made, and Question proposed, That this House do now adjourn.—[Mr. Lennox-Boyd.]
  11.44 pm
  Dr. Jeremy Bray: My constituent, Mr. Patrick McManus, of 40 Aster gardens, Motherwell, submitted to the Law Society of Scotland four sworn statements from witnesses accusing a local solicitor of failing to respond to their pleas to visit his sister-in-law before her death to finalise her will. His brother, John McManus, died on 2 October 1986 without leaving a will and since there were no children of the marriage his whole estate passed to his widow, Mrs. Eileen Patricia McManus.
  The local solicitor attended at the home of Mrs. Eileen McManus on 6 October 1986, four days after the death of her husband, and took instructions on the winding up of the estate. He was also told that she wished him to prepare a will for her, though he did not take instructions at that meeting to prepare a will. Her health deteriorated over the ensuing month, and she died on 6 November 1986. During that period numerous attempts were made to contact the solicitor to get him to see Mrs. Eileen McManus and prepare a will for her. He failed to do so. There are independent witnesses who hold that it was her intention to leave her estate to her brother-in-law, Mr. Patrick McManus, and her sister-in-law. Instead, her whole estate passed to her relatives. The estate was approximately the value of a house.
  Mr. Patrick McManus complained to the Law Society of Scotland a few days after his sister-in-law died intestate. The Lay Observer for Scotland, in a report dated 19 November 1987, confirmed that Mr. McManus had complained to the Law Society in a letter dated 24 November 1986. The Law Society had immediately written to the solicitor, asking for his account of the circumstances. It received a detailed, five-page document dated 4 December, with accompanying documents. This was sent to Mr. McManus, who returned full comments on 20 December. The solicitor replied in detail on 5 January 1987.
  Mr. McManus, the lay observer continued, had referred to certain people who allegedly had tried to contact the solicitor to get him to attend the late Mrs. McManus. The Law Society, on 21 January, asked for sworn statements by witnesses. Four such sworn statements were sent on 28 January. These were copied to the solicitor, who again sent full comments on 5 February.
  Meanwhile, the whole file was circulated to two members of the Law Society for their opinion. It was decided that precognitions should be taken in order to ascertain the strength of evidence of Mr. McManus and his witnesses. These were taken by the Law Society complaints investigator and the whole case was submitted to the complaints committee on 7 May 1987.
  The complaints committee took the view that the solicitor's failure to see his client and take her instructions for the preparation of a will in urgent circumstances amounted to a serious professional misconduct, and recommended that the papers be referred to a society fiscal for prosecution before the Scottish solicitors disciplinary tribunal, the strongest possible action.
  The council, however, referred the case back to the committee for reconsideration, and it was then decided

  1071
  that instead of prosecution a reprimand be issued, but subject to interview. This changed decision, according to the lay observer, was taken after a member of the council, but not of the complaints committee, wrote strongly disputing that there had been professional misconduct. The committee alleges that this letter did not influence the decision.
  On 27 August, the solicitor was interviewed by a panel of the Law Society, with his legal representative. Further evidence from the solicitor, in particular an alleged log book of telephone calls and personal callers kept by the solicitor's firm, was presented. It apparently conflicted with parts of the sworn statements of witnesses. I am told that in court a telephone log is not accepted as firm evidence. Yet the Law Society accepted it in preference to the sworn statements of Mr. McManus's witnesses, and without an opportunity for him or his representatives to examine the log. The complaints committee decided that the proposed reprimand should be withdrawn without further inquiry, or Mr. McManus being shown the new evidence. This was later endorsed by the council. Mr. McManus was informed of the Law Society's decision.
  The lay observer
  "argued that the complainer should first have been advised what information in the log hook contradicted the evidence he had submitted and given an opportunity to comment."
  The lay observer recommended, in her 1987 annual report,
  "that whenever decisions to discipline are taken 'subject to interview' of the solicitor, the Council should, before reviewing those decisions, give complainers:—

  (a) an opportunity to study new information produced at the solicitor's interview and to submit comments;

  (b) an opportunity to be interviewed themselves, if they so wish."

