Commons Sitting of 14 March 1989

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

  New Writ
  Motion made and Question proposed,
  That Mr. Speaker do issue his warrant for the Clerk of the Crown to make out a new writ for the electing of a Member to serve in this present Parliament for the county constituency of Vale of Glamorgan in the room of Sir Herbert Raymond Gower, deceased.—[Mr. Sillars.]
  Hon. Members: Object.
  Mr. Speaker: Objection taken. The debate will stand over until after Question Time.

  PRIVATE BUSINESS

    KING'S CROSS RAILWAYS BILL
    Order for Second Reading read.
    To be read a Second time on Thursday 16 March.

Oral Answers to Questions
  EMPLOYMENT

    Labour Statistics
    Mr. Jack: To ask the Secretary of State for Employment if he will make a statement on the number of people currently in employment in the north of England.
    The Secretary of State for Employment (Mr. Norman Fowler): In the three regions, north, north-west, and Yorkshire and Humberside, the work force in employment in September 1988 was 6,099,000. This has increased by 268,000 or 4·6 per cent. in the last two years alone.
    Mr. Jack: My right hon. Friend's excellent reply helps to confirm why unemployment in my constituency of Fylde has fallen in the past year by 30·3 per cent., but does he agree that the figures also confirm the excellent findings of the recent labour force survey, which show that the Opposition's attempts to rubbish our approach to employment creation are bogus and bankrupt?
    Mr. Fowler: I agree with my hon. Friend on both points. Unemployment in the whole of the region, including the north, the north-west, and Yorkshire and Humberside, has come down by 140,000 in the year to January—a reduction of almost 18 per cent. As my hon. Friend reminds us, at the last Employment Question Time the hon. Member for Oldham, West (Mr. Meacher) asserted that the labour force survey
    "reveals that unemployment today in Britain is still over 2·6 million"—[Official Report, 14 February 1989; Vol. 147, c. 140.]
    270
    The hon. Gentleman now knows what he said. To use his own characteristic words, that is utterly bogus. We wait for his withdrawal.
    Mr. Allen McKay: When the Minister talks about Yorkshire and Humberside and the labour force survey, will he admit that the survey does not tell the whole story, as pockets of unemployment remain? Will the Minister take account of the fact that in my constituency of Barnsley, West and Penistone male unemployment is still more than 16 per cent? What does he intend to do about that?
    Mr. Fowler: There are parts of the country, including Yorkshire and west Humberside, where we wish the employment position to improve substantially. I hope that the hon. Gentleman will also recognise, however, that unemployment has come down by virtually a million since the last election and that there are more than a million new jobs in the economy. That all-time record is certainly better than the position in 1979.
    Mr. Nicholas Winterton: Does my right hon. Friend accept that employment would be even higher if the Government encouraged a positive "Buy British" campaign when British goods are best? Does he further agree that employment would be higher than it is today if there was free and genuinely fair competition, not least for the magnificent British textile and clothing industry, which is one of the largest employers in the country?
    Mr. Fowler: I think that the Government would want free and fair competition. The Government support the organisation that is encouraging British goods and their marketing. As my hon. Friend knows, Sir Basil Feldman is chairman of that organisation, to which my Department subscribes.

    Restart
    Mr. Tony Lloyd: To ask the Secretary of State for Employment if he will make a statement on the progress of the restart scheme.
    The Minister of State, Department of Employment (Mr. John Cope): Since July 1986, about 5·4 million interviews have been carried out under the restart programme. of which just under 90 per cent. have resulted in an offer of positive help being made.
    Mr. Lloyd: Will the Minister confirm that there has been some concern in mining communities about the use of the restart scheme for people in their late 50s and 60s who have retired from mining but who nevertheless have to suffer the indignity of that procedure? Can he confirm that that position is to be resolved and that he will now instruct local offices to cease harassing such people so that they no longer have to undergo the indignity of such irrelevant interviews?
    Mr. Cope: I do not accept that there is harassment, but my right hon. Friend the Secretary of State for Energy is confirming in a written answer today that he is considering modifying the redundant mineworkers pension scheme, which has given rise to the problem to which the hon. Gentleman draws attention, so as to remove the link with unemployment benefit and availability for work. Obviously, we shall take account of what my right hon. Friend does.
    Mr. Marlow: How many bluffs have been called, how many people have been rumbled, and how many have magically disappeared from the unemployment register when they have been called to a restart interview? What further action will my right hon. Friend take to ensure that paid voluntary unemployment does not continue in those parts of the country where there is a labour shortage?
    Mr. Cope: I should be inclined to say that the aim of the restart interview is to contact the longer-term unemployed and to provide them with advice and information, but it sometimes has the effect that my hon. Friend suggests.
    Mr. Eadie: Will the right hon. Gentleman reflect on the answer that he gave to my hon. Friend the Member for Stretford (Mr. Lloyd) about the plight of redundant mineworkers? Does he recall that when the miners' parliamentary group met him he gave a pledge that he would do his best to resolve the anomaly? In the light of that, should there not be some announcement about the matter so that the harassment of miners can cease pending resolution of the problem?
    Mr. Cope: I remember the meeting when the hon. Gentleman brought his colleagues to see me. I will reflect on that, but I urge the hon. Gentleman to reflect on the answer that I gave to the hon. Member for Stretford (Mr. Lloyd), in which he should find some comfort.

    Labour Statistics
    Mr. Speed: To ask the Secretary of State for Employment by how much unemployment has fallen over the past year in the south-east; and if he will make a statement.
    Mr. Fowler: In the 12 months to January 1989, the level of unemployment, seasonally adjusted, in the south-east including London fell by 157,400 or 27·9 per cent. Unemployment in the south-east is now at its lowest level for eight years.
    Mr. Speed: I welcome those figures, and my right hon. Friend confirms that the labour force survey showed that employment in the region rose by 800,000 up to June last year, more than offsetting the fall of 400,000 or 500,000 in the claimant count. Is not the real problem now to find the skills for the 150,000 vacancies in the south-east?
    Mr. Fowler: Yes, Sir. The labour force survey shows a real growth in employment. In the past 12 months, there has been an increase of more than 600,000 in the number of employees. As my hon. Friend says, we now need to improve the nation's skills base. That is why we have introduced the employment training programme and are in the process of setting up the new training and enterprise councils.
    Ms. Short rose—
    Mr. Speaker: Order. Is it about the south-east?
    Ms. Short: Yes, Mr. Speaker.
    Will the Secretary of State confirm that in the south-east and elsewhere the labour force survey and other evidence show that the new jobs being created in Britain are overwhelmingly low paid and part time, which is a real worry for the future of our economy? There is no future for
    272
    Britain in low pay, low investment, low training and a slow economy, but those jobs mean that that is the road that we are on.
    Mr. Fowler: Uncharacteristically, the hon. Lady has apparently not read the labour force survey. One point that emerges clearly from the survey is that the overwhelming number of jobs that have been created in the past 12 months are not part-time, but full-time. The fact that 86 per cent. of those jobs were full-time entirely demolishes the hon. Lady's case.
    Mr. Yeo: To ask the Secretary of State for Employment what is the rate of fall in unemployment in the United Kingdom and in other developed countries; and if he will make a statement.
    Mr. Fowler: Over the past year, the rate of unemployment has fallen faster in the United Kingdom than in any other major industrialised country. The rate of unemployment in the United Kingdom is below the average for the European Community and now stands below that of France, Italy, Belgium, the Netherlands, Spain and Ireland.
    Mr. Yeo: Does my right hon. Friend agree that the Government's step by step approach to the reform of industrial relations has made a significant contribution towards reducing unemployment? In the light of that, will he undertake to introduce further measures of industrial relations reform, including the abolition of what remains of the closed shop, so as to achieve a further reduction in unemployment?
    Mr. Fowler: I entirely agree with my hon. Friend that bad industrial relations, particularly in the middle and late 1970s exported many British jobs overseas. The closed shop puts unacceptable limits on people's freedom to choose for themselves whether or not to belong to a trade union. I made the position clear in the White Paper that I published before Christmas, and I repeat that we shall not hesitate to take any further legislative measures that may be necessary.
    Mr. Wigley: Does the Secretary of State accept that whereas the rate of decrease may be acceptable in south-east England, where the rate of unemployment is 2 or 3 per cent. in many of the home counties, in Wales and elsewhere in these islands, where unemployment is running at between 15 and 20 per cent., it is totally unacceptable? When will he take an initiative to do something about that?
    Mr. Fowler: I hope that the hon. Gentleman will agree that, after the west midlands, Wales is one part of the country where the rate of unemployment has come down most steeply. We shall do all that we can to improve on that. I hope, however, that the hon. Gentleman will concede what has been done already.
    Mr. Holt: Unemployment in my constituency has fallen from its peak by 40 per cent. and stands today at lower than the national average. Is my right hon. Friend aware that the Teesside chamber of commerce has just put out a press release which says that the
    "Teesside economy continues to boom"
    and shows that more than 28 per cent. of the firms on Teesside expect to be employing more labour in the next three months?
    Mr. Fowler: I am sure that what my hon. Friend says is right. The Prime Minister and I were in the north-east on Friday, as my hon. Friend knows, and there was no doubting the new confidence that exists there. It is important for the House to appreciate that in the past two years this country has shown the fastest employment growth since 1945.
    Mr. Meacher: Is the Secretary of State really crowing at the fact that unemployment is still twice as high as it was in 1979? How does he explain the fact that 40 per cent. of the money that the EEC is paying to member states this year to arrest industrial decline and job losses is coming to Britain—twice as much as to any other EEC state? Will he admit that he has been telling only half the story about the labour force survey in that employment has been growing in the last year at only half the rate at which it grew the year before and that 110,000 more people were knocked off benefit than went into jobs?
    Mr. Fowler: The hon. Gentleman is becoming more and more muddled. The labour force survey reveals that for months past the hon. Gentleman has been fiddling the figures upwards. The House expects him to do the honourable thing and give up his job.
    Mr. Butler: To ask the Secretary of State for Employment if he will make a statement on the number of people currently in employment in the north-west of England.
    The Parliamentary Under-Secretary of State for Employment (Mr. John Lee): In September 1988, in the north-west region, the civilian work force in employment was 2,661,000—an increase of 80,000 or 3 per cent. in the past two years.
    Mr. Butler: Does my hon. Friend agree that employment seems to have risen in those areas of the north-west where the work force is co-operative and skilled, in contrast with other areas of the north-west where the unions are bloody-minded and Luddite?
    Mr. Lee: I think that my hon. Friend is getting at the situation on Merseyside. I have no wish to denigrate the work force on Merseyside, but in many cases they are being let down by some very extreme shop stewards.
    Mr. James Lamond: Why does not the Minister, who knows something about the north-west, tell the Secretary of State that he is talking nonsense when he says that jobs are being exported because of trade union activity? The textile workers are struggling to obtain a £100 basic wage for a 39-hour week, while closures in the north-west are taking thousands of jobs, including 250 in Oldham just a fortnight ago.
    Mr. Lee: It is true that there have been some textile losses recently. but in the past three or four years the textile industry has improved dramatically. Indeed, it was a shade churlish of the hon. Gentleman not to acknowledge that in the past two years unemployment has fallen by 31 per cent. in his own constituency.
    Mr. Sumberg: Does my hon. Friend agree that if there is a north-south divide, it is to the advantage of the north-west? Opposition Members who spend their time doing the region down should open their eyes and ears and acknowledge the fact that Lancashire's best friend is the Government.
    Mr. Lee: My hon. Friend is absolutely right. The Opposition do the north-west a disservice by failing to acknowledge the buoyancy, optimism and pride that most people in the region now have.
    Mr. Tony Lloyd: While the Opposition welcome every job that is created, we deplore the fact that there are still record unemployment rates. If the Minister is so confident about the north-west in particular and the north of England in general, will he say why—according to the labour force survey—the rate of increase in jobs in the south-east over the past five years has been more than 10 per cent. while in the north-west it has been less than 1 per cent.? That illustrates the north-south divide.
    Mr. Lee: Why will the hon. Gentleman not acknowledge that in his own constituency unemployment has fallen by 30 per cent. in the past two years?

    Skill Training
    Mr. Wilshire: To ask the Secretary of State for Employment what steps he is taking to increase the range of skills available and the number of people seeking work in the south-east.
    Mr. Fowler: I am taking a number of steps to increase the range of skills available in the south-east and other regions. They include the setting up of training and enterprise councils to help employers to define and meet local skill needs. We are also helping young people and the unemployed to learn new skills through YTS and employment training.
    Mr. Wilshire: As the labour force survey shows that there are now more than a million more people in work than when Labour was booted out of office, does my right hon. Friend accept that such an increase creates new problems of skill shortages and unfilled vacancies in areas such as Spelthorne? Does he believe that the new training and enterprise councils will enable local employers to focus training on local skill shortages and unfilled vacancies?
    Mr. Fowler: Yes, Sir, I agree entirely. The purpose of, and the concept behind, such councils is that they should be employer-led local bodies which assess the training and labour needs in their own particular areas. This is something that many employers have urged for a long time. I am glad to say that although we introduced the prospectus only on Friday there has already been a tremendous amount of interest—including interest from 20 or 30 areas where plans for training and enterprise councils are well in hand.
    Mr. Beggs: Will the Secretary of State use every opportunity available to him to inform industrialists here that in Northern Ireland, where there is high unemployment, there are already highly skilled and well-educated people—
    Mr. Speaker: Order. The question is about the south-east of England, not the south-east of Ulster.
    Mr. Beggs: I thank you, Mr. Speaker, for making that point. I wanted to draw attention to the absence of skilled people in the south-east and to the fact that we in Northern Ireland could assist the Minister to relocate or even set up small subsidiaries to provide employment and meet the needs that exist in the south-east.
    Mr. Fowler: I congratulate the hon. Gentleman. If I meet employers in the south-east who complain of skill shortages and are looking for somewhere to set up or perhaps expand their businesses, I shall certainly say that for all the reasons set out by the hon. Gentleman Northern Ireland seems to be an extremely good place to do so.
    Mr. Rathbone: On that same point, does my right hon. Friend liaise with his right hon. Friends to ensure that jobs are created outside the south-east, thus relieving the congestion and strain on housing there in the way that everyone in the south-east wishes?
    Mr. Fowler: Yes, Sir. As my hon. Friend says, it is not just a matter of private industry—it is a matter of the public sector, too. A major part of my Department, the Training Agency, is in Sheffield. It was announced only last week that a further part of the Ministry of Defence was to move to the north-east. That seems an altogether sensible move of the kind that ought to be encouraged.

    Wages Inspectorate
    Mrs. Golding: To ask the Secretary of State for Employment how many workplaces were visited and how many of them were found to be illegally underpaying for the latest available year by the wages inspectorate divisions covering the west midlands.
    Mr. Cope: The inspectorate targets its visits towards establishments most likely to be in breach. In 1988 in midlands division, which covers both east and west midlands, 2,609 establishments were visited and 747 were found to be paying below the statutory minimum in some respect.
    Mrs. Golding: According to the Government's statistics, there was only one prosecution in the midlands in 1988. Given that during the 10 years of this Government more than 89,000 establishments have been found to be paying illegally low wages, why have there been only 51 prosecutions? Why are the Government so little interested in the low paid?
    Mr. Cope: The hon. Lady's figure for prosecutions is right. In fact, the ratio of prosecutions to underpaying employers is higher now than under the Labour Government. Prosecutions are not the only way in which to achieve the desired aim.
    Mr. Marlow: Why do we need these secret policemen? What do they do for the buoyancy and competitiveness of our economy?
    Mr. Cope: Frequent studies have shown in the past that wages councils tend to decrease employment. That is why we are considering whether to continue with them.
    Mr. Meacher: If the Government believe in law and order, why have fewer than one in 1,000 establishments paying illegally low wages been prosecuted? Is it not ludicrous that, with half the number of wages inspectors, the right hon. Gentleman's Department is sending out postal questionnaires asking employers whether they are committing the criminal offence of paying illegally low wages? Will the Minister confirm that the next step will be to invite employers to write in and announce to the Department that they are committing this criminal offence?
    Mr. Cope: As it happens, the questionnaire method about which the hon. Gentleman complains was introduced by the Labour Government of which he was a member. We have continued to use it and we have increased the prosecution ratio. There are many more ways than one of securing the objects that we both have in mind. We have reduced the number of inspectors because we have simplified the system.

    National Dock Labour Scheme
    Mr. Amos: To ask the Secretary of State for Employment what was the cost to registered port employers of the 1988 levy to finance the cost of the National Dock Labour Board.
    The Parliamentary Under-Secretary of State for Employment (Mr. Patrick Nicholls): The 1988 levy to finance the National Dock Labour Board cost registered port employers £4,690,607.
    Mr. Amos: In view of the very high cost to the nation of the national dock labour scheme, and as it is archaic, anti-democratic and anti-competitive, will my hon. Friend consider abolishing it as soon as possible?
    Mr. Nicholls: Matters covered by the levy include issues relating, for instance, to training, welfare and medical services, which must be provided for. The Government's position on the scheme remains unchanged. There are no plans to change or abolish it.
    Mr. Ernie Ross: Will the Minister confirm that before the introduction of the national dock labour scheme the men in the docks were treated like cattle, and that only since the introduction of the scheme have the ports enjoyed peace and working conditions fit for human beings?
    Mr. Nicholls: If one goes far enough back in history, one can always find something to justify one's views, but the position remains as I have set it out.
    Mr. Janman: Is my hon. Friend aware that the Port of London Authority is interested in developing land immediately adjacent to the port of Tilbury but that it is experiencing extreme difficulty in finding people to take up this opportunity because of the existence of the dock labour scheme? Does my hon. Friend agree that the dock labour scheme costs not only money but jobs?
    Mr. Nicholls: I hear what my hon. Friend says. Obviously, he makes his analysis in his own way, but I do not think that I can fruitfully comment on that analysis at the Dispatch Box.

    Employee Participation
    Mr. Ian Taylor: To ask the Secretary of State for Employment what plans he has to encourage employers to increase employee participation through schemes such as employee share ownership plans.
    Mr. Cope: We encourage employers to develop their employee involvement arrangements by whatever means are best suited to their particular needs and circumstances.
    Mr. Taylor: Does my hon. Friend agree that the validity of the slogan "Owners try harder" is shown by the success of employee share ownership arrangements in the

    277
    United States, which now cover 10 million workers? Does he accept that they have broken down the "us versus them" attitudes in the States and have spread capital? Will he do some research to see how those schemes and those benefits could be applied in this country? By the way, does he have any recent information as to the Treasury view on this matter?
    Mr. Cope: I do not think that I should make any comment on Treasury views at this time of the year. I am well aware of the American experience in the field of employee share option schemes, not least as a result of reading my hon. Friend's articles on the subject. As he knows, my right hon. Friend the Secretary of State for Trade and Industry is also looking at this matter in connection with the Companies Bill.
    Mr. Dykes: Is it not important to try to get the Treasury view? There is still time before the Budget statement this afternoon. One of the important things to do in the future is to get Treasury approval for an increased maximum number of shares held under employee share option schemes.
    Mr. Cope: Treasury views are always important.

    National Dock Labour Scheme
    Mr. John Townend: To ask the Secretary of State for Employment if he will make a statement on his proposals for the future of the national dock labour scheme.
    Mr. Nicholls: The Government's position on the scheme remains unchanged, as my right hon. Friend the Prime Minister confirmed in the House on 19 January 1989 at columns 481–82 of the Official Report.
    Mr Townend: My right hon. Friend will not be surprised that I am very disappointed with his reply. Does he agree that the national dock labour scheme is one of the few remaining relics of the corporate state established by the post-war Labour Government, which has been demolished by this Government? Does he accept that northern ports, like Hull and Liverpool, are able to prosper and compete, that, with the opening of the Channel tunnel, it is essential that they be able to operate in a free market without restrictive practices, and that that will not be possible unless he abolishes the scheme?
    Mr. Nicholls: Again I hear what my hon. Friend says, but I am afraid that I cannot do anything about having disappointed him. I have announced what the Government position is, and I confirm that it has not changed.
    Mr. Moate: Will my hon. Friend bear in mind that, as has already been said, jobs are being lost and that industrial investment in waterside-related schemes is being positively discouraged? He has said that the Government position is unchanged. In view of the overwhelming arguments for abolition of this archaic dock labour scheme can he do the House the courtesy of explaining why that position is unchanged?
    Mr. Nicholls: My hon. Friend describes the argument as overwhelming. That is his analysis, but I think that he will agree that there are very few situations in which the arguments are that easy.

    Wages
    Mrs. Mahon: To ask the Secretary of State for Employment how many and what percentage of full-time male workers earned less than the Council of Europe's decency threshold in the latest available year in the United Kingdom.
    Mr. Nicholls: There is no such thing as a Council of Europe decency threshold for a minimum acceptable level of earnings.
    Mrs. Mahon: In that case, will the Minister say how many, and what percentage of, full-time male workers earn less than the decency threshold decided by the committee of expert advisers advising on the European social charter? In case the Minister has forgotten, let me remind him that it is 68 per cent. of all full-time average earnings.
    Mr. Nicholls: I am not sure that the hon. Lady can have been listening to the answer that I have just given. She asked me about the Council of Europe decency threshold for a minimum acceptable level of earnings. Let me repeat that there is no such thing. Obviously, what she is thinking about is a recommendation of the Council of Europe expert advisory committee as to 68 per cent. of national average earnings. I repeat that there is no such thing as a decency threshold. It would be a good idea if the hon. Lady and her hon. Friends were to get a grasp of that fact.
    Mr. Paice: Does my hon. Friend agree that any threshold relating to average earning is bogus because it is self-perpetuating; as wages increase, so does the average, so there will always be, per se, people below that figure. Any such proposal is designed to give credence to those who want to criticise and abuse, such as the Opposition.
    Mr. Nicholls: My hon. Friend is right, but I am sure that the point will be lost on Opposition Members. One cannot talk of 68, 78 or 88 per cent. without considering the 100 per cent. figure.
    Mr. Wallace: Does the Minister agree that low-paid people would be helped enormously if the national insurance system were changed to allow a threshold rather than an allowance, so that if one earns an extra pound one does not have to pay £2 as a national insurance contribution?
    Mr. Nicholls: That does not arise from this question, and this is not the time to speculate about it.
    Mr. Strang: Does the Minister acknowledge that 500,000 male employees and 2·3 million female employees will not benefit from any increases in allowances that might be announced this afternoon because they do riot earn enough to pay tax? Do not Government proposals to abolish wages councils make it clear that the Government are pursuing policies to make the rich richer and the poor poorer?
    Mr. Nicholls: The hon. Gentleman talks about deductions from those who are in work, but if he had his way and followed the policies advocated by his party, fewer people would have the opportunity to work.

    Tourism
    Mr. Sayeed: To ask the Secretary of State for Employment if he will make a statement on the progress of the tourism industry in Bristol.
    Mr. Lee: The estimated annual 1 million visitors to Bristol and the high levels of investment in tourism projects show clearly that Bristol is sharing in the general prosperity and expansion of our domestic tourism industry.
    Mr. Sayeed: I welcome my hon. Friend's reply, but is he aware that most tourists get no further west than Bath and appear unaware of the historic and architectural merit of Bristol? What are the employment implications of Avon county council's failure to take part in the West Country tourist board and Bristol city council's antagonistic and contemptuous attitude to tourism?
    Mr. Lee: I am sorry that Avon county council is the only council that is not a member of its regional tourist board. I am happy to say that, despite that, about £34 million worth of investment has been made in Bristol. Exciting developments are under way in the harbour and waterfront area, a number of which I have seen.
    Mr. Douglas: When the Minister goes to Bristol, he will no doubt visit the SS Great Britain, which is a monument to the British merchant fleet. Will he acknowledge that we have other monuments under this Government, such as our merchant shipbuilding capacity? What will the Government do about that?
    Mr. Lee: I recollect that when I was a Minister at the Ministry of Defence I heard similar speeches from the hon. Gentleman. I suggest that he puts that question during Defence Question Time rather than at Employment Question Time.

    Loan Guarantee Scheme
    Mr. Batiste: To ask the Secretary of State for Employment if he will make a further statement on the loan guarantee scheme.
    Mr. Cope: Over 21,000 guarantees to a value in excess of £690 million have been issued since the loan guarantee scheme was introduced in 1981. Applications are currently running at nearly 200 a month.
    Mr. Batiste: Does my hon. Friend agree that the loan guarantee scheme has been an essential ingredient in the spectacular job creation success among small businesses of the Yorkshire and Humberside region? Will he confirm that it is one of the most cost-effective job creation schemes that the Government have introduced and that it has a secure future?
    Mr. Cope: Yes, I confirm all that. The scheme has an estimated net job cost of about £450 per job. It contributes much to the creation of small businesses and successful businesses that have grown much, such as the Sock Shop.
    Mr. Fatchett: Will the Minister have a further look at the regional imbalance in the loan guarantee scheme and tell us what justice there is in the fact that the south-east receives considerably more than Yorkshire and Humberside?
    Mr. Cope: Obviously, we respond to requests from individuals, from companies and from the banks. To a certain extent, the take-up achieved by the guarantee scheme in the different regions is a result of demand from interested parties, rather than action on our part to steer the scheme in a particular direction. The only thing that we do in that regard is to offer better terms for those in the inner cities.
    Mr. Tim Smith: Is not the loan guarantee scheme just a rather expensive way in which to train bank managers? My hon. Friend should try to persuade bank managers to put less emphasis on the security on offer and more on the viability of the business plans.
    Mr. Cope: I certainly do my best to try to persuade them of that important aspect of banking science. It is an important scheme because of its educational effect on some bank managers. At the same time, banks use it quite a lot and that is greatly to be desired.

    Wages Inspectorate
    Mr. Allen: To ask the Secretary of State for Employment how many employers were found to be illegally underpaying and how many of them were prosecuted in the latest available year by the wages inspectorate divisions covering the east midlands.
    Mr. Cope: I refer the hon. Gentleman to the reply that I gave earlier to the hon. Member for Newcastle-under-Lyme (Mrs. Golding).
    Mr. Allen: Is the Minister aware that the midlands inspectorate is based in my constituency and that when the Government came to power there were 26 inspectors, but now there are only 10? Will he visit that establishment and explain to the people why there has been a reduction in the numbers of inspectors when more than 4,000 cases of underpayment have been reported, but only nine have been prosecuted? When will the Government start to prosecute those people instead of harbouring them?
    Mr. Cope: I do not think that the hon. Gentleman was listening to the reply that I gave earlier about the increase in the ratio of prosecutions to underpaying employers since the Labour Government left office. The level of compliance in the midlands has not varied significantly over the years.
    Mr. Tredinnick: Is my hon. Friend aware that in my midlands constituency employers are offering wages above the average because of severe skill shortages?
    Mr. Cope: Yes. About 97 per cent. of workers are now paid at least the minumum due.
    Mr. Campbell-Savours: Can I have an honest answer to my simple question? A large number of households in my constituency—families with children—have incomes of less than £100 a week. If I were an elector in my constituency I could not live on that sum. Could the Minister?
    Mr. Cope: In the past I have lived on a good deal less than the hon. Gentleman.

    National Dock Labour Board
    Mr. Wood: To ask the Secretary of State for Employment when he last attended a meeting of the National Dock Labour Board; and what was discussed.
    Mr. Nicholls: My right hon. Friend has never attended a meeting of the National Dock Labour Board.
    Mr. Wood: I thank my hon. Friend for that reply. Is it not clear that the national dock labour scheme acts against the interests of the docks concerned and against the work force in those docks? Surely we should be persuading people working in those docks that it is in their interests to see a change in the scheme or, indeed, its removal.
    Mr. Nicholls: I hear what my hon. Friend says and obviously he is supported by a great many of our hon. Friends. The question was about a meeting with the National Dock Labour Board and I doubt that there is much that I can add to that or to the points that my hon. Friend has just put.
    Mr. Ernie Ross: Will the Minister reflect on the fact that the national dock labour scheme has brought great stability to the docks and it has also allowed—[Interruption.]
    Mr. Speaker: Order.
    Mr. Ross:—and it has also allowed the docks to plan their work properly? All the attacks from the Conservative Benches do not help those trying to have discussions within the dock labour scheme about how it can be improved in the best interests of the country and the economy.
    Mr. Nicholls: That analysis was so patently absurd that it was hardly supported by any of the hon. Gentleman's hon. Friends.
    Mr. Neil Hamilton: May I observe to my hon. Friend that, on this issue, he is beginning to resemble President Botha of South Africa? Nobody in his own party supports him.
    Mr. Nicholls: I am grateful to my hon. Friend and if the great wheel ever goes full circle I shall give him my support as well.

    Wages Inspectorate
    Mr. McAllion: To ask the Secretary of State for Employment what percentage of workplaces and workers were inspected by the wages inspectorate divisions covering the United Kingdom in the latest available year.
    Mr. Cope: A total of 8·7 per cent. of the establishments on the wages inspectorate register covering 329,591 workers, which is an estimated 13·1 per cent, were inspected in 1988.
    Mr. McAllion: Will the Minister explain to the House the standards which this Government apply to the question of law-breaking? On the one hand, the Government put in place a very severe system of penalties, fines and surcharges for those who cannot afford to pay the poll tax; on the other hand, the Government virtually ignore employers who break the law and illegally enforce low wages on workers who are already exploited. Is it a case of no law for the rich and vicious laws for the poor?
    Mr. Cope: On the contrary, we have improved the position. I have already said that 97 per cent. of workers are now paid at least the minimum due, and that is a higher percentage than a few years ago.

    Training and Enterprise Councils
    Mr. Moss: To ask the Secretary of State for Employment what representations he has received on the formation of training and enterprise councils; and if he will make a statement.
    Mr. Fowler: Last Friday I published a prospectus inviting local groups of employers to submit proposals for forming training and enterprise councils in their areas. TECs will represent a fundamental change in the way training and enterprise activities are managed and developed. I have invited the first formal applications for development funding by the end of April. I expect the first TECs to be in operation by early next year.
    Mr. Moss: I congratulate the Minister on this imaginative initiative, which has been warmly welcomed in my constituency and the country as a whole. Does he agree that unfilled job vacancies are more likely to be filled in the future if local industrialists have a direct input into the training of local people for local jobs?
    Mr. Fowler: What my hon. Friend says is absolutely right. The training and enterprise councils will be locally based and led by employers who have a knowledge of their local area. That will be good for jobs in all the areas in which they are set up.

  PRIME MINISTER

    Engagements
    Q.1 Mrs. Fyfe: To ask the Prime Minister is she will list her official engagements for Tuesday 14 March 1989.
    The Prime Minister (Mrs. Margaret Thatcher): This morning I presided over a meeting of the Cabinet and had meetings with ministerial colleagues and others. In addition to my duties in this House, I shall be having further meetings later today.
    Mrs. Fyfe: Does the Prime Minister think that people suffering from Alzheimer's disease should have to pay the poll tax?
    The Prime Minister: As the hon. Lady is aware, those who fall into the definition of severe mental handicap are exempt. It has not been possible to have a particular definition at the time at which that occurs for Alzheimer's disease to bring everyone automatically into that definition.
    Q.2 Mr. Patnick: To ask the Prime Minister if she will list her official engagements for Tuesday 14 March 1989.
    The Prime Minister: I refer my hon. Friend to the reply that I gave some moments ago.
    Mr. Patnick: My right hon. Friend drew attention during a recent visit to the north-east to the region's confidence. Does she agree that that confidence has shown an upswing in the whole of the area, and does it not demonstrate the hollowness of the so-called north-south divide?
    The Prime Minister: I totally agree with my hon. Friend. In a visit to both the north-east and north-west last week one found that business is flourishing, business men are optimistic, unemployment is falling and the amount of reconstruction under the urban development corporation, particularly on the river front, is going excellently. I agree that the north-south divide has gone.
    Mr. Kinnock: Following the comments by the Secretary of State for Health at the weekend, will the Prime Minister now assure the House that when she next needs the services of a doctor she will not follow her usual practice of reaching for her wallet?
    The Prime Minister: The right hon. Gentleman is referring to the average receipts for the general practitioner in the Health Service. My right hon. and learned Friend is absolutely correct in giving the figure for the average receipts.
    Mr. Waller: To ask the Prime Minister if she will list her official engagements for Tuesday 14 March 1989.
    The Prime Minister: I refer to the reply that I gave some moments ago.
    Mr. Waller: Is my right hon. Friend aware of the very considerable concern which exists, for instance, in the Yorkshire area about river pollution and about the fact that the water authorities, which are themselves sometimes the guilty parties, have responsibility for the enforcement of pollution control? Does my right hon. Friend agree that, when ecological issues rightly have priority, it is important that we get rid of these anomalies as soon as we can?
    The Prime Minister: I agree with my hon. Friend. When water is privatised, the duty of regulation and policing the standards of water and of rivers will come either under the National Rivers Authority or under the Director General of Water Services who will also be able to control the prices. That will be a great advance in addition to the extra efficiency that we will get from privatisation. It will be a good deal for the consumer.
    Mr. Heffer: Following the right hon. Lady's visit to Liverpool last Friday when she attacked the workers at Birds Eye—1,000 of whom have now been put out of work—and the city council which is collaborating with all the interests in the area, will she now apologise to the people of Liverpool and Merseyside and understand that the people in my area put compassion before profit, which is something which the right hon. Lady does not understand?
    The Prime Minister: Apparently the hon. Gentleman does not understand that to satisfy the consumer—we are all consumers—companies must stay competitive and efficient. If workers in his area refuse to be competitive, efficient, or to accept high productivity, the investment will go to those many workers who are prepared to be just that.
    Mr. Patrick McNair-Wilson: To ask the Prime Minister if she will list her official engagements for Tuesday 14 March.
    The Prime Minister: I refer my hon. Friend to the reply that I gave some moments ago.
    Mr. McNair-Wilson: In the short time which remains before my right hon. Friend the Chancellor of the Exchequer unveils his Budget proposals to the House, will
    284
    my right hon. Friend reflect on the growing strength of the British economy? Will she confirm that in the past two years the growth in jobs has been greater than at any time since the end of the second world war? Does she agree that it is very gratifying to note that, to the end of last September, 60,000 of those jobs were created in manufacturing industry? Is it not, therefore, clear that those are the outward and visible signs of an industry which has now regained its competitiveness and the outlook for the economy is excellent?
    The Prime Minister: The standard of living is higher than it has ever been. The number of people in work is higher than ever before and there are 1 million more people in work than in 1979. The number of people at work in manufacturing industry is growing. That is a very good record and the prospects for the future are good.
    Mr. McGrady: Is the Prime Minister aware of the distress, hardship and injustice which is often caused in Northern Ireland when the Secretary of State for Northern Ireland issues an order under section 42 in the national interest whereby companies are deprived of their contracts and employees of their jobs? Does she agree that natural justice demands that the accused know the accusation and have the chance to defend themselves? Will she make arrangements for an appeal procedure to enable those injustices to be eradicated?
    The Prime Minister: I shall refer that point to my right hon. Friend the Secretary of State for Northern Ireland who does a superb job in respect of his duties in Northern Ireland, as in all others.
    Mr. Rathbone: To ask the Prime Minister if she will list her official engagements for Tuesday 14 March.
    The Prime Minister: I refer my hon. Friend to the reply that I gave some moments ago.
    Mr. Rathbone: With the Government's commitment to fundamental change in South Africa, will my right hon. Friend the Prime Minister endorse the recommendations of the judicial commission set up by the South African Government for the banning of apartheid, the abolition of all apartheid legislation, the adoption of a Bill of Rights and a national franchise to re-establish human rights in that country?
    The Prime Minister: As I understand it, that particular commission—which we would agree with—insisted that apartheid must end by a process of negotiation and we fully support that. Some encouraging changes are taking place, not least with the independence of Namibia which is a great step forward. We are also doing our level best to help the further education of black South Africans and we are now spending some £10 million on assisting them to get a better education. There is a great deal of room for hope for South Africa.
    Mr. Foulkes: Would the Prime Minister, for once, like the unusual opportunity of uniting the House behind her and join me in sending good wishes to the only football team left in Europe, Heart of Midlothian, in the fourth round tie against Bayern Munich this evening?
    The Prime Minister: Yes, Sir.
    Mr. Roger King: To ask the Prime Minister if she will list her official engagements for Tuesday 14 March.
    The Prime Minister: I refer my hon. Friend to the reply that I gave some moments ago.
    Mr. King: Does my right hon. Friend agree that not only is British business creating more jobs than ever before within the United Kingdom economy but it is investing in and taking over four times as many overseas companies as any other western country? Does she agree with me that this indicates that our economy is very strong indeed?
    The Prime Minister: Yes. As far as this country is concerned, business investment as a proportion of GDP is at an all-time high, in addition to which, being a very internationally minded country, we are investing heavily overseas—more than any other European country. We are in the lead by a long way; we are way ahead of the second country, which is France.
    Mr. Madden: Does the Prime Minister believe that the shameful decision of Judge Pickles to sentence my constituent—[Interruption.]
    Mr. Speaker: Order. The hon. Member knows that the Prime Minister cannot answer questions such as that.
    Mr. David Martin: To ask the Prime Minister if she will list her official engagements for Tuesday 14 March.
    The Prime Minister: I refer my hon. Friend to the reply that I gave some moments ago.
    Mr. Martin: Will my right hon. Friend assure me that the reports that I have seen in the newspapers about delays that may take place in the reform of the legal profession are not right and that we shall get on as soon as possible in the next Session with the excellent reforms proposed by the Lord Chancellor and put them into practice as soon as possible?
    The Prime Minister: The measures have been proposed in Green Papers which will be thoroughly debated. Then I hope that we shall be able to bring forward legislation as soon as possible, most likely next year.
    Mr. James Lamond: Is the Prime Minister's interest in human rights deep enough for her to place on the agenda of the conference on human rights in Paris under the Vienna talks the question of the treatment of political prisoners in Turkey, our NATO ally?
    The Prime Minister: We have raised the question of human rights in Turkey with Ministers who have come here. They have replied that they are doing everything possible to restore full human rights in Turkey and that the cases which are frequently raised date back some considerable time.
    Mr. Batiste: To ask the Prime Minister if she will list her official engagements for Tuesday 14 March.
    The Prime Minister: I refer my hon. Friend to the reply that I gave some moments ago.
    Mr. Batiste: Will my right hon. Friend confirm that where a monopoly does not reflect the realities of the market place it is not only the consumer but the supplier who suffers, because sooner or later the market place will reassert itself and if the supplier has not adjusted his services to meet that it will be unable to adapt? In those
    286
    circumstances, will she give an assurance to those in the legal profession who seek its urgent reform that she is fully behind them?
    The Prime Minister: Most people, I think, who have studied the Green Papers of my right hon. Friend the Lord Chancellor about the reform of the legal profession are behind the overwhelming majority of his reforms. There are still some dissentient voices, particularly in the legal profession, but I think that, broadly speaking, what he proposes is right. We shall consider what is said in the debate very carefully and I hope that we shall be in a position to bring forward legislation.
    Mr. Alton: Notwithstanding the resilience and sense of optimism which the Prime Minister will have found during her visit to the Albert dock in Liverpool and the housing co-operatives that she visited last Friday, does she agree that in an area in which 98,000 people are out of work, and some 18,000 have been out of work for the last five years, there is no point in just blaming the victims and that the Merseyside economy cannot stand to lose another 1,000 jobs? Will she personally do what she can to try to save those jobs?
    The Prime Minister: I was questioned about that particular loss of jobs, and I indicated that it was because the company could not achieve competitiveness, could not get rid of some restrictive practices, and could not increase productivity in that particular factory. So it chose to invest in a factory where it could do so. The company is still investing, but not at that factory. I was questioned about that matter at a spot where it is proposed to create another 5,000 jobs, arising from some of the reconstruction that is being undertaken at the docks as an extension of the work of the urban development corporation. It seems to me that there are fresh opportunities there. The hon. Gentleman will know that the company is delaying the close-down, to enable its workers to obtain other jobs and other training before closure occurs.—[Interruption] The company must be competitive, and if the hon. Gentleman does not understand that, he is against the consumer and against every single worker.
    Mr. Knowles: To ask the Prime Minister if she will list her official engagement for Tuesday 14 March.
    The Prime Minister: I refer my hon. Friend to the reply that I gave some moments ago.
    Mr. Speaker: I do not think that the hon. Gentleman is present.
    Mr. Jack: To ask the Prime Minister if she will list her official engagements for Tuesday 14 March.
    The Prime Minister: I refer my hon. Friend to the reply that I gave some moments ago.
    Mr. Jack: Recently, my right hon. Friend sponsored an excellent conference in London, on the preservation of the ozone layer. Will she consider sponsoring a similar event to help ensure the preservation of the world's rain forests?
    The Prime Minister: That aspect was, of course, mentioned at the conference on the preservation of the ozone layer. If my hon. Friend the Member for Fylde (Mr. Jack) consults my hon. Friend the Minister for Overseas
    288
    development, he will learn that a considerable number of our grants and aid are already given with the preservation of the rain forests in mind, because that is very important to the preservation of the ozone layer as a whole.

