Commons Sitting of 16 May 1989

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

    Skill Training
    Mr. Jack: To ask the Secretary of State for Employment what plans he has to stimulate skills training in the tourism and catering industries; and if he will make a statement.
    The Parliamentary Under-Secretary of State for Employment (Mr. John Lee): Skills training is crucial to secure the quality and professionalism which the tourism and catering industries need to keep their competitive edge. The Government are helping across the full range of training programmes, including the youth training scheme, employment training and the newly launched business growth training, and are working with the industry through the tourism training initiative. The emerging network of training and enterprise councils will provide a further boost for skills training.
    Mr. Jack: I thank my hon. Friend for that encouraging answer. He will be aware of the excellent contribution being made to training in catering and tourism by Blackpool and Fylde college. Does my Friend feel that with more than 1,000 people coming into this industry every week enough is being done elsewhere to meet the industry's training needs?
    Mr. Lee: My hon. Friend is right about the Blackpool and Fylde college. The close liaison between the college and the hoteliers of Blackpool in tailoring training to fit employers' needs is widely regarded as exemplary. The industry is seeking to recruit nearly 1,000 new employees per week. There are far more people than ever before in training for our tourism and hospitality industries and there are an increasing number of courses right across the country, be we need even more.
    Ms. Short: Is the Minister aware that the problem of low pay is great and growing in catering and tourism? Does he not understand that the problem with the whole of the Government's strategy is that if they keep encouraging low pay, we cannot achieve higher standards of skill and the proper management of enterprise because the two aims are contradictory? When will the Government give up their obsession with low pay so that we can achieve decent standard in industry and employment?
    Mr. Lee: The hon. Lady asks the same question almost every Employment Question Time. The answer is that the industry increasingly is improving its remuneration package and far more people than ever before are realising the industry's potential for career opportunities.
    Dame Elaine Kellett-Bowman: Is my hon. Friend aware of the excellent courses available in catering and similar subjects at the Lancaster and Morecambe college of further education, which is one reason why unemployment in our area has fallen yet again?
    Mr. Lee: Yes, my hon. Friend is absolutely right. The courses at the Lancaster and Morecambe college are excellent and I have visited the college. I must point out that the college head was trained in my own constituency, at Nelson and Colne college, and I have a high regard for him.

    Statutory Wage Provisions
    Mr. McAvoy: To ask the Secretary of State for Employment if he will give details of which European Community countries have statutory wage provisions.
    The Minister of State, Department of Employment (Mr. John Cope): Five EC countries—France, Netherlands, Spain, Portugal and Luxembourg—have a statutory national minimum wage on various bases. Ireland and the United Kingdom have statutory minimum rates of pay in certain industries.
    Mr. McAvoy: Does the Minister agree that the. United Kingdom and Ireland are at the bottom of the league in terms of low pay for workers and protection for those workers? Should not the Government be trying to improve their record instead of undermining and trying to destroy the wages council structure?
    Mr. Cope: I rather agree with the report that Mrs. Barbara Castle produced when she was doing our job.
    Ms. Short: That is a bit old hat. It was 1968.
    Mr. Cope: She said:
    "The introduction of a national minimum will add to labour costs. This could in turn increase the level of unemployment."
    We are doing much better in employment than all the other countries of the European Community put together, and that is what counts most.
    Mr. Redwood: Will my right hon. Friend confirm that the Government will make strong representations against any increase in social regulation from Brussels which might damage employment-generating prospects and that they will be especially vigilant to preserve the flexibility of the English labour market?
    Mr. Cope: Yes, indeed, for the reasons that I gave in answer to the previous questioner.
    Mr. Nellist: I wonder whether the Minister remembers the Chancellor of the Exchequer saying on television on 28 April:
    "half average earnings in this country, which is poor; that's poor—half average earnings."
    Given that the wages council structure pays on average £30 less than the Treasury definition of poverty, why is the Minister still proposing to abolish the wages councils?
    Mr. Cope: We are consulting about the abolition of the wages councils and we shall consider the results of those consultations when we see them.
    Mr. Hill: Does my right hon. Friend agree that one of the great myths of the Community is that one can bring out statistics to prove that we should all abide by the same rules on salary and conditions of work and that almost anything that happens in the workplace can be regularised throughout the Community? Despite that myth, however, does he agree that each country has different living standards, different costs of living and different indices and that in the short term it is impossible to have a standard answer for every occasion when such foolish questions are asked of the Department of Employment?
    Mr. Cope: I agree that not only the statistics but the traditions of wage bargaining and similar arrangements are different in the different countries. They are not comparable one with another. However, all sorts of studies have shown that minimum wages tend to increase unemployment.
    Mr. Meacher: When the Secretary of State leapt to the defence of the Prime Minister's attack on the supposed European Socialist superstate, did he include in that the minimum wage provisions in the EEC? Is he aware that Britain is the only country in the EEC with neither a statutory minimum wage nor any statutory underpinning of collective bargaining, which amounts to the same thing? Do the Secretary of State and the Prime Minister not realise that the risk after 1992 is not of a Socialist superstate but of a capitalist jungle in which bad employers will compete, not by improving quality and price, but by driving down working conditions?
    Mr. Cope: I am surprised at some aspects of the hon. Gentleman's question. He spends a lot of time telling us that we are doing the wrong thing by introducing statutory controls and statutory arrangements into free collective bargaining, but he has just urged us to follow the example of European countries which have greater statutory controls on free collective bargaining.
    Mr. Sayeed: As those without jobs are the poorest in our society, should we not try to reduce the barriers to employment rather than increasing them?
    Mr. Cope: I entirely agree with my hon. Friend.

    Skill Centres
    Mr. Dalyell: To ask the Secretary of State for Employment if he will make a statement on progress towards the privatisation of skill centres.
    The Secretary of State for Employment (Mr. Norman Fowler): Preparations are well advanced to offer the Skills Training Agency for sale by private tender. All preliminary expressions of interest are being recorded by the Government's sale advisers, including the proposals for a management buy-out.
    Mr. Dalyell: What is the figure in the Secretary of State's brief for the amount that the Government hope to raise through the sale of skill centre land and buildings?
    Mr. Fowler: The straight answer to that is that we are taking advice from property advisers on that point. I am glad that we have now been able to employ property
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    advisers. They are in the process of valuing the sites and clearly the Government will want a fair price for those sites.
    Mr Paice: Will my right hon. Friend confirm that he will consider applications and proposals to purchase individual skills centres rather than just the national network? Will he also confirm that selling skill centres into the private sector will put them in a better position to provide the flexible response that the private sector has already clearly demonstrated that it is able to do?
    Mr. Fowler: I entirely agree, especially with my hon. Friend's second point. At the moment we have had about 40 expressions of interest in the purchase of skill centres, and they will be considered. It must be understood that the present position of the Skills Training Agency is not sustainable. About one third of the centres are seriously underused and are now making a loss approaching £20 million per year.
    Mr. Tony Lloyd: Will the Secretary of State confirm that the Deptford skills centre is on freehold land which already has B1 planning permission? Will he speculate on what that site will be worth on the open market in that part of London? What did the Minister of State mean when he told me in a written answer that he would make provision for the Government to share in any development gains—not to take them, but simply to share in those windfall gains? Why are the public not to have the full value of any increase in those assets?
    Mr. Fowler: It is certainly the Government's aim that the public should have the full value of the sites. However, I do not believe that it would be sensible for me to speculate about the value of a particular site, especially as we have just appointed a firm of surveyors to carry out the exact exercise required by the hon. Gentleman. Surveyors were appointed following a competitive tender, which is a sensible and businesslike approach.
    Mr. Harry Greenway: Will my right hon. Friend take note of the unsatisfactory situation at the Perivale skill centre in my constituency, which is managed from the Twickenham skill centre some considerable distance away although all the jobs and industry are in the Perivale area? Will my right hon. Friend seek to achieve the division of the management of those two skill centres before any privatisation?
    Mr. Fowler: It will not be before privatisation, because privatisation will take place over the next few months, but I will ask my advisers on the privatisation to take that into account.
    Mr. Dalyell: In view of the unsatisfactory nature of the Minister's reply, I beg to give notice that I shall seek to raise the matter on the Adjournment at the earliest opportunity.