  In the course of nine months there had been a complete volte-face by the Law Society, following representations from a fellow solicitor, and without opportunity for Mr. McManus to examine new evidence. The solicitor in question finally escaped without even a reprimand.
  Mr. McManus contacted the lay observer, whose report, though couched in carefully measured terms, is scathing. He also contacted me. I had a lengthy correspondence with the lay observer, the Law Society, and the Minister responsible for home affairs in the Scottish Office, the hon. Member for Edinburgh, West (Lord James Douglas-Hamilton). At the suggestion of the lay observer, and with my encouragement, Mr. McManus requested the Law Society to appoint a troubleshooter to
  investigate the case. The troubleshooter produced, in the estimation of the lay observer, a "very responsible analysis".
  This report found that. if it were clearly established that it had been brought to the solicitor's attention that the making of a will was urgent, and that he failed to do so within a reasonable time scale. that could be professional negligence. His explanation that he required to wait until the finalisation of the husband's estate before making a will for the wife is difficult to accept. Unfortunately for Mr. McManus, while in the opinion of the troubleshooter he suffered economic loss, there were no grounds for holding in connection with the making of a will for Mrs. McManus that he was employing the solicitor for that purpose. Mrs. McManus could sue for damages for a professionally negligent act as the client, but she is dead.
  There has long been a demand for stiffening the procedures of the Law Society's complaints committee, so that it is less susceptible to pressure from solicitors, and
  1072
  does more to safeguard the interests of clients. The case has been accepted by the Law Society itself. The Solicitors (Scotland) Bill, which is now making rapid progress through Parliament, is a Bill initiated by the Law Society, and agreed by the Law Society, the lay observer, and Scottish Office Ministers. It has all-party support. However, it has been gathering dust in the in-tray of Scottish Office Ministers in one form or another for years. The lay observer has been energetically pressing for the increased powers that the Bill will give her office in report after annual report.
  Specifically as a result of a recommendation made by the lay observer on this case, if new evidence is presented, the Law Society's procedure now requires it to be put to the complainer. I welcome unreservedly the increased powers in the Bill given to the lay observer to refer cases to the disciplinary tribunal, and the new powers to discipline solicitors in Scotland in cases of inadequate professional services. I believe that the case of Mr. McManus has played some part in bringing the new Bill before the House. My only regret is that this important Bill was not introduced by the Government, and the issues properly aired. It was left to my hon. Friend the Member for Edinburgh, Central (Mr. Darling) to introduce it as a private Member's Bill. The Bill has gone through Second Reading and Committee on the nod.
  Had the Bill been enacted in 1986, Mr. McManus's ease would have been handled very differently. As it is, he has so far been left without prospect of recompense. If there was negligence, or reasonable grounds for believing there to be negligence, by a travel agent, a quantity surveyor, or an engineer, there would be some fund from which a person like Mr. McManus could be compensated as a matter of judgment, not of law. It is my hope that the Law Society, and, influenced by colleagues, the solicitor whose failure to act has resulted in Mr. McManus's loss, will find some way of compensating him for his loss. The accumulation of such cases is bound to strengthen the case for lay panels to judge the complaints brought against solicitors. I hope that the Minister will be able to deal with Mr. McManus's case, and, in particular with the means of compensation, and with the complaints procedure generally.
  I hope that I have allowed the Minister adequate time to make a full reply.
  11.55 pm
  The Parliamentary Under-Secretary of State for Scotland (Lord James Douglas-Hamilton): I am grateful to the hon. Member for Motherwell, South (Dr. Bray) for raising this important matter. I was aware of his considerable interest through correspondence I have had with him. I was sorry to learn of the difficulties encountered by his constituent following the deaths of both his brother and sister-in-law. The case concerns the dissatisfaction of the hon Member's constituent, Mr. McManus, with the Law Society's handling of a complaint alleging professional misconduct against the solicitor who handled the estate of his late brother and sister-in-law.