Points of Order
Mr. Speaker: Private notice question. Mr. Neil Kinnock.
Mr. Neil Kinnock rose—
Mr. Jim Sillars: On a point of order, Mr. Speaker.
Mr. Speaker: I will take any points of order after the private notice question.
Mr. Sillars: On a point of order, Mr. Speaker.
Mr. Speaker: Order. Will the hon. Gentleman resume his seat? He knows perfectly well that I take points of order after questions, and I have called a private notice question.
Mr. Kinnock rose—
Mr. Sillars: On a point of order, Mr. Speaker.
Mr. Speaker: Order. The hon. Gentleman knows very well that points of order are taken at their proper time, after private notice questions. I repeat that I have called a private notice question. Mr. Neil Kinnock.
Mr. Kinnock: May I ask the Chancellor of the Exchequer a question—
Mr. Sillars: On a point of order, Mr. Speaker.
Mr. Speaker: If the hon. Gentleman persists, I shall have to take action that I would very much regret having to take.
Mr. Sillars rose—
Mr. Speaker: Order. I am on my feet.
Mr. Sillars: My point of order relates to this question.
Mr. Speaker: Order. I say to the hon. Gentleman for the final time that I will take his point of order after the private notice question.
Mr. Sillars: My point of order relates to the question.
Mr. Speaker: The hon. Gentleman must resume his seat.
Mr. Sillars indicated dissent.
Mr. Speaker: I give the hon. Gentleman one more chance.
Mr. Sillars rose—
Mr. Speaker: The hon. Gentleman will leave the Chamber for the remainder of today's sitting.
Mr. Sillars indicated dissent.
Mr. Speaker: Is the hon. Gentleman refusing to do that?
Mr. Sillars indicated dissent.
Mr. Speaker: If the hon. Gentleman refuses, I shall he forced to name him. I give the hon. Gentleman one more chance to leave the Chamber.
Mr. Sillars indicated dissent.
Mr. Speaker: I name Mr. James Sillars.
Question put,
That Mr. James Sillars be suspended from the service of the House.—[Mr. Wakehum]
The House proceeded to a Division:—
Mr. Patrick Cormack (seated and covered): On a point of order, Mr. Speaker. In view of the time that has been wasted, if there should be occasion for a similar Division, will you use the powers vested in you under Standing Orders to allow us to vote by standing in our places?
Mr. Speaker: That is hypothetical at the moment.
The House having divided: Ayes 376, Noes 16.

Division No. 120]

[3.33 pm

AYES

Adley, Robert

Coombs, Simon (Swindon)

Alison, Rt Hon Michael

Cope, Rt Hon John

Alton, David

Cormack, Patrick

Amess, David

Cran, James

Amos, Alan

Crowther, Stan

Arbuthnot, James

Cummings, John

Archer, Rt Hon Peter

Darling, Alistair

Armstrong, Hilary

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

Arnold, Tom (Hazel Grove)

Davis, David (Boothferry)

Ashby, David

Day, Stephen

Ashdown, Rt Hon Paddy

Dewar, Donald

Aspinwall, Jack

Dixon, Don

Atkins, Robert

Dobson, Frank

Baker, Rt Hon K. (Mole Valley)

Doran, Frank

Baker, Nicholas (Dorset N)

Dorrell, Stephen

Baldry, Tony

Douglas-Hamilton, Lord James

Banks, Robert (Harrogate)

Dover, Den

Barnes, Mrs Rosie (Greenwich)

Dunn, Bob

Batiste, Spencer

Dunwoody, Hon Mrs Gwyneth

Beith, A. J.

Durant, Tony

Bell, Stuart

Dykes, Hugh

Bevan, David Gilroy

Eggar, Tim

Biffen, Rt Hon John

Evans, David (Welwyn Hatf'd)

Blackburn, Dr John G.

Evans, John (St Helens W)

Blaker, Rt Hon Sir Peter

Evennett, David

Boateng, Paul

Ewing, Harry (Falkirk E)

Bonsor, Sir Nicholas

Fairbairn, Sir Nicholas

Boscawen, Hon Robert

Fallon, Michael

Boswell, Tim

Fatchett, Derek

Bowden, Gerald (Dulwich)

Favell, Tony

Bowis, John

Fearn, Ronald

Boyes, Roland

Fenner, Dame Peggy

Brandon-Bravo, Martin

Field, Barry (Isle of Wight)

Bray, Dr Jeremy

Field, Frank (Birkenhead)

Brazier, Julian

Fishburn, John Dudley

Brooke, Rt Hon Peter

Fisher, Mark

Brown, Gordon (D'mline E)

Flynn, Paul

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

Fookes, Dame Janet

Browne, John (Winchester)

Foot, Rt Hon Michael

Buchanan-Smith, Rt Hon Alick

Forman, Nigel

Buck, Sir Antony

Forsyth, Michael (Stirling)

Burt, Alistair

Forth, Eric

Butcher, John

Foster, Derek

Butler, Chris

Foulkes, George

Butterfill, John

Fowler, Rt Hon Norman

Callaghan, Jim

Fox, Sir Marcus

Campbell, Menzies (Fife NE)

Franks, Cecil

Campbell-Savours, D. N.

Freeman, Roger

Carlile, Alex (Mont'g)

French, Douglas

Carlisle, Kenneth (Lincoln)

Fry, Peter

Carrington, Matthew

Fyfe, Maria

Carttiss, Michael

Galbraith, Sam

Cash, William

Gardiner, George

Chapman, Sydney

Garrett, John (Norwich South)

Clark, Dr David (S Shields)

Garrett, Ted (Wallsend)

Clark, Dr Michael (Rochford)

Gill, Christopher

Clark, Sir W. (Croydon S)

Gilmour, Rt Hon Sir Ian

Clarke, Rt Hon K. (Rushcliffe)

Glyn, Dr Alan

Clarke, Tom (Monklands W)

Golding, Mrs Llin

Colvin, Michael

Goodhart, Sir Philip

Conway, Derek

Goodson-Wickes, Dr Charles

Coombs, Anthony (Wyre F'rest)

Gorman, Mrs Teresa

291

Gow, Ian

Lilley, Peter

Grant, Sir Anthony (CambsSW)

Lloyd, Sir Ian (Havant)

Greenway, Harry (Ealing N)

Lloyd, Peter (Fareham)

Greenway, John (Ryedale)

Lord, Michael

Griffiths, Peter (Portsmouth N)

Luce, Rt Hon Richard

Grocott, Bruce

McCrindle, Robert

Grylls, Michael

Macdonald, Calum A.

Hague, William

McFall, John

Hamilton, Neil (Tatton)

Macfarlane, Sir Neil

Hampson, Dr Keith

MacGregor, Rt Hon John

Hanley, Jeremy

McKay, Allen (Barnsley West)

Hannam, John

MacKay, Andrew (E Berkshire)

Hargreaves, Ken (Hyndburn)

Maclean, David

Harris, David

McLeish, Henry

Hattersley, Rt Hon Roy

Maclennan, Robert

Hawkins, Christopher

McLoughlin, Patrick

Hayhoe, Rt Hon Sir Barney

McNair-Wilson, Sir Michael

Haynes, Frank

McNair-Wilson, P. (New Forest)

Heath, Rt Hon Edward

McNamara, Kevin

Heathcoat-Amory, David

Major, Rt Hon John

Heddle, John

Mans, Keith

Henderson, Doug

Maples, John

Hicks, Mrs Maureen (Wolv' NE)

Marek, Dr John

Higgins, Rt Hon Terence L.

Marlow, Tony

Hill, James

Marshall, David (Shettleston)

Hind, Kenneth

Marshall, John (Hendon S)

Hogg, Hon Douglas (Gr'th'm)

Martin, David (Portsmouth S)

Hogg, N. (C'nauld & Kilsyth)

Martin, Michael J. (Springburn)

Holland, Stuart

Mates, Michael

Holt, Richard

Mawhinney, Dr Brian

Hood, Jimmy

Maxton, John

Hordern, Sir Peter

Maxwell-Hyslop, Robin

Howard, Michael

Meacher, Michael

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

Meale, Alan

Howarth, George (Knowsley N)

Miller, Sir Hal

Howe, Rt Hon Sir Geoffrey

Mills, Iain

Howell, Ralph (North Norfolk)

Miscampbell, Norman

Howells, Geraint

Mitchell, Sir David

Howells, Dr. Kim (Pontypridd)

Moate, Roger

Hughes, Robert (Aberdeen N)

Monro, Sir Hector

Hughes, Robert G. (Harrow W)

Moore, Rt Hon John

Hughes, Roy (Newport E)

Morgan, Rhodri

Hunt, David (Wirral W)

Morris, Rt Hon J. (Aberavon)

Hunt, John (Ravensbourne)

Morris, M (N'hampton S)

Hunter, Andrew

Morrison, Sir Charles

Ingram, Adam

Morrison, Rt Hon P (Chester)

Irvine, Michael

Moss, Malcolm

Jack, Michael

Mowlam, Marjorie

Janman, Tim

Neale, Gerrard

Janner, Greville

Nelson, Anthony

Jessel, Toby

Neubert, Michael

Johnson Smith, Sir Geoffrey

Nicholls, Patrick

Jones, Barry (Alyn & Deeside)

Nicholson, David (Taunton)

Jones, Martyn (Clwyd S W)

Nicholson, Emma (Devon West)

Jones, Robert B (Herts W)

O'Brien, William

Jopling, Rt Hon Michael

O'Neill, Martin

Kaufman, Rt Hon Gerald

Onslow, Rt Hon Cranley

Kellett-Bowman, Dame Elaine

Oppenheim, Phillip

Kilfedder, James

Orme, Rt Hon Stanley

King, Roger (B'ham N'thfield)

Owen, Rt Hon Dr David

Kinnock, Rt Hon Neil

Page, Richard

Kirkwood, Archy

Paice, James

Knapman, Roger

Parkinson, Rt Hon Cecil

Knight, Greg (Derby North)

Patnick, Irvine

Knight, Dame Jill (Edgbaston)

Patten, John (Oxford W)

Knox, David

Pattie, Rt Hon Sir Geoffrey

Lamond, James

Pawsey, James

Lamont, Rt Hon Norman

Peacock, Mrs Elizabeth

Lang, Ian

Porter, Barry (Wirral S)

Latham, Michael

Porter, David (Waveney)

Lawrence, Ivan

Portillo, Michael

Lawson, Rt Hon Nigel

Powell, Ray (Ogmore)

Lee, John (Pendle)

Powell, William (Corby)

Leigh, Edward (Gainsbor'gh)

Price, Sir David

Lennox-Boyd, Hon Mark

Raison, Rt Hon Timothy

Lester, Jim (Broxtowe)

Randall, Stuart

292

Rathbone, Tim

Strang, Gavin

Rees, Rt Hon Merlyn

Straw, Jack

Renton, Tim

Sumberg, David

Rhodes James, Robert

Tapsell, Sir Peter

Richardson, Jo

Taylor, Mrs Ann (Dewsbury)

Riddick, Graham

Taylor, Ian (Esher)

Ridley, Rt Hon Nicholas

Taylor, John M (Solihull)

Rifkind, Rt Hon Malcolm

Taylor, Matthew (Truro)

Roberts, Allan (Bootle)

Taylor, Teddy (S'end E)

Robertson, George

Temple-Morris, Peter

Roe, Mrs Marion

Thatcher, Rt Hon Margaret

Rogers, Allan

Thompson, D. (Calder Valley)

Ross, Ernie (Dundee W)

Thompson, Jack (Wansbeck)

Rossi, Sir Hugh

Thompson, Patrick (Norwich N)

Rost, Peter

Thornton, Malcolm

Rowe, Andrew

Thurnham, Peter

Ruddock, Joan

Townend, John (Bridlington)

Rumbold, Mrs Angela

Tredinnick, David

Sackville, Hon Tom

Trotter, Neville

Sainsbury, Hon Tim

Turner, Dennis

Sayeed, Jonathan

Twinn, Dr Ian

Scott, Nicholas

Viggers, Peter

Shaw, David (Dover)

Waddington, Rt Hon David

Shaw, Sir Giles (Pudsey)

Wakeham, Rt Hon John

Shaw, Sir Michael (Scarb')

Walden, George

Sheldon, Rt Hon Robert

Walker, Bill (T'side North)

Shephard, Mrs G. (Norfolk SW)

Walker, Rt Hon P. (W'cester)

Shepherd, Colin (Hereford)

Wallace, James

Shersby, Michael

Waller, Gary

Shore, Rt Hon Peter

Walley, Joan

Sims, Roger

Wardle, Charles (Bexhill)

Skeet, Sir Trevor

Wareing, Robert N.

Smith, Andrew (Oxford E)

Warren, Kenneth

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

Watts, John

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

Wells, Bowen

Smith, Tim (Beaconsfield)

Wheeler, John

Soames, Hon Nicholas

Whitney, Ray

Soley, Clive

Wiggin, Jerry

Speed, Keith

Williams, Rt Hon Alan

Speller, Tony

Wilshire, David

Spicer, Sir Jim (Dorset W)

Wilson, Brian

Spicer, Michael (S Worcs)

Winnick, David

Squire, Robin

Winterton, Mrs Ann

Stanbrook, Ivor

Winterton, Nicholas

Stanley, Rt Hon Sir John

Wood, Timothy

Steen, Anthony

Worthington, Tony

Stern, Michael

Yeo, Tim

Stevens, Lewis

Young, Sir George (Acton)

Stewart, Allan (Eastwood)

Stewart, Andy (Sherwood)

Tellers for the Ayes:

Stokes, Sir John

Mr. Tristan Garel-Jones and Mr. David Lightbown.

Stott, Roger

NOES

Beggs, Roy

Salmond, Alex

Corbyn, Jeremy

Sedgemore, Brian

Cryer, Bob

Sillars, Jim

Douglas, Dick

Skinner, Dennis

Grant, Bernie (Tottenham)

Thomas, Dr Dafydd Elis

Heffer, Eric S.

Wigley, Dafydd

McGrady, Eddie

Molyneaux, Rt Hon James

Tellers for the Noes:

Nellist, Dave

Mrs. Margaret Ewing and Mr. Andrew Welsh

Ross, William (Londonderry E)

Question accordingly agreed to.
Resolved,
The the hon. Member for Glasgow, Govan withdraw from the House.
Mr. Kinnock rose—[Interruption.]
Mr. Speaker: Order. The hon. Member for Govan must now leave the Chamber.
The hon. Member withdrew accordingly.

WAYS AND MEANS

  Budget Statement
  3.45 pm
  Mr. Neil Kinnock (by private notice): To ask the Chancellor of the Exchequer, whether he will make a financial statement.
  The Chancellor of the Exchequer (Mr. Nigel Lawson): I am happy to respond to the right hon. Gentleman's question.

  Budget Statement

    INTRODUCTION
    The background to this year's Budget is the unprecedented strength of the British economy, coupled with the continuing and overriding need to combat inflation, at a time when, throughout the world, it is unmistakably edging up again.
    I shall begin with an account of the performance of the economy in 1988 and the prospects for 1989, set in the context of the past 10 years. I shall then deal with monetary policy and the public sector finances. Finally, I shall propose a number of measures to carry forward the process of tax reform.
    As usual, the Financial Statement and Budget Report, together with a number of press releases filling out the details of my proposals, will be available from the Vote Office as soon as I have sat down.

    ECONOMIC PERFORMANCE AND PROSPECTS
    The Government's first 10 years in office have seen a transformation both in the way in which economic policy is conducted, and in the results that have been achieved.
    For the first time, economic policy has been set firmly and explicitly in a medium-term context. We have been guided by the basic philosophy that the Government should set a sound medium-term financial framework and leave the private sector free to operate with confidence within it.
    The Government came to office with two central objectives—to defeat inflation, and to breathe new life into a moribund economy—and a clear idea of how to achieve those objectives. Inflation is a disease of money; and monetary policy is the cure. The role of fiscal policy is to bring the public accounts into balance and to keep them there, and thus underpin the process of re-establishing sound money.
    Strong sustainable growth is achieved, not through any artificial stimulus, but by allowing markets to work again and restoring the enterprise culture; by removing unnecessary restrictions and controls and rolling back the frontiers of the State; by reforming trade union law and promoting all forms of capital ownership; and by reforming and reducing taxation.
    The first and most urgent task we faced was to damp down the inflationary fires that had raged in the 1970s, and wrought so much economic and social havoc; and we succeeded. Between 1974 and 1979, inflation had averaged more than 15 per cent. Over the past six years it has averaged 5 per cent.—still not good enough, but a massive improvement.
    Once business and industry recognised the fundamental changes that were taking place, they responded to the new economic climate with vigour and confidence. As a result, we have experienced the longest period of strong and
    294
    steady growth since the war. Output in the United Kingdom has grown faster than in all the other main European nations during the 1980s—a marked contrast to the previous two decades, when we were bottom of the league—and this growth has been based on a dramatic and sustained improvement in productivity.
    For the economy as a whole, our productivity growth has been second only to that of Japan among all the major nations during the 1980s, and our productivity growth in manufacturing has exceeded even that of Japan.
    In Britain today we have more people in work than ever before in our history; they are better motivated than ever before, and their living standards have improved beyond recognition. But it is not just our economic performance that has been transformed: so have our prospects for the future.
    Over the past seven years, investment has grown more than twice as fast as consumption, creating the increased capacity necessary to meet future demand. Total business investment is now a higher proportion of national income than ever before, and its quality has improved immeasurably, too; as has the quality of British management. We have seen a dramatic and long overdue improvement in company profits and a remarkable growth in the total number of businesses, last year at the rate of more than 1,000 a week.
    Provided we stand firm in our resolve to get on top of inflation, the prospects before us are excellent. At least on this side of the House, we do stand firm.
    A year ago, in the aftermath of the worldwide stock market crash, it looked as if there would be some slowing down from the rapid growth of 1987. In fact that was not to be.
    As the House knows, the state of the national income statistics leaves much to be desired, but it now appears that we had in 1988 a second successive year of growth at 4·5 per cent., with unemployment falling by over half a million, to well below the European average. Manufacturing output grew particularly rapidly, by more than 7 per cent., to a level well above the previous peak.
    But total spending also grew by getting on for 7 per cent., mainly because of the boom in industrial investment, in itself a welcome event, but also because of continued strong growth in consumer spending. This last was financed to an unprecedented degree by borrowing, overwhelmingly mortgage borrowing.
    Invevitably, the rapid growth of total spending led to renewed inflationary pressure. To some extent this was diverted into a sharp rise in imports, and hence into the deficit on the current account of the balance of payments. The published figures put this at £14·5 billion in 1988, although, given the £15 billion positive balancing item—another name for errors and omissions—the true figure:is almost certainly less than this. But whatever the true figure, it is undoubtedly large, and a sharp increase on the deficit recorded in 1987 after seven successive years of surplus. Given sound policies, however, it can readily be financed.
    Moreover, unlike previous current account deficits we have known in this country, it reflects not excessive Government borrowing, but rather an upsurge of private investment unmatched by private savings, and this imbalance is something that will in due course correct itself.
    The real threat is posed by the increase in inflation itself. Excluding the distorting effect of mortgage interest

    295
    payments, the RPI rose by 4·5 per cent. last year, much the same as the average over the previous five years, but this underlying rate increased significantly through the year, and now stands at 5·5 per cent.
    Moreover, the increase in inflation appears to be a worldwide trend. Taking the seven major industrial nations as a whole, inflation is now at its highest level for three and a half years.
    In the United Kingdom, as in a number of other countries, it became clear that it was necessary to tighten monetary policy sharply. That meant raising short-term interest rates, which I duly did, starting last June.
    I am, of course, keenly conscious of the difficulties many borrowers, particularly home owners, are now experiencing. But however unwelcome high interest rates may be, they are infinitely preferable to the damage that would be done by high inflation.
    There are now increasing signs that the determined action that I have taken is having the desired effect. The housing boom that played such a large part in the events of last year has subsided. Monetary growth has slowed down appreciably, and retail sales, too, seem to have levelled off over the past four months, presaging a gradual recovery in the personal savings ratio.
    The outlook for 1989 is for inflation to rise a little further over the next few months, from 7·5 per cent. including mortgage interest payments, to about 8 per cent., before falling back in the second half of the year to 5·5 per cent. in the fourth quarter and perhaps 4·5 per cent. in the second quarter of 1990.
    Some slowdown in real growth is inevitable as we get inflation back on to a downward path—indeed, it has almost certainly already begun to happen. Overall growth is forecast to fall from the 4·5 per cent. recorded last year to 2·5 per cent. this year, with growth through the year at 2 per cent.
    Domestic demand is forecast to slow down even more markedly. But within this, investment, which is holding up well, is once again forecast to grow faster than consumption. The current account deficit is forecast to remain at the same level as last year.
    But the question of just how "soft" or "hard" the so-called landing will be is not in the hands of Government alone. The Government's task is to reduce inflation by acting, through monetary policy, to bring down the growth of national income in money terms. The task of business and industry is to control their pay and other costs. The more successfully they do so, the less costly in terms of output and employment the necessary adjustment will be.
    Over the medium term, however, it is clear from our experience over the past 10 years that the policy we are pursuing will bring inflation down, and steady growth will resume. The best contribution the Government can make to this is to carry forward the process of supply side reform, to help make the economy work better. That is the objective of the specific measures to which I shall turn in the second part of my statement.

    MONETARY POLICY
    As I said at the outset, monetary policy plays, and must always play, the central role in the battle against inflation. It is at the very heart of the medium-term financial strategy, the 10th edition of which I am publishing today.
    I have described the monetary tightening that has taken place over the past nine months. This has already led to a sharp fall in the rate of growth of the target aggregate, narrow money, or M0.
    For 1989–90, the target range for M0 will be 1 to 5 per cent., as envisaged in last year's MTFS. Although it will start the year above the top of that range, its very low growth over the past six months—below 3 per cent. at an annualised rate—suggests that it will fairly soon come back within the range. As in the past two years, there is no target for the growth of broad money, or liquidity, but I will continue to take it into account in assessing monetary conditions.
    The exchange rate is of particular importance in the conduct of monetary policy. The Government's clear commitment not to accommodate increases in domestic costs by exchange rate depreciation remains a key safeguard against inflation. In this context, we will continue to work with our G7 partners to maintain the greater exchange rate stability that has been a feature of the past two years.
    Short-term interest rates remain the essential instrument of monetary policy. I repeat now what I have stated clearly on a number of previous occasions: interest rates will stay as high as is needed for as long as is needed, for there will be no letting up in our determination to get on top of inflation.

    PUBLIC SECTOR FINANCES
    I now turn to fiscal policy. When we first took office, the public sector borrowing requirement was over 5 per cent. of GDP—equivalent to £25 billion in today's terms.
    This we steadily reduced over the years as a deliberate act of policy, until, by 1987–88, the PSBR had been eliminated altogether, and we started to repay the public debt.
    Accordingly, last year I budgeted for a further public sector debt repayment, or PSDR, of some £3 billion. In the event, it looks like turning out between four and five times as large, at £14 billion, or 3 per cent. of GDP.
    Even if there had been no privatisation proceeds at all, the public finances would still be in surplus, to the tune of some £7 billion. Nothing like this has ever been achieved in the past 40 years. Indeed, Government debt as a proportion of GDP is now lower than at any time since the first world war, and no other major country enjoys a comparable budget surplus. It has not been easy, even though we have been assisted this year by the exceptional buoyancy of the economy, which both boosted tax receipts and reduced public expenditure.
    Moreover, the substantial net repayment of public debt over the past two years has permanently reduced the burden of debt servicing, both now and for future generations. For the coming year, for example, the debt repayments of the last two years mean that net debt interest costs will be lower by over £1·5 billion a year. This saving is being put to good use, allowing extra spending on departmental programmes within our overall public expenditure constraints.
    The dramatic improvement in the United Kingdom's public finances has also provided a welcome opportunity to devote more attention to the structure of the debt that remains. We will continue to seek both to minimise the

    297
    cost of servicing the Government's domestic debt and to improve its quality by relying less on the more liquid borrowing instruments.
    We have also been able to restructure part of the Government's foreign currency debt, launching an innovative and cost-effective programme of Treasury bills denominated and payable in ECU.
    The first series of six-monthly tenders for these bills has proved a highly successful innovation. We plan to continue the programme at around the current level.
    Meanwhile, I am today adding one more entry to the long list of financial controls which we have swept away during our term of office. The last surviving relic of the post-war apparatus for the direction of capital by the state is the Control of Borrowing Order, which, since 1946, has involved, first, the Treasury and, then, the Bank of England in giving consents for equity and bond issues in the capital markets.
    As from today, it will no longer be necessary for companies wishing to make capital market issues to obtain the Bank of England's consent to the timing of such issues. The new issue queue will be a thing of the past. As soon as practicable, we will revoke the order itself and repeal the 1946 Act from which it stems.
    The sterling capital market has in recent times been going through a period of considerable adjustment, as the Government have changed from being a large issuer to a large purchaser of their own debt. The abolition of the Control of Borrowing Order will remove an unnecessary and bureaucratic restriction on issuers of capital as they move into the space formerly occupied by the Government when they were a borrower.
    This new freedom will be enhanced by a further, important set of deregulatory measures for the sterling capital market which are being promulgated today in notices issued by the Bank of England. These measures will open up the market for sterling paper of less than five years' maturity by extending the range of institutions which can make such issues; and they will create a unified regime for all these issues.
    Taken together, the changes I have described constitute a major liberalisation of the arrangements for London's capital markets. They will give greater flexibility to issuers and wider choice to investors.
    In last year's Budget speech, I set out the principle of a balanced budget as the proper objective of fiscal policy, in these terms:
    "A balanced Budget is a valuable discipline for the medium term. It represents security for the present and an investment for the future. Having achieved it, I intend to stick to it. In other words, henceforth a zero PSBR will be the norm. This provides a clear and simple rule, with a good historical pedigree".—[Official Report, 15 March 1988; Vol. 129, c. 996.]
    It is a rule that ensures that, as national income continues to rise, the ratio of public debt to national income continues to fall, and with it the burden of debt interest. It ensures, too, that the state makes no claim either on the savings of the private sector or on flows of finance from overseas.
    To go further than this, and seek to achieve the maximum possible repayment of public debt, would not be consistent with the Government's policy, as it would mean deferring for a very long time the benefits of a reduction in the burden of taxation, so I reaffirm the principle of the balanced Budget. However, given the substantial surplus we now have, the path of prudence and caution must be to
    298
    return to balance not overnight, but gradually, over a period of years. Thus, we can expect further years of debt repayment ahead of us.
    Moreover, given the particular uncertainties there are at the present time, I believe it would be right to budget for 1989–90 for a surplus similar to that secured in the year now ending; in other words, a further public sector debt repayment, or PSDR, of some £14 billion.
    This means that, in the space of three years, we shall have repaid roughly a sixth of the public debt that has accumulated over more than two centuries, but it also means that it will not be possible in this year's Budget to reduce the burden of taxation; that is to say, to reduce taxation as a share of national income.

    TAXPAYER CONFIDENTIALITY
    Before I turn to my proposals for changes in taxation, I have one other change of a specific nature to announce.
    As the House knows, the new official secrets legislation currently passing through Parliament is very much narrower in scope than the present Official Secrets Act. In particular, it does not cover information in the possession of either the Inland Revenue or Customs and Excise concerning the private affairs of specific taxpayers. I am sure that the whole House will agree that it is essential for taxpayer confidentiality to be properly protected.
    I therefore propose to introduce provisions in this year's Finance Bill to ensure that it will continue to be a criminal offence for officials or former officials of either of the Revenue Departments to reveal information about the private affairs of a specific taxpayer.
    I would only add that the need for this protection is in no sense a reflection on the probity and integrity of the members of those two Departments.
    Indeed, after nearly six years as Chancellor and more than eight years as a Treasury Minister, I would like to take this opportuntiy to pay public tribute to the outstanding service I have consistently received from the officials of both Departments.
    Mr. Eric S. Heffer: Will the right hon. Gentleman give way?

    BUSINESS TAXATION
    Mr. Lawson: I now turn to taxation. As I have done on a number of previous occasions, I propose to divide this into three broad sections: the taxation of business. the taxation of savings, and the taxation of personal income and spending.
    First, taxes on business. Ever since the corporation tax reform I introduced in 1984, the rate of corporation tax for small companies, defined for this purpose as those with annual profits of less than £100,000, has been set at the basic rate of income tax, currently 25 per cent.
    Large companies, defined as those with profits of £500,000 or more, pay the main rate of corporation tax of 35 per cent., one of the lowest rates of tax on company profits in the world. Between £100,000 and £500,000, the averge rate of tax gradually rises from 25 to 35 per cent.
    I propose to keep the small companies rate in line with the basic rate of income tax for 1989–90 and to leave the main corporation tax rate unchanged, but I propose to increase the small companies' rate band substantially, by 50 per cent.

    299
    Thus, the small companies' rate will apply to companies with profits of less than £150,000, and the 35 per cent. rate will be reached only at profits of £750,000. These changes will reduce the corporation tax burden for more than half of all those companies that do not already enjoy the benefit of the small companies rate.
    I propose to increase the VAT threshold to £23,600, the maximum permitted under European Community law.
    I also have to set the scales for the private use of company cars. This remains far and away the most widespread benefit in kind. When I doubled the car scales in last year's Budget, I made it clear that this still left this benefit significantly undertaxed. Accordingly, I propose to increase the car scales by one third for 1989–90. The yield from this will be £160 million in 1989–90 and £200 million in 1990–91. There will be no change in the fuel scales.
    Over the years, I have received a number of representations from business complaining about the long-standing tax treatment of foreign exchange gains and losses. I recognise that, as business becomes more global, this subject becomes increasingly important. However, I have to say that I find it one of the most intractable I have encountered. Certainly, there can be no question of any change in the present system until a number of crucial and complex issues have been satisfactorily resolved. I have therefore authorised the Inland Revenue to publish today a consultative document which explores those issues and examines the scope for reform.
    Finally, on business taxation, I have two major simplifications to propose, both of which follow from the income tax reforms that I introduced in last year's Budget.
    One of the many undesirable features of an income tax system with several higher rates was that, since a taxpayer's marginal rate could well be very different in different years, the question of which year income related to made a great deal of difference. This was true of schedule E, where the strict rule is that income is taxed in the year to which it relates, on an accruals basis.
    For the vast majority of employees, this basis of assessment for schedule E poses no problem, but for about half a million people, mainly directors, who do not receive all their income in the year to which it relates, it causes complications and often needless assessments and correspondence long after the tax year is over. It is also open to manipulation.
    I therefore propose that income tax under schedule E should in future be assessed on a receipts basis, with the simple principle that one pays the tax when one receives the income. This will have a transitional cost of £80 million in 1989–90 and £60 million in 1990–91, but in the long term it will yield both extra revenue and a significant saving in both taxpayers' time and Inland Revenue staff.
    The reduction in the top rate of income tax to 40 per cent. in last year's Budget also enables me to make a major simplification of the tax regime for the vast bulk of the incorporated sector of small businesses: those known as close companies—generally speaking, unquoted companies that are controlled by five or fewer people.
    The rules for the so-called apportionment of close companies' income are notoriously complex, taking up some twenty pages of impenetrable legislation. These rules
    300
    are no longer needed, and I propose to abolish them. I believe that family businesses in particular will welcome this substantial simplification.
    I do, however, have to guard against the avoidance of tax on investment income by channelling it through a closely controlled investment company. Any such company which does not distribute the bulk of its profits and other investment income will therefore be taxed at 40 per cent., equivalent to the higher rate of income tax.