    Disabled People
    Mr. Wareing: To ask the Secretary of State for Employment what plans he has to eradicate discrimination against disabled people in employment and seeking employment.
    Mr. Lee: It is in the employer's interest to adopt good policies and practices on the employment of people with

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    disabilities. My Department will continue to encourage and help them to do so through its disablement advisory service and other appropriate media.
    Mr. Wareing: The Minister's Department has not been very successful. Does the Minister realise that only 31 per cent. of disabled people below pension age are in jobs? Will he explain why it is illegal to discriminate in employment against a person because of colour or sex, but it remains lawful for any employer to discriminate against a person because of his or her disability? Will the Government legislate to do something about that problem?
    Mr. Lee: On the hon. Gentleman's first point, he will know that statistics are rather thin in that area—
    Mr. Wareing: There is the OPCS survey.
    Mr. Lee: The Department has therefore commissioned a study to provide information on the numbers, the distribution, the characteristics and the needs of people with disabilities in the labour market. We hope to have the results by the year end.
    The hon. Gentleman knows, because he has repeatedly asked for legislation in this area, that the Government do not favour a legislative approach.
    Mr. Evennett: Does my hon. Friend agree that it is much better to encourage employers and to give them practical help than to legislate?
    Mr. Lee: My hon. Friend is right. Through our mainstream programmes during 1987–88, we helped about 117,000 people at a cost of £193 million, and through our programme specifically geared to help the disabled we helped 78,000 people at a cost of £135 million.
    Mr. Alfred Morris: Do not the OPCS figures referred to by my hon. Friend the Member for Liverpool, West Derby (Mr. Wareing) shout of discrimination against disabled people? Is the hon. Gentleman aware that even those with jobs were found to be mainly on very low pay? What is the hon. Gentleman's response to the report of Dr. Eileen Fry on discrimination against disabled people in employment? What does the hon. Gentleman have to say about the case that is known to the Royal Association for Disability and Rehabilitation—RADAR—where a public employer recruited a disabled young woman only to exclude her from the superannuation scheme because of her disability?
    Mr. Lee: If the right hon. Gentleman writes to me about that particular case, I will look into it. On his earlier points, I repeat that the Government do not favour the legislative route. Nevetheless, as the right hon. Gentleman knows, we have instituted a major review of our whole approach to the disabled in employment and, of course, there is the earlier study to which I referred.

    Tourist Accommodation (Classification)
    Mr. Butterfill: To ask the Secretary of State for Employment what progress he is making towards agreement on a common classification scheme for hotels, boarding houses and self-catering accommodation throughout the United Kingdom.
    Mr. Lee: The tourist boards for England, Scotland and Wales have now agreed common criteria for their classification and grading scheme for serviced accommodation. The English and Scottish boards have reached
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    agreement on uniform criteria for self-catering accommodation. The English tourist board plans to begin inspections using the new criteria in September 1989, and to include the new classifications in accommodation guides for the 1991 season.
    Mr. Butterfill: I am most grateful to my hon. Friend and I am pleased to hear his answer, but it seems to imply that there will be different classification schemes for the catered and non-catered sectors. I should be grateful if he would confirm whether that is the case. If so, is it not rather unsatisfactory and likely to confuse the general public? Would it not be better to have a symbol common to both but different in some way, such as a filled-in crown for the catering sector to show that the inner man is being looked after, and an outline crown for the non-catered sector?
    Mr. Lee: My hon. Friend has written to me on that point. I understand that the English tourist board considered an outline crown symbol for self-catering, but it was rejected because it wanted to draw a clear distinction between serviced and self-catering accommodation. My latest understanding is that it is proposing a key containing a crown, so there is an element of compromise.
    Mr. Kennedy: Will the Minister use his offices to encourage the English tourist board to reach a final agreement on the matter? The Scottish self-catering sector is concerned that the general aim, which everyone should endorse, of a common crown system throughout the United Kingdom is to some extent being thwarted because of what is probably an unnecessarily severe view on the part of the English tourist board about the discerning abilities of the public with regard to self-catering and fully-supportive holiday accommodation, as the hon. Member for Bournemouth, West (Mr. Butterfill) said.
    Mr. Lee: The hon. Gentleman is right. We want to move towards common criteria. I should have thought that the hon. Gentleman would welcome the fact that the changes that I have announced move increasingly towards the Scottish system, in which the classification introduces a quality assessment—something that we do not have in England.
    Mr. Key: I thank my hon. Friend for his progress report, which will be welcome in Wessex where many farmers are seeking to diversify in that area. However, who is to bear the cost of the new classification and what plans does my hon. Friend have for revising and updating the guide, as that is a crucial aspect?
    Mr. Lee: We hope that in the long term the classification scheme will become self-financing, but in the short term, we estimate that it will cost about £468,000 net in 1989–90, which I hope will he reduced to about £300,000 net by 1992–93.

    YTS
    Mr. Ian Bruce: To ask the Secretary of State for Employment what reduction there has been in the number of people on YTS in the past 12 months; and if he will make a statement on the likely future trends of YTS.
    Mr. Cope: About 390,000 young people were in training on YTS in both March 1988 and March 1989. We