  Although the hon. Gentleman has given an extremely clear exposition of the facts, this is a complicated case, and I should like to run briefly through the main points. The background is as follows. The constituent's brother died in October 1986 without leaving a will. There were no children of the brother's marriage, so his whole estate

  1073
  passed to his widow. The widow in turn died in November 1986, also without leaving a will. As a consequence of her death without leaving a will, her whole estate passed to her relatives, and Mr. McManus and his sister were not entitled to any part of that estate.
  Shortly after the death of her husband, a solicitor was called to the home of the widow and was instructed to take action to wind up her husband's estate and to prepare a will for her. Subsequent to that meeting, the health of the widow deteriorated rapidly until she herself died the following month. It is alleged by witnesses that, during the period between the meeting at the family home and the widow's death, numerous attempts were made to contact the solicitor to have him call upon her and prepare a will.
  In a total of five sworn statements, two witnesses claimed to have visited the solicitor at his office on two occasions to advise him of the lady's failing health and her concern that he had not called upon her in connection with the preparation of a will. It is further claimed by those witnesses that, had a will been drawn up, in all probability the estate of the deceased would have passed to Mr. McManus and his sister. Mr. McManus complained to the Law Society of Scotland about the solicitor's handling of his sister-in-law's instructions as regards her will.
  For the benefit of the House, it may be worth while if I explain the general procedure for handling complaints against solicitors. These are a matter in the first instance for the Law Society of Scotland, which under the Solicitors (Scotland) Act 1980 has a general duty to promote the interests of the solicitor profession in Scotland and the interests of the public in relation to that profession. The Law Society will investigate a complaint made to it and has power in the case of a justified complaint to refuse to renew a solicitor's practising certificate, which he or she needs to practise, or at any rate to issue one subject to conditions.
  If the Law Society considers that there has been professional misconduct by the solicitor, it may refer the case to the independent Scottish solicitors' discipline tribunal which has power to censure, fine, suspend or strike off the solicitor concerned. The Law Society can also provide a "troubleshooter", who is a solicitor prepared to take action on behalf of a complainer against another solicitor—for example, for negligence.
  Should the complainer remain dissatisfied with the Law Society's handling of the complaint after the society has reached its final decision, it is open to the complainer to approach the lay observer for Scotland, who is an independent person appointed by the Secretary of State, to examine complaints about the Law Society's handling of allegations against solicitors. The lay observer, who sees the Law Society's files, can issue an opinion analysing the case and setting out her conclusions, which may include recommendations that the Law Society should take certain action on the complaint. However, the lay observer's opinions are not legally binding upon the Law Society. As the Minister responsible for matters affecting the solicitors' profession, I have general oversight of these arrangements, but am not involved in decisions about individual cases.
  Returning to the case raised by the hon. Gentleman, his constituent took all the appropriate steps in pursuit of his complaint. He approached the Law Society for Scotland
  1074
  but, dissatisfied with the way in which it handled his allegations, he took his case to the lay observer for Scotland. The lay observer's opinion expressed concern about a number of aspects of the Law Society's handling of the investigation.
  First, the Law Society's investigating committee had taken the view that the solicitor's failure to see his client and take instructions for the preparation of a will in urgent circumstances amounted to serious professional misconduct, and it recommended to the council of the Law Society that the solicitor should be prosecuted before the Scottish solicitors discipline tribunal. The council referred the case back to the committee for reconsideration and the committee then decided that its previous recommendation to prosecute was inappropriate but that a reprimand be issued. The decision to reprimand was accepted by the Council "subject to interview". The solicitor was invited to an interview to restate and elaborate upon the information already provided.