    TAXES ON SAVING
    I now turn to the taxation of saving.
    The sharp decline in the ratio of personal saving to personal income, over the past two years in particular, has led to even more discussion than usual of the merits of providing greater tax incentives for personal saving.
    Certainly it is desirable that, over the medium term, we generate as a nation a level of saving sufficient to finance a high level of investment, but what matters for that is not personal saving alone, but corporate saving too, which is running at a historically high level, and public sector saving, which has been boosted by the move to budget surplus.
    Moreover, the personal saving ratio is measured in terms of gross saving net of borrowing, and it has fallen not because of a decline in gross saving but as a result of the sharp increase in personal borrowing. The appropriate remedy for that is to raise the cost of borrowing, and with it the return on savings, as we have done.
    Above all, the role of tax reform is to encourage enterprise and improve economic performance in the medium term. It is wholly inappropriate as a response to short-term or cyclical phenomena. So for the taxation of savings, the Government's policy is clear: it is to strengthen and deepen popular capitalism in Britain, by encouraging, in particular, wider share ownership. I have a number of specific tax measures to announce today to that end.
    Personal equity plans, or PEPs, were first announced in my 1986 Budget, and started up in January 1987. As the House knows, those who invest in these plans pay no further tax at all, either on the dividends they receive or on any capital gains they may make—indeed, there is no need for them to get involved with the Inland Revenue at all.
    Personal equity plans got off to a good start, with over a quarter of a million investors, many of whom had never owned shares before, subscribing almost £500 million between them in 1987.
    Since then, however, the take-up of new PEPs has slowed down, not least as a result of the changed climate in the equity market which followed the October 1987 stock exchange crash. So the time has come to improve and simplify PEPs and give them a new boost.
    First, I propose to raise the annual limit on the overall amount that can be invested in a PEP from £3,000 to £4,800. Secondly, within that, I propose to raise substantially the amount that can be invested in unit trusts or investment trusts. For many small savers, these provide an excellent introduction to shareholding.
    At present, PEP investors are limited to £540 a year, or a quarter of their PEP, whichever is the greater, in unit or investment trusts. I propose to increase this limit very substantially, to £2,400 a year; and the whole of a PEP will be able to be invested in unit or investment trusts, up to

    301
    this limit. To qualify for tax relief, the unit or investment trusts will be required to invest wholly or mainly in United Kingdom equities.
    Thirdly, at present, only cash may be paid into a PEP. I propose that investors should also be permitted to place directly into a PEP shares obtained by subscribing to new equity issues, including privatisation issues.
    Finally, I propose to make a number of important simplifications to the PEP rules so as to make the scheme more flexible, better directed to the needs of small and new investors, and, above all, cheaper to administer.
    I am confident that the changes that I have announced today will enable personal equity plans to play an important part in stimulating the spread of ownership of British equities in the years ahead.
    I also have a number of improvements to announce specifically designed to encourage employee share ownership.
    It is a striking fact that the number of approved all-employee share schemes has risen from a mere 30 in 1979 to almost 1,600 today, benefiting some 1·75 million employees. At present, the annual limits on the value of shares which can be given under all-employee profit-sharing schemes are £1,250 or 10 per cent. of salary up to a ceiling of £5,000. I propose to raise these cash limits to £2,000 and £6,000 respectively.
    Secondly, I propose to increase the monthly limit on contributions to all-employee save-as-you-earn share option schemes from £100 to £150, and at the same time double the maximum discount from market value at which options may be granted from 10 per cent. to 20 per cent.
    Thirdly, a number of my hon. Friends have been concerned that current tax law may be inhibiting the development of employee share ownership plans, otherwise known as ESOPs. These are distinguished from ordinary approved employee share schemes by the fact that they use a wider variety of finance, acquire more shares and tend to operate on a longer time scale.
    I propose to make it clear that companies' contributions to ESOPs qualify for corporation tax relief, provided only that they meet certain requirements designed to ensure that the employees acquire direct ownership of the shares within a reasonable time. I hope that this will encourage more British companies, particularly in the unquoted sector, to consider setting up ESOPs.
    Those firms with employee share ownership schemes have no doubt that giving the work force a direct personal interest in their profitability and success improves the company's performance. The same benefits flow from profit-related pay. That was one of the reasons why, in my 1987 Budget, I introduced a tax relief to encourage its development. I have some improvements to make to this scheme, too.
    First, as I have previously announced, I propose to abolish the restriction that, to qualify for the tax relief, prospective profit-related pay must equal at least 5 per cent. of total pay. Secondly, I propose to raise the limit on the annual amount of profit-related pay which can attract relief from £3,000 to £4,000.
    Thirdly, I propose to enable employers to set up schemes for headquarters and other central units using the profits of the whole company or group for their profit calculations. Fourthly, to help share schemes and ESOPs as well as profit-related pay, I propose to change the
    302
    so-called material interest rules which may at present unnecessarily exclude employees from schemes where they can already benefit from a trust set up for employees.
    Taken together, the package of measures I have announced to encourage wider share ownership in general, and employee share ownership in particular, will help to ensure that the idea of a share-owning democracy becomes ever more entrenched as a part of the British way of life.
    I now turn to life assurance. Last June, the Inland Revenue issued with my authority a major consultative document on the taxation of life assurance. The tax regime for life assurance is unique. The present system dates back to the first world war and has developed over the years in a piecemeal way, leading to a state of affairs in which the incidence of tax is extremely uneven, with some life offices paying no tax at all.
    There is clearly a powerful case for reform, with a view to securing a tax regime which is more equitable both within the industry and as between life assurance and most other forms of savings.
    I have considered very carefully the representations that the industry has made, and taken full account both of the changes to the regulation of life assurance proposed by the Securities and Investment Board under the Financial Services Act 1986 and the prospects for increased competition within the European Community after 1992. In the light of these factors, I have decided not to proceed with the more radical reforms canvassed in the consultative document, but I do have number of important changes to propose, based for the most part on the general tax reform principle of seeking lower rates on a broader base.
    First, many life offices write pension business as well as life assurance, and they are not required to keep the two businesses entirely separate for tax purposes. This enables them to set the unrelieved expenses of the pensions business against the income and gains of their life business, thus giving their life profits unduly favourable tax treatment. The life offices themselves have accepted that this treatment is anomalous, and I propose to end it.
    This change will come into force on 1 January 1990. Together with some related measures to put the taxation of life offices' pension business on to a proper footing, it will yield some £150 million in 1990–91.
    The remainder of the changes that I have to propose constitute a broadly balanced package which, because of the transitional provisions, will reduce the taxation of life assurance in 1990–91 by some £100 million.
    I propose that the expenses incurred by life offices in attracting new business should continue to be fully deductable for tax purposes from the income and gains of life funds, but should in future be spread over a period of seven years. To give the industry time to adjust, this change will be phased in gradually over the next four years, starting on 1 January, 1990.
    There are certain other, more technical, matters raised in the consultative document which will require further discussion with the industry, and any legislative changes on these issues will have to wait for next year's Finance Bill. But I can say here and now that I propose, as from 1 January 1990, to abolish life assurance policy duty. I also propose, from the same date, that the rate of tax payable on the policyholders' share of the income and gains of life offices, which at present stands at 35 per cent on

    303
    unfranked investment income and 30 per cent. on realised capital gains, should be reduced to the basic rate of income tax.
    The net effect of all these changes to the taxation of life assurance will be a cost of £20 million in 1989–90 and a yield of £45 million in 1990–91, rising somewhat in subsequent years. But above all it will provide a more efficient and equitable tax regime for this most important industry.
    Later this year, United Kingdom unit trusts will be able to compete freely in Europe and will face competition from analogous Community investment schemes here. At present, trusts investing in gilt-edged securities or other bonds face a tax disadvantage. They pay corporation tax at 35 per cent. on their income but can pass on a credit of only the basic rate of income tax to their investors. I therefore propose that from 1 January 1990, as for life assurance companies, the corporation tax rate on unit trusts that come within the new European Community rules will be equal to the basic rate of income tax. Their investors will then get full credit for all the United Kingdom tax the trusts pay.
    I turn now to pensions. The tax treatment accorded to occupational pension schemes is particularly favourable; and the extent of this privilege has to be circumscribed by Inland Revenue rules. Thus, pension, schemes qualify for tax relief only if they meet certain conditions, notably that the pension paid may not exceed two thirds of final salary: and if they fall foul of any of these rules, they lose all relief.
    This has the perverse result that tax law effectively constrains the overall pension an employer can pay his employee. This is neither desirable nor necessary. Accordingly, I propose to make it possible for employers to provide whatever pensions package they believe necessary to recruit and reward their employees.
    However, while it is clearly right that employers should be free to provide whatever pension they see fit, it would not be right to make the present generous tax treatment open-ended. I therefore propose to set a limit on the pensions which may be paid from tax-approved occupational schemes, based on a final salary of £60,000 a year.
    I have deliberately set the ceiling at a level which will leave the vast majority of employees unaffected, and it will be subject to annual uprating in line with inflation. It will still be possible for a tax-approved occupational scheme to pay a pension of as much as £40,000 a year, of which up to £90,000 may be commuted for a tax-free lump sum.
    The new ceiling will apply only to pension schemes set up on or after today, or to new members joining existing schemes after 1 June. Public sector schemes, too, will be amended to comply with this. As I have already said, there will now be complete freedom to provide benefits above the Inland Revenue limits, though without the tax relief.
    The introduction of this ceiling on tax relief also enables me to simplify and improve the rules for the majority of pension scheme members, in partcular to ease the conditions under which people can take early retirement.
    I also propose to simplify very substantially the rules concerning additional voluntary contributions to pension schemes, or AVCs. In particular, the present requirements for free-standing AVCs place a heavy administrative burden on employers. These requirements will be greatly reduced. Indeed, in many cases employers will not need to be involved at all.
    Furthermore, if AVC investments perform very well, occupational pensions may at present have to be reduced to keep total benefits within the permitted limits. I propose that, in future, any surplus AVC funds should be returned to employees, subject to a special tax charge. This will remove the penalty that at present exists on good investment performance.
    The most important development in pensions in recent years has undoubtedly been the introduction and success of personal pensions. Since July last year, 1 million people have already taken advantage of the new flexibility and opportunities these offer. I have two proposals today to make personal pensions still more attractive.
    First, I propose to make it easier for people in personal pension schemes to manage their own investments. Second, I propose to increase substantially the annual limits, as a percentage of earnings, on contributions to personal pensions by those over the age of 35.
    This will be of particular value to those running their own businesses, who are often unable to make contributions until later on in their working life. It will also improve the position of personal pensions in relation to occupational schemes. The new limits will be subject to an overall cash ceiling based on earnings of £60,000, corresponding to the new ceiling for occupational pensions, and similarly indexed.
    These changes build on, and complete, the pension measures I introduced in my 1987 Budget. They represent a significant deregulation which will allow more flexibility, while setting for the first time a reasonable cash limit on the tax relief available to any individual. They should give a boost, in particular, to saving through personal pensions and through AVCs.
    Coupled with the changes I made in 1987, this is as far as I wish to go in amending the tax treatment of pensions.
    Finally, on the taxation of saving, it should not be overlooked that a far-reaching reform which I announced in last year's Budget, to come into effect in April 1990, is relevant in this context. I refer to independent taxation, about which three new explanatory leaflets are now available from all tax offices.
    There can be little doubt that one of the greatest disincentives to saving in the present tax system is the treatment of the savings of married women. At present a wife's income from savings has to be disclosed to her husband, and taxed at his marginal rate.
    Independent taxation will change all that. In particular, those married women who have little or no earnings will in future have their own personal allowance to set against their savings income. Independent taxation may well do much to encourage the growth of personal saving in this country.

    TAXES ON SPENDING
    I now turn to taxes on personal income and spending. As the House knows, Her Majesty's Government are obliged to implement the European Court's judgment that certain of our zero rates of VAT on supplies to business, notably on non-residential construction, but also on fuel and power and on water, are not lawful. This derives from the court's interpretation of the Community's sixth VAT directive, to which the United Kingdom agreed in 1977. The necessary changes will be introduced in this year's Finance Bill, and draft clauses have already been published.
    In implementing the judgment, I have sought to do as much as possible to minimise the burden. From 1 April, VAT will be payable in respect of all non-residential construction, unless carried out under agreements entered into before the court ruling. As from 1 August, Iandlords will have the option to tax rents, which means, in practice, that in most cases no extra VAT will be paid at all.
    These measures will reduce the burden of VAT on construction, so far as the private sector is concerned, to just £35 million in 1989–90, rising to £110 million in 1992–93. Without them, the yield from VAT on construction in the private sector would have risen to £450 million. There will also be a first-year yield of £250 million from construction carried out for the public sector, and the public sector programmes concerned have already been protected by compensatory adjustments where necessary.
    So far as water for industry and fuel and power for business use are concerned, VAT will not be payable until July 1990. VAT on fuel and power will apply to business users above a specified threshold. Private households will remain zero-rated.
    I have been particularly concerned about the impact of the European Court's ruling on charities. Unfortunately, charities' business activities cannot lawfully be shielded from the effects of the ruling, but I have been able to retain zero rates for construction, water, fuel and power for all charities' non-business activities, for churches, and for residential accommodation such as hospices, students' hostels and old people's homes.
    I have considered whether there is anything further I can sensibly do to assist charities with their VAT bills in these special circumstances. I propose to relieve charities from VAT on fund-raising events, on sterilisng equipment for medical use, and on classified advertising.
    I also propose to relieve from car tax cars leased to the disabled. This is equivalent to an overall saving of about £400 on each vehicle leased to a disabled person. However, in general, I continue to believe that the best way of helping charitable causes through the tax system is by directly encouraging the act of charitable giving. The payroll giving scheme, which I introduced in my 1986 Budget, has been growing steadily. Some 3,400 schemes have now been set up, and over 100,000 employees are already participating, quite a few of them giving the full £240 annual limit for tax relief. I now propose to double that limit to £480, or £40 a month.
    I now turn to the excise duties. For some years now, the potential damage to the environment in general, and the risk to child health in particular, from excessive lead in the atmosphere has been a matter for concern. Lead in petrol accounts for 80 per cent. of lead in the atmosphere. The Government are firmly committed to phasing out leaded petrol, and in successive Budgets I have sought to assist this.
    I first introduced a tax differential in favour of unleaded petrol in 1987, and I increased it last year, but, although sales are undoubtedly rising, unleaded petrol still accounts for only some 5 per cent. of total petrol sales, even though two-thirds of the cars now on the road could use it, either without any modification, or else with only a minor modification, which should not usually cost more than £20 and, in many cases, will be carried out free.
    One of the problems is ignorance of the facts. Many motorists do not realise that their cars can already use unleaded petrol. Othes are unaware of how modest the
    306
    modification cost usually is, and many are under the false impression that if they do switch to unleaded petrol, their cars will no longer be able to use leaded petrol.
    It is clearly essential that these myths are rapidly dispelled. Meanwhile, I propose to take the opportunity of this Budget to increase still further the tax differential in favour of unleaded petrol, by nearly 4p a gallon. This means that, at a shade over 14p a gallon, or more than 3p a litre, our tax differential in favour of unleaded petrol will be greater than that of any other country in the European Community, with the solitary exception of Denmark.
    If the benefit of today's change is fully passed on to the customer—and I look to the oil companies to see that it is—it means that the price of unleaded petrol at the pump will generally be getting on for lop a gallon, or just over 2p a litre, cheaper than four-star leaded petrol.
    But I do not intend to stop there. I also propose to raise the tax on two and three-star petrol, so that the pump price of these grades will be at least as high as that of four-star.
    This should encourage garages to phase out two-star petrol, which is already down to about 6 per cent. of the total market, thus enabling them to switch storage capacity, and in some cases pumps too, to unleaded petrol—quite apart from the incentive to the remaining two-star users to switch to unleaded fuel.
    I am confident that the duty changes I have announced, which will take effect from six o'clock this evening, will contribute to a marked increase in the use of unleaded petrol over the next 12 months. They will also lead to a loss of revenue of some £40 million in 1989–90. I propose to recoup this from vehicle excise duty.
    At the present time, a bus or a coach has to have 66 seats before it pays as much in vehicle excise duty as a family car. I propose to rectify this anomaly by increasing the tax rates of this group of vehicles so that they cover their track costs. I also propose to increase the rates of duty for the heaviest non-articulated lorries, to put them on a more equal footing with articulated lorries. At the same time, I propose to simplify the system, greatly reducing the number of separate rates of vehicle excise duty.
    I have no further changes to propose this year in the rates of excise duty.

    INCOME TAX
    Nor do I propose any change this year to either the basic or higher rate of income tax.
    Since I aligned the rates of income and capital gains tax in last year's Budget, it follows that I also propose no change this year in the capital gains tax rates. However, I do have a few announcements to make concerning capital gains tax.
    With the advent of independent taxation from April 1990, married women will acquire their own capital gains tax threshold, so that a married couple will enjoy two such exemptions. In the light of this, I propose to maintain the capital gains tax threshold at £5,000 for 1989–90.
    Secondly, I propose to abolish the general holdover relief for gifts. This was introduced by my predecessor in 1980, when there was still capital transfer tax on lifetime gifts, in order to avoid a form of double taxation, but the tax on lifetime giving has since been abolished, and the relief is increasingly used as a simple form of tax avoidance. However, while the general holdover relief will

    307
    go, I propose to retain it for gifts of business, farm and heritage assets; and, of course, gifts between husband and wife will continue to be exempt.
    Moreover, I propose to extend the existing relief for all gifts to charities and to gifts of land and buildings to housing associations. Where, instead of being given away, the land is sold at less than market value, any capital gains tax will be based on the actual proceeds rather than, as now, on the market value. I also propose that such gifts and concessionary sales be normally exempt from inheritance tax.
    In the case of gifts of personal belongings, these benefit from chattels relief, under which any items worth less than £3,000 on disposal are entirely exempt from capital gains tax. I propose to double the chattels exemption limit to £6,000.
    Thirdly, I propose to change the tax treatment of certain bonds so as to simplify the tax rules and prevent a loss of yield by the use of indexation to create losses and the conversion of income into capital gains.
    To return to income tax, I propose to raise all the main income tax thresholds and allowances by the statutory indexation factor of 6·8 per cent., rounded up. Thus, the single person's allowance will rise by £180 to £2,785, and the married man's allowance will rise by £280 to £4,375. The basic rate limit will rise by £1,400 to £20,700. The single age allowance will rise by £220 to £3,400, and the married age allowance by £350 to £5,385. The higher level of age allowance will rise by £230 to £3,540 for a single person, and by £360 to £5,565 for a married couple.
    I have a number of measures to help the elderly. In 1987 I introduced a new and more generous age allowance for those aged 80 and over. I now propose to extend it to include all those aged 75 and over. This will take an additional 15,000 elderly single people and married couples out of tax altogether. Three quarters of all those aged 75 and over will not be liable to income tax at all.
    The income limit for the age allowance will rise by £800 to £11,400, again in line with indexation. However, I propose to reduce the rate at which age allowance is withdrawn above this income limit. I propose that, in future, it should be withdrawn at the rate of £1 of allowance for each £2 of income above the limit, instead of the present rate of £2 for every £3. This means that the marginal tax rate for those in the withdrawal band will be reduced to well below 40 per cent., thus meeting a large number of representations I have received over the past year.
    The Finance Bill will also include the provisions to establish the new tax relief for the over-60s' health insurance premiums, which I announced to the House in January, and which will take effect from April next year, at a cost of £40 million in 1990–91.
    I have one further change to make to help pensioners. Under the earnings rule, any pensioner who decides to continue to work after reaching the statutory retirement age sees his or her pension docked at a rate of 50 per cent. on every £1 earned between £75 and £79 a week, rising to 100 per cent. for every £1 earned over £79 a week. This rule applies until he or she has reached five years beyond the state pension age.
    The manifesto on which we were first elected in 1979 acknowledged that it was wrong to discourage people who wished to work beyond retirement age in this way, and we pledged that we would abolish the earnings rule. That is precisely what we shall do. My right hon. Friend the
    308
    Secretary of State for Social Security and I have agreed that the pensioners' earnings rule should be abolished from the beginning of October, the earliest practicable date. The necessary legislation will be included in the Social Security Bill currently before the House.
    The cost to public expenditure will be £190 million in 1989–90, which will be entirely met from the Reserve, but the net cost of this measure will be significantly reduced by the income tax payable on the increased pensions.
    Those who wish to defer taking their pension will remain entirely free to do so, and will continue to earn a higher pension in return. I am sure the whole House will welcome this long-overdue reform.
    If I were to adopt the so-called "duck test" now in vogue across the Atlantic, the pensioners' earnings rule would probably qualify as a tax, and I would now be able to claim to have abolished a sixth tax, but sound tax principles, coupled with my innate modesty and natural reticence, prevent me from doing so.

    NATIONAL INSURANCE CONTRIBUTIONS
    I have one further measure to propose. It has long been a feature of the national insurance system that, once people earn more than the lower earnings limit, which in 1989–90 will be £43, they have to pay national insurance contributions at the same rate on the whole of their earnings up to the upper earnings limit. There are currently three different rates—5 per cent. and 7 per cent. for those on lower pay, and the standard rate of 9 per cent. The two reduced rates, which I introduced for both employers and employees in my 1985 Budget, cut the cost of employing the young and unskilled, among whom unemployment was then high and rising, and cut the burden of national insurance contributions on the low paid.
    However, the highly desirable reduction in the steep step at the lower earnings limit was achieved at the expense of creating two small steps further up the earnings scale. This is not a real problem so far as employers' contributions are concerned, but it is for employees. For it inevitably means that, at certain points on the income scale, people can still be worse off if they earn more. Their extra earnings take them from a lower rate band to a higher one, and they therefore lose more in national insurance contributions than they gain in extra pay.
    In agreement with my right hon. Friend the Secretary of State for Social Security, I now propose to build on my 1985 reform. For pretty well everyone who pays employee national insurance contributions, I propose to reduce to only 2 per cent. the rate of contributions on their earnings up to and including the lower earnings limit. On their earnings above that limit, there will be a single rate of 9 per cent., up to the upper earnings limit, which has already been set for 1989–90 at £325 a week. This will abolish altogether the steps which at present exist at earnings, for 1989–90, of £75 and £115 a week, and thus remove a serious work disincentive from the system.
    The step, which has always existed at the lower earnings limit, where people first come into the national insurance system, is the entry ticket to the full array of contributory benefits—as such, it is an essential feature of the contributory principle—but my proposals will more than halve this step, to only 86p a week in 1989–90. There will be no change in the contributions payable by employers.
    This reform will significantly reduce the burden of employees' national insurance contributions across the board. For the lowest paid, that burden is now heavier than the burden of income tax. This is the most effective measure I can take to lighten it. For everyone on just under half average earnings and above, it will leave them £3 a week more of their own money.
    The new system will take effect from the beginning of October, the earliest practicable date. The cost will be £1 billion in 1989–90 and £2·8 billion in 1990–91. The necessary legislation will be included in the Social Security Bill currently before the House.
    The total additional cost of all the measures in this Budget, on an indexed basis, is under £2 billion in 1989–90 and £3·5 billion in 1990–91.

    CONCLUSION
    In this Budget I have reaffirmed the Government's commitment to the defeat of inflation through the maintenance of prudent monetary and fiscal policies. I have budgeted for a debt repayment of £14 billion—the largest ever. I have announced a major reform of, and reduction in, employees' national insurance contributions; and I have honoured our pledge to abolish the earnings rule for pensioners.
    I commend this Budget to the House.
    Mr. Kinnock: I begin with customary felicitations and, on this occasion, thank the Chancellor of the Exchequer for his reply to my private notice question. I shall try to ensure that my supplementary is not as long as the answer he gave me.
    I also take this opportunity to welcome the change that the right hon. Gentleman has announced in the excise duties, a change that will promote the use of lead-free petrol. That is an entirely sensible step for the Chancellor to take. On behalf of my hon. and right hon. Friends, I further welcome the belated achievement, after 10 years in government, of the Conservative pledge to abolish the earnings rule for pensioners. It is only a fortnight since my hon. Friends on the Social Security Bill Committee sought, not for the first time, to secure that abolition. It is a shame that the Government did not see lit, even at that juncture, to make the adjustment so that at least it could have been an act of consensus, which I am sure it will be.
    This is not simply an annual Budget; the occasion is becoming marked by what can only be described as the custom of holding the annual nationalist games. I hope that that custom will not last very long because it is of no use to anybody, least of all the people of Scotland and Wales. In any case, we did not have to rely on the nationalists for entertainment when we had a professional juggler right in front of us.
    After nearly six years as Chancellor of the Exchequer, the right hon. Gentleman was able to stand up this afternoon and say that inflation in the second half of this year will reach 8 per cent. and that then it is expected to dip. He is so afraid of what will actually happen that he dare not raise any excise duties. He announced that growth in the course of this year will be halved and that the balance of payments deficit will stay the same this year as it was last year—that is, around about £15 billion. He said that he expected interest rates to remain high. But still, after announcing all this wonderful record of his
    310
    achievements, particularly in the past 12 months, the right hon. Gentleman produced again the lexicon of clichés about an unprecedented strength in the economy.
    Yet again, in the next 12 months, we shall see just how much strength the right hon. Gentleman will produce in the economy. A year certainly does make a difference. Last year we had the boom budget that made the credits spree and the trade deficit and inflationary pressures worse than they otherwise would have been. This year we have had the bust Budget—a botched attempt to make up for the Chancellor's excesses and messes in last year's Budget.
    Last year, in his Budget forecasts, the Chancellor told us that, in 1988, inflation would be 4 per cent., but he said that that was still too high. It was 6·8 per cent. in 1988 and it is now 7·5 per cent. and he has just told us that it will rise further. Of course, it might dip a little towards the back end of the year, perhaps even as early as July, because of the arithmetic of the year-on-year calculation of inflation. The fact remains, however, that without any excuse of any major move in commodity prices and without the pressure of any major movement in oil prices such as the previous Labour Government had to put up with, this is a Chancellor who is fast becoming Mr. Inflation.
    Last year, the Chancellor, as usual, missed his monetary targets—missed them by billions. In his estimate of the Budget surplus at £3 billion, he showed that he had absolutely no idea of what was happening in the economy—he was out by a factor of five. Last year, the Chancellor proved that he is to economic forecasting what Eddie the Eagle is to ski jumping.
    There will, as usual, be much comment on the Budget, but I warrant this: this year no one, neither the Chancellor's friends nor the Prime Minister—there is a distinction—will say that this Budget was
    "quite the most brilliant we have seen"
    After the experience of the past 12 months, perhaps the Prime Minister knows the difference between brilliance and flashiness, but the less lustrous Budget of 1989 cannot be blamed on any lack of advice. There has been no shortage in either the quantity or the quality of that advice.
    The Chancellor of the Exchequer has received advice from his right hon. Friends the Members for Henley (M r. Heseltine), for Shropshire, North (Mr. Biffen), and for Chesham and Amersham (Sir I. Gilmour) and had the benefit of advice from his right hon. Friend the Member for Woking (Mr. Higgins)—whose advice is of high quality—and he has also had the benefit of advice from his right hon. Friend in the Cabinet, the Secretary of State for Wales, but he ignored that advice as well. He has also had high-quality advice from his right hon. Friend the Member for Old Bexley and Sidcup—the good old Member for Bexley and Sidcup, say we, because he tendered very high-quality advice to the Chancellor. However. the Chancellor has dismissed all his right hon. Friends as if they were a bunch of
    "teenage scrbblers".
    The Chancellor was right about one thing last year; he was absolutely right to scorn the estimates offered in July by the City analysts that the balance of payments deficit for 1988 would be £10 billion. They were totally wrong about that; it was £14·7 billion, so the Chancellor was right to scorn them. Let us hope that he does not berate them quite so frequently this year because though they were far out, they were a great deal closer than the Chancellor of the Exchequer.

    311
    There was advice for the Chancellor from this side of the House too. Sadly, he neglected that. He told my hon. Friend the Member for Dunfermline, East (Mr. Brown), who presented a series of proposals for improving the situation, that there would be no change of policy. That was the Chancellor's absolutely unflinching announcement. He must have forgotten nine movements in the interest rate over a very short period, a kind of economic yo-yo, but he told my hon. Friend that there would be no change of policy. At all times, except when the Chancellor has faced the Prime Minister, his responses to demands and protests have been the same: "No change; I am standing firm. Read my blips." That has been the answer he has offered this 12 months.
    Let us hope there will be different responses in the forthcoming months; otherwise there may be substance in the rumours percolating that the Prime Minister might be looking for a replacement for this Chancellor of the Exchequer. We understand that her gaze has fallen favourably upon the Secretary of State for the Environment. It is only a week since she was telling us that the right hon. Member for Cirencester and Tewkesbury (Mr. Ridley) is
    "absolutely first-class in every way,"—[Official Report, 7 March 1989; Vol. 148, c. 751.]
    whether in architecture, art, or civil engineering. Clearly, here we have a renaissance Cabinet Minister, with such an accumulation of talents as to make Leonardo da Vinci feel humble. So it might be that, in the course of the next 12 months, Michelangelo will replace Machiavelli. I do not know whether the country will be the better for it.
    In this Budget the Chancellor did not offer anything to repair the damage done to ordinary families both as a result of last year's giddy, give-away Budget and so much else that the Chancellor of the Exchequer has been doing. His failure to make that reparation will dismay many people in our country, but it will not surprise them. Because, for instance, of the briefing that did not take place and the tapes that do not exist, the people of Britain now know that child benefit hangs by a mere comma in the Conservative Manifesto. They also know that they have a Chancellor who believes that only a "tiny minority" of pensioners have "difficulty in making ends meet", even though there are 6 million retired people in this country either below or just on the official poverty line.
    So it comes as no surprise to the people of Britain that they have a Government who take with one hand and then take more with the other. They are a Government who give income tax cuts and then wipe out any gains with mortgage and interest rate rises and rises in other taxes, who have imposed the highest tax burden in peacetime history on the people of this country.
    This Budget will not lessen the burden either on the family or on the national income. I see the Chancellor disagreeing. The fact is that, even to get back to the burden as a proportion of national income and a weight on the average family that was reached under the last Labour Government, the Chancellor would today have had to cut the standard rate of income tax by another 6p. That demonstrates how much of an increase there has been in the tax burden under this Chancellor of the Exchequer.
    However, not content with maintaining that record tax burden, the Chancellor of the Exchequer has ensured that the greatest burden falls on the average family. Since the
    312
    right hon. Gentleman, the great tax reformer, entered 11 Downing street, the bottom 50 per cent. of British taxpayers, over 10 million people, have received £10 billion in income tax cuts; the top 1 per cent., just 200,000 people, have been given £16 billion in tax cuts. That cannot be just, efficient or right, and it will certainly not be right when that burden is increased by the Government-sponsored price rises in water and electricity and the poll tax—no tax was ever conceived or designed to fall more heavily on ordinary families throughout the country and less heavily upon the very rich.
    Not content with being a high-tax party, the Conservative party, especially under the Prime Minister and the chancellorship of the right hon. Gentleman, is also spectacularly the high interest rate party. The average mortgage rate under this Government has been at an all-time record for an all-time record period. It is not an accident. The right hon. Gentleman told us last year, and he repeated it of course this year
    "that interest rates remain the"
    not "an" but "the"—
    "essential instrument of monetary policy"
    [Official Report, 15 March 1988; Vol. 129, c. 995.].
    While even he cannot have thought, when he said last year, that the essential instrument would become a 13·75 per cent. bludgeon on home buyers and a huge cost burden added to the costs of industry, it is only really this Chancellor's usual performance.
    After all, in the past six years this miracle worker has raised the mortgage rate to a level more than 35 per cent. above that which he inherited. Today, just before he sat down, the Chancellor claimed that the changes in national insurance contributions make this a budget for the low-paid. They certainly need it, because the great supply-side reform that this Government has achieved is to remove both rights and protections for the lowest paid workers in the land.
    The right hon. Gentleman told us that he was going to claim credit for removing the steps in national insurance contributions. That is very interesting. We of course welcome it. We have made several demands over several Budgets for radical reform in national insurance contributions to alleviate the burden on the lowest paid workers. What has to be remembered, however, is that this man now removing the steps in national insurance contributions is the Chancellor who installed the steps in national insurance contributions and who increased the rate from 6·5 per cent. to 9 per cent.—a huge tax increase for those least able to afford it.
    I wish this were a Budget for the low-paid. The truth is that the changes announced by the Chancellor today hardly touch the average family and its income, and they do not compare with the endless largesse that he was prepared to show last year to those on the very highest income. This is not a Budget for the low-paid worker; this is another con job from a low-down Chancellor.
    True to form, again in this Budget, while the right hon. Gentleman was failing the majority he was favouring the minority. Even this modest Budget today brought in a few more of what are becoming known as Lawson's loopholes. We have had them before. We had the BES and enterprise zones. Those are just two examples; there are plenty more of them. We have had various kinds of tax relief, based on the hope that if the tax obligations of those on higher

    313
    incomes were reduced they would be more willing to commit their resources to investment. That has never worked, and it will not work now.
    The Chancellor has announced with a little twist today that, through this Budget, he will allow previously purchased privatisation share issues to be placed in personal equity plans. It will be plain to everyone that he is doing that to give free and speculative gains on privatisation issues. That is the water privatisation bribe, and the Government will need all the bribes that they can get if they are going to make that flotation work.
    Of course, trying to relieve of tax the people on top incomes to induce them to invest has not worked. After 10 years of giving away £26 billion to the richest I per cent. in our country, the proportion of total investment in GDP is lower than during any year under the last Labour Government. The savings ratio is also at rock bottom. It is historically at its lowest ever figure.
    I used to think that it was the national debt which did not matter. It now appears to be the savings ratio which does not matter. That is extraordinary. If the savings ratio does not matter, why did the Chancellor put all that effort into trying to subsidise savings if it was not to try to pull up savings from the historically low level which he has managed to reach as further evidence of his brilliance?
    The Chancellor's steps today. like so many of his other steps, show his incompetence and perversity. If the fact that we have 13 per cent. interest rates does not attract savers, why should subsidies attract them? In a country in which the Government refuse subsidies to meet the environmental costs of a rail link and in which they regard subsidies for training or research as the work of the devil, people rightly ask why subsidies are right for those with the money to save and wrong for those who use railways, carry out research or need training.
    The Budget contains the most indefensible of all the Government's tax subsidies—the subsidy which they propose to give to people who buy private health insurance for the over-60s. If the Government want to give priority in the Budget to the health needs of the elderly, the answer is not tax relief on medical insurance premiums for the well-off. The answer is to provide proper funds to cut NHS waiting lists for the elderly, to increase district nursing, health visiting and chiropody and physiotherapy services. If the Prime Minister would only join the NHS queue instead of jumping it, she would know that I am telling the truth.
    When I raised this matter with her, the Prime Minister said that she was surprised I was
    "prepared to purchase a private house but not prepared to purchase private health care. [Official Report, 2 February 1989; Vol. 146, c. 424.]
    That is what she said to me just a couple of weeks ago. The Prime Minister is so distant from reality that she equates housing with health. If she can do that, perhaps she can tell us what are the health equivalents to rent, mortgage arrears, housing, rises in mortgage rates, overcrowding and homelessness. If the Prime Minister believes that there is an equation between buying a house and buying private health insurance, she can tell us all about it. I might even get her to rise at the Dispatch Box to answer this, who knows?
    The needs of the elderly, whether they are in the private sector or on the NHS, will not be met by subsidies of this kind. When we know that the Government, according to the Chancellor, are prepared to give over £40 million—it
    314
    will be a lot more than that in reality—of taxpayers' money to the already well-off, when they are denying proper facilities to those who do not, cannot and will not pay, that is a grotesque sense of injustice.
    We all know why that provision is in the Budget. It is not because the Chancellor is enthusiastic about it. It is not even, to do him credit, because the Secretary of State for Health is enthusiastic about it. That provision is in the Budget because it is one of the Prime Minister's pet obsessions. She deludes herself, or she wants to delude others, that private health subsidies for the over-60s will somehow ease pressure on the Health Service. It cannot and will not do that.
    Apart from any other considerations, private health insurers do no cover pre-existing medical conditions such as arthritis, senile dementia, loss of mobility or many of the other most usual ailments of the very elderly. BUPA offers the advice that private health insurance does not exist to alleviate long-term illness, because that is not a suitable subject for insurers.
    In the Finance Bill which will follow this Budget and in many other ways, it is important that people's attention is drawn to the basic ideology behind that proposition so that people can judge the Budget and the Government's White Paper on "Working for Accountants". The idea that the private medical sector can help with health needs is not the Prime Minister's only delusion. She believes, or says that she believes, that the
    "trade deficit is being financed by people who are prepared to invest in Britain and who have full confidence in the country's economy."—[Official Report, 2 March 1989, Vol. 148, c. 392.]
    The Chancellor said something like that again today. However, the truth is that the brilliant Chancellor has made such a botch of his job that the only way in which he can get short-term money into this country to fund his record balance of payments deficit is to offer the highest interest rates in the industrial world.
    At the same time that the Chancellor is making families and businesses bear the crushing interest rate burden, he is presiding over a huge and continuing net outflow of long-term capital. Last year, about £9 billion of long-term capital came into Britain and £24 billion of long-term capital went out. Some "full confidence" that shows in "the country's economy", to use the Prime Minister's words a net long-term capital outflow of £15 billion to go with the deficit on the current account of £15 billion which will stay with us again this year.
    However, against that background the Chancellor expects us to stand back and admire him for accumulating a Budget surplus. Against a background of huge household debt, a rock-bottom savings ratio, a massive trade deficit and a record tax burden, the Chancellor expects the people of Britain to become positively reverential at what he calls his "prudence and caution" in using that surplus to pay back the national debt.
    Before anyone becomes too impressed with the Chancellor, a few factors should be taken into account. It is very difficult for the Chancellor to claim "prudence" for accumulating the surplus when he did not plan for it and when it is five times bigger than he expected. He was the most shocked man in the House of Commons. He must be the only person who still believes in Father Christmas.
    Despite all the talk that we heard again this afternoon about "prudence and caution" in paying off the national debt to "lift the burdens of the future", the Chancellor

    315
    knows that he is not using the Budget surplus because he wants to. He is using it to repay the national debt because he thinks that he dare not do anything else with it.
    The Chancellor has his bonanza budget surplus—a real windfall if there ever was one—which he believes that he cannot use in Britain without sucking in more imports and sending the markets haywire. He has all this money, but he dare not use it. He must feel like the robber who opens his swag and finds that all the banknotes are marked. The robber analogy is not entirely without meaning, especially when we bear in mind the remarks of the former Prime Minister, the late Lord Stockton, about selling the family silver.
    We must remember that the surplus is not the Chancellor's. The headlines might read "Mr. Lawson's surplus", "The Government's surplus", "The Chancellor's surplus", "Mr. Fixit's surplus", "Wonderman's surplus" or even "The Brilliant Chancellor's Surplus". However, as the Chancellor and the Prime Minister repeatedly and rightly remind everyone, Governments do not have their own money. Governments only have the people's money. Governments only have the taxpayers' money. So Governments do not have their own surpluses: they have only the people's surpluses.
    What are the people in Britain saying should be done with their surplus? In every measure of opinion, such as that in The Daily Telegraph 10 days ago and confirmed by every other source, people are not saying that the surplus should be used to repay the national debt or to spend on big tax handouts. In huge majorities, in all measures of opinion, the people who own that surplus are saying that their surplus should be used on health, education, transport, to protect the environment and to make the streets and railways safer and cleaner. The people are saying that their surplus should be used to prepare for their future and for their children's future. That comes through strongly from every measure of opinion, and this is a day on which the Chancellor should have trusted the people.
    Some of the people want their surplus used in this way because of their instinct for social justice; others because of an innate understanding that this country's economic and social fabric has been run down and must be built up if we are to face the future. But most people, I suspect, will say that their surplus should be used for constructive reasons of the most enlightened and common-sense self-interest, because the people of Britain know that they need the National Health Service and the public education system; they need comfort and security and efficiency as they travel across the country. They know all that because, unlike the Prime Minister and most of the Cabinet, they use the public services in Great Britain.
    This is the time that the Chancellor really should have trusted the people of this country, because the National Health Service lacks the resources to spend properly on its development needs. In this country, rivers, beaches and water supplies need cleansing. In this country, under this Government, local council house building has dropped by two thirds, private house building has fallen by one third and we have increased overcrowding, bad housing and homelessness. Under this Government it is a country that spends a fraction of what our competitors spend on skill training and in which investment in commercially viable
    316
    research is still, despite all the oil, the tax burden and the Budget surplus, still spending 10 per cent. less on research than in 1979.
    In this country, with all those needs, the Government would have to spend £14 billion in order to raise the proportion of GDP spent on public sector capital investment back to the level it was at under the right hon. Member for Old Bexley and Sidcup (Mr. Heath), or under my right hon. Friends Lords Wilson and Callaghan.
    The Chief Secretary to the Treasury (Mr. John Major): He does not understand.
    Mr. Kinnock: Oh, I understand only too well. One only has to walk out of this place and see the filth on the streets and the railways, the schools understaffed, the shortages of teachers and the under-funding of research to know that I understand only too well.
    In this country, with all these needs for repair and renovation and to face the future, a Government that use their Budget surplus to pay the national debt are like a householder who insists on paying back the mortgage despite the fact that the roof is leaking, the damp is rising, the electric wiring is perilous and the windows are falling out. This decision is justified by the Chancellor and the Prime Minister by saying that we should be paying off the mortgage, paying off the national debt, because if the people do not use their resources for that they will leave a debt round their children's necks.
    It is strange that the Prime Minister and the Government as a whole always say that they do not want to leave debts to our children. Yet they are always prepared to cut the taxes of the rich and to restrain public capital spending. They do not want to leave debts to our children, but they are always willing to preside over stagnation in manufacturing investment, always ready to leave a legacy of decay and danger because they will not undertake proper investment in the present or the future.
    They leave debts, too—the debts of a Chancellor who, in his time in office, has seen exports rise by 21 per cent. and imports by 58 per cent. In the last 12 months alone, he has seen exports rise by 1·8 per cent. and imports by 13 per cent. Such a Chancellor leaves debts. Such a Chancellor runs up overdrafts. Does he think that there is some charity in the sky that will fund that huge deficit that he has run up?
    That is not all the debt story. Under this Chancellor personal debts have risen, because of his fiscal and monetary incompetence, to a level which means that British households are more indebted than those of any other of the seven major industrialised nations. The Chancellor, who now uses his single instrument of record interest rates, punishes people for believing him on previous occasions. This Chancellor and this Government allow decay to increase, danger to spread, debt to rise and division to increase. The people will have to pay those debts now because they are without choice when they face their bills. The right hon. Gentleman and the Government will pay later because they will have to face the people without support.
    Mr. Speaker: As the private notice question is fully debatable on the Ways and Means resolutions, I do not propose to take any further questions on the private notice question.