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    keep the scope and role of YTS under review to ensure that training for young people continues to meet the changing needs of the economy.
    Mr. Bruce: I thank my hon. Friend for that answer. I am surprised that nationally YTS numbers have not yet started to fall, although they have clearly evened out. In the south-east, and in my constituency of south Dorset the number on youth training schemes is declining as a result of demographic changes and extra jobs. As the number of people on youth training schemes declines, how can the current level of spending on training be redirected to other forms of training and to helping people to obtain a real technological education?
    Mr. Cope: We believe in improving the quality of training and we are trying to achieve that. In particular, we are having a greater drive towards youth training schemes resulting in qualifications. That is all part of the greater concentration on the outcome of training schemes. At present about 63 per cent. of those who complete youth training schemes gain qualifications.
    Mr. Alex Carlile: Does the hon. Gentleman agree that in Wales and some other regions there has been difficulty in finding suitable quality trainers for YTS? Will he ensure that the training and enterprise councils have sufficient funds to recruit trainers and to keep an ongoing check on the quality of training that they provide for young people?
    Mr. Cope: Yes. Part of the point of the training and enterprise councils is to involve employers more so as to improve the quality of the training offered, not only on YTS but on other schemes as well.
    Mr. Latham: As the construction industry training board is the managing agent for YTS in the construction industry, and as that industry's training record is abysmal, is it not clearly important that the construction industry training board should be retained?
    Mr. Cope: My hon. Friend will know that we have that matter under consideration, and that it follows from what was said in the recent White Paper.
    Mr. Fatchett: Given the question posed by the Minister's hon. Friend the Member for Dorset, South (Mr. Bruce) and the possible decrease in the number of YTS trainees, what measures will the Government take to ensure that 16-year-olds who find immediate employment on leaving school also find employment which guarantees training opportunities? If they do not, will there not be a danger that those youngsters will find themselves with no training, no hope and no future jobs?
    Mr. Cope: The labour market for young people is changing as their numbers decrease and their bargaining power in the market increases. However, the system should remain voluntary because not all young people want to be forced into a job that guarantees particular arrangements. That thinking underlies all our policies. It is also why we intend, as I said earlier, to improve the quality of YTS training.

    Jobcentres
    Mr. Arbuthnot: To ask the Secretary of State for Employment how many people have consulted jobcentres in the last 12 months; and if he will make a statement.
    Mr. Lee: Precise information is not available. However, I would expect the total to be broadly similar to the 29 million inquiries recorded in 1985–86, the last year for which comprehensive information is available.
    Mr. Arbuthnot: What proportion of the inquiries received by jobcentres came from the unemployed and from job changers, and how many people were placed in jobs as a result of those inquiries?
    Mr. Lee: The last information that we have is from a sample survey in 1987, which indicated that about 83 per cent. of unemployed claimants used the jobcentre network. In 1988–89, 1·9 million job seekers, 1·5 million of whom were unemployed, were placed in jobs.
    Mr. Leighton: Are not the numbers of staff in jobcentres now being reduced? The Under-Secretary of State has an opportunity to provide a better service to the unemployed. Why is he throwing that away?
    Mr. Lee: I have to make the point—I am sure that the hon. Gentleman is well aware of it—that unemployment is falling substantially. Therefore, we obviously have to look at the jobcentre network. Having said that, we are at the same time trying to improve the quality of service for those individuals who are, sadly, unemployed. Even at present, the jobcentre network employs about 6,800 people.
    Mr. Devlin: Why does not my hon. Friend consider merging jobcentres and unemployment offices as quite a few people still seem to get lost somewhere between the two? It seems self-evident that people who are registering as unemployed should be directed at least to somewhere in the same building so that they can be found employment as quickly as possible.
    Mr. Lee: My hon. Friend has a good point. Obviously, we have been thinking about this, and there have been 79 pilot schemes in which we have considered the options for integrating unemployment benefit offices and jobcentres. As he will know, the employment service is intended for agency status.
    Mr. McAllion: Does the Minister not understand that one of the main barriers against people finding work at present is that more than 150 major United Kingdom employers are buying personnel management systems which claim, on the basis of a 15-minute pencil and paper test, to establish the honesty and emotional stability of job applicants? Does the Minister approve of employers taking such a crude approach or does he intend to do something to stop that abuse?
    Mr. Lee: With respect, I am not sure that I fully understood the hon. Gentleman's question. With regard to the employment service for which my Department is responsible, I should have thought that the placement figures that I gave earlier indicated the success of what we are trying to do.

    Employment Training
    Mr. Riddick: To ask the Secretary of State for Employment what progress has been made on employment training in Yorkshire since its inception; and if he will make a statement.
    Mr. Fowler: Employment training continues to make excellent progress in Yorkshire. Almost 20,000 people are currently in training. This reflects the success of employment training across the country.
    Mr. Riddick: Does not that reply show that employment training is proving highly successful in the Yorkshire area—perhaps more so there than in any other area of the United Kingdom? Would my right hon. Friend care to join me in congratulating the training agencies in and near my constituency—for example, the Kirklees chamber of commerce—for responding so positively to the challenges presented to them by employment training?
    Mr. Fowler: I entirely endorse what my hon. Friend says, particularly about Kirklees chamber of commerce, which I know and admire. I am glad to say that in Yorkshire generally, unemployment has fallen by an average 24 per cent. in the past 12 months.
    Mr. Hardy: There may be some effective operations in Yorkshire, but does the Secretary of State accept that he should be aware—if he is not, some of his colleagues in the Department should be—that there are grounds for serious concern in certain parts of Yorkshire, and certainly in the metropolitan area of Rotherham, which deserve serious attention?
    Mr. Fowler: I shall certainly look into any points that the hon. Gentleman wants me to consider. After only eight months in operation employment training now has about 185,000 people in training—the best start for any adult training programme that we have ever launched.

    Strikes
    Mr. Yeo: To ask the Secretary of State for Employment if he will make a statement on the work days lost through strikes in (a) February 1979 and (b) February 1989.
    Mr. Fowler: Nearly 2·5 million days were lost through strikes in February 1979. In February 1989, it is provisionally estimated that 58,000 working days were lost. In the year to February 1989, 3 million working days were lost. In the year to February 1979, 13·3 million working days were lost. It is in everyone's interest that this improvement should be maintained.
    Mr. Yeo: Does my right hon. Friend agree that one absolutely certain way of increasing the number of days lost through strikes would be to repeal the Government's employment legislation, as some union bosses want their lackeys in the Labour party to do?
    Mr. Fowler: That is entirely right. Those problems would be made even worse if any of the proposals on the extension of secondary action and secondary picketing were ever adopted in this country. The sort of proposals that the hon. Member for Oldham, West (Mr. Meacher) and the Labour party are putting forward represent a charter for strikes.
    Mr. Bidwell: Does it not appear that as we head towards a summer of discontent, employment legislation is taking this matter out of the hands of trade union leaders to such an extent that unofficial strikes are likely to increase enonnously, as inflation rises and the value of wages falls?
    Mr. Fowler: That is not true. The hon. Gentleman was drawing a comparison with the winter of discontent, when the headlines in February 1979 ran as follows:
    "Health warning as the rubbish piles mount up";
    "Ambulance men walking out";
    and
    "Strike in children's wards".
    That was the record of the Labour Government, of which the hon. Member for Oldham, West was a prominent member.
    Mr. Madel: Does my right hon. Friend agree that after 10 years of changes in industrial relations law, management still has a responsibility clearly to explain to each employee why a particular pay claim can or cannot be accepted? To that extent, does he agree that the country is looking to employers and unions in the electricity supply industry to work out a solution to their problem without industrial disruption?
    Mr. Fowler: Yes, what my hon. Friend says is wise. It is clearly not in the interests of the public or of anyone working in those industries that industrial action should take place.
    Mr. Heller: I ask the right hon. Gentleman to remember that there were no strikes in Hitler's Germany, or in Mussolini's Italy, or in Stalin's Russia, or in Franco's Spain, and that there are no strikes in any country in which legislation makes them illegal. Is the right hon. Gentleman aware that we are getting close to that in this country? People's rights to work or not to work in pursuit of decent conditions are being taken away from them. The right hon. Gentleman had better understand that sooner or later the workers' dam will break—they will not stand for this for ever.
    Mr. Fowler: What the hon. Gentleman has said is, with respect, utter nonsense. It will not be accepted by the vast majority of people in this country. When the hon. Gentleman talks about employment, the fact is that industrial action destroys jobs and does not create jobs. Many people in this country resent the attempt of the Labour party to put unions above the law again.
    Mr. Nicholas Bennett: Will my right hon. Friend not agree that workers' rights have actually been increased under this Government by making sure that they have a secret ballot before they are forced to strike? What does he think of the Labour party's proposals that strikes should start before the workers have been consulted?
    Mr. Fowler: The Labour party, and particularly the hon. Member for Oldham, West, have a great deal of explaining to do about those proposals, and I cannot understand the enthusiasm which appears to be coming from him and Labour Members for industrial action, which cannot be in the interests of anyone in this country.
    Mr. Strang: If the dock employers continue to refuse to negotiate collective agreements with the Transport and General Workers Union to replace the dock labour scheme and the registered dockers come out on strike, will the Government give the port employers the same unconditional support they gave British Coal during the miners' strike?
    Mr. Fowler: There is absolutely no reason for the TGWU to call out the dockers on strike action over the abolition of the dock labour scheme. The port employers