  At this point, the society received a submission from a solicitor who was also a member of the society's council supporting the solicitor in respect of whom the complaint had been made, disputing strongly that there had been professional misconduct and questioning the issue of a reprimand. It is recorded in the minutes of the investigating committee and the committee was not influenced by this submission. The solicitor, supported by his legal representative, was interviewed by a panel of the Law Society and, in the light of the information put forward at that interview, the council of the society ultimately decided that the proposed reprimand should be withdrawn. The complainer was informed of the outcome and was sent a full extract from the record of the interview. This was the Law Society's final decision.
  As a result of her consideration of the case, the lay observer questioned several aspects of the Law Society's procedure: first, the apparent practice of taking disciplinary action "subject to interview" with the solicitor concerned; secondly, the timing of such interviews; thirdly, the dismissal of evidence contained in five sworn statements from witnesses on the basis of an interview with the solicitor; fourthly, the fact that the complainer was not given an opportunity to comment personally on the points put forward at the solicitor's interview; and, fifthly, the involvement of a council member in presenting personally a case on behalf of a solicitor against whom a complaint had been made. The lay observer noted in particular that failure to give the complainer an opportunity to comment personally on the points put forward at the solicitor's interview was a frequent source of concern to her and that she intended to raise the point in her annual report to the Secretary of State.
  The complainer sought the assistance of a troubleshooter to establish whether the facts of the case entitled him, as someone who would have benefited from his late sister-in-law's will, had she made one, to raise an action against the solicitor based upon professional negligence. The troubleshooter took the view that, under existing legislation, even if the solicitor had been negligent, such an action would have little chance of success if pursued through the courts, because the complainer in this case was not the client of the solicitor. In other words, the solicitor was not employed by the complainer for the purpose of preparing a will for his late sister-in-law. A further point at issue, which was derived from the sworn statements of witnesses but which can only remain speculative, is

  1075
  whether the complainer's sister-in-law, had she made a will, would have excluded succession by her sister and bequeathed her estate to the complainer and his sister.
  It would seem that the hon. Gentleman's constituent has exhausted the existing procedures for pursuing his complaint against the solicitor concerned. The lay observer has, as she promised, drawn attention to certain aspects of the Law Society's practice in relation to complaints procedures as highlighted by this case and others like it in her annual report for 1987 which she presented to the Secretary of State for Scotland in March.
  I can assure the hon. Member that the Secretary of State and I pay very close attention to the views expressed by the lay observer in her annual reports and to all representations about the Law Society's handling of complaints. The legislation governing solicitors' complaints is kept under continuous review. I understand from the Law Society that it has now changed its procedures so that the complainer will have an opportunity to comment on any points made by the solicitor, no matter at what stage. That was one of the hon. Gentleman's key points about this case.
  I should stress that the Law Society's present complaints procedures are geared to alleged professional misconduct. They may be compared with the role of police officers in investigating crime. They are not essentially about civil remedies or making good a loss to a complainer. So even if the solicitor had been found guilty of misconduct, and perhaps fined, he could not have been obliged to make any payment to Mr. McManus.
  As regards a civil remedy or recompense, the troubleshooter is firmly of the opinion that no contractual relationship existed between Mr. McManus and his sister-in-law's solicitor and that therefore the solicitor had no professional obligations towards him. A solicitor certainly has a duty of care for the interests of a third party, such as a beneficiary. In this case, however, since his late sister-in-law did not leave a will, Mr. McManus could not be regarded as a beneficiary, despite the assertions of witnesses about the late Mrs. McManus's intentions.
  It seems to me that there are no circumstances, therefore, in which the question of ex gratia payments or compensation can arise in this case, which is of course a very unusual one. The legislation governing the procedures for dealing with complaints against solicitors already makes provision for the payment of compensation in certain cases, which I went into thoroughly.
  The Scottish solicitors guarantee fund, administered by the Law Society, to which all practising solicitors in Scotland must contribute as a condition of receiving their practising certificate, exists for the purpose of making grants in order to compensate persons who in the opinion of the Law Society suffer pecuniary loss by reason of dishonesty on the part of any solicitor, employee of a solicitor or an incorporated practice. Also, in the interests of consumer protection, the Law Society requires that all practising solicitors must take out and maintain an insurance policy under the society's master policy for the purpose of providing indemnity against any class of professional liability.