    CONCLUSION

      PROVISIONAL COLLECTION OF TAXES
      Motion made, and Question put, pursuant to Standing Order No. 50 (Ways and Means motions).
      That, pursuant to section 5 of the Provisional Collection of Taxes Act 1968, provisional statutory effect shall be given to the following motions:—

      (a) Hydrocarbon oil (motion No. 2);

      (b) Vehicles excise duty (rates) (motion No. 5);

      (c) Special machines (vehicles excise duty and hydrocarbon oil) (motion No. 7).—[Mr. Lawson.]

      Question agreed to.
      Mr. Deputy Speaker (Mr. Harold Walker): I now call on the Chancellor to move the motion entitled "Amendment of the law". It is on this motion that the Budget debate will take place today and on the succeeding days. The remaining motions will not be put until the end of the Budget debate next week and they will then be decided without debate.

Budget Resolutions and Economic Situation

  AMENDMENT OF THE LAW
  Motion made, and Question proposed,
  That it is expedient to amend the law with respect to the National Debt and the public revenue and to make further provision in connection with finance; but this Resolution does not extend to the making of any amendment with respect to value added tax so as to provide—

  (a) for zero-rating or exempting any supply;

  (b) for refunding any amount of tax, otherwise than in a case where the amount has been paid by reason of a mistake;

  (c) for varying the rate of that tax otherwise than in relation to all supplies and importations; or

  (d) for relief other than relief applying to goods of whatever description or services of whatever description.—[Mr. Lawson.]

  [Relevant documents: European Community document No. 8887188, Annual Economic Report 1988–89 and the unnumbered document, "Annual Economic Report 1988–89" (final version as adopted by the Council).]
  5.29 pm
  Mr. David Knox: I should like to start by congratulating my right hon. Friend the Chancellor on this, his sixth Budget statement. Like all his previous Budget statements, his speech today was well constructed, to the point and commendably brief. I do not know how many more Budgets my right hon. Friend will introduce, but he has set his successors a very high standard to match, and of course his Budget speeches compare very favourably both in style and in content with those of the right hon. Member for Leeds, East (Mr. Healey) between 1974 and 1979.
  Mrs. Maria Fyfe: But they are an awful lot denser.
  Mr. Knox: I must thank the right hon. Gentleman the Leader of the Opposition for his private notice question this afternoon. With the exception of one or two hon. Members, the entire House is very grateful to him for co-operating to stop an abuse of parliamentary procedure. As a result of the right hon. Gentleman's action, the House was able to proceed with the Budget debate in the usual way. I think that a Conservative Member ought to express the gratitude of this side of the House to the right hon. Gentleman for his action.
  However, unlike the Leader of the Opposition, I welcome my right hon. Friend's cautious and prudent Budget. Given the balance of payments position and the current rate of inflation, he was right to be very cautious and to maintain the public sector debt repayment at the same level in the coming year as it has been in the past year. I strongly welcome a number of measures in my right hon. Friend's Budget. Chief among them is the fulfilment of the pledge made in our 1979 election manifesto that the earnings rule would be abolished. We have long waited for that to happen, and at last it has been implemented. Incidentally, another pledge made at the same time was that there would be rather less legislation under a Conservative Government than under the previous Labour Government. Perhaps that pledge also will be fulfilled in the coming years, who knows?
  In the face of inflation and balance of payments difficulties, I am pleased that my right hon. Friend decided

  319
  to stick to increasing the thresholds by only the statutory amount. One expected him to do at least that, because he was one of the authors of the original Rooker-Wise-Lawson amendment back in the 1970s. Although he does not always receive as much credit as he should for this, he has as Chancellor fulfilled the spirit of that amendment in the past.
  I am pleased also that my right hon. Friend has made the changes he has to national insurance contributions. The new arrangements will be much more satisfactory, because they remove the disincentive to people to earn more that obtains in the existing arrangements. I am pleased that my right hon. Friend has taken steps to increase long-term saving. I view the decline in saving over the past few years as a serious matter. I am glad that my right hon. Friend has taken the important measures that he has to try to increase the rate of long-term saving. Together with those, there are measures to increase wider share ownership, which is important if we are to create a capital-owning democracy—to use that great phrase of the late lain Macleod.
  I am pleased that my right hon. Friend has not increased duty on alcohol and tobacco. I warmly welcome the change in duty payable on unleaded petrol. Only 5 per cent. of petrol consumption is accounted for by unleaded petrol, and it is high time that its share was considerably increased. Yesterday, I took the precaution of asking my garage to convert my car to unleaded petrol, so clearly I shall benefit from that measure. I had no pre-knowledge of the Chancellor's decision.
  Important though the measures announced by my right hon. Friend are, he will be judged on the economy's general performance during the next year rather than on his Budget. Two areas of the economy are of particular concern at present. They are the balance of payments and inflation. There is no doubt in my mind that the balance of payments is the more serious of them. In the early 1980s, we had—thanks to oil—very large surpluses on the current account of our balance of payments. They enabled us to build up massive overseas investment. Today, British people own much more capital abroad than foreigners own in this country. Britain has become one of the strongest creditor countries in the world. It can be argued that that is the only real advantage North sea oil has given us.
  It was hoped that that advantage would be a lasting one and that the income from our overseas investments would help us to pay our way in the world when the oil was no longer there and we were compelled to import oil again. However, over the past three years we have moved from a position of having a substantial surplus on our balance of payments current account to having a substantial deficit. Last year, the deficit totalled 14·5 billion. This afternoon, my right hon. Friend announced that he expects a similar deficit in the coming year. We can pay for such deficits either by the sale of overseas investments or by borrowing.
  So far, the deficits have been financed mainly by borrowing at excessively high rates of interest, which have attracted hot money into London. A combination of our strong net capital position and high interest rates has enabled us to avoid the kind of sterling crisis that we knew in the 1970s. If our current account deficit continues uncorrected for any length of time—and there is no sign
  320
  that it will not do so—our net capital position will deteriorate, to the point where we shall eventually become a net debtor country. If that happens, apart from the devastating repercussions for our domestic economy, it will mean that oil had come and gone with no long-term advantage to the British economy.
  I have none of the hang-ups about borrowing and debt that the Government have, but I find it difficult to understand how a Government who are so concerned about their own borrowing, and who are now so proud that they are paying back the national debt, can appear indifferent to the fact that we, as a nation, are deeply in debt, that we are enjoying a standard of living that we are not earning, and that that standard of living is financed in part by borrowing from foreigners.
  The principal task facing my right hon. Friend in the immediate future is action to remedy the current account deficit. What should be done? Our deteriorating balance of payments probably owes something to increased inflation. Prices are rising faster in Britain than in many other countries, which makes us uncompetitive. Although action must be taken to control inflation, I do not attach great significance to rising inflation as a contributory factor to creating the deficit, because it appeared before inflation started rising.
  Whatever view one may take, I hope that no one believes that controlling inflation will of itself remedy our balance of payments problem. Much more important as contributory factors to the deficit are the rise in consumer demand and the effects of high interest rates. Rising consumer demand has been fuelled by easy credit, a fall in personal savings, and the tax cuts of the past two Budgets. As to the latter, I am not being wise after the event, because in my speeches on the last two Budgets, I criticised tax cuts because of their possible effect on our balance of payments. I regret that it seems that I was right.
  As to rising consumer demand, I am sorry that my right hon. Friend has not introduced some form of credit control in his Budget, but I am not terribly surprised that he did not do so. I welcome steps to encourage savings. It is important to remember that temporary increases in fluctuating interest rates are unlikely to act as an incentive to the kind of long-term saving that we need. My right hon. Friend's new measures will have a positive effect on increasing long-term savings—and it is those that we need.
  I welcome the fact that my right hon. Friend did not announce further tax cuts—not because I have any ideological objections to them, but because I believe that the money would have been spent at least in part on imported consumer goods, and we cannot afford that at present. I am sorry that my right hon. Friend did not divert some of the money he might otherwise have devoted to tax cuts to capital expenditure on the infrastructure with a low import potential. In that way domestic demand could have been maintained at such a level as to ensure that unemployment continued to fall.
  In my view the greatest stumbling block to righting the balance of payments deficit is the policy of high interest rates. It is of course true that the current high interest rates policy will bring downward pressure on inflation and consumer demand—which will help the balance of payments—but it also has a serious adverse effect. High interest rates keep sterling at an artificially high level, which makes British exports dearer in overseas markets and hence more difficult to sell. It also makes foreign imports cheaper, so they are easier to sell.

  321
  As long as the high interest rates persist, I do not think that we can expect to reduce the deficit, far less eliminate it. If we are to eliminate it—and we must—there must be a reduction in the exchange rate of sterling against other currencies, and that means that interest rates must be allowed to fall. I am afraid that I heard no indications of such a policy this afternoon.
  The other economic problem facing the Government is inflation. Although I do not consider it as serious a problem as the balance of payments deficit, the current position requires remedial action, particularly because of the political importance that the present Government have always attached to controlling inflation. Over the past year retail prices have risen by 7·5 per cent., and, as my right hon. Friend said this afternoon, they are likely to rise to 8 per cent. in the next few months. That is more than twice as fast as the annual rate of inflation 12 months ago.
  The Government have reacted to rising inflation by increasing interest rates, and I have no doubt that if they persevere with that policy inflation will eventually be brought under control—but at a price. Apart from the effects on the balance of payments, to which I have already referred, the use of high interest rates has other adverse effects. If interest rates are used as the sole weapon against inflation, to be successful the policy must be pressed to the point at which there is a severe demand deflation. Output will stop rising and will probably start to fall; unemployment will stop falling and will probably start to rise again, although there are still far too many people out of work—despite the welcome fall of 1 million in unemployment over the past two years.
  The cost of squeezing out inflation using interest rates on their own is very heavy for the balance of payments, output and jobs, and other measures should be used in addition to interest rates.
  Of course alternative anti-inflationary weapons such as credit controls also have deficiencies and weaknesses, but surely there is a case for using a combination of measures. None need be pursued to its ultimate extreme, but the overall effect will be more likely to achieve the objective of controlling inflation without over serious side effects.
  One aspect of our inflationary problem, which I think that the Government should consider again, is the effect of wage and salary increases on price rises. In recent years wages and salaries have continued to rise faster than output, and that rise has accelerated recently, thus contributing to the higher rate of inflation. The problem may well worsen in the current year, because the increase in the inflation rate will mean that the cost of living factor in wage and salary claims will be higher in 1989 than it was in 1988.
  The excessive increase in earnings has happened because the labour market for wage and salary earners has been overheated, despite high levels of unemployment and the freeing of the labour market that has resulted from the trade union legislation and other measures introduced in recent years. Obviously that overheating has intensified as unemployment has fallen. It is, of course, absurd that the labour market should be overheated when 2 million people and more have been out of work, but it shows the importance of more and better training—the Government's actions in that regard are to be commended—and of further measures to improve the mobility of labour.
  No matter what action is taken, however, it seems likely in the long term, and certain in the short and medium
  322
  terms, that the labour market will continue to be prone to overheating, even at times of high unemployment. It seems to me that we are further away than ever from resolving the great unresolved economic problem of the post-war era—how to maintain high employment and at the same lime control inflation, particularly wage and salary cost inflation.
  Could it be that there is a case for an incomes policy after all? Of course incomes policies have their weaknesses and deficiencies, but so have all the alternatives. I hope that the Government will think again, and will not rule out some form of incomes policy in the future.
  5.45 pm
  Dr. David Owen: Having erred considerably in the direction of carelessness in last year's Budget, the Chancellor has certainly chosen the path of caution this year. What worries me is that he has not sought to take measures that will improve the underlying competitiveness of British industry.
  Like the hon. Member for Staffordshire, Moorlands (Mr. Knox), I believe that the balance of payments deficit haunts the economy and is likely to do so for the next two to three years. Unless serious steps are taken to ensure that unit costs are kept down and our manufacturing competitive edge is maintained, we shall continue for the next few years to look apprehensively over our shoulder to see how much foreign confidence in the United Kingdom economy we are able to retain.
  It appears to me from his overall Budget judgment that the Chancellor is more fearful than I had expected: this is a more cautious Budget. There are two possible interpretations of that caution. Perhaps, having been careless last year, the Chancellor is determined not to repeat his error this year, in which case his caution must to some extent be welcomed. A more cynical explanation, borne out by the cynical manner in which consumer spending has been pumped up before elections, is that the Chancellor has deliberately been over cautious this year so that he can he far more relaxed in the run-up to the next election, and that the old familiar electoral cycle is dictating Budget judgments.
  How much credibility can we give the Chancellor's judgments? People have been pretty kind to him, hut the fact is that in March last year he predicted a current account deficit of only £4 billion and an inflation rate of 4 per cent. For him to have been so grotesquely wrong about the balance of payments deficit figures, and now to admit that he expects inflation to rise to 8 per cent., is a mark of how seriously wrong last year's forecasting was.
  The question is whether we can give much credence to the Chancellor's figure of 8 per cent. The worst decision that he has made in social terms, and in terms of equity and justice, is his decision to cut the retail price index by 0·5 per cent. In forgoing excise duty indexation, the Chancellor is forgoing some £290 million. I am worried about inflation and I want to see the Chancellor trying to massage the RPI down. Nevertheless, I find it immensely hard to understand how a Chancellor can raise charges for prescriptions, eye tests, water, gas and electricity—all of which are essential—yet forgo an increase which most people had expected on cigarettes, which kill and damage and cost the National Health Service substantial sums every year, and alcohol, the growing abuse of which is causing immense social problems.

  323
  The Chancellor has a funny sense of social and economic priorities. In deciding to reduce the pressure on the retail price index, which I support, he opts for freezing the duty on cigarettes and alcohol, yet increases prescription charges and essential charges for water, electricity and gas, which every family in Britain cannot do without. If those are Lawson priorities, I do not want much of them.
  There is a serious question about the essential issue of how to bring down the RPI, but there are also other problems. The Chancellor has produced some well-thought-out measures and, to be fair to him, it is very attractive that at long last the earnings rule has been abolished. That was a very brave decision. His decision on unleaded petrol is certainly a step in the right direction. I would have preferred a bigger margin of 20p, but provided that the oil companies do not cheat this time, a 10p margin will be most beneficial. We strongly support some of his other measures.
  I am anxious, however, about the strategy behind the Budget. The fundamental objective is to improve our competitiveness. The Chancellor has decided to spend £14 billion on public sector debt repayment. He wisely decided not to reduce basic tax rates, as that would have sent all the wrong messages and would have fed through into consumer spending, but there is no inherent reason why we have to pay back our debt except to retain confidence. The Chancellor could have embarked on spending priorities to strengthen the underlying economy and retain confidence.
  For example, the Chancellor inveighed against a devaluation in the currency to retain competitiveness because of his very reasonable fear that that would feed through in inflation. He stated that that would not be the case and that he would hold up interest rates to protect the pound because of his anxiety about inflation. Yet the Red Book states:
  "manufacturing unit labour costs rose by 22 per cent. in 1988, a little more than in 1987"
  but were not offset by productivity.
  "Unit labour costs in the other major countries fell slightly on average."
  There is no sign that unit labour costs in Britain will fall.
  We need devaluation without inflation. How do we achieve that? The Government could consider the national insurance contributions paid by employers. We have argued in the SDP many times that targeted reductions in employers' national insurance contributions should be part of a strategy to tackle unemployment and encourage industrial expansion. We have argued that those reductions should and could be targeted to be fully in effect by the end of 1992. If we were to phase out the national insurance contributions by employers, perhaps by a 15 per cent. reduction this year at a cost of £2 billion, we would have a strategy for retaining the competitivenes of British industry, provided that that relaxation was not simply passed on in pay rises. But no one can do anything about industry that pays over and above productivity. There are already ominous signs in the economy that some employers are beginning to allow pay rises that cannot be justified by productivity.
  I was surprised that the Chancellor did not take the opportunity to link pay rises to share options, so that all company employees would have the tax-free share perk which was given to directors in the 1984 Budget. But it
  324
  should be given only on pay rises, not on existing pay and would be taken in the form of share options. That would have exerted downward pressure on wage inflation and attracted more savings.
  Almost all the measures that the Government have announced for savings are worth while, but they are very cautious and minimalist, and will not improve the personal savings ratio to the extent necessary to provide a little more room for manoeuvre on interest rates. Therefore, I fear that interest rates will remain high for some time, and that will damage industry and investment.
  I believe that it was a mistake not to encourage more private investment into infrastructure. Infrastructure investment is difficult for private investors. There is a long pay-back time and a very high environmental cost which is not always justified by pure profit. The Government should consider the SDP's suggestion for infrastructure bonds, encouraging people to invest in infrastructure, which is an essential part of keeping British industry competitive. It is no use making the substantial and worthwhile investment in the Channel tunnel unless it is linked to all parts of the United Kingdom. That necessitates an improvement in road and rail links right up to Scotland.
  There is no evidence yet that the Government realise the urgency of our transport links, and they are not producing the Victorian investment which made our present railway network and is needed to revive and renew it again. There is no dedicated freight line and no linkage to Liverpool to open up that port to Atlantic trade and enable it to compete with Rotterdam with a free flow rail link straight through to the Channel tunnel. That is an inspired investment. It is seen to be long-term and does not feed through to inflation and I believe that it would carry confidence abroad far more than public sector debt repayment.
  There is no vision in the Budget and no element in which the Chancellor is tackling the very weaknesses exemplified by our trade deficit. He has no strategy to improve the competitiveness of our manufacturing export industry on which our real prosperity depends. Only if that and our industrial and manufacturing capacity improves will we get away from the confidence factor and be able safely to reduce interest rates. We need investment in substantial portions of British industry. We do not attract the same levels of investment as our foreign competitors.
  We have to remember the true message of 1992. To hear the Government talk about 1992 one would think that it was all opportunities. The Government are right to be optimistic and to get our business men orientated to the fact that 11 nations' markets will be open to us. But it is about time that Britain realised that II other nations see ripe opportunities in our market. It is very easy to penetrate the British market. We have national newspapers and national media and if one pays for advertising in those one goes in with a tremendous market push.
  We are extremely vulnerable to aggressive exporting incentives by the other II European Community countries. We have to be more conscious of how vulnerable we will become in 1992 when the barriers come down. It is excellent that we talk about the opportunities, but we should realise how vulnerable we are and how dangerous 1992 could be. What we do between now and 1992 is of critical importance in ensuring that our industry

  325
  is competitive. The absence of that drive in the Budget makes me feel so negative and pessimistic—intense caution and no imagination.
  The Chancellor has had a bruising year. There has never been a period when a Chancellor has been so comprehensively disowned by his Prime Minister. Indeed, there was a time when some of us wondered whether he was the Chancellor of the Exchequer. It is all very well for him to come to the House without some of the bombast that we have had to put up with when he slashed into teenage scribblers in the City who jump up and down in an effort to get press attention, but their predictions were right and the Chancellor's were wrong.
  There is something else missing. There is an absence of commitment to investment, to keeping unit costs down and to skill training—an essential element if we are to remain competitive. Much of the wage pressure that is building up is because employers have to pay over the odds. There are not enough skilled people even though there is high unemployment in some parts of the country. We are not getting the right type of people through. The Government may say that they are taking measures to redress the position but all the time there is a lack of real investment in skill training, which would produce results as quickly as they are needed, which is pretty quickly.
  Then there is the social dimension. The Government have done insufficient to shield some of those who are feeling the effects of high interest rates—in particular, first-time home buyers. we should move towards expenditure taxation. All savings should be treated the same. The Chancellor has always favoured a broad tax base and low rates. The problem is that the Prime Minister faces one of her usual dilemmas between intellect and instinct She wishes to retain some tax allowances, like the mortgage tax allowance. She wants low tax rates but she wants to keep various allowances. We have to read between the lines of the Chancellor's statement. I have not yet had time to read the small print, but from what he said on life assurance and on pensions, it seems that once again his dream of taking away all tax allowances, and of going for a broad-based tax and low rates has been defeated by politics, if not by institutional inertia.
  It is high time we went the other way. We have to face the fact that most tax allowances will stay. The mortgage tax allowance will remain. Therefore, all savings should be treated equitably and fairly, with tax allowances at the standard rate across them all. There is nothing inherently wrong in saving for a house. It is no different from saving for a pension. It is an individual choice that people make. We had better give up the idea of getting rid of all tax allowances and going for a simple system of narrower-based tax. We shall continue to have many allowances on savings. Let us make them neutral between savings instead of having the nonsense about mortgage tax allowance hovering between the Prime Minister's passion and the Chancellor's hatred. Let us face it: it is legitimate to have mortgage tax allowance at the standard rate and to be prepared from time to time to up it to help young people who are buying a house for the first time. They are being treated badly; it is wrong that that should happen.
  One suggestion of the SDP is for a kick-start mortgage: the limit would be raised to £50,000 for the first year and then tapered down. We have to consider the question more rationally. Are the Government phasing out the mortgage tax allowance? Is that their policy? I would be interested to know. It appears that one day the Chancellor wants that
  326
  but that near election day the Prime Minister comes back increasing it. We are unequivocal. We want an expenditure tax and we want all savings to be treated neutrally. Tax allowance at the basic rate, but not at the higher rate, is acceptable; the higher rate should be abolished. We would keep mortgage tax allowance and encourage home ownership. It is essential that young people who want to purchase their own homes are not savaged because of high interest rates.
  Other social requirements are missing. The child tax allowance should have been increased by at least £1. It is an outrage that we have not been able to help the greatest element of poverty—the poverty among families with a large number of children.
  The Chancellor has rightly concentrated quite a lot of money and support on the elderly. He has reduced the age allowance for additional tax relief from 80 to 75 and has also abolished the earnings rule for pensioners.
  I welcome what the Chancellor has started to do on national insurance contributions. The SDP has urged him for many years to act on the national insurance contribution for employees. His tentative first step is welcome. It starts to make the national insurance contribution more progressive. Although there are many spikes within his new system, it will be logical only if the Chancellor carries reform on each year, continuously making changes to marry the national insurance contribution to income tax. We should accept that a national insurance contribution paid by an employee is to all intents and purposes an addition to income tax. It is one and the same thing and the two should be treated in the same way, with no disincentives and a smooth transition between the two. If that is the Chancellor's strategy, we welcome it. I hope that he will move faster on it and eventually reach complete integration.
  Another missing social requirement relates to housing benefit. The impact of the present housing benefit on poor families is appalling. I hoped that there would be at least a 10 per cent. increase in housing benefit to shield people on lower incomes.
  I thought that the Chancellor was seriously interested in attracting women back into employment. The problem in nursing will be savage. Employers who make nursery provision for female employees are treated absurdly because the Government insist that that is a tax perk that has to be clawed back. That is wrong, and the requirement should be abolished. These are all important changes. They are right in social justice but also have economic advantages.
  The Budget has been unimaginative. I leave it with a feeling of pessimism. It is as if the Chancellor's imagination and bounce have been knocked out of him over the last year. By all means let him be cautious, but where was the understanding of the faults of our economic position? I do not know that we are yet in a crisis, but the balance of payments deficit has to be grappled with far more courageously and adventurously, and with much greater commitment to investment in the medium term than is contained within the Budget. Perhaps the Chancellor fears something that he has not felt able to let the House know. Certainly I find it hard to understand why he has produced a Budget with so little imagination on the central question of Britain remaining competitive in its industry and ensuring that its exports can expand in order to close the trade deficit.
  6.8 pm
  Sir John Stokes: My right hon. Friend the Chancellor was faced with a difficult problem this year owing to the rise in inflation and the danger to sterling. In framing his Budget he has been extremely sensible and realistic and he comes out with credit. His Budget is sound and strictly anti-inflationary.
  Official statistics are notoriously unreliable. I suspect that our balance of payments figures are nothing like as bad as they are presented. Industry is thriving to an extent which I have not seen for a long time. The recent report of the Institute of Directors expresses confidence among business men. It says that generally high interest rates are not harming investment.
  The outlook for business profits continues to be very good. I am delighted to see in my own constituency the progress of many firms in the past year, especially in sales and marketing and in their use of skilled manpower. Exports are holding up very well and the remarkable export successes of some of my firms, even very small ones, are unsung in the media, which only seem to like bad news.
  British industry as a whole still cannot make enough products of the right design and price to compete with the flood of imports from abroad. That serious matter will take some time to cure. The motor trade, on which so many people in my constituency depend, is holding up very well.
  The strength of sterling depends on strict control of inflation and is also based on the respect of foreign countries for the Government, headed as they are by a Prime Minister who is a leading world statesman. It would be too frightful to contemplate what would happen if the Opposition parties were able to form a Government.
  The control of inflation must always be the hallmark of the Government. There is no doubt now that the high interest rate is cooling down excessive spending in the high streets. It is essential to bring inflation tightly under control once again, for the good of the country and to ensure that the Government are returned at the next general election.
  It is terrifying to look back at the pace of inflation in the last two generations. It would take £25 today to buy goods worth £1 before the war. Even in the past 10 years, the value of our money has gone down by 50 per cent. That has not happened in certain other countries such as Germany and Switzerland. We must ask ourselves why. Is it because we have not worked hard enough, have paid ourselves too much or have paid out vast sums in welfare and other benefits which we cannot afford? These difficult questions are for the present generation to answer, in spite of the vast improvements of the Thatcherite revolution. We must hope that the next generation will make a better job of it than we have done.
  I welcome the higher bands on which income tax will be levied, which will attract those who are out of work to seek employment more avidly. I particularly welcome the reductions in national insurance payments for the lower paid. I am not surprised at the vast amounts that these very important reforms will cost the Treasury, as they are well worth it from the human point of view and for the help that they will give as an incentive to work and to improve one's earnings.
  I have a few disappointments, however, in this otherwise excellent Budget. I should have liked capital gains tax to be abolished, as well as inheritance tax, which
  328
  runs quite counter to the philosophy of the Government. It is only natural for a parent to wish to hand on to his children what he has saved and built up. I also hoped that stamp duty might have been abolished, especially in house purchase, thereby reducing costs, and the mass of paperwork involved in housing transactions.
  I welcome the reduction in the national debt, which is good housekeeping and saves the taxpayer money in future years. It also paves the way for tax cuts. I am delighted that the earnings rule for pensioners has been abolished.
  I have received several representations from constituents about their fears of an increase in the tax on company cars. On the whole, I agree with what the Chancellor has done. The more that tax allowances are phased out, the greater can be the reduction in income tax.
  Mr. Graham Riddick: Does my hon. Friend not agree that there is a major problem for a salesman who travels, say, 30,000 miles a year and who needs his company car? He has no choice, as he could not carry on his job without a car. It is essential that the Chancellor stops hammering those thousands of people.
  Mr. Stokes: My hon. Friend is very percipient. I was coming to that very point, having a son who has risen from salesman to general sales manager, and who is now a consultant. It is most unfair on those people. I hope that there will be a chance to make the correct amendments during debates on the Finance Bill.
  I welcome the improvements in corporation tax, so that smaller firms will have more money available for investment. The fall in unemployed, about which we hear so little from the Opposition, is also very welcome, but it puts up pressure for higher wages. That should be resisted by employers, unless there are real productivity gains. I welcome the many steps that have been taken to improve savings, which are vital to our future prosperity. I also greatly welcome the plans to extend share ownership.
  The Chancellor said nothing, perhaps wisely, about 1992. I would be happier about it if the EEC concept was less Socialist-oriented, and more keen to create real competition from firms that were freed from old fashioned Socialist ideas, such as worker directors.
  I hope that the recent blast from the bishops will not deflect the Government from continuing to enable individuals to give of their best, to help themselves and their families, and of course the economy at large. The attack by some leading Churchmen on individual effort is sinister and dangerous. Who wants inefficient state industries? How right the Government are to denationalise them as fast as they can, and thus staunch the dreadful losses that have built up. Who wants inefficient private companies or an inefficient City of London?
  A good industrial or commercial concern treats its employees, suppliers and customers fairly, as for instance does Marks and Spencer and other similar organisations. What on earth is wrong with that? It is from the profits of our industry and commerce, and especially from the successes of our manufacturing industry, that taxpayers' money is found to fund all kinds of good causes such as better health care, a better environment and improved roads, and better welfare benefits, where all those are right and desirable. There would be more money for the arts and all kinds of other good causes. There would be support for

  329
  the police in the fight against crime. There would be more to contribute to the defence of the West and to the defence of our country.
  The enormous sums of money needed to provide for our colossal public expenditure could not be found if individuals at all levels in industry and commerce did not work and try hard. Their successful effort is vital to the nation, competing as we are against the great trading nations of the world. But that does not mean that all those hard-working and patriotic people are nasty selfish brutes.
  We only have to consider the enormous increase in charitable giving to realise how generous people are. Lower taxes seem to mean that people are giving more away; and how splendid. It is a marvellous time for charities. Let us hope that they are all being run efficiently.
  I hope that the Chancellor will pay no attention to the silly dons in some of our universities who, leading a marvellously sheltered and secure life, constantly complain and hold out the begging bowl. The Oxford dons made such fools of themselves in refusing to give my right hon. Friend the Prime Minister an honorary degree. Now they are appealing for a large sum from private individuals to assist in the running of one of the great universities of the world. The combination of taxpayers' and private money is often the best way forward, whether for institutions such as universities or for special situations such as the regeneration of our inner cities.
  Vast sums of taxpayers' money are spent on state education. It is right that my right hon. Friend the Secretary of State for Education and Science should be trying to ensure that education equips people for life, including earning a living, but that does not mean that we are producing a philistine generation. I read history at Oxford, a subject that I have always loved, and I have found it a great help to me in dealing with my fellow English men and women, and essential for understanding our institutions.
  As a nation we love to grumble, and the media, particularly the BBC, love to foment that characteristic. Of course we have the bad and sad pockets—the poor and those who cannot cope with life—but the vast mass of the people have never been so prosperous as now. The change in the west midlands is startling compared with when I first went there over 20 years ago. So many more ordinary people now own their own homes, and they have cars and telephones, every kind of gadget in the kitchen, televisions and videos and holidays abroad once or twice a year. They dress very well, their children are spotlessly turned out and they eat and drink well. They go out more to restaurants and they enjoy themselves.
  I am glad about all that and we must be thankful for it. Provided that, as a nation, we improve ourselves morally as well as we have economically, we have little to fear and we should all count our blessings.
  6.21 pm
  Mr. Roy Hughes: We have listened to the Chancellor deliver his sixth Budget this afternoon. Beforehand, the pundits had predicted that it would be as exhilirating as a wet Sunday afternoon. After listening to it, many will feel that their forecast was correct.
  There were one or two concessions in the Budget, such as the abolition of the earnings rule for pensioners, which the Opposition welcome, and the small concession to the low-paid in national insurance contributions. However, as
  330
  my right hon. Friend the Leader of the Opposition said, the Chancellor faced a cruel dilemma. He had a surplus of no less than £15 billion—five times bigger than he had expected. He did not know what to do with that for fear of triggering off an inflationary spiral, upsetting the City and threatening sterling. But much of the Chancellor's dilemma this afternoon was of his own making. Last year he created a bonanza for the better-off. It helped spark off the credit boom, and the country is now suffering the after-effects.
  How did the Chancellor obtain that £15 billion surplus which has caused him such problems? First, he stoked up the economy to achieve relative boom conditions at a time of the previous general election. That in turn brought about an increase in tax revenue. Secondly, the Government continue to derive immense benefits from North sea oil revenue. Whether such revenue has been put to the best use is an argument for another day. Thirdly, there is the money from the sale of what has euphemistically been called the family silver. Vast revenues have come into the Treasury from that source. Fourthly, there is the sale of council houses. The list goes on, and the vast bulk of the proceeds is pocketed by the Treasury.
  In judging the measures that the Chancellor proposed this afternoon, it is worth looking, as my right hon. Friend the Leader of the Opposition did, at his earlier forecasts. The trade deficit at the end of 1988 was £14 billion. The Chancellor had forecast that it would be £4 billion. He was a little out there. The trends in 1989 are even worse. For example, the January deficit was £1,700 billion, equivalent to an annual deficit of £20 billion. Interest rates have gone up from 7·5 per cent. last May to 13 per cent. That has led to increased mortage costs, imposing hardship on many less well off families. As a result, there have been many repossessions and the number of homeless families has increased correspondingly.
  The situation is made worse because the Government are not allowing our local authorities to use the proceeds from the sale of council houses to build the new houses for rent which so many less well off families urgently need. Likewise, high interest rates keep up the value of the pound, making it harder to sell British goods overseas. Furthermore, high interest rates stifle investment because the cost of borrowing is so dear, yet that investment is so badly needed, particularly in our manufacturing industry.
  Three years ago, the Chancellor told a City audience that inflation was the judge and jury, so let us take him at his word. He forecast a 4 per cent. inflation rate at the end of 1988. In fact, it is just under 8 per cent. at present and is still rising. In addition, there are to be increases in water and electricity charges. The poll tax is still very much an unknown quantity, but we can all fear the worse.
  The Labour party criticised last year's Budget, saying that, apart from being unjust, it was foolhardy. However, the Prime Minister described it as brilliant in concept, drafting and delivery. How wrong can one be? I wonder what she will be saying about this Budget. It is because the Chancellor was so wrong last year that he has had to be cautious this year.
  What would a Labour Chancellor do in the present circumstances? I am convinced that he would not give priority to paying off the national debt. First, he would look at the state of our NHS after 10 years of Thatcherism. His first decision would be to scrap the recent White Paper, which is little more than a step on the road to the privatisation of that wonderful service. He would

  331
  concentrate on reducing those huge hospital waiting lists and take steps to increase the number of doctors and nurses in the service. He might look too at the measly wages paid to the back-up staff in the NHS, not only the clerical and administrative staff, but the technical staff, so many of them highly trained, using the most sophisticated equipment in the operating theatres and other vital areas. If greater appreciation is not shown to those people, many of them will leave the service, and the patients will be the real losers.
  An efficient transport system is basic to an efficient economy. In manpower terms, our rail network has been cut to the bone. Competitor countries such as France and West Germany have invested heavily in their rail networks. We must now do likewise. Without prejudging any inquiries that are taking place, there seems little doubt that manpower cuts imperil passenger safety.
  When so much of our passenger and freight transport is by road, we are still a long way from creating an efficient road network. There are too many bottlenecks, so many bypasses yet to be constructed and our motorway network is still incomplete. We should get rid of the iniquitous toll system on estuarial crossings. Those toll charges are relics of a feudal age.
  There is no excuse for not investing in roads, when this year about £17 billion will be raised in motor taxation and less than a quarter of it will be spent on roads and maintenance.
  Labour believes that a concerted effort should be made to preserve and protect the environment. That cannot be left to the vagaries of market forces. The Thatcher Government have presided over a decade of environmental negligence and lassitude. Labour is pledged to clean up our beaches, promote safe energy, tackle the greenhouse effect and save the ozone layer. We want our water safe and clean, not sold off.
  According to Government statistics, unemployment is now running at about 2 million. I would put the figure much higher, and I agree with the economics editor of The Observer who last Sunday put it at 2,700,000. But with such a staggeringly high level of unemployment, a skill shortage is fast developing. Many employers having cut back over the years in this vital sphere, there is now an urgent need to invest in skill training, and a Labour Chancellor would give that task the highest priority.
  There are at last indications that the political tide is turning. The forthcoming Vale of Glamorgan by-election is likely to show that trend accentuating. At last, people are calling for change, and it is clear that Britain now needs a Labour Government.
  6.33 pm
  Dr. Alan Glyn: The people are calling for change, as the hon. Member for Newport, East (Mr. Hughes) said, and that is exactly what they are getting. This is a sensible and prudent Budget. It is the first time in the nation's history that we have begun to pay back the national debt, and I consider that 14 billion towards that repayment will recoup itself in interest charges. If we can go on in that way, we shall be able to repay all the debts that have been incurred by our predecessors.
  I, too, welcome the abolition of the earnings rule and the encouragement which the Budget gives to wider share
  332
  ownership. When I speak of wider share ownership, I appreciate what the right hon. Member for Plymouth, Devonport (Dr. Owen) said about the need to think in terms of home ownership and the ownership of all assets. Those assets should be passed on to the children of those who have acquired them without incurring a penal rate of tax. The idea of saving should not be confined to one generation, just as the idea of paying back debts should not be confined to one generation.
  Our exports are up, and 1992 will provide us with a challenge and a wonderful opportunity. That point was well illustrated by the right hon. Member for Devonport. Our competitor countries are often able to get into our markets and invest in our enterprises. We have the chance of doing the same to them, and there is no reason why we should not do it.
  Controlling inflation is one of the most important tasks on which the Chancellor has embarked. We can see, by looking back, say, 30 years, the way in which inflation has altered the pattern of our lives. It has done much damage to the elderly, who find towards the end of their lives that their savings are worth perhaps 10 per cent. of their original value.
  Our society is, happily, rapidly improving its standards of living. That is happening under Conservative rule. But high earnings must give people a sense of environmental responsibility, for example, through the use of lead-free petrol. In the way that they mean a better standard of living, they must be accompanied by higher moral attitudes. We must work at preserving that and other aspects of our lives.
  Conservative policy has altered the nation out of all conception. Had we thought, say, 30 years ago of the changes that have taken place, we could not have imagined that they would happen. In my lifetime much has completely altered. Today, brains, intelligence and the ability to produce goods are attributes which the Conservative party recognises.
  If we continue in this manner, we shall arrive at an even higher standard of living and create a nation that is proud of itself, in which opportunities are available to everybody and a nation that can stand well above all other nations in Europe.
  6.37 pm
  Mr. Stuart Bell: It is a pleasure to speak following the hon. Member for Windsor and Maidenhead (Dr. Glyn) but, given the short time available to me, I shall not go into many of the matters which he raised.
  Today's Budget was trailed for some time as a Budget for the low paid. It was said that the Chancellor would try to rectify the disequilibrium in his fiscal system by correcting the mistakes he made last year, when he gave massive tax reductions to the top 5 per cent. of taxpayers.
  I agree that the Conservatives had given a manifesto pledge to reduce taxation to 25 per cent. as soon as prudently possible, but it was rash of the Chancellor to effect that commitment so early in the Parliament and at the same time to reduce the higher rates of taxation from 60 to 40 per cent. The consequences were that he was reducing taxation in an expanding economy. The economy was forecast last year to rise by 3 per cent. It actually rose by 5 per cent. That, combined with the tax deductions, produced a massive import bill of £15 billion.