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    have offered talks at port level, which is a sensible step. The only people who will lose out as a result of industrial action in scheme ports are those in the scheme ports themselves, and I hope that will be remembered by all those working in them.

    Wages
    Mr. Clelland: To ask the Secretary of State for Employment how many firms visited in 1988, were paying below the legal wages council minima; and how many were prosecuted.
    Mr. Patrick Nicholls: Wages inspectorate statistics on compliance with wages orders are compiled on the basis of establishments rather than firms.
    In 1988, underpayments were found at 5,597 of the establishments visited. There were 10 prosecutions for underpayment offences.
    Mr. Clelland: Given the fact that 380,000 establishments are covered by wages councils, were not a disgracefully low number visited by inspectors last year? Why have the Government cut the number of inspectors by over 100 per cent.? Even on this small sample, over 17 per cent. of those visited were paying below the statutory minimum, so why were only 0·03 per cent. prosecuted? Is this not another example of the fact that under this Government there is one law for the employers and another for lower-paid workers?
    Mr. Nicholls: No. The hon. Gentleman's conclusion is as false as the statistics that he recited. The fact is that the wages inspectorate concentrates on those establishments which it believes to be underpaying. What it finds when it goes to many of these establishments is that there may be only two or three people being underpaid. If the hon. Gentleman is concerned about the number of prosecutions which take place, he should realise that the number of prosecutions has remained constant under this Government, as under the last.
    Mr. Hayes: Is my hon. Friend aware that even Left-wing economists are now saying that wages councils cause unemployment? Does he not agree that the major cause of poverty is unemployment?
    Mr. Nicholls: That is absolutely right, as my hon. Friend says. The link is indeed well made out. The difficulty with Labour Members is that they cannot see that no job is worse than low pay.
    Mr. Meacher: On the question of very low wages, who does the hon. Gentleman agree with? Does he agree with the Secretary of State for Social Security that wage poverty does not exist—in which case how are three quarters of a million workers caught in a poverty trap where they lose more than 70p of every extra £1 earned—or does he agree with the Chancellor of the Exchequer that workers paid less than half national average earnings are indeed poor—in which case, why have the Government prosecuted only 56 out of more than 88,000 establishments found to be paying illegally low wages?
    Mr. Nicholls: One of the hon. Gentleman's many troubles is that he seems to be prosecution-happy. The point about prosecution policy is that if on a visit it is found that there has not been a blatant disregard of the law but perhaps a mistake, obviously, prosecution may not
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    be appropriate. That was the reason—and the hon. Gentleman would have heard it if he had been listening—why I was able to say to his hon. Friend that the rate of prosecution under this Government has remained the same as it was under the previous Government. My right hon. Friend the Secretary of State for Social Security made a valuable contribution when he said that some people have a vested interest in poverty-mongering. From what we have heard it would appear that that includes the hon. Gentleman.

    Bank Holidays
    Gregory: To ask the Secretary of State for Employment how many representations he has received about changes in dates for national bank holidays; and if he will make a statement.
    Mr. Nicholls: A number of differing views have been expressed to my Department about public holidays, including the first Monday in May. The question of any changes raises several complex issues, which my right hon. Friend is considering.
    Mr. Gregory: My hon. Friend will have noted that there are no bank holidays whatever from the end of August until Christmas and that we have a plethora of them in the spring, which is disruptive for industry. Will he consider resiting or allocating one of those to the autumn? Perhaps we could do our duty by Nelson and make Trafalgar Day a national day.
    Mr. Nicholls: My hon. Friend makes a persuasive point, but there are probably two difficulties. One of them is to try to find some consensus about how the bunching of bank holidays might be accommodated, and the other is to find a place in the calendar to which a bank holiday might be more suited. Many people, probably the overwhelming majority of people, would rather celebrate a British occasion, such as Trafalgar Day, than some inappropriate foreign import such as May Day.
    Mr. Grocott: Does the Minister not agree that the important issue is not which days are being celebrated but how many days' holiday workers are entitled to? Does he further agree that holidays for British workers compare unfavourably with those in other European countries, both in terms of bank holidays and annual holiday entitlement? Is it not time that we had a minimum statutory requirement of six weeks?
    Mr. Nicholls: The issue is rather narrower than that. It is a question whether the present spread of bank holidays is appropriate or whether there is such a bunching that it would be better to dispense with the bunching. It is difficult to find a consensus about how the arrangements might be altered, and that is why my right hon. Friend is considering the matter.
    Mr. Fairbairn: May I suggest to the Minister a simple solution to the need for a national day? It is to change the title of 1 May to Union Day, because that was the glorious day upon which the Act of Union came into force.
    Mr. Nicholls: Not having a clapometer with me I cannot detect whether those who are in favour of Trafalgar Day outnumber those who are in favour of Union Day. Hon. Members will have to make up their own minds.
    Mr. Geraint Howells: Will the Minister consider making St. David's Day a national holiday for the people of Wales?
    Mr. Nicholls: Any alteration in the bank holidays which would give me the opportunity to spend more time in the hon. Gentleman's constituency would be most welcome, as the hon. Gentleman is well aware.