  In Mr. McManus's case, it seems to me that he would be unlikely to qualify for redress from the guarantee fund for two reasons. First, the Law Society's investigations failed to produce any evidence of dishonesty on the part of the solicitor against whom complaint had been made. Secondly, it cannot be said that Mr. McManus lost his
  1076
  own money as a result of the actions of the solicitor. In the case of recompense through the indemnity fund, the troubleshooter has advised strongly against Mr. McManus raising an action for damages because of the cost involved and on the grounds that he would be unlikely to succeed as he was not a direct beneficiary.
  As the hon. Gentleman will be aware from recent correspondence, one important recommendation made by the lay observer in her 1986 annual report was that she should have powers to refer complaints direct to the Scottish solicitors discipline tribunal when she believes that the Law Society has reached a faulty decision. This recommendation has been incorporated into the provisions of the Solicitors (Scotland) Bill which is currently before the House. The Bill is sponsored by the hon. Member for Edinburgh, Central (Mr. Darling) and has benefited from Government assistance with drafting, and I strongly support it.
  The Law Society of Scotland has demonstrated a strong case for introducing this Bill in the current Session so as to give it the powers it desires as quickly as possible. I recognise the point made by the hon. Member for Motherwell, South that he would have preferred the Government to do this. Unfortunately, pressure on the legislative programme meant that there was no Government time available to devote to the Bill. We were pleased to give drafting assistance for a private Member's Bill as the most appropriate method of bringing these provisions, which are considered to be worth while by hon. Members from all sides of the House, into force at the earliest convenient opportunity. The first solicitors' Bill was a private Member's Bill.
  As the hon. Gentleman will know, the handling of the Bill is the responsibility of the Member promoting it. The Bill is designed, among other things, to extend the powers of the council of the Law Society and the discipline tribunal to enable them to deal with cases of inadequate professional services in addition to cases of professional misconduct as at present. The Bill would also enable such complaints to be made not only by the solicitor's client but by anyone having an interest in the services provided by the solicitor. It is intended that the Bill will come into effect six months after enactment, but its provisions will not be retrospective except in relation to services whose provision is continuing. It would not be appropriate to impose penalties on solicitors under the new arrangements for work carried out before the new disciplinary powers had been defined and set in place.
  I fully recognise that these legislative proposals cannot benefit the hon. Gentleman's constituent. Beyond empowering the lay observer to report a case to the discipline tribunal, I do not think that they would help Mr. McManus directly, since he was not a beneficiary of a will. Nevertheless, his case was very much in mind in the drafting of the Bill and I hope that the assistance we have provided for the Bill will stand as evidence of our concern that these matters should be properly regulated, and of our willingness to take action when the circumstances require it.
  It is very much to the credit of the hon. Gentleman that he has taken this case as far as it is possible to take it. This case has highlighted the need for reform in a number of areas. It highlights, for example the capacity of anyone having an interest both to report complaints to the Law

  1077
  Society and discipline tribunal and also to have the opportunity to respond to new evidence put before the Law Society on behalf of the solicitor.
  These reforms are being introduced in the first case by the Solicitors (Scotland) Bill and in the second case by the reformed practices of the Law Society. This leads to the question whether reform should be retrospective. The case against retrospective legislation is that it is very difficult to observe a law that is not enacted, not in force and not known about. Furthermore, it is unfair to expect solicitors
  1078
  to conform to laws that are not in existence. While I sympathise very much with the hon. Gentleman's constituent, the disadvantages of retrospective legislation outweigh any possible advantage to his constituent. None the less, the hon. Gentleman and his constituent can take some consolation from the reality that their perseverance and dedication were factors giving rise to the terms of the Solicitors (Scotland) Bill, which I hope will receive its Third Reading before long.
  Question put and agreed to.
  Adjourned accordingly at thirteen minutes past Twelve o'clock.