  333
  The hon. Member for Staffordshire, Moorlands (Mr. Knox) foresaw that in his Budget contribution last year, when he expressed fear that, when the tax deductions had worked their way through the system, they would come out in consumer goods, that those goods would come from imports and that the result would be a massive increase in our balance of payments deficit. All that has come about, and the Chancellor has been required to raise interest rates nine times within a few months to finance that deficit.
  The Chancellor has done that at the expense of mortgagors and business people wishing to expand. Everyone needing credit is having to pay more—all because of the actions of the Chancellor last year—and virtually everybody is suffering. The right hon. Member for Plymouth, Devonport (Dr. Owen) said that the Chancellor had been reckless last year. He was more than reckless—he put forward a catastrophic Budget. Therefore it is appropriate that this year he should seek to bring in a cautious Budget that is lacking in imagination.
  If the Chancellor really wanted to help the low paid in our society he should have increased child benefit from £8·35 to make good the cuts in its value. He should also have announced a further increase to £10·75 to reflect the real cost of bringing up children. We all welcome the national insurance contribution rate of 2 per cent. for the low paid, which the Chancellor introduced today. As the hon. Member for Halesowen and Stourbridge (Sir J. Stokes) said, that will cost the Chancellor a lot of money—£1 billion in 1989–90 and £2·8 billion for 1990–91. In our view, that does not go far enough to rectify the imbalances in last year's Budget tax cuts for the low paid.
  If the Chancellor wanted to bring in a Budget for the low paid, he should have raised the income tax threshold for those low-paid workers by 16 per cent. As we know, the Chancellor of the Exchequer actually raised the threshold only in line with the Rooker-Wise amendment. Not taking account of fiscal drag, means that more tax will be collected by the Revenue and this will be of no great benefit to the taxpayer over the next year. The Budget is a status quo Budget, which may be in the interests of the British people but does not serve the interests of the low-paid.
  It was clear that the Chancellor wanted last year's Budget to be a tax reforming Budget, and he described it as such. In an article that he wrote entitled "Tax Reform, the Government's Record", published by the Conservative Policy Centre, the Chancellor declared that his main objective in reforming taxes was to improve economic performance. Judged by his own standards, last year's Budget could only be described as a catastrophic failure.
  As a direct consequence of that Budget we have had inflation running at 8 per cent. and I noticed that, in his Budget statement today, the Chancellor was careful not to say that the inflation rate would come down in the last quarter of this year. In fact, there is a clear indication that high inflation of 8 per cent. will continue into the 1990s—that is twice the rate of inflation in the United States of America, which must worry the Government.
  As we know, the balance of payments deficit is now £15 billion and interest rates are 13 per cent. Personal savings must also worry the Government because they are at their lowest for 40 years—lower than any other major industrial country. In the three-tier Europe that is rapidly developing, we find ourselves—in terms of inflation—in the third tier, with Greece and Portugal.
  334
  All those unhappy events need not have happened had the Chancellor not chosen a fiscal boost at the time of an expanding economy. In his modest way, the Chancellor last year congratulated himself on having achieved what he described as sustained growth with low inflation. He did not realise that his Budget would give us reduced growth and increased inflation. Today he said that the growth rate for the present year will be 2 per cent. In his Budget speech last year he said that he expected the year to be one of healthy growth and low inflation. He said that an inflation rate of 4 per cent. would be too high, and forecast a £4 billion deficit—less than 1 per cent. of GDP. He described that as temporary and said:
  "The medium term financial strategy, now entering its ninth year, will continue to provide the framework for reducing the growth of money GDP, and hence inflation, over the medium term."—[Official Report, 15 March 1988; Vol. 129, c. 995.]
  As we know, none of that has happened—for which the Chancellor must bear the responsibility.
  As I said earlier, the Chancellor raised personal tax allowances only in line with inflation as it stood at the end of last year. He did not raise them sufficiently to take into account fiscal drag and did not raise them enough to help the lower paid. Had he done so and raised the allowances by 16 per cent. he would have ensured that the tax burden of a couple earning half the average wage would be restored to 1978–79 levels.
  The Government have announced their intention to abolish Britain's minimum wage system. While the Chancellor today offered some tax cuts to the low-paid by way of allowances and changes in national insurance contributions, he also threatened them with wage cuts. If he really wanted to help the low paid, the best news that he could have announced today would be that the Government were scrapping their plans to leave Britain the only nation in Europe without minimum wage protection for its poorest workers.
  I received a letter from one of my constituents who is a senior shop steward in the National Union of Tailors and Garment Workers, asking for my support in the fight to keep the wages councils. He wrote:
  "the clothing trade does not want to go back to the sweat shops of the past. As you are aware many low-paid workers in your constituency need the protection of the wages councils."
  That letter was written on behalf of 600 union members who live in my constituency and who are most concerned about what will happen if the wages councils are abolished.
  Earlier in the year, the Social Security Advisory Committee, in its paper "Credit Debt and Poverty", showed that the amount of money borrowed by people in Britain had doubled in seven years. The number of mortgage repossessions rose nearly eightfold over the same period and more than half of unemployed families with children are in debt. According to the Department of Social Security, 5 million people have a standard of living that is less than half the national average. Nearly 11 million people—about one fifth of the population—have a standard of living that is less than 60 per cent. of the national average.
  Last week, two of my constituents, a blind man and his wife, told me that the man received £74 a week in benefit. They received income support and the man received severe disablement allowance. He tried to put £30 a week in the bank in order to cover gas and electricity bills which, he

  335
  said, were onerous at this time of the year. He had also tried gas and electricity-saving schemes but without much success. Therefore, the couple also drew money from the man's bank account for their personal clothing. They also had to pay 20 per cent. of their rates. They had almost nothing in the house and lived out of tins every day. As the man said, it was all too much. I wonder what that couple thought that the Budget provided for them as they listened to it on the radio.
  If the Chancellor really wanted to help those on low pay and at the poorer end of our society, he should have increased child benefit from £8·35 to make good the cuts in its value and he should also have announced a further increase to £10·75 to reflect the real cost of bringing up children.
  We heard a novel way of handling the economy—to repay the national debt. I remember, many years ago, reading "Great Expectations" by Charles Dickens—a book written over 100 years ago—in which it was said that paying off the national debt was a barmy concept. It has taken 100 years to meet a Chancellor who believes in paying off the national debt.
  The Chancellor said today that the national debt would be reduced by one sixth as a consequence of the Budget, but the national debt is just a figure. It does not take into account the £530 billion that is owed to people contributing to pensions; if it did take that into account, it would be out of the question to pay off the national debt. The right hon. Gentleman is paying off the national debt because he does not know what else to do with the money. Even so, he is putting money into the economy by allowing Treasury paper to be taken back by the banks and institutions that bought it in the first place. The Chancellor is giving them about £14,000 million. That will be used in the City for more fancy and far-fetched takeover bids, and for exporting abroad, which will not help our economy.
  The Chancellor has given us a cautious Budget. I am glad that he did not reduce income tax by 1p. He had no manifesto commitment to do that. If he had done so, he would have been trying to fulfil a pledge that he gave at the Dispatch Box last year. It was better to reduce the national insurance contribution by the low paid to 2 per cent., giving them a badly needed boost.
  The Chancellor has still not rectified the great disequilibrium that he put into last year's Budget. We have all heard of fool's gold: it is actually iron pyrites. We have heard of a fool's paradise—a paradise of economic and financial structures in which there is a reduced manufacturing base, a massive increase of imports to maintain our standards of living, and reduced investment—with the result that the country's infrastructure is going to rack and ruin. In this fool's paradise oil tax revenues and the receipts of asset sales are squandered to repay the national debt of past generations, instead of being used to build up the future for generations yet to come. That is the fool's paradise of this Chancellor of the Exchequer. It is the one in which he wants us to live, and it is one which I am sure the British people will shortly reject.
  6.52 pm
  Mr. John Redwood: I congratulate my right hon. Friend the Chancellor on an excellent and cautious Budget that includes many good measures. It is a
  336
  Budget for the low-paid. A welcome change in the national insurance rules means between £1 and £3 a week for families on lower incomes, buttressed by the fairly generous increase in thresholds necessitated by the relatively high rate of inflation, which provides another £1 a week.
  This is also a Budget for the pensioner. The whole House welcomes the decision at last to abolish the earnings rule which has stopped pensioners taking those extra jobs and benefiting in full from them.
  The House should also welcome the changes in the age allowance which give a useful boost to pensioner incomes in the 75 to 79 year-old range. Those changes complement the reforms and improvements in previous years that helped the over-80s, both on the benefit side and on the tax side.
  This is a Budget for the small company. Many Conservative Members will welcome the improved tax regime on profits and the increase in VAT threshold for smaller businesses. My only regret is that the Chancellor and his colleagues have not been able to persuade the EEC that the threshold for small businesses should rise still further. A threshold of about £50,000 would be much better than one of about £23,000.
  This is a Budget for wider ownership, continuing the progress that the Government have made through their privatisation programme and tax measures. I welcome the profit-related pay ideas, and the ideas about ownership of shares for employees in the companies for which they work. I hope that these measures will provide a major boost to the ownership of shares in their companies by employees, and I hope that the idea of profit-related pay will make more rapid progress in the coming year as a result of the more generous treatment afforded it in the Budget. Both these proposals cannot but strengthen the response of the economy to the present high level of demand; they cannot but improve relationships between managers and employees, boost productivity output and earnings, and a sense of participation in the economy.
  Last but not least, there is a welcome green tinge to the Budget, with the widened differential for unleaded fuel, giving it a 14p advantage over ordinary petrol.
  What should we make of the balance of this Budget? It is clearly designed to make fighting inflation the main priority, and that must be right. Conservative Members do not wish inflation to rise to 8 per cent. and stay there. We have every wish to see it fall to well below 5 per cent. The main intention of the Budget is to deliver a shock to the incipient inflationary psychology, so that inflation will again fall to low single figures. I believe that the Budget is fierce enough, as a complement to the tight money policy that is now being pursued, to achieve the aim of reducing inflation after its peak in a few months time.
  The Government's stance has now moved to being tight on money. I would therefore expect sterling to perform reasonably well on the exchanges as a result of that policy. As the Chancellor explained, the main object of monetary policy is to curb inflation; fiscal policy need not carry that burden indefinitely.
  I welcome the idea that over the next few years the Government can return the economy to a zero public sector surplus or deficit. That means that there is plenty of scope for tax reductions and for the improved public services which have been the hallmark of the Government in recent years and which will continue to be so in the strategy mapped out in the Red Book.

  337
  The balance of payments deficit has excited interest among Opposition Members. It is one of the few things to which they can point which looks less than ideal. I hope that the Treasury will pursue its inquiries into the £15,000 million black hole that has appeared in the balance of payments statistics. The actual deficit on trade must be running below the deficit being reported to the House and the nation. The problem is that no statistician seems able to tell us exactly how much of the deficit can be accounted for by the missing items not recorded in the figures and how much of it is genuinely a trade deficit.
  I hope that the Chancellor will not intervene too much in the exchanges, and will let tight money policy do the job. I think that the whole European Community has one problem with exchange rates—the large undervaluation of the deutschmark against all other leading European currencies. That is a result of a managed exchange rate system in Europe, and it means that 10 out of 11 member states of the Community are running substantial trade deficits with Germany. I hope that my right hon. Friend and his colleagues will examine that in their discussions with Finance Ministers of the other member nations of the EEC
  The Opposition have been fairly muted in their criticisms of Government economic policy on the issues that matter to people, such as the large increase in the number of jobs and the much more satisfactory record on inflation than that before 1979. They have concentrated on the items that they want to accent at any given time and which they think are going wrong. I do not blame them for that. They are also succeeding by that device in avoiding telling the House and the nation what they would do and what their economic policy might be. I hope that in the course of the debates in the next few days a little more light will be thrown on that mildly interesting subject.
  Today, we learned from the Leader of the Opposition that Labour would not run a great big surplus such as this
  338
  one. How true that is: it would not have generated a big surplus like the one that the Government enjoy because its policies would not have generated the growth and it would not have been prudent enough with the public accounts to have generated a surplus in the first place—
  Mr. Bell rose—
  Mr. Redwood: After all, the Government inherited, in today's money, a £25,000 million deficit from the Opposition and are now running a £15,000 million surplus.
  There has been some comment that, were the Opposition in control, the money would be spent on a variety of schemes in the public sector—from water works to rail projects and other infrastructure investment. Where were these gentlemen when the Government came to the House in the autumn and announced major increases in infrastructure investment in all the major spending programmes of concern to them?
  How can the Opposition argue that such an expenditure programme would have no inflationary conequences, when the construction industry is already operating at full capacity and any major surge in demand on top of the generous levels of capital spending projected by the Government and coming from the private sector would immediately lead to an inflationary force within the economy, which would in turn lead to the bidding up of wage rates, which in turn would be spent in the shops? It is a complete myth that, if the money is spent in the public sector, there will be no inflationary consequences. I hope that we will get elucidation of these important matters of Opposition policy.
  I have great pleasure in recommending the Budget to the House.
  Debate adjourned.—[Mr. Gerald Howarth]
  To be resumed tomorrow.

  First Scottish Standing Committee
  7 pm
  Mr. Michael J. Martin: Regretfully I have to report from the First Scottish Standing Committee that, having drawn the attention of the Committee to the disorderly conduct of the hon. Members for Banff and Buchan (Mr. Salmond), for Glasgow, Govan (Mr. Sillars) and for Angus, East (Mr. Welsh), I have been directed to report those hon. Members to the House.
  The Members referred to in my report were not nominated to serve on the Committee appointed to consider the Self-Governing Schools Etc. (Scotland) Bill, but they were present in the body of the Committee room when the Committee met today at 10.30 am. I called upon them to withdraw, but they refused to comply with my request. In these circumstances, the Committee agreed to the motion that I have reported. As the House will know, neither a Standing Committee nor its Chairman has power to discipline Members, and it is for the House to decide what action, if any, it wishes to take.
  7.2 pm
  The Lord President of the Council and Leader of the House of Commons (Mr. John Wakeham): I beg to move the following motion relating to a matter of privilege:
  That the Chairman of the First Scottish Standing Committee in respect of the Self-Governing Schools Etc. (Scotland) Bill shall have power to order any Member who is not a member of the Committee to withdraw immediately from the Committee room; and the Serjeant at Arms shall act on such orders as he may receive from the Chairman in pursuance of this order.
  I very much regret, as I have no doubt do most right hon. and hon. Members in all parts of the House, that the hon. Members for Angus, East (Mr. Welsh) for Banff and Buchan (Mr. Salmond) and for Glasgow, Govan (Mr. Sillars) should have thought it right to defy the authority of the Chair by refusing to withdraw from the Standing Committee on the Self-Governing Schools Etc. (Scotland) Bill when called on to do so by the Chairman of the Committee. It is a long-standing and inviolable tradition of this House that the authority of the Chair is invariably accepted. The hon. Members have challenged that authority by refusing to comply with the request from the Chairman of the Standing Committee to withdraw.
  Whatever their views about the size and composition of the Standing Committee, it is totally wrong that they should attempt to express their views in this way. I fully accept that they may hold their views quite strongly, as is shown by the enforced absence of one of their number from the Chamber at the moment, but they were wrong to act in this way. By doing so they have infringed one of the most fundamental privileges of this House—the position of the Chair.
  Mr. Allan Stewart: Will my right hon. Friend, in the light of what he has said, take it from me that many hon. Members take the view that the motion that he has moved is extremely moderate, bearing in mind the gross disorder this morning? Does he agree that if there is further disruption from those hon. Members, the House should consider imposing the severest penalties upon them?
  Mr. Wakeham: That is a hypothetical question, and I hope that the situation will not arise. However, I have no doubt that the House would take an even graver view of any further disorder.
  Subject to your views, Mr. Speaker, the size of the Committee and its composition are not a matter for discussion today. It is a matter entrusted to the Committee of Selection, and it is not the issue now facing us. It may be asked why I am taking the step of moving this motion now, before it can be printed on the Order Paper. I remind the House that it is over 16 years since we last had to consider such a step, and I think I am right in saying that on that occasion my predecessor suggested that there had been no earlier precedents. Fortunately, he was corrected by Mr. Speaker, who drew attention to a ruling of some 46 years previously by the Speaker that this was a matter of privilege which could be raised without prior notice. I am sure that hon. Members would consider it remarkable for the House not to have an opportunity to take action in time to prevent the disruption of the next meeting of the Committee, which takes place on Thursday.
  As I have said, we are not debating the merits of the decision taken by the Committee of Selection, which, I may say, was in accordance with established procedure, or, indeed, the substance of the Bill before the Committee. This is a narrower debate about a very important aspect of the privileges of the House and the powers of the Chair. This, too, is entirely in accordance with the terms of the debate held on a similar occasion 16 years ago—in respect, by coincidence, of similar actions taken to disrupt a Scottish Standing Committee then considering the Local Government (Scotland) Bill.
  The House now has to make up its mind whether it should allow hon. Members who have been unable to get their way through the proper procedures to attempt to obtain what they want by refusing to obey the request of the Chair and by disrupting the proper consideration of the business before the Standing Committee. I have absolutely no doubt that, if such conduct were to be accepted, and were repeated, the standing and authority of this House and the orderly conduct of our debates would be seriously threatened.
  In my view there is only one decision the House can take: the Chairman of the Standing Committee on the Self-Governing Schools Etc. (Scotland) Bill must be given the power to require hon. Members who are not members of the Committee not to attend to sit as members of it and thus seek to disrupt its proceedings.
  7.7 pm
  Mr. Frank Dobson: I want to speak briefly in support of the motion. The Standing Committee on the Self-Governing Schools Etc. (Scotland) Bill is supposed to be considering the detail of the Bill. The measure, as most of us know, is objectionable to most of the people of Scotland, but the Committee stage will give Scottish Members of Parliament who are opposed to it an opportunity to mount cogent arguments against it and to marshal further opposition to it. In these circumstances it behoves every Member of the House—and I mean every Member—to sustain the authority of the Chair of that Committee so that those debates may take place, and the people of Scotland may make their judgment on the basis of the arguments that are mounted.

  341
  As I said on another occasion, when we were talking about discipline in this House, Members of Parliament deal in words, and we want our words to have influence. But before our words can have influence, they must be heeded; before they can be heeded, they must be heard; and if they are to be heard, we must have order. For those reasons, we must sustain the authority of the Chair in this Committee.
  The fact is that many of us—perhaps all of us at one time or another—do stupid and slightly, or even substantially, disorderly things on the spur of the moment. Most other Members are willing to forgive us because they recognise that they may themselves do something similar in the near future, or have done something similar in the not-so-distant past. But in this case the obvious object from the start was to disrupt the Committee's proceedings and to make it impossible for the Chairman to ensure that the Committee was able to discharge the business that it was supposed to be discharging.
  I do not want to say any more about that side of the matter, but I should like to point out that my understanding of the Bill is that, before schools may opt out, even under this legislation, it will be necessary for those in favour of that course to convince a majority of the parents involved that it would be a good thing. It is therefore vital that the arguments against opting out be properly heard and properly conveyed to the people of Scotland.
  I urge on all Scottish Members of Parliament solidarity in this matter. Only if all the people in Scotland who are opposed to this ridiculous proposition stick together and argue against it will there be a likelihood—indeed, if we all stick together, a certainty—of the parents of Scotland rejecting it as soon as they have the opportunity to do so.
  Hon. Members opposed to Tory party policy in Scotland and the Bill should stick together. One way of doing so is to stick by the authority of the Chair, by allowing debate and argument to be mounted and the people of Scotland to hear, appreciate, understand and agree with the overwhelming arguments against opting out.
  7.9 pm
  Mrs. Margaret Ewing: I rise to respond to and comment on the report put before the House by the hon. Member for Glasgow, Springburn (Mr. Martin) and the motion moved by the Lord President of the Council.
  I found the speech by the hon. Member for Holborn and St. Pancras (Mr. Dobson) strange. He seemed to be saying that all we have to do is to collude and let the system work. It did not seem to matter whether the political opinions of the people of Scotland, as expressed at the election, will be lost in the process of such collusion. I suggest that Labour Members should cross the Floor and join Conservative Members, because that is what they have done today.
  Mr. D. N. Campbell-Savours: Will the hon. Lady give way?
  Mrs. Ewing: I have just begun my remarks. I shall give way generously if the House allows me to address the issues involved.
  The Government have today taken an unusual step. Rightly, the Lord President of the Council quoted the precedent that occurred on Burns night in 1973 during
  342
  consideration of the Local Government (Scotland) Act 1973. A similar step had to be taken against various Scottish hon. Members, who included the right hon. Member for Tweeddale, Ettrick and Lauderdale (Mr. Steel), the hon. Member for Inverness Nairn and Lochaber (Sir R. Johnston), the hon. Member for Berwick and East Lothian, Mr. Mackintosh, the hon. Member for Paisley, Mr. Robertson, the hon. Member for Edinburgh, Central, Mr. Oswald and the right hon. Member for Orkney and Shetland, Mr. Grimond. There was no precedent, but it showed how much opposition there was to the Local Government (Scotland) Act, and reflected the views of the Scottish public. Hon. Members tried to make a strong point on behalf of their constituents and national opinion in Scotland.
  Mr. Campbell-Savours: Before the hon. Lady leaves the subject of collusion, may I put it to her that the ultimate act of treachery was committed in 1979 by her hon. Friends and Welsh nationalists when they brought down the Labour Government and let this rabble into office?
  Mrs. Ewing: I thought that it might be as well to allow the hon. Gentleman to intervene at this stage because I should remind Labour Members that they refused to put the Local Government (Scotland) Act to a vote of confidence, thereby destroying the Government's ability to continue. The hon. Gentleman should not include Welsh nationalists in his remarks because of the circumstances at that time.
  I wish to explain to hon. Members who will be asked to vote on this issue the reason for my hon. Friends' action this morning. It is important that people understand the rationale for our activities.
  Mr. James Wallace: The hon. Lady mentioned the incident that occurred in 1973. Does she accept that when my right hon. and learned Friends sat in on that Committee there was no Liberal representation on it? Some of the Labour Members who sat in were protesting that there was no geographical representation. Does she see a distinction between that and the present position, because the Scottish National party is represented on the Committee dealing with the Self-Governing Schools Etc. Bill?
  Mrs. Ewing: The hon. Gentleman makes a fair point about the circumstances in 1973. We argue that Scottish legislation should be dealt with by Scotish hon. Members, and I think that Social and Liberal Democratic Members appreciate that. Indeed, they have said so publicly in Scotland, but they may take a different attitude in the House.
  In the 1987 election, the Conservative party made a sudden announcement about the possibility of opting out being included in education legislation. It was sprung on a surprised electorate. I shall refer to some remarks made on Second Reading by the right hon. Member for Kincardine and Deeside (Mr. Buchannan-Smith). He remembers being
  "totally surprised by the idea".
  I asked whether opting out would apply in Scotland and we were immediately assured that it would not and that it was introduced to meet special circumstances in England and Wales. The Secretary of State intervened to try to insist that this was not the case. The right hon. Member for Kincardine and Deeside said:

  343
  "It is a pity that my right hon. Friend did not speak to me personally during the general election campaign. Fighting as a candidate in my part of Scotland, when I consulted on the matter I was quite clearly told that it did not apply to Scotland."—[Official Report, 6 March 1989; Vol. 148, c. 649:]
  The Conservative party did not include opting out in its election manifesto for Scotland. Indeed, it did not win any support for its general manifesto.
  The issue was first mooted by the hon. Member for Eastwood (Mr. Stewart) during consideration in Committee of the School Boards (Scotland) Act 1988—from which the Scottish National party was excluded—and was officially included in the Gracious Speech last autumn.
  Suddenly, the self-governing Schools Bill was produced in February and is now in Committee. All educational organisations in Scotland are deeply concerned about the speed with which this legislation has been brought forward. My hon. Friends and I are concerned about the education system in Scotland. All four of us volunteered to serve on the Committee.
  Mr. Robert Maclennan: On a point of order, Mr. Speaker. We are debating a procedural motion. The hon. Member for Moray (Mrs. Ewing) has been making substantive points about the Bill, which may or may or not be relevant. The substance of the matter with which we are dealing is disorder. Those guilty of creating disorder should not use this opportunity further to forward arguments that hon. Members may wish to deploy in the proper place at the proper time.
  Mr. Speaker: I must agree. The hon. Member for Moray (Mrs. Ewing) must stick to the motion.
  Mrs. Ewing: I was trying to explain my hon. Friends' action this morning and why the motion has been moved. Hon. Members who will be asked to vote on the motion should understand the reason behind our action.
  I say to the hon. Member for Caithness and Sutherland (Mr. Maclennan), that I find it strange that Scottish Members who attend a Scottish Committee dealing with Scottish matters to voice the opinion of their constituents should be described as disorderly. I should not define that as disorderly. My hon. Friends attended because six Conservative Members who represent English constituencies and have no interest in Scottish education have been appointed to the Committee.
  The Select Committee on Selection and the Whips have deliberately tried to fill the Committee with hon. Members who will agree with the hon. Member for Stirling (Mr. Forsyth), the Under-Secretary of State for Scotland. Their sole purpose, as was apparent when they arrived this morning, is to sit in the Committee, deal with their constituency mail and vote with the hon. Member for Stirling. They are present not to listen to the arguments and the debate but as Lobby fodder, which is legislative imperialism by the establishment to ensure that Scottish opinion is ignored and defined full explanation.
  There is anger and frustration in Scotland about the way in which Scottish legislation is being conducted through the House. The Leader of the House has said that we are trying to prevent debate from taking place, and perhaps that is true, but it is interesting to read some of the comments made on Second Reading by hon. Members now serving on the—
  Mr. Speaker: Order. I hope that the hon. Lady will not go into that, I have given her a good deal of scope, but she must deal with the motion on the Order Paper.
  Mrs. Ewing: As you know, Mr. Speaker, I am a respectful person and I try hard to observe your rulings in this House. As one who attends regularly I am conscious of the difficulties that you face and I also know that you understand the difficulties that we in the so-called "minority" parties face.
  Today we have seen an attempt by the establishment on the two Front Benches to collude to stop Scottish opinion being voiced accurately. As I said when we first discussed the Bill, I believe that the Bill should be referred to a Committee of Scottish Members. I still believe that that is the answer and, that instead of this procedural motion, the Leader of the House should have moved a motion to enable us to look at our procedures so that Scottish legislation, which deals with a distinct policy such as education, could be considered solely by hon. Members who are elected from Scottish constituencies. [Interruption.] That would best solve the problem facing us, but I gather from the noise coming from the Back Benchers of the establishment parties of the House that they do not agree.
  Those hon. Members are ignoring Scottish political opinion and to do so is extremely dangerous. They should not treat Scottish political opinion with contempt. I believe that we should now remit the Bill to a Standing Committee consisting solely of Scottish Members.
  7.21 pm
  Mr. Andrew Welsh: Part of the reason for our actions this morning is evident from the noise coming from the Benches around me and the way in which hon. Members have reacted.
  Hon. Members do not understand what the House is doing to Scotland. Major Scottish institutions and fundamental matters affecting Scottish society are being railroaded by an English majority that neither cares nor understands and which is callously used by the Government to get their majority through. [Interruption.] That noise illustrates my argument.
  At the heart of this matter is what to do in a democracy when the wishes of the Scottish electorate are not only disregarded but flouted in the House—in other words: "What do you do in a democracy when minority means you?"
  It is clear that the Government have no mandate in Scotland and that is why they are forced to draft English Members on to a Committee to make up numbers. The Government do not have a majority in Scotland.
  Mr. Brian Wilson (Cunninhgame, North) rose—
  Mr. Speaker: Order. The hon. Gentleman does not wish to give way.
  Mr. Welsh: This morning we took a principled stand to draw to the attention of the Scottish people the injustices that are being perpetrated against them by the Government and their Labour allies. We are now faced with an unholy coalition. English Tories have been drafted on to the Committee, yet Scottish Members, who have an informed view of Scottish education, are not allowed to participate.

  345
  The hon. Member for Holborn and St. Pancras (Mr. Dobson) has told us that we should mount cogent arguments against the Bill, but his advice is absolute nonsense.
  Mr. Campbell-Savours rose—
  Mr. Welsh: No, I shall not give way.
  The nonsense spouted by the hon. Member for Holborn and St. Pancras about cogent arguments is immediately refuted by the remarks of the hon. Member for Glasgow, Maryhill (Mrs. Fyfe) on Second Reading of the self-same Bill:
  "None of our amendments is ever accepted in Committee. That is"—[Official Report, 6 March 1989; Vol. 148, c. 690]—
  Mr. Speaker: Order. The hon. Gentleman must not go back to the Second reading, we have passed that stage. He must direct his remarks to the motion.
  Mr. Welsh: The hon. Member for Holborn and St. Pancras favours cogent argument, but one of his Back Bench colleagues has already recognised that the Government do not accept cogent arguments or amendments. What can be done when something as important as Scottish education—
  Mr. Campbell-Savours rose—
  Mrs. Maria Fyfe rose—
  Mr. Welsh: No, I shall not give way.
  The Government do not accept any amendments, so any charade in Committee will leave the Bill unamended and its nature will have been determined by the English majority who have been drafted in to make sure of that. The Government are disregarding the opinions of the Scottish electorate. That is disgraceful.
  I am unhappy about the use of the words "disorderly conduct" because we simply turned up in the Committee Room. Nothing was said and we did not seek to interrupt the Chairman. I am sure that that is not the type of disorderly conduct which leads to arrest at weekends. We made a dignified, orderly and justified protest.
  We are up against stultifying rules that restrict Back Benchers. Earlier today, the coalition between the Tories and Members of the Labour Front Bench made sure that, through the medium of a private notice question, yet another legitimate procedural manoeuvre has been closed off to Back Benchers.
  Mr. Dobson: When the hon. Gentleman served on the Standing Committee on the Transport (Scotland) Bill, why did he not make use of the procedural manoeuvres available to Committee members? He spoke only for 17 minutes out of the 33 hours that made up that Committee stage.
  Mr. Welsh: I had the same success in getting amendments through as the Labour party—[Interruption.]—I am not allowed to quote the words of the hon. Member for Maryhill, but she made it clear that, whatever the Bill, the Government do not accept amendments.
  English Tories have been drafted on to a Scottish Committee which affects a fundamental part of our society. What happens to Scottish education will be determined by people who do not know or understand our educational system.
  346
  The Government have no mandate from the Scottish people and what we did this morning was simply to demonstrate that enough is enough. The present system rides roughshod over the Scottish electorate; someone, somewhere, had to do something about that, especially as the Labour party has failed to do anything. The Labour party has sought to co-operate with fellow Tories, but we have used the procedures available to us to demonstrate that enough is enough.
  7.27 pm
  Mr. Alex Salmond: In common with my hon. Friend the Member for Angus East (Mr. Welsh) I am interested in the term "disorderly conduct". I do not know what happened in 1973 among the hon. Members on the Liberal Benches—[Interruption.]—but our conduct in the Committee this morning was less disorderly than the conduct of many Labour Members tonight.
  The central element of the speech of the Leader of the House was that we should make our arguments in Committee. Surely it must be in order for me to answer that suggestion. The answer lies in the words of the hon. Member for Glasgow, Maryhill (Mrs. Fyfe), who is a member of the Committee, and who said to you, Mr. Speaker, on Second Reading:
  "I say that with all respect to you, Mr. Speaker. I did not sit in my place thinking that if I were fortunate enough to catch your eye I would be able to change the minds and attitudes of Conservative Members. We all know what a foolish hope that would be. None of our amendments is ever accepted in Committee. That is certainly true of social security and employment legislation, and the same can be said of any other measure that is considered in Committee."—[Official Report, 6 March 1989; Vol. 148, c. 690.] The hon. Member for Glasgow, Maryhill (Mrs. Fyfe) was speaking in the Second Reading debate.
  Mrs. Fyfe: I thank the hon. Member for giving way. I certainly agree that those were my words, and I stand by them, because the point of being on a Committee or discussing legislation on the Floor of this Chamber is not to change the minds of the hon. Members opposite; it is to get the words on the record and communicate them to the Scottish public. To do that we have to put down amendments and be there.
  Mr. Salmond: I am glad that the hon. Member stands by her words. Perhaps she can discuss with the shadow Leader of the House whether it is fruitful to put these arguments in Committee. I agree that it is important to the Scottish public to hear the arguments, but the most fundamental thing is the decision made by the Committee.
  Mr. Dewar rose—
  Mr. Salmond: If the hon. Member will contain himself and allow me to develop some points, I will give way to him later in my speech.
  The fundamental point is whether we can expect this Committee, in view of its complexion, in any way to respect Scottish public opinion. A brief glance through the six English Conservative Members who have been parachuted on to this Committee gives the lie to any feeling that they are there to listen to the Scottish arguments. There is the hon. Member for Hexham (Mr. Amos), a former London teacher, councillor, Right-winger, anti-smoking, pro-birching for muggers and rapists, strong NHS supporter, educated at St. Albans—
  Mr. Speaker: Order. That has nothing to do with this motion. The hon. Gentleman should return to it.
  Mr. Salmond: It was not my intention to go through the six Members one by one. I was going to mention the hon. Member for Brigg and Cleethorpes (Mr. Brown), a former director of Michael Forsyth Associates Ltd.
  I make the point that these six hon. Members from English constituencies are not there to listen to the Scottish arguments. I, as a Member of this House who volunteered to serve on that Committee, have thousands of constituents who stand to be threatened by this measure, which will divide and fragment Scottish education. These hon. Members do not have a single constituent who will be affected by this legislation, yet they were selected to serve on this Committee while the applications of myself and my hon. Friends were refused. That is a fundamental point.
  It has already been said that we on this Bench are beginning to think there is a degree of collusion, to put it no stronger, between Labour Members on these Benches and those on the Benches opposite. The vote this morning in Committee was, significantly, 17 to 1. This afternoon we saw the remarkable sight of a Leader of the Opposition who believes it is his job not to create problems for the Government but to solve them. We believe, as a minority party, that we are the victims of collusion between the two major parties.
  Mr. Donald Dewar: I am genuinely curious, and I hope the hon. Member will be able to help me. We understand from the earlier part of his speech that he is totally convinced that membership of this Committee is a futile exercise which will gain absolutely no results. We understand, on the other hand, that the whole point of this manoeuvre is that all the Scottish National party members want to be on the Committee. How does he reconcile these two points?
  Mr. Salmond: The case the Scottish National party makes is that this Bill should have been considered by the Scottish Grand Committee on Second Reading. We are happy to leave the decision to hon. Members whose constituencies are affected by this legislation and, as the hon. Member well knows, 64 of the 72 Scottish Members have declared their opposition to the Bill. It is not the right of the Scottish National party to decide what we are arguing for; it is the right of the Scottish people to decide this legislation that we are arguing for.
  Mr. Dennis Skinner: I am not sure whether the hon. Member really wants to destabilise the Committee or not. If he does want to stop the show, he has a friend in me. However, what concerns me now is that he seems to be sailing through clearer waters in wanting it put before the Grand Committee. Why can he not put it before the Convention?
  Mr. Salmond: I am happy to answer the point directly. We want to form a body which will decide matters. If the Convention were to discuss the fundamental issues of Scottish education, yet allow a Standing Committee of the House of Commons to railroad through opting out legislation in Scotland, the cause of the Scottish people would not be advanced one jot.
  I claim that it is not just a Scottish National party point of view that this Committee has been rigged against the wishes of the Scottish people. It was also the view of the
  348
  hon. Member for Glasgow, Garscadden (Mr. Dewar) himself, when he argued that the Bill is not merely bad but a breach of faith, and that it concerns a matter of honour.
  I want to turn to our belief that the rules and regulations of this House are flexible: there is one set of rules for the Scottish National party and minority parties and another set of rules for the Front Benches. We have already found in this Parliament that a Standing Order of the House of Commons concerning the need to set up a Scottish Select Committee has not been implemented. We found a remarkably flexible interpretation of the rights of private notice questions and what notice should be given this afternoon. I will not go further on that matter, except to say that it is a matter to which we shall certainly return later.
  As a minority party, we believe it is our right to represent our constituents in a matter which affects only Scotland. It is only Scottish constituents who are threatened by the opting out legislation for Scotland. Not a single constituent of the six hon. Members parachuted on to the Committee will be affected. I, as an SNP Member, a Scottish Member, cannot accept the right of English Members of Parliament to ride roughshod over clearly expressed Scottish opinion.
  I close with this remark. There are only two measures which I believe have mobilised deep opposition in Scotland to the present Government. The first is the poll tax, and that campaign is under way. The second is this Bill, and the Scottish National party will not accept the English majority imposed upon us on the Standing Committee.
  7.28 pm
  Mr. Dick Douglas: I feel inclined to be very brief, and I sense that the mood of the House is of great tolerance on both sides, because hon. Members have listened reasonably attentively to arguments in the hope that people outside will appreciate the exigencies and intricacies of our procedure. The Leader of the House is well known for his tolerance and understanding, and I do not want to go into the difficulties he has had in setting up a Scottish Select Committee.
  I think we are due some explanation of the effect of this motion. How long is it intended to last? Is it intended to last for the duration of this Parliament or just for the duration of this particular Committee? Normal procedure, as I understand it, is if Members who are not on such bodies as Select Committees enter Committee rooms when a Committee is deliberating in private, the Chairman may courteously ask a Member who has inadvertently come in to remove himself, and no draconian measures will be necessary.
  I wonder where we are going. If Members are sitting within the precincts of the Committee, as I expect was done today, how are these defined in our Committee rooms? We know quite clearly when we are in the House and when we are out of the House. For example, if I step across this line, by convention I am out of order. If I move into the Gangway, I am out of order. How are we to determine, when a Member is in a Committee room, whether he is actually in the Committee or not? [Interruption.] Hon. Members may say that those SNP Members were stupid. We do many things in this place which are apparently stupid. Some of our procedures are dignified and sanctified, but the whole procedure of voting might be construed as stupid as we march through the