    Self-employment
    Mr. Rowe: To ask the Secretary of State for Employment if he will make a statement on the number of people currently self-employed in the south-east.
    Mr. Cope: In December 1988 there were 1,080,000 self-employed people in the south-east, including London, an increase of 112,000 over the previous two years.
    Mr. Rowe: Does my right hon. Friend agree that that is a remarkable and welcome achievement? Does he also agree that self-employment constitutes one of the very best opportunities for women to establish businesses of their own, that they are taking advantage of that in large numbers, and that even Opposition Members might welcome self-employment as a means of expressing in practical terms equal opportunities for women?
    Mr. Cope: Yes. The number of self-employed women has gone up by about 113 per cent. since 1979.
    Mr. Cryer: Could the Minister explain the basis of this estimated number of self-employed in the south-east? Could he also tell us how many self-employed businesses have gone into liquidation—have gone bust—as a result of the Government's high interest policies which are bearing down on the very small businesses that the Government are supposed to encourage?
    Mr. Cope: The hon. Gentleman knows that interest rates are very important in the control of inflation. I cannot give him a specific figure, because it is difficult to sort out the reasons why individual companies do not succeed. But there is a high success rate among self-employed people and among small businesses generally.

    Labour Statistics
    Mr. Sayeed: To ask the Secretary of State for Employment whether the labour force survey, European Economic Community and Organisation for Economic Co-operation and Development surveys show falls in United Kingdom unemployment; and if he will make a statement.
    Mr. Fowler: The latest labour force survey shows a fall in the number of people unemployed in the internationally agreed definitions of about half a million between the spring of 1987 and the spring of 1988. This confirms the sharp fall in unemployment recorded by the monthly claimant count. United Kingdom unemployment has fallen at a faster rate over the last two years than in any other major industrialised country.
    Mr. Sayeed: Can my right hon. Friend confirm that the measurement of unemployment as shown by the ILO and OECD figures, as well as by the latest labour force survey, reveals the number of unemployed as being lower than the number of claimants registered with his Department? Does
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    that not give the lie to the suggestion that the Government are fiddling the figures? Can he also inform the House of the number of long-term unemployed now compared with the number six years ago?
    Mr. Fowler: My hon. Friend is right on the first point, and we have entirely demolished the gloss that the hon. Member for Oldham, West (Mr. Meacher) has put on the definition. The number of long-term unemployed in January was 821,000, the lowest for more than six years.

  PRIME MINISTER

    Engagements
    Mr. Evennett: To ask the Prime Minister if she will list her official engagements for Tuesday 16 May 1989.
    The Prime Minister (Mrs. Margaret Thatcher): This morning I had meetings with ministerial colleagues and others. In addition to my duties in the House, I shall be having further meetings later today. This evening I hope to have an audience of her Majesty the Queen.
    Mr. Evennett: Will my right hon. Friend confirm that under her leadership Britain will continue to champion a Europe dedicated to enterprise, opportunity and freedom for all its citizens? Will she also reaffirm her resolve to fight any proposals from Europe designed to deprive this Parliament of any powers over taxation and the economy?
    The Prime Minister: Yes, I agree with my hon. Friend. Our vision of Europe is a vision of sovereign states co-operating freely in those things that we can do better together than we can do ourselves. We shall certainly resist proposals which would deprive this House of its premier standing on taxation—[Interruption.]—and no longer enable us to take our own decisions on taxation.
    Mr. Kinnock: Will the Prime Minister say whether Conservative candidates in the Euro elections should take their lead from her or from Henley?
    The Prime Minister: They will take it from the manifesto, which will shortly be published. I am sure that the right hon. Gentleman will read it most assiduously, and he might even agree with a great deal of it.
    Mr. Kinnock: Will the right hon. Lady, in compiling that manifesto, be consulting the right hon. Member for Old Bexley and Sidcup (Mr. Heath)?
    The Prime Minister: The manifesto will be prepared as previously—on our stance in Europe. We are very good Europeans and we shall work within the Community. Any country—[Interruption]—which gives £2 billion this year to the Community—our net contribution—which stations the number of troops in NATO that we do and which has its history with Europe as we have, is likely to be a very good European and have a vision of a free enterprise Europe based on freedom under the rule of law.
    Mr. Jacques Arnold: To ask the Prime Minister if she will list her official engagements for Tuesday 16 May 1989.
    The Prime Minister: I refer my hon. Friend to the reply that I gave some moments ago.
    Mr. Arnold: In view of the disgraceful scenes of football-related violence last weekend, may I ask my right hon. Friend if she agrees that this problem will not go away and that firm action needs to be taken?
    The Prime Minister: I agree with my hon. Friend. The scenes last Saturday, when there were about 220 arrests—after Hillsborough—were absolutely appalling and utterly disgraceful, and we were all horrified by them. I believe that indicates that more steps need to be taken. There is a Bill before the House, with which we said we would go ahead on condition that it was an enabling scheme and that therefore it would come before the House before being finalised. It has other measures too, including the licensing of grounds. I believe that we should go ahead with that measure, which would be a vehicle for any further measures that it was thought necessary to take, without just waiting and doing nothing before the coming football season.
    Mr. Ashdown: Does the Prime Minister realise that the House of Lords spoke for the whole nation on the Water Bill last night? Will she accept the House of Lords decision or will she condemn the British people to drinking dirty water for longer?
    The Prime Minister: I believe that the Government have spoken for the whole nation in greatly increasing the amount of investment spent on improved water—investment far greater than under any previous Government. We shall look at that amendment. The question is whether it can be done in time. I hope, therefore, that the right hon. Gentleman will make it clear that the extra things that he is demanding will cost a good deal more money and will not complain when that price is exacted.
    Mr. Budgen: In view of the humiliating defeat suffered by the British Government and people last night in the EEC, when a directive concerning public health was foisted on us through a majority vote under the Single European Act, will my right hon. Friend undertake that this decision will be referred by the British Government to the European court or that the veto will be exercised?
    The Prime Minister: No. We shall consider the matter very carefully but, as my hon. Friend knows, under the Single European Act we agreed that, for the purpose of implementing the Single European Act and only for that purpose, the majority rule should apply in certain cases. What is a matter sometimes for the court to decide is whether a particular issue comes under the majority rule or whether it remains under article 100. It is that, which is maybe an issue, that we shall consider very carefully.
    Mr. McFall: To ask the Prime Minister if she will list her official engagements for Tuesday 16 May.
    The Prime Minister: I refer the hon. Gentleman to the reply that I gave some moments ago.
    Mr. McFall: It is exactly one year since the Prime Minister lectured the General Assembly of the Church of Scotland on how to be Christian. In the light of the statement by the Secretary of State for Social Security, which is appalling, that poverty in this country has now been eliminated, will the Prime Minister undertake that on her next visit to Scotland she will dispense with her "Sermon on the Mound", stop turning the other cheek and
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    address the problems of poverty which are still a reality for many hundreds of thousands of Scotsmen, women and children today?
    The Prime Minister: Surveys show that people at all income levels, including those in the bottom one tenth of income levels, are far better off than they were 10 years ago. What the hon. Gentleman and many of his colleagues would prefer is that the bottom tenth should be worse off provided they pulled all other levels down with them. That is an appalling doctrine.
    Mr. Hill: Will my right hon. Friend agree with me that when it comes to sovereign states working in unison there is no finer example than the Council of Europe? Indeed, only last week Finland joined, making a total of 23 countries. Does she agree that this is the genuine voice of Europe, the overwhelming voice of Europe; that it is the true parliamentary assembly of Europe and that the European Parliament needs to be told this time and time again?
    The Prime Minister: I agree with my hon. Friend that the Council of Europe does extremely valuable work and obviously goes a good deal wider than the European Community. We take a great interest in all its work, but we also belong to the European Economic Community. We are bound to it by treaty, the amended treaty, but we wish to see that in future it develops along the courses which we wish it to take and which we believe to be the right ones, and that it does not become too bureaucratic.
    Mr. Eadie: To ask the Prime Minister if she will list her official engagements for Tuesday 16 May.
    The Prime Minister: I refer the hon. Gentleman to the reply that I gave some moments ago.
    Mr. Eadie: Can the right hon. Lady tell us what role she sees deep-mined coal in Scotland playing in the energy provisions of the United Kingdom? Does she support the proposal that deep-mined coal production in Midlothian should end despite the fact that there are very rich reserves of coal that would last well into the next century?
    The Prime Minister: The question will initially be one for British Coal. As the hon. Gentleman is aware, it is not only the reserves of coal that matter but whether they can be mined competitively, so that people are not overcharged for the electricity that comes from coal. The hon. Gentleman is well aware that the mine at Longannet will continue to be worked for Longannet power station. He is also well aware that there are other proposed closures because some pits have lost as much as £20 million recently, and we cannot allow losses of that dimension to continue. There is a major place in the United Kingdom for coal-fired power stations, and the major part of our electricity will continue to be generated by them for a long time to come.
    Mr. Ian Bruce: The whole House will have heard the sad news of the deaths of nine Royal Navy personnel in the helicopter crash in Africa, which comes hard on the heels of the deaths of two Royal Navy pilots who crashed in my constituency of Portland. Will my right hon. Friend take this opportunity to express the sympathy of the whole House to the relatives and friends of those victims? Will she also reflect that, in these times of peace, the people who have been peacekeeping with the Armilla patrol for the