  349
  Lobbies, walking back and forth, at 1 or 2 o'clock in the morning. My God, what could be more stupid than that? If our constituents saw it, they would think that we were mad.
  That is not at issue today. We are considering a unique power which we are going to give my hon. Friend the Member for Glasgow, Springburn (Mr. Martin). The last time such powers were used was in 1973. I believe that the use of such powers was justified then to deal with a piece of legislation from which many of our difficulties today emanate. My goodness, if there was any piece of legislation which we should not have passed, it was that legislation dealing with the so-called reform of local government. We will have to try to reform that again, but that is another issue.
  I do not want to be disrespectful to you, Mr. Speaker. However, my experience of this place goes back in one way or another for 14 years. I have never known a private notice question not to appear on the annunciator. Its absence today was sharp practice. I am not accusing you, Mr. Speaker, but the Front Benches used sharp practice against the Back Benches. I do not care tuppence which party that practice was used against: it was used against Back Benchers. Some people have used a rather crude word to describe it—collusion. The Front Benches collude and Back Benchers must be very careful that they do not collude against them. Our liberties and rights as Back Benchers can be severely restricted in this place. We must be careful to ensure that they are not further restricted.
  I do not intend to consider the merits of the Self-Governing Schools Etc. (Scotland) Bill now. Nor do I intend to consider the merits of the Government's railroading the legislation through. There can be no more objectionable legislation before the House now than the legislation to reform Scottish education.
  The Leader of the House has responsibilities. I have emphasised to him before that his responsibilities lie not simply to the Tory party, but to the House. His colleagues may shake their heads, but I have described the tradition and we are considering the traditions of this place. The onus and balance of the argument in this place claims that those terrible SNP Members have offended against the traditions of order.
  Mr. Stuart Bell: I hesitate to intervene, but is it not a fact that those hon. Members intervened on the freedom of speech?
  Mr. Douglas: I doubt that very much. This House has a responsibility to defend the freedom of speech, but people outside the Chamber defend it. Freedom of speech is defended outside this place. Many people have a mistaken view about the location of the repository of free speech. We are lucky to have freedom of speech, and over recent years the Government, with their enormous majority, have railroaded minorities in this House and particularly over minorities represented on the Labour Benches.
  We must be very careful about the powers which we confer. Of course we want order and we want the procedures of this place to be carried out. However, we should not kid ourselves that the Government will play by the rules. Any Opposition Member who thinks that is kidding himself. The issue arises because the Government know that they have extreme difficulties over the number of Conservative Scottish Members. They are changing the
  350
  rules daily. That is why we must be very careful before we pass this motion. We must ensure that we are not creating an unfortunate precedent.
  7.42 pm
  Mr. Harry Ewing: I suppose that hon. Members who speak in this debate should present their credentials. For the past 18 years, I have fought against the erosion of the rights of Back Benchers. Over that time, I have seen rights eroded. When I first came here, hon. Members could table two written questions to Ministers. There was also a counting-out procedure in the House. In those days, we could ask Mr. Speaker to count the House and if there were fewer than 40 Members present, the Government would lose their business for the day.
  Between 1970 and 1974, the Conservative Government, led by the right hon. Member for Old Bexley and Sidcup (Mr. Heath), reduced the quorum in Standing Committee and abandoned the counting-out procedure and the quorum in the House. I fought against all that.
  If I give the impression that what happened in Standing Committee this morning was an erosion of Back Benchers' rights, I would be giving the wrong impression. Members of the SNP may call that collusion. I do not care about that, because I have been in politics long enough and I can defend myself before my constituents. SNP Members need not take my word for that, they can ask Dr. McIntyre, John Donnachy, John McGregor or Ron Halliday and all the other SNP candidates who have opposed me over the past 18 years. They will say whether I am fit and able to defend myself before my constituents in anything that I may do.
  It would be a great mistake if we created the impression that what happened in the Standing Committee this morning had to do with the erosion of Back Benchers' rights or was related to concern being expressed on behalf of the people of Scotland about the measure before that Standing Committee. It is wrong for SNP Members to give the impression that they are the only Members of this place concerned about the Government's proposals on opting out.
  If you do not mind my saying so, Mr. Speaker, the three SNP Members who have contributed to this debate have displayed an appalling lack of confidence in their ability to convince their constituents that this legislation is so bad that their constituents should not use the terms of the legislation to opt out.
  Mr. Bill Walker: Will the hon. Gentleman give way?
  Mr. Ewing: No, I will not give way, because I do not want to get involved in an argument with the hon. Gentleman and the three SNP Members. I want to make serious points. If the hon. Member for Tayside, North (Mr. Walker) is going to make a serious point, I will give way. This is not a trivial matter.
  Mr. Walker: My serious point is that the hon. Gentleman has a distinguished record for having amendments accepted in Committee when he was leading from the Opposition Front Bench. If his colleagues had his confidence, obviously the Standing Committee could make progress and we could get on with the work.
  Mr. Ewing: I suspect that if I had been leading from the Opposition Front Bench during this Parliament, my distinguished record would have been somewhat dented.
  About three weeks ago the right hon. Member for Old Bexley and Sidcup detailed 47 pieces of legislation to which no amendments were accepted in Standing Committee. I would not want the impression to go from this place tonight that what has happened in Standing Committee today is an erosion of Back-Bench rights or an expression of concern.
  Mr. Salmond: Looking at the complexion of the Standing Committee with his long experience in the House, does the hon. Gentleman anticipate any meaningful amendments being accepted in Committee? As we both know the Under-Secretary of State for Scotland, does he believe that Scottish schools which might be vulnerable to the legislation will be provided with substantial incentives to opt out if the Bill reaches the statute book?
  Mr. Ewing: This is not the first piece of education legislation to come before Scottish Members during this Parliament. The school boards legislation passed through the House, but there was no demonstration by SNP Members and there was no SNP Member on that Committee. There is one SNP Member on the Committee on this Bill, and there has been a demonstration.
  It is as well that the House should know that this whole exercise has been trailered for the last three weeks. The only people who have been taken in by it tonight, as far as I am aware, are the Scottish media. I understand that they have covered this incident, but that is because it has been a dull Budget. To be fair to the Scottish media, they have not really had much to report in terms of the Budget.
  In all seriousness, it would be a great tragedy if somehow or other the impression were given that the demonstration in Committee this morning was a demonstration of concern for the people of Scotland or concern that Back-Bench rights were being eroded. It is purely and simply—there is no nice way of saying this—a publicity stunt for the SNP, and some of the media in Scotland will fall for it.
  If all four Members had secured a place on that Committee, it would have been the worst thing that could happen to the SNP. I apologise to the Leader of the House, because he is not responsible for it, but I am sorry that the Chairman of the Commitee could not find a place for all four Members, because they would not have turned up. I have the voting record here, if any hon. Member wants to challenge me, of Committees they have been on. I will not speak ill of Donald Stewart, because he is one of the finest friends I have had in all my years in the House. Donald will send me a nice letter after this; the only problem is that he will write it in Gaelic so that I will not be able to read it.
  However, when Gordon Wilson and Donald Stewart were here and we had the Select Committee on Scottish Affairs, the two of them would serve on that Committee. The SNP does not have a good Committee record. We have had as many as 11 SNP Members here and they still did not have a good Committee record. They are trying to give the impression today that somehow or other they are bubbling over with concern for the people of Scotland. They are bubbling over, all right—bubbling, full stop—and they will bubble all their days here because that is all they can do.
  352
  I am confident that I can take this bad legislation to my people in Falkirk, East and convince them that it is not worth paying any attention to it. If the SNP Members had any confidence in themselves, they would do the same. I shall give my support to the Chairman of the Committee because that is the only way the House can function. The only alternative is to break away. There is just no other option. The rules and procedures of the House will not be reformed to meet the views and the needs of four Members, so we should face up to that challenge: we either support the Committee Chairman and make sure that these Committees work, or we do the extreme thing. I am against that, so I am in favour of the Chairman and will support him tonight.
  7.52 pm
  Mr. Donald Dewar: Perhaps it is an exaggeration to say that we are getting used to the idea that there will be a bit of excitement from the Scottish national on Budget day, but I suspect that it may be the start of a tradition. I remember that when I first came to the House the excitement was what Mr. Leo Abse might be wearing. Perhaps in future years it will be who is going to be thrown out from the Scottish National party Bench.
  I do take this seriously, although it is a matter on which it is easy to joke, and there are quite important principles at stake here. It is not a matter just of who is colluding or conspiring with whom; it is a matter of the good order of the House and how we conduct our affairs.
  I have to say to my colleagues on the Scottish National party Bench that I have found some of the remarks made tonight difficult to understand. The hon. Member for Angus, East (Mr. Welsh), for example, made a very spirited point about the difficulty in getting any of his amendments accepted. My understanding—I am quite prepared to be corrected—about the Transport Bill is that the hon. Gentleman put down one amendment, to replace the word "may" by the word "shall", so possibly he is generalising from a rather narrow base.
  Mr. Andrew Welsh: As usual in these matters the hon. Gentleman is entirely wrong. That was not my amendment. He perhaps might take into account my eight amendments on this particular Bill.
  Mr. Dewar: I am glad to hear that the hon. Gentleman's interests are growing. I noticed that he was careful to say, "That was not my amendment." He did not say that he had more than one, however, in the whole history of the Transport Bill.
  Undoubtedly, what took place this morning was an attempt to disrupt the Committee, and this has not happened in Committees of the House in the past. I have considerable respect for Gordon Wilson and Donald Stewart, and they did not think it was necessary to disrupt the poll tax Bill, although certainly that was a piece of legislation that was disliked by the people of Scotland in an almost unprecedented way.
  I am totally confused as to exactly what argument has been put to the House. As I understood what the hon. Member for Moray (Mrs. Ewing), who spoke first for the SNP, had to say, she was advancing the argument that the whole point of the demonstration today was that she and her three colleagues should all have been included in the membership of the Committee. Then we had the hon. Member for Banff and Buchan (Mr. Salmond), who

  353
  argued very strongly that the last thing he wanted was to be on the Committee as at present constituted because it would he an essay in futility and he would be unlikely to make progress of any kind. I am not clear whether we are being told that the Committee should never meet or that the Committee should be reformed to include those hon. Members.
  Mrs. Margaret Ewing: The hon. Gentleman seems to have moved very substantially from the points he made in his own speech on 6 March, columns 644 and 645, when he said it would be—
  Mr. Speaker: Let us not go into the Second Reading Committee again, please. We are dealing with this motion.
  Mr. Dewar: I am grateful to the hon. Lady for the information that she has been re-reading my speeches. I do not often make that mistake, but on this occasion I will perhaps have a look.
  It is always dangerous to put historical perspectives on these matters and I plead guilty to trying to do this. Perhaps I could be allowed to give the House a quotation which is of historical interest as it goes back to the mid-1970s:
  "Following Hamilton and Mrs. Ewing's grand tour of Scotland, where she played to packed houses, the SNP gained an instant mass membership. But it was membership lacking in political background and quality, with a higher than normal proportion of cranks and people motivated by grudges."
  That was the hon. Member for Glasgow, Govan (Mr. Sillars) talking about the hon. Member for Moray's mother-in-law. I give you a solemn undertaking, Mr. Speaker, that that is my last mother-in-law joke of the evening.
  To be serious on the matter, I genuinely regret that this motion has had to be brought foward, but this is, as the Leader of the House has said, a very unusual set of circumstances. What distinguished this from many rowdy scenes that we have seen on these premises at various times is that it was quite clear that the people involved intended to persist. This was not a matter of making a point and withdrawing. It was quite clear that if the House did not take steps to deal with the matter we should see it on Thursday and Tuesday and the following Thursday ad infinitum. That, I think, is what gives it its special character and justifies the fact that this motion is now before the House.
  It is not a draconian measure, I say to my hon. Friend the Member for Dunfermline, West (Mr. Douglas); it is a motion specifically related to the proceedings of this one Committee when it is considering this one Bill. It is not a blanket power that is being brought forward that will stay there to threaten the activities of Back Benchers on all occasions. It is tailored to deal with this one specific situation, where unmistakable notice has been given that if the House does not take steps we shall be in a situation of continuing impasse, which would not be good for Scottish politics or, certainly, for the conduct of the House.
  I am not on the Committee but, on behalf of my colleagues, I am anxious to see the issues debated, because this is an unusual Bill. I will not go into the merits of the Bill except on this narrow point, which is relevant to why I believe that we should not be faced with a continuing impasse. Even if the Bill is forced on to the statute book, its most objectionable part—the opting-out provisions—
  354
  will remain simply an entry on the shelves and a piece of constitutional lumber, unless it is brought to life by groups of parents using the powers.
  The real argument will be conducted in Scotland with public opinion, with the Minister trying to create circumstances in which the powers will be used, while those of us on the other side of the argument will try to persuade parents to consider the wider interests of the educational system and refuse to have anything to do with the legislation.
  To do that, it is necessary to debate the matter in Committee. This morning, all that was achieved was two and a half hours of nominal debating time, during which the Minister did not have to say a single word to justify or defend his proposals. There is no point in that.
  Mr. Salmond: Will the hon. Gentleman address the point that, if the legislation proceeds, either parents will be faced with huge incentives to agree that schools should opt out or, as has been the English experience, they will be faced with school closures—
  Mr. Speaker: Order. The hon. Member for Glasgow, Garscadden (Mr. Dewar) should not address that point, as it has nothing to do with the motion.
  Mr. Salmond: On a point of order, Mr. Speaker. Is it in order for the hon. Member for Glasgow, Garscadden (Mr. Dewar) to be allowed to make an argument and then for other right hon. and hon. Members not to be allowed to pursue that argument with questions?
  Mr. Speaker: The motion before the House is in order, but much wider consideration of the merits of the Bill is not.
  Mr. Dewar: It is clear that there are points of difference as to the Bill's merits. I am saying to the House that it might be advisable to get down to debating those differences rather than get hung up on a procedural wrangle that has a lot to do with column inches hut not very much with the practical fate of the legislation.
  We have had a day of excitement. Earlier in the day, the House was invited to advance the Budget debate by discussing the fate of the Vale of Glamorgan. I know that I cannot do that now, but that was a transparent procedural device—it could not be anything else. There was the extraordinary situation of an attempt to move the writ being made by one member of the Scottish nationalist group while being opposed by another. That was a device for making a point on the Floor of the House. It was a manoeuvre for political advantage, and one cannot call foul if one is out-manoeuvred. The only result is that one hon. Member has been suspended, which is to no one's credit—certainly not to his. The cause in question was advanced not a whit.
  I back the motion not because I am conspiring with the Leader of the House, with whom I have not spoken today, nor because I am in some way conniving in the suspension of Back Benchers.
  Mr. Salmond rose—
  Mr. Dewar: I am just finishing. I have given way several times.
  I am backing the motion because, put in the simplest possible terms, I believe that it is an attempt to mount a parliamentary manoeuvre that is outside the rules of the House, that cannot be justified, and that is wrong on the

  355
  basis of the arguments and the merit. It is for those reasons, and because I agree, albeit reluctantly, that such a step is necessary, that I invite my hon. Friends to support the motion that is before the House.
  Question put:—
  The House divided: Ayes 256, Noes 10.

  Division No. 121]

  [8.3 pm

  AYES

  Adams, Allen (Paisley N)

  Fenner, Dame Peggy

  Arbuthnot, James

  Fishburn, John Dudley

  Arnold, Tom (Hazel Grove)

  Fisher, Mark

  Ashdown, Rt Hon Paddy

  Flynn, Paul

  Baldry, Tony

  Fookes, Dame Janet

  Battle, John

  Forman, Nigel

  Beith, A. J.

  Forsyth, Michael (Stirling)

  Bell, Stuart

  Forth, Eric

  Bevan, David Gilroy

  Foster, Derek

  Biffen, Rt Hon John

  Fox, Sir Marcus

  Blackburn, Dr John G.

  Franks, Cecil

  Blaker, Rt Hon Sir Peter

  French, Douglas

  Blunkett, David

  Fyfe, Maria

  Body, Sir Richard

  Galbraith, Sam

  Boswell, Tim

  Gardiner, George

  Bottomley, Mrs Virginia

  Garel-Jones, Tristan

  Bowden, Gerald (Dulwich)

  George, Bruce

  Bowis, John

  Glyn, Dr Alan

  Boyes, Roland

  Golding, Mrs Llin

  Bradley, Keith

  Goodhart, Sir Philip

  Brandon-Bravo, Martin

  Gorman, Mrs Teresa

  Brazier, Julian

  Greenway, Harry (Ealing N)

  Brooke, Rt Hon Peter

  Greenway, John (Ryedale)

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

  Griffiths, Peter (Portsmouth N)

  Browne, John (Winchester)

  Ground, Patrick

  Buchanan-Smith, Rt Hon Alick

  Gummer, Rt Hon John Selwyn

  Buckley, George J.

  Hague, William

  Budgen, Nicholas

  Hamilton, Neil (Tatton)

  Butcher, John

  Hanley, Jeremy

  Butler, Chris

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

  Butterfill, John

  Hargreaves, Ken (Hyndburn)

  Caborn, Richard

  Harris, David

  Callaghan, Jim

  Hayhoe, Rt Hon Sir Barney

  Carlile, Alex (Mont'g)

  Haynes, Frank

  Carlisle, Kenneth (Lincoln)

  Higgins, Rt Hon Terence L.

  Carrington, Matthew

  Hind, Kenneth

  Cash, William

  Hogg, Hon Douglas (Gr'th'm)

  Chapman, Sydney

  Holt, Richard

  Chope, Christopher

  Hood, Jimmy

  Clark, Dr David (S Shields)

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

  Clarke, Tom (Monklands W)

  Howell, Ralph (North Norfolk)

  Coombs, Anthony (Wyre F'rest)

  Howells, Dr. Kim (Pontypridd)

  Coombs, Simon (Swindon)

  Hughes, John (Coventry NE)

  Cormack, Patrick

  Hughes, Robert (Aberdeen N)

  Cran, James

  Hughes, Robert G. (Harrow W)

  Cunliffe, Lawrence

  Hunt, David (Wirral W)

  Dalyell, Tam

  Hunt, John (Ravensbourne)

  Darling, Alistair

  Hunter, Andrew

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

  Ingram, Adam

  Davis, David (Boothferry)

  Irvine, Michael

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

  Jack, Michael

  Day, Stephen

  Janman, Tim

  Dewar, Donald

  Jessel, Toby

  Dixon, Don

  Johnson Smith, Sir Geoffrey

  Dobson, Frank

  Jones, Barry (Alyn & Deeside)

  Doran, Frank

  Jones, Martyn (Clwyd S W)

  Dorrell, Stephen

  Jones, Robert B (Herts W)

  Douglas-Hamilton, Lord James

  Kellett-Bowman, Dame Elaine

  Duffy, A. E. P.

  Kennedy, Charles

  Dunn, Bob

  King, Roger (B'ham N'thfield)

  Durant, Tony

  Kirkwood, Archy

  Dykes, Hugh

  Knapman, Roger

  Eadie, Alexander

  Knight, Greg (Derby North)

  Eastham, Ken

  Knowles, Michael

  Ewing, Harry (Falkirk E)

  Knox, David

  Fallon, Michael

  Lamond, James

  Favell, Tony

  Lang, Ian

  356

  Latham, Michael

  Roe, Mrs Marion

  Lawrence, Ivan

  Rogers, Allan

  Leigh, Edward (Gainsbor'gh)

  Ross, Ernie (Dundee W)

  Lennox-Boyd, Hon Mark

  Rowe, Andrew

  Lester, Jim (Broxtowe)

  Sackville, Hon Tom

  Lightbown, David

  Sayeed, Jonathan

  Lloyd, Sir Ian (Havant)

  Shaw, David (Dover)

  Lloyd, Peter (Fareham)

  Shaw, Sir Giles (Pudsey)

  Lord, Michael

  Sheerman, Barry

  McAllion, John

  Shephard, Mrs G. (Norfolk SW)

  McCartney, Ian

  Sims, Roger

  Macdonald, Calum A.

  Skeet, Sir Trevor

  McFall, John

  Smith, Andrew (Oxford E)

  Macfarlane, Sir Neil

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

  MacGregor, Rt Hon John

  Snape, Peter

  McLeish, Henry

  Speed, Keith

  Maclennan, Robert

  Speller, Tony

  McLoughlin, Patrick

  Spicer, Sir Jim (Dorset W)

  McNair-Wilson, Sir Michael

  Squire, Robin

  McNair-Wilson, P. (New Forest)

  Stanbrook, Ivor

  Madel, David

  Steel, Rt Hon David

  Malins, Humfrey

  Steen, Anthony

  Mans, Keith

  Stern, Michael

  Maples, John

  Stevens, Lewis

  Marshall, David (Shettleston)

  Stewart, Allan (Eastwood)

  Marshall, John (Hendon S)

  Stokes, Sir John

  Martin, David (Portsmouth S)

  Stott, Roger

  Martlew, Eric

  Stradling Thomas, Sir John

  Maxton, John

  Taylor, Mrs Ann (Dewsbury)

  Maxwell-Hyslop, Robin

  Taylor, Ian (Esher)

  Meale, Alan

  Taylor, John M (Solihull)

  Michie, Bill (Sheffield Heeley)

  Tebbit, Rt Hon Norman

  Miller, Sir Hal

  Thompson, Jack (Wansbeck)

  Mills, Iain

  Thompson, Patrick (Norwich N)

  Mitchell, Sir David

  Thurnham, Peter

  Monro, Sir Hector

  Twinn, Dr Ian

  Morley, Elliott

  Vaz, Keith

  Morris, M (N'hampton S)

  Waddington, Rt Hon David

  Morrison, Sir Charles

  Wakeham, Rt Hon John

  Moss, Malcolm

  Walden, George

  Moynihan, Hon Colin

  Walker, Bill (T'side North)

  Nicholson, David (Taunton)

  Wallace, James

  Nicholson, Emma (Devon West)

  Waller, Gary

  Norris, Steve

  Wardle, Charles (Bexhill)

  O'Brien, William

  Wareing, Robert N.

  O'Neill, Martin

  Watts, John

  Oppenheim, Phillip

  Wells, Bowen

  Page, Richard

  Wheeler, John

  Paice, James

  Whitney, Ray

  Patnick, Irvine

  Widdecombe, Ann

  Pattie, Rt Hon Sir Geoffrey

  Wiggin, Jerry

  Peacock, Mrs Elizabeth

  Wilshire, David

  Pike, Peter L.

  Wilson, Brian

  Porter, David (Waveney)

  Winterton, Mrs Ann

  Portillo, Michael

  Winterton, Nicholas

  Powell, Ray (Ogmore)

  Wolfson, Mark

  Raison, Rt Hon Timothy

  Wood, Timothy

  Redwood, John

  Worthington, Tony

  Rhodes James, Robert

  Young, Sir George (Acton)

  Riddick, Graham

  Rifkind, Rt Hon Malcolm

  Tellers for the Ayes:

  Roberts, Allan (Bootle)

  Mr. David MacLean and Mr. David Heathcoat-Amory.

  Robertson, George

  NOES

  Barnes, Harry (Derbyshire NE)

  Salmond, Alex

  Beggs, Roy

  Skinner, Dennis

  Douglas, Dick

  Wigley, Dafydd

  Kilfedder, James

  Molyneaux, Rt Hon James

  Tellers for the Noes:

  Nellist, Dave

  Mrs. Margaret Ewing and Mr. Andrew Welsh.

  Ross, William (Londonderry E)

  Question accordingly agreed to.
  Resolved,
  That the Chairman of the First Scottish Standing Committee in respect of the Self-Governing Schools Etc (Scotland) Bill shall have power to order any Member who is not a member of the Committee to withdraw immediately

  357
  from the Committee Room; and the Serjeant at Arms shall act on such orders as he may receive from the Chairman in pursuance of this order.

  First Scottish Standing Committee

    PREVENTION OF TERRORISM (TEMPORARY PROVISIONS) BILL (ALLOCATION OF TIME)
    Resolved,
    That the Order of the House [23rd January] be supplemented as follows:

    PREVENTION OF TERRORISM (TEMPORARY PROVISIONS) BILL (ALLOCATION OF TIME)

      Lords Amendments
      1. The proceedings on Consideration of Lords Amendments shall be completed at this day's sitting and, subject to the provisions of the Order of 23rd January, those proceedings shall, if not previously brought to a conclusion be brought to a conclusion not later than the expiration of the period two hours beginning with the commencement of the proceedings on this Order.
      2.—(1) For the purpose of bringing any proceedings to a conclusion in accordance with paragraph 1 above—

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

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

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

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

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

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

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

      (2) Proceedings under sub-paragraph (1) above shall not be interrupted under any Standing Order relating to the sittings of the House.

      Stages subsequent to first Consideration of Lords Amendments
      3. Mr. Speaker shall put forthwith the Question on any Motion made by a Minister of the Crown for the consideration forthwith of any further Message from the Lords on the Bill.
      4. The proceedings on any such further Message from the Lords shall, if not previously brought to a conclusion, be brought to a conclusion one hour after the commencement of those proceedings.
      5. For the purpose of bringing those proceedings to a conclusion—

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

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

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

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

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

      Supplemental
      6—(1) Mr. Speaker shall put forthwith the Question on any Motion made by a Minister of the Crown for the appointment and quorum of a Committee to draw up Reasons.
      (2) A Committee appointed to draw up Reasons shall report before the conclusion of the sitting at which they are appointed.
      7.—(1) In this paragraph "the proceedings" means proceedings on Consideration of Lords Amendments, on any further Message from the Lords on the Bill, on the appointment and quorum of a Committee to draw up Reasons and on the Report of such a Committee.
      (2) Paragraph (1) of Standing Order No. 14 (Exempted business) shall apply to the proceedings.
      (3) No dilatory Motion with respect to, or in the course of, the proceedings shall be made except by a member of the Government, and the Question on any such Motion shall be put forthwith.
      (4) If at any time the proceedings are interrupted by a Motion for the Adjournment of the House under Standing Order No. 20 (Adjournment on specific and important matter that should have urgent consideration), the bringing to a conclusion of any part of the proceedings which, under this Order, are to be brought to a conclusion after that time shall be postponed for a period equal to the duration of the proceedings on that Motion.—[Mr. Douglas Hogg.]

  Prevention of Terrorism (Temporary Provisions) Bill
  Lords amendments considered.
  Prevention of Terrorism (Temporary Provisions) Bill
    Clause 15

      PROVISIONS SUPPLEMENTARY TO S.I4.
      Lords amendment: No. 1, in page 10, line 41, at end insert—
      "(10) Section 61(1) to (8) of the Police and Criminal Evidence Act 1984 (fingerprinting) shall apply to the taking of a person's fingerprints by a constable under subsection (9) above as if for subsection (4) there were substituted—
      (4) An officer may only give an authorisation under subsection (3)(a) above for the taking of a person's fingerprints if he is satisfied that it is necessary to do so in order to assist in determining—

      (a) whether that person is or has been concerned in the commission, preparation or instigation of acts of terrorism to which section 14 of the Prevention of Terrorism (Temporary Provisions) Act 1989 applies; or

      (b) whether he is subject to an exclusion order under that Act;

      or if the officer has reasonable grounds for suspecting that person's involvement in an offence under any of the provisions mentioned in subsection (1)(a) of tlat section and for believing that his fingerprints will tend to confirm or disprove his involvement.""—[Mr. DouglasHogg.]
      Mr. Speaker: With this we shall consider also Lords amendments 5, 28 and 29.
      8.13 pm
      Mr. Barry Sheerman: As the amendments are either technical or part of the general thrust of amendments moved by the Opposition in the House of Lords, I shall not oppose them.
      Question agreed to.
      Remaining Lords amendments agreed to.

  British Railways Bill
  Order for Second Reading read
  8.15 pm
  Mr. Patrick McNair-Wilson: I beg to move, That the Bill be now read a Second time.
  The annual British Railways Bill is connected with the desire of the British Railways Board to bring the railway system into line with the requirements of modern operation. This general works powers Bill is one of a substantial number introduced in the House since 1963. It aims to improve the safety and efficiency of the railway system, but such Bills have always been seen in the past as an opportunity for hon. Members to raise other matters relating to the railway system. Although I am sponsoring the Bill on behalf of the board, hon. Members should recognise that I am not competent to answer any points outside its scope.
  It is, of course, right that all hon. Members should be concerned about safety, as indeed is everyone in the country. Let me make it clear that the board never puts safety after passenger convenience: it is always a top priority. Everyone who works at British Rail receives basic training, and every railwayman receives at least two years' training before taking out trains, so that he has a knowledge of both train operation and the routes that the train is likely to cover.
  Automatic warning systems are already provided for drivers, and automatic train protection is the next step. Such technology, however, has yet to be applied to a complex rail network. It is in existence for simple rapid transit systems, and it is hoped that a pilot scheme may be in place next year.
  Part I of the Bill deals with the normal preliminary provisions that incorporate the usual enactments by reference relating to such matters as compulsory purchase. Part II deals with the works proposed, part III with the lands, part IV with the normal standard protective provisions and part V with the miscellaneous and general provisions.
  Let me begin with the major works proposed. Works No. 1 is a new railway in Birmingham to connect Snow hill station with the station at Smethwick West. The proposed new railway is sponsored by the Passenger Transport Executive which will pay the cost of the reinstatement of British Rail tracks on disused track-bed out of Snow hill until the line joins up with the board's existing freight railway for the final part of the link. For part of its length, the proposed link will share presently disused four-track formation with a light rapid transit railway proposed to be constructed by the PTE. That plan is very much welcomed by local residents and will benefit them and others.
  Works No. 3 consists of a new railway—partly reinstatement of disused track, and partly totally new railway—intended to form a link between Nottingham and Mansfield to permit services on the Nottingham-Mansfield-Worksop corridor. The proposal is backed by local authorities in the area which will provide the funds to construct the railway which is expected to relieve traffic congestion. There is also some likelihood of European funding being obtained.
  Works Nos. 9, 10 and 11 consist of work associated with platform extension to enable longer trains to operate on certain sections of Network SouthEast. Hon. Members who are concerned about overcrowding on trains must

  361
  welcome that proposal, which will provide some easement of the inevitable overcrowding in the rush hour. Works No. 9 deals with the reconstruction of the tunnel at Woolwich Dockyard station. Works Nos. 10A and 10B involve bridge and viaduct widening at Lewisham station. Works No. 11 involves bridge widening at Dartford station.
  Greenwich borough council is aware of the proposed works No. 9 and has expressed no opposition. Lewisham borough council has expressed some concern about some aspects of works Nos. 10A and 10B, but discussions are continuing with the board and it is hoped that a mutually acceptable solution will emerge. The initial reaction to the proposed works No. 11 from Kent county council and Dartford borough council is not unfavourable and further discussions are continuing.
  I shall briefly identify the other works in the Bill for the convenience of hon. Members. Works No. 2 at Tickhill has received no objection from Doncaster metropolitan borough council or from the Tickhill town council which is well aware of the planned works. Works No. 4 relates to the extension of the high speed train depot at St. Philip's marsh. Bristol city council is aware of the board's proposals, and discussions are taking place.
  Works No. 5 relates to the construction of a new cord line to improve facilities for the coal trains supplying the Fiddlers Ferry power station to which there is no objection, as far as the board is aware.
  Works No. 7 is a new siding to run to the British Alcan works at Bassaleg, and the Gwent and Newport district council is in favour of the scheme.
  Works No. 8 relates to the deviation of Margam to Tondu branch railway at Cefn Cribwr to achieve the release of a significant amount of coal which can be exploited by British Coal.
  Clauses 6, 7 and 8 relate to works No. 1, clause 9 involves the relinquishment of powers under the British Railways (No. 2) Act 1981 and the British Railways (No. 2) Act 1984. Clauses 10, 11, 12, 13, 14 and 15 relate to works Nos. 3 to 9.
  We now come to the provisions of the Bill which have caused some concern. The hon. Member for Denton and Reddish (Mr. Bennett) has expressed concern and has put his name to the blocking motion. The provisions deal with the stopping up and closing of footpaths. The hon. Gentleman will be familiar with the petition on behalf of the Ramblers Association. Clause 17 deals with the removal of a dangerous walkway over the River Ribble. I hope that the hon. Gentleman agrees that that change should be made in the interests of safety.
  For the convenience of the House I shall touch on the related clauses. Clause 11 relates to the stopping up of footpaths at Kirkby in Ashfield and deals with the earlier works to which I have referred. Clause 18 provides for the taking down of a dangerous footbridge and clause 19 the stopping and discontinuance of a footpath at Tipton with which the hon. Member for Denton and Reddish is particularly concerned. The vehicular use of the crossing was prohibited in 1981 and subsequently in 1984 and as a result the crossing has been only for users of the footpath.
  Mr. Peter Snape: I apologise for intervening at this stage, but perhaps I should tell the hon. Gentleman as a matter of information and courtesy
  362
  that clause 11 is of interest not only to my hon. Friend the Member for Demon and Reddish (Mr. Bennett), but to you, Madam Deputy Speaker, as it is in your constituency.
  Madam Deputy Speaker (Miss Betty Boothroyd): Order. The hon. Gentleman should proceed with caution.
  Mr. McNair-Wison: Of course I shall proceed with caution, and I hope that I will carry you with me, Madam Deputy Speaker. I want to make it absolutely clear that the board has no desire gratuitously to curtail movement across any of its tracks or any of its land. In all the cases that I have mentioned, the proposals stem entirely from a desire to improve safety.
  Clause 19 relates to Watery lane level crossing in Sandwell. Vehicular access was prohibited nearly 10 years ago and the board proposed a scheme using miniature warning lights. Quite properly and understandably, the local school and the council were concerned that that would be dangerous because many trains travel through the area. The council was concerned that the crossing should be closed. The board believes that that is probably the only sensible answer, but as school-children and those requiring access to the school are likely to be concerned for at least another year, no action will be taken until 1990, but I hope that you, Madam Deputy Speaker, the hon. Member for Denton and Reddish and others concerned about the footpath will look favourably on the suggestion, which is not a gratuitous interruption of access but in the interests of safety. If hon. Members wish to explore the matter further I shall do my best to answer their points later, if I am fortunate enough to catch your eye again, Madam Deputy Speaker.
  The remaining clauses in the Bill are fairly standard. Clause 28 sets time limits for the purchase of land and the rights over land which are limited until 31 December 1994. Clause 29 deals with the extension of a time limit from an earlier Bill because of the work required for the reinstatement of the curve linking the midlands line with the great central route at Doncaster. The board intends to apply for an extension until December 1994.
  Part IV of the Bill is the standard incorporation of previous protective provisions. As I said at the beginning of my remarks, part V deals with the miscellaneous and general provisions. As the House well knows, there are also schedules attached to the Bill.
  In conclusion, I want to point to the modest nature of the proposal. I hope that, it will find favour with the House. I also hope that, at a time when British Rail is very much in the news, perhaps for all the wrong reasons, those of us who are concerned about its operation will give the Bill an opportunity to proceed so that the modernisation, and as a result the safety and efficiency that we hope will flow from it, will be a benefit to all the travelling public.
  8.30 pm
  Mr. Andrew F. Bennett: I apologise to the House for causing a debate to take place on the Bill. I had hoped that it would be possible for the promoters to meet the points raised by the Ramblers Association and by myself without a debate. I was disappointed last week that it was not possible for the promoters to give an undertaking, particularly because my hon. Friend the Member for Mansfield (Mr. Meale) has been pressing me hard for several months about the importance of the part of the Bill which will provide a rail