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    past 10 years should be recognised, perhaps by a campaign honour—which seems to have been rather slow in coming to people who have been doing a magnificent job over many years?
    The Prime Minister: I am grateful to my hon. Friend. The whole House will wish to take advantage of his invitation to send its sympathy to the relatives of those lost in the crash to which he refers, of a helicopter that has been flying from HMS Brilliant, which had previously been on duty with the Armilla patrol. I am grateful to my hon. Friend for raising that matter. Other matters are being considered by the Ministry of Defence, but we would like to honour those who took part in the Armilla patrol and in its extremely important work in the international waterway of the Gulf.
    Mr. Allen McKay: To ask the Prime Minister if she will list her official engagements for Tuesday 16 May.
    The Prime Minister: I refer the hon. Gentleman to the reply that I gave some moments ago.
    Mr. McKay: Is the Prime Minister aware that after nearly two years of negotiations by some local authorities in south Yorkshire and in Scunthorpe, an agreement was signed five months ago for a £308 million aid concession from Europe? Is she aware that the Secretary of State for the Environment decided to break that agreement so that the aid will be widespread throughout the east of England? Does the right hon. Lady agree with the Secretary of State's action, which has deprived my constituency—which has a 20 per cent. male unemployment rate—of substantial aid, or does she disagree with him and accept that the money should be spent where the EEC said? If the Prime Minister does agree with her right hon. Friend, do we not risk losing credibility in respect of our use of EEC aid?
    The Prime Minister: No. Those EEC aid agreements must also take into account the Government's view as to how the money can best be spent. Every single pound spent by the EEC in this country is paid for by the taxpayers of this country. Over and above everything that we pay for, this year we shall pay £2 billion net to the European Community, so it is obviously very important that the Government's views are also taken into account.
    Dame Jill Knight: To ask the Prime Minister if she will list her official engagements for Tuesday 16 May.
    The Prime Minister: I refer my hon. Friend to the reply that I gave some moments ago.
    Dame Jill Knight: Will my right hon. Friend take this opportunity to welcome the interest shown by hospitals throughout the country in achieving self-governing status? Will she stress once again to the House and to the country that self-governing status does not mean that hospitals are either opting out of the Health Service or going private?
    The Prime Minister: My hon. Friend is correct. No hospital will be privatised. Hospitals will be given the
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    choice, if they wish, to be self-governing, which means that they will have control over their own budgets so that decisions will be taken much nearer to the patient. which will in many cases mean far better value for money.—[Interruption.] Opposition Members dislike choice except when they choose to say that they like it occasionally. Whether or not a hospital becomes self-governing is a matter of choice.
    Mr. Skinner: To ask the Prime Minister if she 'will list her official engagements for Tuesday 16 May.
    The Prime Minister: I refer the hon. Gentleman to the reply that I gave some moments ago.
    Mr. Skinner: On reflection, does the Prime Minister regret having used a three-line Whip and a guillotine to push the Single European Act through the House?
    The Prime Minister: No, I do not. We wished to have many of the directives under majority voting because things which we wanted were being stopped by others using a single vote. For example, we have not yet got insurance freely in Germany as we wished. We strenuously contest some decisions concerning animal and health regulations, which we believe should come under unanimity and that is our understanding. We are not quite certain what will be the judgment not of the Council of Ministers but of the European Court, which makes judgments on whether a particular matter comes within majority or unanimity if it is not clear on the face of the wording.
    Mr. Moss: To ask the Prime Minister if she will list her official engagements for Tuesday 16 May.
    The Prime Minister: I refer my hon. Friend to the reply that I gave some moments ago.
    Mr. Moss: Is my right hon. Friend aware that Governments throughout the world are looking at ways to reform the provision of health care and that Poland and Hungary, to name but two Communist countries, are introducing methods of private insurance and charges?
    The Prime Minister: Certainly, many countries are looking at the rapidly increasing cost of health care. We recall that in 1977 Alec Merrison said that provision for health care in this country could take the entire income of the country, so we are all looking to get the very best value for money, not only in Poland and Hungary, but in Germany, Italy and other countries in the European Community. Those who take out private insurance pay their full share of tax to the National Health Service and by not using it and paying further for their own treatment they are taking a very great burden off the Health Service and should be thanked for doing that.

Charities Legislation (White Paper)
3.31 pm
The Secretary of State for the Home Department (Mr. Hurd): With permission, Mr. Speaker, I wish to make a statement about our plans for charities legislation. I have laid a White Paper before the House today.
It is about 30 years since the last major charities legislation. Since then the charitable world has seen substantial changes. The number of charities has grown enormously—with a corresponding increase in the funds flowing through them. That is welcome news. The part which charities and the voluntary sector play in meeting genuine need at home and abroad is increasingly impressive and important.
But that expansion makes safeguards essential. My right hon. Friend the Chancellor of the Exchequer and I jointly commissioned in 1987 an efficiency scrutiny of the supervision of charities. The scrutiny team, led by Sir Philip Woodfield, submitted its report in June that year. We welcomed the report. The White Paper now sets out how we propose to implement it.
We have also taken the opportunity to raise some fundamental issues relating to charitable status. They are difficult and we invite views on them.
The White Paper concerns England and Wales. My right hon. and learned Friend the Secretary of State for Scotland will be putting forward separate proposals. We shall be considering to what extent the changes proposed in the White Paper should be extended to Northern Ireland.
Our aim has been to strike a balance between freedom and control. Charities should be able to go about their business without unreasonable interference but within a framework which ensures that they are properly accountable to the public.
At the core of the White Paper are proposals to give the commissioners new powers in dealing with mismanagement and abuse. For example, there will be a new power for the commission—in the last resort—to transfer a charity's assets to another charity.
To enable the commissioners to concentrate on their new priorities we are proposing that the commission should be relieved of some of its present statutory duties. For example, we propose to relieve the official custodian of his responsibilities for administering charity investments, and we are also proposing that the commission should largely withdraw from its present responsibility for overseeing many charity land transactions.
Other major reforms are necessary to enable the commission to monitor charities adequately. It needs more information, and in particular financial information, about charities. In future all registered charities will have to submit fuller accounts to the commission each year. Accounts of all but the smallest charities will need to be professionally audited or independently examined.
The commission's register of charities has been criticised as out of date and of limited use. An accurate, up-to-date and accessible data base is needed in which the public can have confidence and which the commission can use as its basic supervisory tool. The White Paper provides for that.
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The Charities Act 1985 has improved the effectiveness of small charities. We believe that it would be right to build on the experience which has been gained by extending its effectiveness.
We have consulted widely on the reform of the law relating to fund-raising. We are proposing measures to clarify and simplify the present law on public collections and to deal with malpractice. We look to voluntary efforts to regulate the newer means of charitable appeal, such as telethons, but we propose to take powers to regulate these forms of appeal should this become necessary in future.
We believe that charities should make some contribution towards the Charity Commission's costs—now over £7 million a year. So we propose a registration fee of £25, and graduated charges for some other services. Small charities will continue to receive the commission's services free. We reckon that some 90 per cent. of the commission's costs will continue to be borne by the Exchequer.
The commission has already acted to carry out the recommendations of Sir Philip Woodfield which do not require legislation. It has improved its management and the efficiency of its procedures; it has developed its capacity to monitor and deal with abuse; and it is preparing the ground for computerisation. Those changes will fit the commission for the active exercise of the new powers that we propose, and I believe that the result will be a better service to public and charities alike.
The cost of the commission is only a small part of the Government's contribution to charities, and to the voluntary sector more generally. The proposals that we are putting forward will help to provide a framework within which the health and integrity of charities can be assured. Our duties in respect of grants to individual organisations go beyond this. Our immediate concern must be to ensure, on behalf of the taxpayer, that we get value for money and effective services in return. It is for that reason that I have today announced, in response to a written parliamentary question from my hon. Friend the Member for Daventry (Mr. Boswell) plans for a scrutiny of Government funding of the voluntary sector.
We shall take careful note of views expressed on the White Paper, both inside and outside the House. We hope then to bring forward legislation.
Mr. Stuart Randall: On behalf of the Opposition, may I thank the Home Secretary for his statement on the future of the Charity Commission.
We are uncertain about whether paragraph 5 of the White Paper goes far enough in dealing with abuse. Will the Charity Commission have all the powers that it needs to root out abuse? Have all the recommendations of the Woodfield report on the matter been included in the White Paper? If not, why not?
Paragraph 2.4 appears to leave open the question whether there will be changes in the legal meaning of charitable status. Will the Home Secretary say a little more about his feelings on that vital and central matter? Why have the Government decided to introduce charging for registration? Does not the Home Secretary accept that many very small charities might encounter financial difficulty with those proposals? Does he agree that charities would not receive services from the commission for those fees and that the real purpose of registration is merely legal recognition? Are not the Government being rather mean in making the proposals? Is it not the thin end of the charging wedge?

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Does the Home Secretary feel that the White Paper goes far enough beyond the Charities Act 1985 in encouraging the large number of very small and ineffective charities to merge or to amalgamate?
Does he agree that rationalising the existing registration structure is still long overdue?
We welcome the proposal to allow the Charity Commission direct access to the courts for the first time instead of having to work through the Attorney-General. Will the Home Secretary tell the House how the relationship between the Attorney-General and the Charity Commission will work in practice?
Does the Home Secretary agree that if the commission is to be effective in tackling many of the unacceptable shortcomings in its organisation which were presented in the Woodfield report it will need resources? Will he assure the House that all the resources needed by the commission to modernise its organisation, including the means for regionalisation, will be made available?
Mr. Hurd: I am grateful to the hon. Gentleman, and will try to deal with his questions. His first point dealt with abuse. Chapter 5 of the White Paper sets out specific ways in which we believe that the powers of the Charity Commission could be strengthened, but there is a further and perhaps more substantial factor. It is not always understood that under the existing law the commissioners have the power to remove a body from the register of charities if there is evidence that it is pursuing its objectives in ways that are not to the public benefit. That is an important safeguard, and I believe that there is a strong case for clarifying it in law.
The hon. Gentleman talked about the legal definition of a charity, which is dealt with in chapter 2 of the White Paper. We have come to the tentative conclusion that the common law definition—the M'Naghten definition—is probably as good as any that could be worked out in statute, but the House and experts on the matter will no doubt wish to consider that conclusion.
If the hon. Gentleman examines the carefully regulated proposals for charging, I do not think that he will find that any charity, however small, could conceivably suffer financial hardship as a result of them. Yes, I believe that the 1985 Act deals adequately with the point about small charities.
We shall need to work out the exact procedures for the commission's direct access to the courts. If the hon. Gentleman wishes to pursue that point, I will gladly write to him.
Yes, the Charity Commission will need to strengthen its effort. A major part of the White Paper's purpose is to relieve the commission of a number of rather fiddling duties which are actually already the responsibility of the trustees of individual charities—I mentioned land transactions, for instance—so that it can deploy its resources for the important purpose of monitoring and investigation. That is already happening, in fact. The chief commissioner tells me that the commission has raised from 14 to 38 the number of people in the commission now engaged on that central task.
Mr. Tim Boswell: I congratulate my right hon. Friend on the comprehensive approach to the reform of charity law that he has set out this afternoon. Bearing
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in mind that this takes place on average once a generation, his apparent readiness to continue consultations widely until the very moment of the legislation is most welcome.
Will my right hon. Friend take into account one or two points of concern? The first relates to charging for the services of the Charity Commission. I accept that in principle, but will my right hon. Friend confirm that arrangements will be made in practice to ensure that the revenue is additional to that obtained by grant in aid so that the commissioners may use it, for example, for the promotion of development schemes and local reviews?
My second question relates to the linked issue of the review of funding of voluntary bodies. Will my right hon. Friend confirm that it is designed to secure more value for money rather than a reduction in the total amount paid to such bodies?
I understand that the White Paper contains no proposals relating to the Inland Revenue. Does my right hon. Friend accept that in the long run it must make sense to move towards a system whereby the registration of charities by the commission, and their acceptance of charitable status, is in parallel with and identical to their treatment by the Inland Revenue?
Mr. Hurd: I am grateful to my hon. Friend. He is right to stress the importance of the charitable sector, whose turnover is now £13 billion a year. A new charity comes to the commission for registration about every half hour of every working day; that is the scale of it.
I cannot give my hon. Friend the exact assurance for which he asks on charges. Charges will contribute about 10 per cent.—about £750,000—a year and will clearly add to the strength and effectiveness of the commission. M y hon. Friend also raised the question of the Government's contributions to the voluntary sector. Our aim is to ensure that the taxpayer, whom we represent, receives value for money. The Government contribution is now running at £293 million a year. If we add in all public sector contributions to the voluntary sector, the figure is £2 billion a year, but £293 million is a big enough sum. We need to look closely at the way in which choices are made and the criteria that are used.
I did not deal with taxation issues, but my hon. Friend knows about the closer relationship that has developed in recent years between the Inland Revenue and the Charity Commission. Nothing in the proposals will impede that.
Mr. Robert Maclennan: Does the Home Secretary propose to legislate to alter the rules and laws governing the right of charities to advertise and to broadcast direct appeals for funds, especially in view of the extensive use of telethons for fund-raising?
On the regulation of collections, does the Home Secretary accept that it would be undesirable that charities should have to accept more stringent control than other forms of collection? Does he intend to deal with that?
Mr. Hurd: My answer to the hon. Gentleman's first point is that we have no intention of dealing with that. Chapter 10 of the White Paper deals at length with the problem of fund-raising. The hon. Gentleman will know that there has been some concern about possible abuses of fund-raising. We propose certain changes, such as that all funds collected should be passed to the charity in whose name they have been collected and that there should be discussion about administrative expenses after that rather than deductions being made before the money has been