  363
  link from Mansfield to Nottingham. I fully appreciate his point, and I have great admiration for the work that he has done on behalf of his constituents to try to get that line included in the legislation and to get the local authorities, and hopefully the EEC, to come up with the money to make the line a practicality.
  I am concerned about the principle as to how footpaths should be diverted or stopped up. Anyone who wants to close a footpath, stop it up or divert it should use the highways legislation or the Wildlife and Countryside Act 1981 rather than a private Bill. I do not want to rehearse the whole argument. I suspect that on future British Rail Bills we will go into the argument in more detail.
  I have always contended, and I believe that the Private Bill Committee has also made it clear, that planning matters should be the subject of public inquiries and, perhaps as a long stop, parliamentary legislation, rather than public inquiries being short-circuited by parliamentary legislation.
  It would have been possible for the diversion of the footpath in the Mansfield area to be dealt with by an application to the local authority. The local people would have had an opportunity to object. As I understand it—I do not know the area well—most of the local people do not object. They are losing one piece of path and they will gain an alternative path. Therefore, British Rail could have used the local procedure. If local people had been concerned about the proposal, they could have made their point of view known directly to the inspector appointed to consider the objections to the footpath closure. Instead, the proposal has to be dealt with at second or third hand on the Floor of the House and in Committee upstairs.
  No doubt my hon. Friend the Member for Mansfield knows all the detail on the ground, but it is not easy for another hon. Member to argue about footpaths in a constituency other than his own. It is not easy either for the Ramblers Association, which has to put the petition to the Committee, to get its information from local walkers and put it to the Committee at second hand. It would have been far better for British Rail or the other promoters to make their proposal for the diversion of the footpath through the Wildlife and Countryside Act and the highways legislation rather than by a private Bill.
  The next footpath is at Malton where the proposal is to take down the bridge at the level crossing because it is not safe. Again, local procedures could have been used rather than resorting to a private Bill. It is a cumbersome process for local people who want to object. It would be simpler if they could object to the local authority. I believe that there would have been no difficulty for British Rail if it had proceeded in that way.
  The third footpath is in the Tipton area at Sandwell. It is more complicated and I am reluctant to tread that path. Again, I suggest that it is not appropriate to deal with the matter through a private Bill. As it involves the closure of a footpath across a railway, it could have been argued about locally rather than at second hand in the House. British Rail insists that it could not use the highways legislation or the Wildlife and Countryside Act because it could not establish that no one wanted to use the footpath.
  The argument is more complicated. In that case, people want to use the footpath but it is not safe. British Rail argues that, because it wants to close the footpath in the
  364
  interests of safety, it could not use the highways legislation or the Wildlife and Countryside Act. It could use those provisions only if it believed that people did not want to use the footpath.
  I do not know enough about the local position. Perhaps British Rail is using the argument of safety to avoid the cost of constructing a proper crossing which would enable people to get over the railway safely. In one or two places British Rail has erected footbridges. Although the footbridges are a safe way for people to cross, they have caused considerable upset to people who have suddenly found a substantial structure by the side of their gardens. I do not know enough about the Tipton case to know whether a new footbridge would be practical.
  Again, it is not the best use of parliamentary procedure for a private Bill to be pushed through the House which will close a crossing over the railway on the ground of safety, with the odd little addition that British Rail will not close the footpath straight away but will leave it open as long as a school wants to use it. In future, when the children stop using the footpath, other local people will be denied the opportunity to do so. Again I argue strongly that such a proposal should not be in a private Bill but be dealt with by other means.
  The Ramblers Association will put its petition to the Committee. I hope that British Rail may be able to meet the association's points. Perhaps British Rail need not make changes to the Bill in relation to Mansfield and Malton. If it was to give a general undertaking to the Ramblers Association that in future it will deal with closures through local procedures rather than a private Bill, that would be satisfactory. In the case of Tipton there should be more investigation of the legislation in general to see whether it is correct, as British Rail contends, that it could not close the footpath by any procedure other than a private Bill.
  I do not intend to divide the House, particularly in view of all the efforts that my hon. Friend the Member for Mansfield has made to try to get the railway line into his constituency. I hope that British Rail can clear up the matter and that the Bill may have a speedy passage. Perhaps in the not too distant future my hon. Friend will invite me to travel on that bit of railway to see his constituency.
  8.39 pm
  The Minister for Public Transport (Mr. Michael Portillo): It might be for the convenience of the House if I were to intervene now and briefly explain the Government's view of the Bill. First, I congratulate my hon. Friend the Member for New Forest (Mr. McNair-Wilson) for his very lucid exposition of the Bill. These Bills are necessarily complicated and detailed, so I am sure that the House is grateful to my hon. Friend for his very useful presentation, which enables hon. Members to have an informed debate on these matters. The Government have considered the content of the Bill and have no objection in principle to the powers sought by the British Railways Board.
  The hon. Member for Denton and Reddish (Mr. Bennett) made an interesting and thoughtful contribution, in which he alluded to the Ramblers Association's objection in principle to the use of private Bill procedure for the stopping up and diversion of public footpaths, on

  365
  the ground that the existing powers of highway authorities provide adequate safeguards for public rights and private interests.
  However, I understand that the powers under the Highways Act 1980 do not at present allow for stopping up on safety grounds. The hon. Gentleman will know that the Joint Committee that considered Private Bill procedure recommended in October that the Highways Act 1980 should be extended to permit stopping-up orders to be made on grounds of safety in appropriate cases. That would be achieved through the usual Highways Act procedures, including confirmation by the Secretary of State, if necessary following a local public inquiry. But the House has not yet had an opportunity to debate that report. The Government are still preparing their response to it. It is only fair to tell the hon. Gentleman that in the present circumstances the Government are satisfied that there is no objection to British Rail seeking powers in the Bill.
  The three petitioners against the Bill will have the opportunity to present their objections to the Committee, which will be in a very much better position than we are tonight to examine in detail the issues involved. It will have the added advantage of hearing expert advice. Therefore, I welcome the assurance by the hon. Member for Denton and Reddish. I recommend to the House that the Bill should be given its Second Reading and be allowed to proceed in the usual way to Committee, where it can be given the detailed consideration that it merits.
  8.42 pm
  Mr. Peter Snape: Like the Minister, I welcome the Bill. I also extend my usual thanks to the hon. Member for New Forest (Mr. McNair-Wilson) for the way in which he moved the Second Reading of the Bill. I, too, spend a long time—it might seem even longer to my audience—dealing with these measures. Perhaps I might be allowed to refer to some of the works in the Bill in a little more detail, not least because many of the provisions of works No. 1 are in my constituency.
  I and most of my constituents express great pleasure at the restoration of the old great western route between Snowhill and Handsworth, especially as that route will be eventually a four-track formation once again. While we shall not be able to see halls, kings and castles along the great western main line, I hope that we shall see on two of the tracks fairly new sprinter DMUs, and on the adjacent tracks the even newer super-trams of the midland metro, provided the Department of Transport gets its act together and stops changing the rules, as it did recently in a hopefully futile attempt to stop us having a midland metro. But that expectation gives me great pleasure. I hope that the works will be proceeded with quickly if the Bill receives its Second Reading tonight.
  I should like to deal with works No. 3, and the replacement of a passenger rail service between Nottingham and Mansfield, and, I believe, Worksop. I congratulate my hon. Friend the Member for Mansfield (Mr. Meale) who has done a great deal of work behind the scenes in the House and with his local authority and the other relevant local authorities to see that the railway services that were short-sighted and misguidedly withdrawn in the 1960s are restored sooner than later.
  Mansfield is the largest English town that is not connected to the railway network. I apologise in advance
  366
  if I have pinched a line from my hon. Friend's speech in saying that, but the fact that a town the size of Mansfield has been off the railway network for 25 years speaks volumes for the short-sighted decisions that were taken in the so-called Beeching era. Thanks to the efforts of the local authorities and hon. Members with constituencies in that part of the world, I am sure that that railway service will be restored.
  My hon. Friend the Member for Denton and Reddish gave a careful and concerned speech about clause 19, the Tipton Watery lane level crossing. As I said to the hon. Member for New Forest, who is responsible for the Bill, that crossing is in the constituency adjacent to mine. I notice that the hon. Gentleman was careful to give a full and detailed explanation to Madam Deputy Speaker when she was in the Chair, as the work concerns her constituency.
  The circumstances surrounding the clause are complicated. It is a long-running saga. Sandwell borough council wrote to Madam Deputy Speaker, my hon. Friend the Member for West Bromwich, West (Miss Boothroyd), and to me, and I should have thought also to my hon. Friend the Member for Warley, East (Mr. Faulds) and to my right hon. and learned Friend the Member for Warley, West (Mr. Archer), asking for support so that the crossing would remain open. The circumstances surrounding its proposed closure are that the British Railways Board, in its constant desire to cut costs and ingratiate itself with the Minister of State and his right hon. Friend the Secretary of State for Transport, wants to close the manned signal box at Watery lane, which controls the wicket gate through which members of the public pass across the track.
  I have some sympathy with BRB and I do not quibble with my hon. Friend the Member for Denton and Reddish, as I am aware of his expertise on Acts of Parliament. But British Rail has the bulk of the responsibility for preventing motorists and pedestrians from killing themselves. It is strange and slightly illogical, although I understand the reason for it, that we protect the railways in this manner, yet children and adults, whether responsible or sober, are free to cross heavily-used dual carriageways if they are unwise enough, without any protection. Proposals to stop up crossings across lightly used railways—although this is a heavily used main line—are greeted by opposition from individuals, local authorities and groups such as the Ramblers Association.
  Various alternatives to closure have been discussed by the council and BRB. I ask the Minister to clarify this point at the end of the debate. As I understand it, the board does not propose to take any action until an annexe has been completed for an adjacent school in 1990. Once that annexe is completed, the need for the crossing will be removed, although I accept my hon. Friend's point that there may well be inconvenience to present users.
  As my hon. Friend the Member for Denton and Reddish reminds us, the replacement of level crossings by bridges is occasionally as controversial as the original decision to close a level crossing. He does not represent the Woodsmoor area of Stockport, but it is close to his previous constituency, and he will be aware of the controversy that arose when British Rail decided to stop up a level crossing to save the wages of those working in the signal box, and to replace it with a bridge. There was such a row that after about seven years British Rail had to take down the bridge. Thankfully, there is no suggestion in works No. 3 that British Rail will adopt that course, but

  367
  that case shows that often what British Rail does is wrong in the eyes of many people. I hope that, as my hon. Friend said, the discussions that are taking place, and will take place up to 1990, will lead to agreement. He may be able to persuade the Ramblers Association, whose interests he guards zealously in the House, that the closure should go ahead.
  As the Minister said, these matters can be discussed more fully in Committee. On behalf of the official Opposition, I give the Bill a warm welcome. On behalf of my constituency, I hope that British Rail, having been given the parliamentary go-ahead for these works, will proceed quicker rather than slower, and that we shall see once again early in the 1990s a four-track railway line between West Bromwich and Birmingham Snow hill.
  8.50 pm
  Mr. Andrew Rowe (Mid-Kent): This can be described as a useful little Bill. It costs only £26 million and extends British Rail's network. As the preamble to the Bill says, British Rail has a duty
  "to provide railway services in Great Britain and, in connection with the provision of railway services, to provide such other services and facilities as appear to the Board to be expedient."
  I am most grateful to my hon. Friend the Member for New Forest (Mr. McNair-Wilson) for allowing a debate on this issue which goes wider than the details of the Bill, to which I have no objection and in no way wish to obstruct. Throughout the debate on the extension of the British Rail network as it affects my constituents and my part of Britain, I have tried constantly to be constructive and positive. I have no desire to be a Luddite, and never have been. My anxiety is to make sure that as Britain enters the 21st century, for the first time for many years with a rather exciting prospect for railways, we get it right.
  Getting it right means not only getting a railway of a kind that we can be proud of and that can discharge the kinds of functions that we wish it to discharge, but also a railway that is acceptable to the people who have to endure its passage. I talk about the new high-speed rail link to the Channel tunnel, which has been a source of trauma for a long time in my part of the world.
  Part III of the Bill includes powers of compulsory purchase. One can but hope that British Rail has fully consulted all those affected. However, one cannot rely upon that. In my recent experience, British Rail does not understand what consultation is. In my part of the world, British Rail has exhausted itself with meetings. On the one project alone, admittedly 77 times more expensive than the one we are discussing this evening, it held about 160 public meetings. Any fair-minded person must pay tribute to the extraordinary stolid good humour with which British Rail personnel, often exhausted and often shown to be incompetent, managed to retain their good nature.
  However, good nature is not enough. The meetings were all confused, crowded and very angry. They were confused because either they were told different things at different times or they were told nothing much at all. They were crowded because they dealt with matters at the very heart of individuals' concerns—home, environment and life style. They were very angry—this is the point—because they were in no sense consultations; they were confrontations. I hope that, in the areas covered by the
  368
  Bill, British Rail has consulted or will consult. However, in case it still has not learnt what consultation is, I shall tell it again, although I have told it often enough already.
  Consultation means sharing. It means saying to someone, "This is my difficulty. It affects you. Will you help me to resolve it?" In my area there are many people with diverse skills, long experience and a strong sense of public duty. There are engineers with experience of multi-million—even billion—pound projects. There are architects, planners, designers, naturalists, noise specialists, geographers, surveyors and lawyers. They are intelligent, mature, rational people. Present them with a problem and they will work to find a solution. Confront them with a solution designed with no reference to them, pat them on the head as if they have nothing valuable to contribute, and they will fight every inch of the way.
  My worry in Kent is that, now that British Rail has retired to a new position prepared in isolation, it will argue that it has consulted enough. I tell it now that further public meetings with communities down their chosen route will not be considered consultation. North Downs Rail Concern—the umbrella group with which I have been associated—has reorganised itself. It has set up specialist sub-committees concentrating on matters such as compensation, noise measurement and so on. It will offer its help to the individual communities along the line, each of which will set up its own negotiating team to talk with British Rail.
  If British Rail responds to that, it will be consulting. If it does not, it will be confronting. I hope that in Kent, as in other areas covered by this Bill, it will this time consult. If it does not, it will steel the opposition to its railway and all its related works.
  In relation to freight, the Bill allows for the construction of new railways. In my part of the country we are in trauma over the plan to construct the longest railway in Britain this century. It will be a passenger line. Part of our trauma stems from the fact that we do not believe that the proposed railway is the only railway that will need to be built. We believe that there is already a need for a purpose-built freight line. We are not alone in that belief. Eurotunnel would like one. Its chairman, Alastair Morton, says:
  "We believe it is virtually certain that the capacity of Network SouthEast to accept and carry to schedule a rapidly rising flow of international passenger and freight trains will not be maintained at the level shown in British Rail's Study Report."
  Maunsell's, Kent county council's consultants, pointed out that even the higher estimates so far used by British Rail stem from a database which dealt with the years 1974 to 1984. They recommended
  "That serious consideration be given to the design of the new tracks to accommodate freight services in addition to international passenger services."
  Steer, Davies and Gleave, consultants to Transport 2000, also attack British Rail's forecasts, pointing out that it has carried out no complete revision of freight forecasts since 1985. That group believes that it may be possible to cope by upgrading an existing line, but only if it were upgraded to take continental gauge freight.
  General Technology Systems makes it clear that, unless British Rail provides a Berne gauge line, it will lose to the competition for the growing Euro-freight market and that its revenue loss will be so great that the funds to sustain

  369
  even relatively modest improvements to the United Kingdom rail network, such as are proposed in the Bill, will fall.
  The Minister tells me that I am wrong because there will not be capacity in the tunnel to take the freight anyway. I believe him to be misinformed. I think that British Rail, frightened of competition, is trying to persuade us that it will make an adequate response to the challenge of a rapidly growing European freight market by slotting in freight trains in gaps left open by the transfer of some passenger trains.
  It is absurd to enter the 21st century with a railway system which cannot take Berne gauge wagons. Out of 200,000 European freight wagons, only 2,500 can run on British tracks. That is why I believe that we shall shortly be confronted with a proposal for a new freight line, possibly built by private enterprise. No wonder we in Kent take a burning interest in the hitherto unavailable freight proposals of British Rail. I earnestly hope that British Rail, which is bound to present its freight proposals before the end of the year, will have the tact as well as the sense to present them before it puts its private Bill before the House next November, if it manages—
  Mr. Deputy Speaker (Sir Paul Dean): Order. The hon. Member has been referring to the subject of the Bill until recently, but I am now getting a little lost. I am sure that he will return to the subject matter of the measure.
  Mr. Rowe: I was about to do so with my next sentence, Mr. Deputy Speaker.
  This interest should not he confined to Kent. The people of Birmingham, Doncaster, Ashfield and Gedling, Bristol, Avon, Warrington and Newport, and all the other places covered by the Bill, should be taking as sharp an interest as we are taking.
  Mr. Snape: I assure the hon. Gentleman that the people of all those places, and of West Bromwich, take an interest in these matters. If, however, he is seeking allies for a Bill which will come before the House at a future date, he will not get them by blocking the installation of new railway systems in other parts of the country. Speaking for my constituency—even though I am on the Opposition Front Bench—we in West Bromwich welcome a new railway line. If the hon. Gentleman wants allies to prevent the establishment of a different line, we would appreciate it if he did not block the Bill.
  Mr. Deputy Speaker: Order. Hon. Members must be careful not to stray from the subject matter of the Bill that we are discussing. I am sure that the hon. Member for Mid-Kent (Mr. Rowe) will stay in order.
  Mr. Rowe: It was never my intention to block this Bill and I did not realise that there was any danger of the House running out of time on it. The House will agree that I have not been frivolous or irrelevant in the remarks I have made. I will not develop further my argument about freight at this stage.
  I have no doubt that some of those affected by this Bill will be entitled to compensation. I wonder whether they feel less aggrieved than my constituents, some of whom are distraught at the damage already done to their property by British Rail's proposals. We have no idea if or when this massive purveyor of blight will be built. The chairman of BR, presenting BR's chosen route to MPs, said as his eighth presentational point:
  370
  "We have no idea when this project will become economically viable, but we are sure it will one day."
  As a result, hundreds, if not thousands, of households have seen tens of thousands of pounds arbitrarily sliced off the value of each of their homes. As the average stay in a house is less than five years, the great majority of them will have to sell their homes long before any line is built. Surely they are entitled to some compensation.
  There must be considerable merit in compensating people if their homes are disturbed by BR proposals to build new lines, to extend existing lines or to alter materially the way in which lines are operated by those properties being bought by the British Rail Property Board, one of the largest property organisations in the country. It is imbued with the clear vision, which is shared by railwaymen throughout the country, that living near a railway line is an asset rather than a disadvantage.
  Given that to be the case, it has nothing to lose by backing its judgment and buying properties which, to their present owners, appear to be disadvantaged by the existence of a railway line. That is, in BR's eyes, a serious misconception because it believes that people will benefit from the railway line, even if they do not understand that at this stage.
  The British Rail Property Board should buy the large numbers of houses that will be at a serious disadvantage in the property market because of British Rail's proposed changes which, in many cases, may take many years to come to fruition.
  I do not wish to be destructive or Luddite or to block the Bill in any way, and I bring my speech to a close.
  9.5 pm
  Mr. Alan Meale: I congratulate the hon. Member for New Forest (Mr. McNair-Wilson) on introducing the Bill so that we might at last have the opportunity to try to obtain proper transport services in my area, if works No. 3 of the Bill is eventually carried out.
  Tonight we are faced with an unusual set of circumstances, particularly when we remember what has recently happened in the railways. The hon. Member for New Forest has received an all-party and disciplined response to his call to get the Bill through the House this evening. The Bill's supporters come from both Conservative and Opposition Members and the Government support the Bill's passage through to Committee.
  My hon. Friend the Member for West Bromwich, East (Mr. Snape) has a great history with, and knowledge of, the railways, in particular the National Union of Railwaymen. If hon. Members were to examine my biographical details, which are in the Library, they would see that I too have a history of working with the rail unions and with the train drivers, union, ASLEF.
  I should also like to thank the hon. Member for Mid-Kent (Mr. Rowe) for saying that he does not wish to block the Bill, which will also provide a great service for his constituents. Whether he likes it or not—I am sure that he does—my in-laws are his constituents. They live in Bearsted in Kent and I am sure that they will be pleased that the hon. Gentleman will not be opposing the Bill. As my hon. Friend the Member for West Bromwich, East said earlier, the Bill will enable them to board a train in their constituency and travel to the largest town in England yet to acquire a railway service.

  371
  All the hon. Members who support works No. 3 of the Bill represent constituencies in Nottinghamshire—the hon. Member for Sherwood (Mr. Stewart), my hon. Friends the Members for Bassetlaw (Mr. Ashton), for Bolsover (Mr. Skinner), for Ashfield (Mr. Haynes) and for Nottingham, North (Mr. Allen)—and have been active in pursuing the objectives contained in the Bill. Credit should also be given to British Rail for its excellent work in bringing the Bill to the House, and to the local authorities in the Nottinghamshire area—in particular to Nottinghamshire county council, which has spent much time and money arguing the need for such services into the east midlands areas. The county council has spent much money with Leeds university going through feasibility studies with the communities that will be involved in stages one and two of the programme. I am happy to report that on each occasion, the general public were very much in favour of reviving the service.
  If it is reintroduced, the line will travel from Nottingham to Ashfield, Mansfield and Worksop and will pass through many areas that have lost their main source of employment because of the massive pit closure programme in Nottinghamshire in recent years. These communities have lost pits or the pits in them are at risk, and the line would be a shining light in these areas, heralding the restructuring of opportunity throughout Nottinghamshire.
  I am pleased to report that the Bill is also supported by the Railway Development Society and all the MEPs of the area. As the Minister knows, only last week Worksop, Mansfield and Nottingham were given the go-ahead by the EEC, thanks to the support of the Chancellor of the Duchy of Lancaster. I should be grateful if the Minister for Public Transport would pass on a message of thanks to his right hon. Friend for his honest approach to the application for grant. These three areas in Nottinghamshire have successfully applied for regional assistance from the EC. We hope that some of the money will be used to rebuild our society, which has been so badly hit.
  If the Bill becomes law it will be a shining example of economic development for people in the areas concerned. Not much light has been seen there in recent times. Not only is Mansfield the largest town in England without a railway, it is a small constituency. I could walk its width in about 45 minutes. It is like a city in the middle of the country. My hon. Friends who represent neighbouring constituencies could probably drive for 30 or 40 minutes and still be in them. The constituency is many miles from the centres that do have transport. The M l is five or six miles away and the Al more than seven miles away. The main conurbations such as Worksop are furtherTrom the M I. Worksop is about 17 miles from Mansfield, which is 12 miles from Chesterfield—the nearest railway station—15 miles from Nottingham railway station, and 19 miles from the railway station in Newark. This is a problem area, and the Bill would give us great hope if it became law.
  The Bill would also give us the chance to try to attract new businesses and create the employment necessary to reduce unemployment in the areas through which the route would pass. Up to 37,000 people are unemployed now in the small communities that would benefit from such a service.
  372
  I appreciate the fact that my hon. Friend the Member for Denton and Reddish (Mr. Bennett) has decided not to pursue his objections to the Bill at the end of the debate. I am grateful to him because I know of his concerns. I may add that I have equal admiration for the sturdy work that he does on behalf of the Ramblers Association and others. For many years he has represented their interests in this Chamber.
  In conclusion, I beg hon. Members on both sides of the House, in the interests of an awful lot of people—about 500,000—to register their objections by a method different from that which might be adopted in the Chamber tonight. If they think it necessary, let them adopt the procedure that could be used at the Committee stage.
  9.15 pm
  Mr. Gerald Bowden: I do not want in any way to oppose this Bill or to impede its progress. As the hon. Members for Mansfield (Mr. Meale) and for West Bromwich, East (Mr. Snape) have said, where it affects particular constituencies it is to be welcomed. In that spirit I do welcome it. I have taken note of the words of the hon. Member for Denton and Reddish (Mr. Bennett), who gave the Bill qualified support. I think he accepts that the legislation has to go through as a private Bill, but he expressed the view that this principle may itself be wrong. It seems entirely wrong and archaic that the presentation of propositions, plans and proposals to improve the railway system in this country should depend on the private Bill procedure. It is wrong that debates attended by so few hon. Members should be the means by which people's lives are changed dramatically—in some cases, their homes destroyed and their whole lifestyle and family life put at risk.
  The principle of this Bill is broadly welcome, but it is the same principle that will be used in the next few days to get the King's Cross measure through. There has been little consultation. The very procedure this evening demonstrates the inadequacies. The establishment of a second terminal in London, at King's Cross, will predetermine the route through south-east England and the route through London. The proposal presupposes that every passenger going to Mansfield or West Bromwich, East, or Denton and Reddish must go through London. It presupposes that every item of freight coming through the Channel tunnel or coming from the south-east of this country will have to go through London before reaching an onward destination.
  This Bill demonstrates the inadequacies of the parliamentary vehicle, even though its purpose is generally acceptable. I will give an example to illustrate my point. Last week—quite out of the blue, without warning—it was proposed that, by way of a private Bill, a whole area of my constituency centred on Warwick gardens should be disrupted. It is suggested that there should be a sub-surface junction with a branch line going to Waterloo by a most circuitous route. People who are not going to Waterloo will go through King's Cross.
  The locality has been presented with a great problem, which raises the question whether we ought to change our procedures for dealing with British Rail matters. We must ask whether there should be some kind of public inquiry to meet the needs of local residents and to give them an input as to the implications. As my hon. Friend the Member for Mid-Kent (Mr. Rowe) suggested, there is often far more

  373
  expertise, experience and professional skill locally than is available to British Rail in making its plans in the first instance. It would be very wrong not to recognise that and to proceed with this means of dealing with British Rail business.
  I will not oppose the Bill; indeed, if it goes to a vote I will support it, but, in supporting it, I am doing so for its proposals and not for the means of their implementation—the matter, not the manner. Before we embark on other major legislative proposals introduced by private Bill that will affect not only thousands in the south-east today but millions throughout the rest of the country tomorrow, we should consider whether the procedure is right. I believe that it is wrong.
  9.19 pm
  Mr. Patrick McNair-Wilson: With the leave of the House, I should like to deal with some of the points that have been made and thank my hon. Friend the Minister and the hon. Member for West Bromwich, East (Mr. Snape) for their support. As the hon. Member for Mansfield (Mr. Meale) rightly said, this is important legislation and the sooner it passes its remaining stages the better it will be for British Rail and the travelling public. I was interested by the remarks of the hon. Member for Mansfield about works No. 3.
  I listened with interest to the comments made by my hon. Friends the Members for Mid-Kent (Mr. Rowe) and Dulwich (Mr. Bowden). They dealt with important matters relating to British Rail, and although their remarks were slightly outside the detail of the Bill I am sure that they will have been noted by the Department and the British Railways Board.
  I shall deal in more detail with the remarks of the hon. Member for Denton and Reddish (Mr. Bennett). Interestingly, he drew our attention to the report of the Joint Select Committee on Private Bill Procedure, of which I had the honour of being Chairman. I am looking forward to the debate on private Bill procedure almost as much as the hon. Gentleman. We shall discuss the provision of powers for British Rail that will be an alternative to the current private Bill system. Let us hope that we will not have to wait too long for that debate.
  The hon. Member for Denton and Reddish specifically addressed his remarks to the footpaths that we were discussing earlier this evening and to clauses 18 and 19. As he will know, there are powers in the Highways Act 1980, but, as my hon. Friend the Minister said, safety is not a consideration. The Joint Select Committee report makes some suggestions about that.
  It might have been possible to apply to a magistrates' court under section 116—I am thinking mainly of the Ribble crossing—to obtain powers if the highway authorities had been so minded. It is necessary to prove that the way in question is unnecessary. It is believed that
  374
  magistrates are likely to be unwilling so to find, especially if there is evidence of opposition to the proposal. While the board does not seek to dissuade highway authorities from making applications under section 116, as, if they are successful, the board and the highway authority are content, it is difficult to argue that it is an appropriate vehicle for dealing with such matters.
  As the law stands, if there is considerable objection it could be a slow or futile process when one is dealing with something that, in the wider context of the works in the earlier part of the Bill, means that closures are essential. If we are to use the present procedures, the board has no alternative. I hope that the hon. Gentleman will understand that, although he and I may share views about how things should be done on another occasion.
  Mr. Andrew F. Bennett: I admired the work done by the Joint Committee on private Bill procedure and I hope that much of its work will be implemented quickly. It strikes me that promoting a private Bill could save some time. On other occasions, will British Rail consider starting, proceedings under the Highways Act 1980 so that, when it reaches this stage, it can say that local agreement has been reached or that a local inquiry has been undertaken and that the inspector has found that there is a case for closure? I believe that that would simplify things.
  Mr. McNair-Wilson: I am sure that the hon. Gentleman's remarks will have been noted by the board and others, and I hope that they will be carefully, considered.
  The hon. Member for West Bromwich, East discussed the Sandwell borough council problem. He referred to the school and the new buildings. It is important to note that, conscious that the crossing is of such potential danger, the council has concluded that the only satisfactory solution would be to close it completely. Coincidentally, the council's education committee has proposals for extending the accommodation at the main Alexandra high school, thereby enabling it to close the annex in Queen's road. Therefore the only caveat which the council has is that the crossing should remain open until July 1990, when the academic year ends. The hon. Gentleman stressed that point. Against that background the board, by clause 19 of the Bill, seeks power to stop up the crossing.
  I hope that the hon. Gentleman will consider that that is a fair solution given the problems relating to a busy piece of track and the possible dangers to children and others if something is not done.
  The proposals are comparatively modest. They do not represent major pieces of railway building, but are essential to the proper performance of the railway system. Therefore, I hope that the House will now allow the Bill to go forward to Committee for further consideration.
  Question put and agreed to.
  Bill accordingly read a Second time and committed.

  Bromley London Borough Council (Crystal Palace) Bill (By Order)
  Order for Second Reading read.
  9.27 pm
  Sir Philip Goodhart: I beg to move, That the Bill be now read a Second time.
  The passage of the Bill will enable the work to begin on a hotel and leisure complex that will bring considerable benefit to the area as a whole and to my constituency in particular. The hotel and leisure complex will be built on a small part of the site occupied by the old crystal palace.
  That palace was opened by Queen Victoria in June 1854 and between then and the beginning of the first world war it became the dominant entertainment and cultural centre of south London. Crowds flocked there to watch sporting events, listen to concerts and to marvel at the art displays and the permanent exhibitions. The crystal palace led to the development of the surrounding area.
  In 1914 the management of crystal palace changed and the Crystal Palace Act 1914 empowered trustees to hold and to manage it as a place of public resort and recreation. The main object of the trust, as expressed in the 1914 Act, was to maintain and manage the park as
  "a place for Education and Recreation and for the promotion of Industry, Commerce and Art"
  In 1936, as some of us will remember, the crystal palace burned down in one of the greatest peacetime fires ever known in the country. Much of the park continued to be open, but the site of the crystal palace was derelict and closed to the public. In 1951 control of the area passed to the London county council and in 1965 it was taken over by the Greater London council. In 1986 control passed to the London borough of Bromley and the council of the London borough of Bromley wished to open up the area, which had lain derelict and closed to all members of the public for more than 50 years. Much of the work is already in hand, partly in conjunction with English Heritage.
  The council decided, after very wide consultation, that it would be beneficial to lease part of the land and to build a £20 million hotel and leisure complex and, because there is a shortage of such facilities in the area, money from the lease would pay for the improvements to other parts of the park.
  The aim of the Bill is to permit the commercial co-operation necessary and the implementation of easements on the land concerned. Clause 3 of the Bill, which is the operative clause, would permit the council to lease all or part of the land shown on the plan and to grant easement in connection with the provision of a hotel, restaurant, shops, licensed premises, leisure facilities, entertainment facilities or other associated uses.
  The 1951 Act gave the LCC very wide powers to build or alter buildings, create gardens, ornamental lakes and even spaces for military drill, but under the strict interpretation of the 1951 Act the provision of a hotel did not seem to come under the five headings of education, recreation, industry, commerce or art. Clause 3 of the Bill fills that gap.
  The council's plans, which were unveiled two years ago, have been the subject of very wide local consultation. This large draft landscape plan was widely circulated. There was a popular version of it. There were public meetings and an exhibition in the civic centre, and the views of local inhabitants were canvassed widely.
  376
  The result of that consultation showed a unanimity which we normally associate with the regimes of Romania or Albania: over 95 per cent. of those consulted or who responded to the consultation were in favour of the council's broad proposals, and there has been all-party support for them.
  The area surrounding Crystal Palace park is represented by Conservative and Labour councillors, while the area of the Bill itself is part of a ward presently represented by two councillors who were members of the SDP and who are now members of the party widely known as the "salads". Conservatives, Labour and SLD have supported the proposals. It is not surprising that the plan received such widespread support. There is a shortage of first-class hotel accommodation in the area, and Holiday Inn, which will run the hotel, has a deservedly high reputation.
  It is perhaps worth noting that the management of the national sports centre, which will be overlooked by the hotel, is particularly enthusiastic about this 150-bedroom development, for many of the leading athletes who come to the national sports centre now look down their noses at the hostel rooms available at the sports centre itself. It is also worth noting that the Department of the Environment and the relevant tourist authorities also strongly support the provision of extra first-class hotel accommodation in the area.
  The hotel and leisure complex will also provide a welcome extension to employment opportunities in the area. Over the past two years the unemployment rate in the area has dropped dramatically, but new job oppportunities are still welcome. The creation of 200 new jobs, of which a substantial proportion should be filled by my constituents, will still be very welcome.
  The few people who object to the proposal tend to believe that open space will be taken away from the general public. That is not so. For more than 50 years, since the palace burned down, the 20 acres which we are talking about have been closed off entirely. No member of the public has had free access to the bramble-covered terraces, and for 80 years before the great fire in 1936, the public had to pay to get into that area.
  It is exactly 175 years since the few acres which we are talking about were last generally open to the public. The Open Spaces Society has raised some objections in recent weeks. Consultations have taken place between that society and council officials. I believe that the objections on the grounds of loss of an open site can and will be met.
  There is also a feeling in some quarters that the jobs on offer should be looked down upon because they will be mainly in a first-class hotel. I believe that that attitude is wholly mistaken. Tourism and business travel are growth industries in most parts of the world. There is nothing second-rate about jobs which provide shelter, food and comfort for travellers.
  There is also some concern about the extra traffic which will be generated by the development. It is impossible to build a 150-bedroom hotel anywhere in London without causing some traffic problems. However, it would be difficult to think of a site more capable of absorbing extra pressure than this. Crystal Palace parade, which the development will adjoin, is an exceptionally wide thoroughfare and the scheme envisages the provision of no fewer than 800 parking places. It is true that there is considerable congestion on the roads in other boroughs

  377
  near the access to the roundabout where Anerly hill meets Crystal Palace parade. However, some elementary traffic management in those boroughs would ease the problem.
  By all sensible criteria, therefore, this scheme, which has all-party support, should be allowed to proceed. I hope that the House will give this worthwhile Bill a Second Reading.
  9.38 pm
  Mr. Tony Banks: I had several reasons for blocking the Bill originally. As an ex-member of the Greater London council, I have no love for the London borough of Bromley. I may as well come straight out and declare my prejudices. If the London borough of Bromley promoted a private Bill to give away free bacon sandwiches, I would object to it.
  I well remember that borough's record in its—as it turned out—successful attempt to destroy the GLC's "fares fair" policy. I believe that that was unconscionable. It put the London borough of Bromley in the kind of context where I have always kept it. It is one of the meanest, nastiest, mean-spirited boroughs, and I want to respond in kind tonight.
  My second point is the substantial one and it is that my dislike of the London borough of Bromley is more than matched by my great love of the crystal palace site. The hon. Member for Beckenham (Sir P. Goodhart) quite rightly described some of the feeling that many Londoners have for the crystal palace, particularly those of us who have lived in the south of London. For electoral purposes I have transferred my residence to the east side of London but it is a difficult jump to make. That river is a great barrier, physically and psychologically, in many respects, so my feelings still are with areas such as Crystal Palace where I spent a great deal of my childhood.
  I ought to say something about the crystal palace because it plays an enormously powerful image-building role in the consciousness of many people who live in the south of London. One does not have to have been around at the time of the great exhibition of 1851, although one or two hon. Gentlemen I know were, to have taken the tram ride up Sydneham hill or to have seen the great fire in 1936. My mother still talks about the fact that in 1936 the glow over the whole of London was fantastic. It was one of the greatest fires that London had ever seen and people were taking the tram to Crystal Palace to see this spectacular incident. It provided a good night out for large numbers of Londoners, but a far greater number deeply regretted that tragic fire, the causes of which, as far as I am aware, have never yet been found although it happened all those years ago.
  At least one was able to go up there by tram in 1936. I am still looking round for the very clever person who decided that we did not need trams any more. I remember riding on what was, I think, the last tram from the Oval to Brixton, from my school to where I lived. The hon. Member for Surrey, South-West (Mrs. Bottomley) looks up. I was, of course, a child in arms, just in case she tries to check in Dod's. It was a sad occasion when the trams were removed. We now have bus lanes, which are unenforceable. Those trams that took people to see the great conflagration of 1936 could have been doing a very useful job since 1936 and right through to 1989 taking the citizens of London round somewhat faster than the buses and tubes do today.
  378
  The original crystal palace, as you probably know, Mr. Deputy Speaker, was built in Hyde park to house the great exhibition of 1851. The idea of the exhibition was to enable Britain, at that time the wealthiest and most powerful nation in the world, and other countries, to display their manufactures and arts and thereby promote international trade and understanding. The designer of the building was Joseph Paxton, a brilliantly versatile man, who was self-taught in architecture. He was not an architect but a gardener, as I recall, who was very adept at putting up glasshouses, and he made the crystal palace one of the largest glasshouses that the world has ever seen. The structure was of iron and glass. It was 1,848 ft long and 488 ft wide and held more than 100,000 exhibits.
  As the hon. Member for Beckenham said, there is no longer a palace at Crystal Palace. For more than half a century, one of the finest sites in London has remained empty, while that great symbol of the Victorians' faith in progress and enlightenment has lived on only in the imagination. Such was its grip on the imagination of so many people in London, young and old, that it has remained the crystal palace. Many mementoes of the palace were created, so that we have many visual images in prints, paintings, models and medallions, which one can still buy fairly cheaply in the markets of London.
  If anyone wants to start a good collection, I suggest 1851 memorabilia. They might not appreciate in price, because millions of these things were produced during the course of the great exhibition, but they give an image of the sort of vision that the Victorians had—a vision that is so sadly lacking on the Government Benches today.
  Mr. Roger Sims: I remind the hon. Gentleman that although the Crystal Palace was destroyed by fire, the two towers remained as a visual reminder of the old palace until they were pulled down during the war.
  Mr. Banks: Vandals are all around us, even to this day. Let us briefly move on to the 1951 festival of Britain. It is a lamentable fact that its skylon and dome of discovery were pulled down. Even a shot tower went in order to clear the site. Fortunately, no one has proposed pulling down the Royal Festival hall. That example of the festival of Britain shows that, even in a period when one might have thought people would be more concerned and sensitive about our architectural legacy, the vandals were still among us and prepared to destroy it. In the same way that there is a proposal to recreate the site of the 1851 exhibition, there are also proposals. which the House debated yesterday, to recreate something close to the 1951 festival on the south bank. I have as many reservations about that as I do about the 1851 re-creation.
  Sir Philip Goodhart: The two towers to which the hon. Gentleman referred were pulled down not as an act of cultural vandalism but because they served as a landmark for German bombers during the war. They were removed as an anti-aircraft measure.
  Mr. Banks: There are no greater vandals than the Luftwaffe, and obviously one would not have wanted to guide its planes to sensitive spots.
  Even though the crystal palace site remained derelict after the 1936 fire and after the towers were pulled down, it had an ability to recapture the spirit that prevailed there until the great fire—even though we knew that it was not

  379
  the original site of the great exhibition and that the palace was transferred from Hyde park to Sydenham hill. I hope that I have made my point about the palace's imagery.
  It is now suggested that the palace will rise, phoenix-like, from the ashes on Sydenham hill. What rises from the ashes will not be a replica or re-creation of one of the 19th century's finest monuments, but a mockery. The romanticism of the crystal palace, which has acquired almost mythical importance, is to end in pathos. My second objection to the scheme is the function of the proposed building, which is to be private rather than public. It would be built on the site of the original terraces, which Bromley restored with the help of English Heritage, using taxpayers' and not private money.
  The Crystal Palace Foundation, which is an institution for which I have the highest regard and which was established in 1979, welcomes the prospect of a new crystal palace but questions whether the hotel and proposed facilities are necessary and whether a more imaginative scheme should not be promoted. The foundation asks:
  "If this is to be the new palace of the people, could there be space created for public meetings, conferences, concerts, and so on?"
  Mentioning concerts gives me an opportunity to ask the hon. Member for Beckenham, who has a constituency interest in the matter, to tell me what happened to the open-air concerts at the Crystal Palace bowl. In the days when the GLC was responsible for the Crystal Palace park, I used to spend very enjoyable evenings at the weekend attending open-air concerts, which attracted thousands of people from the immediate locality. That was a really enjoyable experience. What happened to those concerts? Why have they stopped? That is one of the casualties of the GLC's abolition that has not drawn much comment either in the House or outside it. I will gladly give way to the hon. Member for Beckenham if he can explain why I have had to feel so deprived on Saturday and Sunday evenings since the abolition of the GLC, partly because I have been unable to attend concerts at Crystal Palace. For the new complex to become just another hotel does not reflect what the original Crystal Palace stood for.
  The London borough of Lambeth has considered the proposal. Although I do not know whether the borough has communicated the full extent of its objections to the Bill's promoter, I know that correspondence has been exchanged between the boroughs of Lambeth and Bromley. Lambeth has objected to the various changes proposed by Bromley to enable the complex to go ahead. Bromley's additional aims would include
  "a hotel, restaurant, shops, leisure facilities, entertainment facilities or other associated uses".
  In September 1987 members of the town planning application sub-committee in Lambeth were advised by their officers that Bromley's proposals for the site were premature and took no account of the visual effects or the traffic effect on the area or the benefit to users of the park from such development. Lambeth's sub-committee agreed, and the council therefore replied to Bromley stating its objections
  "on the grounds that insufficient detail was provided as to the sale of the development and suggested that (a) a planning brief for the Crystal Palace Parade site is prepared by Bromley officers; (b) a Public Inquiry is held to consider hotel/leisure development proposals before planning permission is
  380
  granted; and (c) a comprehensive traffic management study is carried out to assess the impact of the proposed developments."
  I would like to know to what extent any of the requests made by the London borough of Lambeth were commented on or followed by the London borough of Bromley. The paper that I have in front of me, having recently acquired it from the London borough of Lambeth, states:
  "Bromley's Borough Plan (adopted in 1985) designates the Crystal Palace park as Metropolitan Open Land. This includes the application site on which Lambeth's observations were sought. The Plan's written statement contains three policies on Metropolitan Open Land. Policy R8 states:
  'Within the areas of Metropolitan Open Land as defined on the Proposal Map the following are the only uses which will generally be considered acceptable: (i) Public and private open space and playing fields; (ii) agriculture, woodland and orchards; (iii) golf courses; (iv) allotments and nursery gardens; (v) cemeteries and crematoria; and (vi) schools and institutions in large grounds'.
  The proposals to which Lambeth objected did not appear, therefore, to conform to Bromley's own adopted Borough Plan, yet there was no reference to a possible departure from the Borough Plan in Bromley's request for formal observations from this Council."
  It is clear that Bromley is prepared to alter its own plan, adopted as recently as 1985.
  "Bromley Council granted itself deemed planning permission for the application referred to … It was not called in, despite it appearing to represent a departure from the adopted Bromley Borough Plan. However, it appears that the existing legislation, contained in the London County Council (Crystal Palace) Act 1951 is not wide-ranging enough to encompass Bromley Council's plans for the use of the Park."
  That is why Bromley has come to the House to use the Private Bill procedure to change the legislation and to get round its own plan.
  That brings me to my third objection, which has been echoed by Conservative Members in respect of other legislation: the use of private Bill procedure, in the event of controversial, perhaps unacceptable proposals such as this, to get round planning inquiries. Often the promoters of a Bill use the private Bill procedure to circumvent a local authority's own planning procedures. Here we have a local authority using private Bill procedure to circumvent its own planning procedures, which is twice as bad.
  That is why I object so strongly to the Bill. It is not the way to go about it. The hon. Member for Beckenham said that the various documents had been well circulated around the area. Of course I accept what he says, but so often what happens in such circumstances is that the documents are put through people's doors. The bigger and bulkier they are the more one can guarantee that they will not be read.
  The hon. Gentleman may intervene, or wait to reply to the points that I have raised, to say whether a synopsis of the plan was circulated, in which the proposals were fairly simple and straightforward so that people would get a general idea of what was being proposed. Even if that has been done, it is no substitute for a proper local inquiry so that people have the opportunity to think about it.
  It is not a question of people sitting isolated in their homes waiting for documents to be stuffed through their letterboxes, reading them and understanding immediately the implications of the proposals. We all know that it does not happen like that. People may throw the information to one side or not understand it. It is only when people who have more time and direct interest have studied the

  381
  document and explained its implications that the real body of feeling awakens. I believe that there will be a real body of opinion when people become more aware of precisely what the proposals entail.
  Mr. Ivor Stanbrook: Will the hon. Gentleman tell us what plans the Greater London council had for developing the site when it had control of it, so that we can appreciate his point more fully?
  Mr. Banks: That is a fascinating subject. I should love to hold the attention of the House for as long as possible, perhaps even until 11.30 pm. to explain all the various proposals that we had. The main area of expenditure by the Greater London council was on the national sports centre. When I was chairman of the arts and recreation committee of the Greater London council, I took great pleasure in devoting a large amount of London ratepayers' money to the development of that site, without feeling guilty. I have had close, detailed discussions with the Crystal Palace Society about what we could do with the site where the new development is to take place.
  I must tell the hon. Gentleman that my plan was to completely rebuild the crystal palace. We have all the plans and many of the artefacts still exist. It might look like a tip, but plenty of things could be restored. The Crystal Palace Society has done a wonderful job restoring many of the old artefacts from the original site. My idea was to rebuild it and we started discussing the proposal. It would have been an exhibition centre for concerts and for the arts generally, but essentially it would have been a public development scheme. However, we are talking big money—or megabucks, as they say. Although the Greater London council was a fairly well-heeled organisation, in the time scale that I envisaged we did not have the money for that development, but the idea was there. It was not just a dream: I had committed it to paper and worked out some plans and some proposals which I think would have grabbed the imagination of people in the immediate vicinity and throughout London.
  The hon. Member for Orpington (Mr. Stanbrook) asked me a question and I have done my best to answer it. The hon. Gentleman put up a fairly spirited defence of the Greater London council from time to time.
  Mr. Stanbrook indicated dissent—
  Mr. Banks: I was giving the hon. Gentleman the benefit of the doubt. I thought that he was on the side of the angels, but I realise that, as ever, he was working with the forces of darkness to try to destroy the Greater London council. I meant to refer to the hon. Member for Beckenham.
  The destruction of the Greater London council was a tragedy and was deeply resented by large numbers of Londoners. Opinion polls still show that 70 per cent. of Londoners oppose the Government's proposals. But she that must be obeyed had already decided that the Greater London council was to be abolished. Therefore, it went. The renaissance of that wonderful crystal palace could have been achieved. I hope that the hon. Member for Orpington feels totally ashamed of the shabby role that he played in the destruction of the Greater London council, thus denying the resurrection of the wonderful Crystal Palace.
  Mr. Stanbrook: Surely the hon. Gentleman has just made an excellent case for what the London borough of Bromley proposes to do.
  Mr. Banks: No. That is most certainly not the case.
  I come to my last point: what is proposed? If it was a faithful reconstruction of the Crystal Palace, if it was still enshrining the old visions of the Victorians and if it was to be a public building, providing a great addition to the facilities for ordinary people in south-east and south London generally, I would not object to the scheme, other than perhaps to have a go at Bromley borough council about something or other. Because the proposed scheme does not fit the image that I have tried to describe and because it does not follow the traditions of the old Crystal Palace, I object to it.
  David Prout, the architectural adviser to the Victorian Society, wrote a good letter in which he said:
  "We are extremely worried about the cynical exploitation of the dream of rebuilding the Crystal Palace in order to promote the use of the site for the construction of a luxury hotel and shopping centre. We wish to condemn the present scheme and emphasise that the lip service paid by the developers to the old Palace should not prejudice opinion in their favour."
  That is a full answer to the hon. Member for Orpington.
  Mr. Prout continued:
  "Architecturally the Crystal Palace was one of the most significant buildings of the 19th century. This building having disappeared, however, it is more important to remember that for the second half of the 19th century the Palace was a place of public entertainment and education, comparable in importance to the South Bank centre in modern London."
  I can see how the Crystal Palace and the south bank centre are being linked. It is coincidental that the House is considering reconstruction at Crystal Palace and also the proposed development at the south bank around the site of the 1951 exhibition. In neither case is the proposed reconstruction fitting to the traditions of the historic past.
  David Prout continued:
  "Rather than a great public building, however, the present plans envisage a typical suburban commercial development with luxury hotel, shopping facilities and leisure centre. This is a wasteful abuse of a location which is a natural site for a public building. It utterly ignores the influential historic role of this nationally important site and the possibility of restoring this role.
  As if in compensation for this, the developers propose to build a 'new' Crystal Palace. The resulting 'conservation modernism", however, is totally unacceptable. The curtain wall structure with a mirror glass skin is pastiche revivalism of the very worst kind. Not only is it a pastiche architecturally, but it is a fraudulent abuse of the Crystal Palace dream."
  Perhaps I would not have put it so exotically, but I could not have put it better than David Prout.
  I have raised my three sets of objections. I do not like the London borough of Bromley, and never will until it becomes Labour controlled, which I expect it to, very soon. Secondly, I do not think that the proposal fits in with the image and vision or, indeed, the use of the old Crystal Palace. Thirdly, this is further evidence of the abuse of the private Bill procedure. It is for those three reasons that I wanted the Bill to be brought to the Floor of the House for a short debate.
  10.4 pm
  Mr. Ivor Stanbrook: I had not realised that the hon. Member for Newham, North West (Mr. Banks) has a similar background to mine. It is different because we are both Londoners, but I was born north of the Thames

  383
  and now represent a London constituency south of the Thames. Like the hon. Gentleman, I find that the gracious river separates London in many ways besides the geographical division. Nevertheless, one has great affection for London's institutions, including Crystal Palace.
  I remember, possibly unlike the hon. Gentleman, the night when the Crystal Palace was burning. I heard about it on the wireless and went out and saw a red glow in the sky to the south. I thought how terrible it was. But times have moved on and in the past 50 years the site has been cut off from the public and has not been developed for any public or useful purpose. I am beginning to think that this is a repetition of the old story of an area in London that could not be developed because the local authorities could never agree with each other. The London docks are the best example of bureaucratic, official, municipal inertia; no one could agree on the best way forward, so nothing was done for 50 years.
  When I asked the hon. Gentleman what the Greater London council had done about Crystal Palace he seemed confident that there was a solution to the problem and he had grandiose ideas about what might have been done. In some ways one sympathises with him: it might have been nice to rebuild Crystal Palace to serve the purposes of its original design, or at least to be of some public benefit.
  Unfortunately, those Socialist pipe dreams of local councils and the Greater London council were never achieved and translated into practicality. Like the London docks, the solution depended on the enterprising authority of the London borough of Bromley, which decided to develop the site at last, using funds from the private sector. The splendid London docks development has been rejuvenated in that way with the assistance of private money. Almost everyone, even those wretched borough councils that refused to co-operate with each other, now admit that that splendid progressive development has benefited all of London. I believe that the same will result at Crystal Palace.
  Thank goodness for the London borough of Bromley, which has had the good sense, courage and enthusiasm to decide at last on the future development of that site. I hope that it will benefit all Londoners and will realise to some extent the worthy aims and ambitions of the hon. Member for Newham, North West. I welcome the Bill and hope that it goes through rapidly without further amendment.
  10.8 pm
  The Parliamentary Under-Secretary of State for the Environment (Mrs. Virginia Bottomley): It may be helpful to the House to give a brief indication of the Government's view of the Bill. It is traditional on consideration of private Bills that the Government take a neutral stance, and this Bill is no exception to that rule. The Government have considered the content of the Bill and have no objection in principle to the powers sought by the London borough of Bromley. We have no points outstanding on the Bill.
  It is for the promoters to persuade Parliament that the powers they are seeking are justified. Only one petitioner remains against the Bill for the Select Committee to consider. The Committee will be in a very much better
  384
  position than we are tonight to examine the issues involved in detail. It will have the added advantage of hearing expert evidence.
  I therefore hope that the Bill will be allowed to proceed in the usual way to Committee for this detailed consideration.
  10.8 pm
  Sir Philip Goodhart: With the leave of the House, I shall respond to one or two of the points made by the hon. Member for Newham, North-West (Mr. Banks). I am delighted that he began by explaining that his main reason for opposing the Bill was his prejudice against the London borough of Bromley. He is an honest Member of the House and we are glad to have that on the record.
  The hon. Gentleman departed a little from his normal sense of honesty when he claimed the national sports centre for the GLC. I was present at the opening of the national sports centre, which took place slightly before the GLC came into being.
  Mr. Tony Banks: I did not say that the GLC constructed the national sports centre; I said that the national sports centre was the main recipient of expenditure devoted by the GLC to the Crystal Palace area. When I chaired the arts and recreation committee, I spent, on behalf of the hon. Gentleman and all other London ratepayers, large amounts of money, as I said, without any guilt, on upgrading and investing in the national sports centre. One can still see the result of that work around us today.
  Sir Philip Goodhart: I am delighted that money was poured into the national sports centre. I am slightly less pleased because perhaps the hon. Gentleman, certainly some of his colleagues, removed me from the management committee at that time. No doubt the money would have been spent even more wisely if that had not happened.
  I was fascinated by the hon. Gentleman's description of the splendid public building that would have emerged on the site if only the south bank regime had remained in power in London for another mere 50 years. However, there were 20 years when the GLC had control of that site. I am sure that the hon. Gentleman had some fascinating plans in his fascinating mind, but, during those 20 years he did not share those thoughts on the development of Crystal Palace with me, my constituents or the local inhabitants in any way. Since no scheme was produced by the hon. Gentleman, it is not surprising that the new scheme has been greeted with enthusiasm.
  The hon. Gentleman referred to the concerts. They gave a great deal of pleasure to many people but they also caused some aggravation. By no means all my constituents were enthusiastic supporters. Financial problems have arisen and there are disputes over the contracts. Since legal action is pending, it would not be appropriate for me to go into those matters in detail. However, I hope that in future appropriate open-air concerts will be held on the site once again.
  The hon. Gentleman referred to the somewhat muted opposition from Lambeth council. It has not petitioned against the Bill. After its initial objections, it did not follow up those matters with the council, but I believe that its points about traffic management and parking problems have been dealt with.

  385
  The hon. Gentleman's main point was the suggestion that the London borough of Bromley was using this procedure because it wished to short-circuit the normal planning procedures. That is not the case. The private Bill procedure must be used because the site is governed and controlled by a private measure. To go outside the use of the site in terms of that measure, another private Bill is required.
  Mr. Tony Banks: The proposal before us tonight could not proceed under Bromley's borough plan, which was adopted in 1985. I agree that Bromley must come to Parliament with a new Bill if it wishes to change the original measure. The 1985 plan took into account the original measure, and under those circumstances the borough is, in effect, getting round both procedures.
  Sir Philip Goodhart: I am sure that the hon. Gentleman would not argue that once a plan has been produced it can never be changed. We have procedures for changing a plan, and those procedures have been followed in this case.
  The widest consultation took place. About 5,000 people locally were circulated, meetings were held and the overwhelming view of those consulted was that the plan should proceed. I hope that the House will support this legislation.
  Question put and agreed to.
  Bill read a Second time and committed.

  Voluntary Services (Bradford)
  10.17 pm
  Motion made, and Question proposed, That this House do now adjourn.—[Mr. Fallon.]
  Mr. Max Madden: I am introducing a brief debate on the funding crisis facing the voluntary sector in the city of Bradford.
  Last Friday, my constituent Michelle Renshaw was sentenced to a week's imprisonment for contempt of court when she refused to give evidence against someone who had threatened her with violence because she was frightened to give that evidence.
  It may not seem immediately apparent why I am referring to that case in a debate on the voluntary sector. I am doing so because there is widespread concern, which the Renshaw case has aroused, over the effect that that case will have on many women facing violence, who it is feared will not be prepared in future to come forward and make a complaint for fear that they might finish up in prison in the way Michelle Renshaw did last weekend.
  It is also relevant for me to mention the case of Michelle Renshaw, and the fears that many women threatened with violence will have of coming forward, because one of my local voluntary organisations threatened with closure is the Bradford Gingerbread centre, which provides support and self-help for lone parents and their children. There are only a handful of such agencies in Bradford and if the Gingerbread centre closes, it will be another door shut in the face of worried women in Bradford, who are desperately looking for advice, help and support. Undoubtedly, after the Michelle Renshaw case, the work of such organisations will become more, and not less, important.
  When Bradford Gingerbread centre was threatened with closure a few days ago, I contacted a large number of agencies and individuals who had used its services over many years. I shall give three of the views expressed by people who have used the centre. One said:
  "Coming to the centre means that I am not on my own and I can share my problems with other Single parents. I am disabled and my son is 7½. Coming here shows my son that he is not the only child without a dad."
  Another said:
  "For many parents, the centre is a lifeline, it offers security knowing that people care about you as an individual, without the centre people will feel isolated."
  The third said:
  "For me personally it has built up my confidence and gives me something to look forward to."
  These examples demonstrate the genuine strength of feeling and underline the importance of the Gingerbread centres in Bradford and Keighley which should be kept open and allowed to continue to serve the vulnerable people in our deprived and disadvantaged community in Bradford.
  It is always a pleasure to debate with the hon. Member for Surrey, South-West (Mrs. Bottomley) but I am rather disappointed not to be debating with the hon. Member for Rossendale and Darwen (Mr. Trippier) who is visiting Bradford tomorrow—perhaps that is why he is not here tonight. I understand that when he is there he will visit the enterprise centre, which is a new, plush, city centre project with uniformed staff, colour-matched furniture and

  387
  fittings, and rubber plants. It is sad that there is no wheelchair access to the library and information centre, which are said to have cost a total of £200,000.
  It is sad for those working in voluntary organisations in Bradford to see such vast expenditure on a new city centre project when genuine community-based projects such as the West Bowling enterprise—which helped more than 300 people in a recent 12-day period—has no money with which to pay the workers. It is sad that Bradford will lose those important community services.
  It would be a scandal if the Bradford Cyrenians centre were forced to close. It is the only—I stress only—direct-access hostel for homeless men, especially young and old single men. One hundred men use this hostel every year and a staggering 400 are turned away. The Cyrenians have a long-stay home and furnished flats, which provide accommodation for 33 men. If its funding is withdrawn, the project will close, which will mean more and more homeless men sleeping rough in cardboard boxes, on benches and in doorways in Bradford. Such a scandalous state of affairs can be found in many cities, as well as Bradford, and is not just a grim feature of everyday life in London.
  On 7 March, the voluntary sector co-ordinating group issued a statement saying that 32 voluntary projects were facing closure or severe cuts in services at the end of this month as a result of the failure of Bradford council to pick up urban programme funding or former Manpower Services Commission grants. The statement went on to say that Councillor Pickles, the Conservative leader of Bradford council, had said that no money was available to fund these projects. It continued:
  "There is at least £5 million allocated to next year's Council balances—money which will not be spent.
  Councillor Pickles has said that the money going to the voluntary sector in 1989–90 will be at the same level—£5·1 million—as in 1988–89. However this claim is backed up by very dubious creative accounting. For example £400,000 of the money claimed to be going to the voluntary sector is in fact debt charges on capital purchases, some as many as ten years old. This money has never been mentioned before or included in any calculations about voluntary sector funding. In most cases, the property it represents was bought by the Council and is owned by the Council … and never belongs to the groups—this is as if Council is forcing the voluntary sector to pay its mortgage.
  In 1989–90. £200,000 of the money allocated for the voluntary sector will actually go towards the running costs of the community trust. Administration costs of grants have never before been included in the calculations. Coincidentally, the amount of money needed to pick up the threatened projects is around £600,000."
  The statement concluded:
  "We understand that the Council has obtained permission from the Department of the Environment to refund 3 projects (around £100,000) out of next year's Urban Programme grant. While we welcome this, it is important to stress that it is not new money—it means that less will be available for other urban programme spending next year. When the Labour controlled Council approached the DoE for a similar solution in September … they were refused."
  This raises a number of interesting questions, not least why the Department of the Environment was prepared a few days ago to give £100,000 to enable three voluntary organisations to continue when last September it was not prepared in identical circumstances to allow such an allocation of urban programme money. The voluntary sector co-ordinating group rightly pointed out that 62 full
  388
  and part-time jobs will be lost if these 32 voluntary projects are closed down or if their services are severely cut. The cost of making these people redundant will he at least £55,000, which is enough to fund essential services.
  The statement went on:
  "Next year 400 people would have come to the Volunteer Bureau looking for the chance to do voluntary work—where will they go? 6,000 people would have come to Gingerbread in Bradford and Keighley for advice and support—where will they go? 7,000 children will be looking for playschemes, toy libraries, holidays and trips out—where will they go?"
  All these cuts and closures and lost services come on top of a catalogue of cuts that have hit the poorest people in Bradford extremely hard. Earlier this year our benefit advice shops were closed. Our school meals charges are now the third highest in Britain and our council house rents have been increased by £5 a week. Charges across the board, from home helps to car parks, have been greatly increased.
  We know that these massive cuts are deliberately undertaken to reduce the poll tax so that middle-class people living in middle-class areas will pay less poll tax, while the people I represent—the unemployed, the poor, the deprived and the disadvantaged—who live in difficult areas, will pay a high poll tax. The price that they will pay for that will be cuts in services and increased charges for all the things on which they depend in their daily lives.
  I want quickly to refer to some of the organisations that are threatened with closure. The first is the Asian women and girls centre. Based in Manningham, it offers support for Asian women and girls. Its activities include sewing and craft classes, English classes, a playgroup and advice counselling. More than 100 women use the centre each week. Bradford Metro Childminders employs a part-time worker to offer support to registered childminders in the district—of whom there are 800, and more than 250 of them use the service.
  The Bradford metropolitan council for voluntary service is particularly hard hit. I have already mentioned its volunteer bureau. Its employment development projects offers advice and support to groups that work with the unemployed, and encourages the development of projects that offer employment and training. There is also the Asian development project.
  The Bradford parent and toddler association employs a part-time worker to offer advice and support to about 70 PTAs in Bradford. It runs a toy library, a bulk-buy service and training for parents and play leaders. All its services would be lost. DIAL grant funds an advice line service. It is part of the Bradford voluntary action group for the disabled and provides advice and information for disabled people.
  Keighley Gingerbread family support unit offers a comprehensive advice and support service to single parents in Keighley. It deals with a wide range of problems and develops activities to support single parents, such as housing projects and self-help groups. It will close without funding. It dealt with more than 3,000 inquiries in 1987–88.
  Thorpe Edge encourages the development of a range of local groups, including tenants associations and a credit union and provides equipment, facilities and meeting places. There are many more of these organisations, but time does not permit me to mention them all.
  Great anxiety and uncertainty hangs over all these voluntary organisations and the thousands of men, women and children who depend on them to improve the quality of their life.

  389
  A letter dated 23 February., written by Barry Clark, the chair of Bradford metropolitan council for voluntary service, to Councillor Pickles says:
  "In your telephone conversation … you said that 'everyone knew that these cuts would take place, and that no reasonable person could have expected otherwise'. This is in direct contradiction to what you, your deputy, Richard Wightman, and Council officers, have been telling Voluntary organisations and the press since the full council meeting on October 25th …
  Time after time we and others have asked for assurances that your promise to fund the voluntary sector at the level of funding received in 1988/9, plus inflation, was a real commitment, and not just political rhetoric. Time after time you assured us that 'The Council is already committed to maintaining the current level of funding support to the voluntary sector in 1989/90 plus inflation' and that 'you will note that so far the voluntary sector has escaped any cuts in real terms at the expense of cuts in council services'—your letter to Val Mills on the 30th January …
  Is it really your intention to cause the voluntary sector serious harm by depriving it of essential funding for core services, and if this is your intention, why did you not say so at a much earlier date? Why, particularly, have you left it until a few weeks before the beginning of a new financial year before informing voluntary sector groups of your intentions to cut or remove their funding, and why have you, or your officers, not even had the courtesy to inform affected groups that they were even being considered for such drastic cuts?"
  There is widespread anxiety about the community trust which is proposed for Bradford. I gather that there are about 50 others around Britain. I understand that none have budgets of more than about £100,000. In Bradford, it is proposed that the community trust would allocate more than £5 million. There are worries about the legalities and constitution of a community trust. I understand that the Conservative council intended to allocate section 11 and urban programme moneys through the community trust, but it has been advised that that would be illegal. There is concern that the community trust will be unelected and unaccountable. It is seen as a buffer between the public and the council that is extremely unwelcome. I hope that the Government will persuade Bradford council that it would be monstrous for an unelected and unaccountable body such as the community trust to allocate enormous amounts of money.
  For many years, the voluntary sector in Bradford has offered vital service to a city that suffers from acute deprivation and disadvantage. We hope that the Minister will make clear that the Government will provide the £600,000 that is necessary to enable the 32 voluntary organisations to continue. That sum is peanuts, and I hope that the Government will recognise that on a day when the Chancellor of the Exchequer has allocated £10 million to repay the national debt and spent only £2,000 million on the people of this country. Many people who depend on the voluntary sector in Bradford will not see an extra penny piece from today's Budget.
  I received a reply to a question that I tabled to the Under-Secretary of State for the Environment, the hon. Member for Rossendale and Darwen (Mr. Trippier). He said:
  "I understand that several projects which have reached the end of their approved funding period, and which were not included in next year's programme, may come forward for consideration. I will of course examine these very closely.—[Official Report, 9 March 1989; Vol. 148, c. 669.]
  The Government should put their money where their mouth is. If the Government and Councillor Pickles believe that the voluntary sector is important and should be protected, they should provide the extra £600,000 that
  390
  the voluntary sector so badly needs and not allow it to fall victim to the political whims and prejudices of Conservative councillors and Ministers.
  I hope that the Minister will make it clear that that £600,000 will be made available, that funding will be guaranteed indefinitely and that the voluntary sector in Bradford can continue doing the excellent job that it has done for many years, served by dedicated men and women whose only desire is to serve the community.
  10.37 pm
  The Parliamentary Under-Secretary of State for the Environment (Mrs. Virginia Bottomley): I apologise for not being my hon. Friend the Member for Rossendale and Darwen (Mr. Trippier), but I assure the hon. Member for Bradford, West (Mr. Madden) that I will pass to my hon. Friend the observations that have been made in the debate.
  I may be an appropriate Minister to reply to the debate, because I have a long experience of work with the voluntary sector. It has pioneered many of our greatest and most important social reforms. Often, it has set up services on a shoestring budget to meet a previously unrecognised need and has developed sources of funding until they become stable within the community.
  It is naive of the hon. Gentleman to think that the funding of the voluntary sector has ever been predictable and secure. Some uncertainty about finance is often inherent in voluntary sector organisations. I fully appreciate that those involved want to bring an end to the present uncertainty, and I hope that by putting the hon. Gentleman's remarks in the context of the variety of sources of funding for voluntary groups I shall be able to throw some light on these problems.
  I want to make it unequivocally clear that the Government believe that the role of the voluntary sector is profoundly important. The Government have been a major supporter of the voluntary sector. In 1986–87, voluntary organisations received £280 million in grant from Departments, which is an increase in real terms of 90 per cent. since 1979. Overall funding from Government sources amounted to over £2 billion. In addition, many voluntary organisations are charities and so benefit from tax relief, which in 1986–87 amounted to £600 million.
  The hon. Gentleman mentioned the Budget, which offered further assistance to charities, both in terms of VAT relief and in terms of the doubling of the tax relief that will be available for payroll giving. We believe that, although the funding of the voluntary sector should come from Government and local authority sources, the individual, the company, the church and other groups have an important part to play.
  Voluntary organisations must look widely for funding and for support. Anyone who has worked with a voluntary organisation will know that there are various sources of support and assistance. Such support is no longer limited to cash donations, as secondments, provision of equipment and facilities, gifts in kind and sponsorship are increasingly the norm.
  For the most part, voluntary organisations—I recognise that there are some exceptions—should not be dependent upon long-term Government funding. It is in their own interests, as much as anything else, to move on and to become independent. Voluntary organisations can receive funding from a number of different Government Departments, depending on their areas of activity. Some

  391
  of the programmes are aimed specifically at the voluntary sector and in other cases voluntary organisations can obtain funding for projects of funding to provide services under more general schemes. The range of the programmes and the number of the organisations funded is such that it would not be possible, without detailed inquiries, to make a precise analysis of the full range of funding available to the voluntary organisations in Bradford.
  The hon. Gentleman may have just learnt that Bradford has been chosen to form part of the safer cities programme, for which my right hon. Friend the Home Secretary is responsible. Projects supported by that programme aim to reduce crime, lessen the fear of crime and create the conditions within which economic enterprise can flourish. The hon. Gentleman mentioned Miss Renshaw and the need to overcome the fear of crime and build up confidence in the community is important. In Bradford, work is being done with the voluntary sector, with the council for voluntary service, the community relations council and others.
  Bradford benefits greatly from section 11 funding, which is also the responsibility of my right hon. Friend the Home Secretary. Last year, about £6·5 million was spent in the Bradford area, particularly to provide assistance for work with ethnic minorities of Commonwealth origin.
  One of the major sources of funding for the voluntary sector, to which the hon. Gentleman referred, is the urban programme, which works in deprived inner-city areas. Through that grant machine local authorities, with severe inner-city problems, including Bradford, receive a yearly allocation from central Government to be spent on a variety of projects. Apart from inner-city Bradford, the surrounding district also benefits. Economic, environmental, social and housing schemes are all represented by that programme, and all sectors of society have an opportunity to participate in worthwhile projects aimed at inner-city regeneration.
  The voluntary sector is particularly well represented and the Department of the Environment, through the urban programme, actively encourages community-based projects. A strong voluntary base has always been seen as a vital element in the Government's determination to uplift urban areas.
  My professional experience of working in Peckham and Brixton strongly bears out the importance of working with voluntary groups rather than only working with and directing help to local authorities. The urban programme has made an impressive contribution to Bradford and in part explains why the hon. Gentleman was able to read out such a string of organisations that have benefited from that form of Government assistance.
  In the year 1986–87 alone, some 116 voluntary projects, which accounted for £1·17 million, were approved. That
  392
  meant that 116 groups which could find no other source of income were given a new lease of life. In 1987–88 we had a similar story when 189 projects were helped and a further 120 projects, worth £1·29 million, have been approved in the current year. The type of project currently supported is almost unlimited and the hon. Gentleman has made reference to some. They cover such things as help for disabled community centres to help for single-parent families.
  It is important to appreciate that the urban programme is not, and never has been, a bottomless pit for funding. It has always been a pump-priming grant, designed to get things started. Projects that prove their worth will, when they reach the end of their period of funding, often survive on their own or be taken over by the local authority.
  The difficulty in Bradford is that many of the schemes to which the hon. Gentleman referred have already been re-funded, so there would not normally be an expectation that they would be funded again under the urban grant scheme. However, in exceptional circumstances, it is open to the local authority to resubmit a scheme for a further period of funding, although this would be expected to last for only a short time. The decisions on these important and valuable schemes are being taken by my hon. Friend the Member for Rossendale (Mr. Trippier). He hopes to make an announcement on these matters soon, and bring an end to the uncertainty.
  The hon. Gentleman also referred to the establishment of community trusts. These are independent charitable trusts, drawing funds from a variety of sources to help the needs of the community. the idea came from the United States, where such trusts have been successful. They have only recently started to emerge here, but they offer a way to bring together the voluntary organisations, the local authorities, the business community and individuals. We believe that support for systems like this means that the local authority can extend its facilitative and enabling role within the community. Recently, the Society of Local Authority Chief Executives welcomed trusts as an important way to achieve a good working relationship with the voluntary sector.
  Bradford has achieved a significant increase in Government grant of some £23 million, or 16 per cent., which has meant that its block grant goes up to £167 million next year. It is a matter for the authority how it spends those resources and it is making every effort to analyse and consider carefully the most effective and productive way to allocate the money. We have no doubt that voluntary organisations can play an important part in bringing people together and generating alternative sources of finance to meet the needs of the community in an effective and valued way.
  Question put and agreed to.
  Adjourned accordingly at thirteen minutes to Eleven o'clock.