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passed to the charity. Chapter 10 contains one or two similar suggestions, but we are open to comments. I do not want to introduce unreasonable, extra regulations for charitable fund-raising, but there has been concern about it. If, when he looks at chapter 10, the hon. Gentleman feels that we have gone too far, or that we have not gone far enough, I am sure that he will let me know.
Dame Janet Fookes: What assurance can my right hon. Friend give us about adequate staffing for the Charity Commission? When the old Expenditure Committee looked at charity law, it found that there was not a single accountant to scrutinise accounts at that time.
Mr. Hurd: It is precisely those initial critical reports which led to the Woodfield scrutiny, which, in turn, led to the White Paper. The Woodfield scrutiny found that the Charity Commission was so bogged down in a number of relatively trivial duties imposed on it by statute that it was unable to do the job of monitoring and investigating, which was at the heart of its duty. That is why, without legislation, the Charity Commission has shifted its priorities and I gave the figures for those engaged in monitoring and investigation compared to the past. The commission understands the importance of accountancy and it employs members of that profession, as well as having access to the talents and activities of accountants whom it does not employ directly.
Mr. Robert Hughes: As the chairman of a small but important charity, the Bishop Ambrose Reeves Trust, I want to ask the Home Secretary about definition. Will he confirm that the future definition will be broadly the same as the present one, and that there will be no redrafting to exclude charities already accepted by the Charity Commission?
Mr. Hurd: If the hon. Gentleman looks at chapter 2, on which we spent a great deal of effort, he will see an analysis of definitions, beginning with 1601 and going on to Lord M'Naghten's definition of the four main heads of charity in 1891. We are inclined to believe that the hon. Gentleman is right and that it is better to rest on that than to try to devise some new statutory definition. It is a matter on which there are differing views and we have set out our provisional conclusion.
Mr. Jack Ashley: The Home Secretary has used the phrase "value for money", which is understandable, but will he assure the House that none of the proposals will bring undue pressure, financial or otherwise, to bear on the small charities, especially on those that help disabled people?
Mr. Hurd: When I used the phrase "value for money", I was talking about the £293 million that central Government give in different forms each year to the voluntary sector. That will be subject to the scrutiny that I announced in reply to a question from my hon. Friend the Member for Daventry (Mr. Boswell). Value for money for charities is a wider question and, although it does not involve value for money for the taxpayer in most cases, I can assure the right hon. Gentleman that nothing in the proposals will bear heavily on the smaller charities. Indeed, the existence of a good up-to-date register and of
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proper safeguards against abuse will help to build up the general health of the charitable sector, including the small charities.
Sir Charles Morrison: Is my right hon. Friend aware that if he were to step out of the corridors of power into the highways and byways he would discover that the taxpayer believes that he already receives good value for money from what he provides already to charities? Is he aware that, when my right hon. Friend introduces his welcome proposals to reduce abuse still further, the taxpayer will feel even happier without the necessity of the introduction of a charge which will upset the taxpayer as much as it will upset many small and medium-sized charities?
Mr. Hurd: The charging arrangements serve to provide a total of £750,000. This is a worthwhile exercise which will not bear hardly on the smaller charities as my hon. Friend will see if he looks at the proposed charges. Indeed, it will involve them usefully in the process. The £293 million that the taxpayer contributes direct to the voluntary sector is increasingly important. More and more we in the Home Office find activities that are performed best by the voluntary sector—indeed, better than they would be performed under a statutory scheme. However, we must ensure, both as regards our own voluntary service unit in the Home Office and more widely across central Government, that there are reasonable criteria and standards by which the money is expended. That is the purpose of the scrutiny.
Sir David Price: Is my right hon. Friend standing on the answer that he gave both to the hon. Member for Kingston upon Hull, West (Mr. Randall) and to the hon. Member for Aberdeen, North (Mr. Hughes) that he is satisfied with the current legal definition of "charities"? Is he aware that many of us feel that the definition is drawn far too wide and that we all have evidence from our personal experiences of organisations, often of a dubious religious nature, which enjoy charitable status, but which many of us feel should not enjoy the tax advantages that genuine charities certainly should enjoy?
Mr. Hurd: My hon. Friend's objections probably do not arise so much from the professed objects of the charity as from the way in which they carry on their activities and from what they do. That is why it is important that the law should make it clear that the commissioners have the power to remove a body from the register where there is evidence that it is acting in pursuit of its objects in ways that are not for the public benefit. If we can make that clear and strengthen that power, as we propose in chapter 5, we have a hope of meeting my hon. Friend's point.
Mr. Eddie Loyden: Does the Home Secretary agree that the definition of "political activities" can differ widely depending on the way in which one wants to interpret the activities of certain charities? Will he give an assurance that those charitable organisations that "campaign" against certain activities of the Government, such as, from time to time, the citizens advice bureaux, will not be affected by any legislation to be proposed by the Government?
Mr. Hurd: We set that out for discussion in the White Paper. The Charity Commission's guidance on that point is perhaps worth reading. It is not very long. It is broadly to the effect that
"governing instruments should not include a power to exert political pressure except in a way which is ancillary to a charitable purpose;
—the powers and purposes of a charity should not include the power to bring pressure to bear on the Government to adopt, to alter, or to maintain a particular line of action, although charities may present reasoned argument and information to Government;
—where the objects of a charity include the advancement of education or the power to conduct research, care must be taken to ensure that both objectivity and balance is maintained and that propaganda is avoided."
That is the Charity Commission's existing guidance, and it appears to meet the case.
Mr. Ivan Lawrence: Is my right hon. Friend aware that his proposals will be especially welcome to all genuine charities in this country because, if there is greater public confidence that all the money given to charities will go to charitable ends and that the charities are properly run, obviously, in our affluent society more people will give? However, I am not sure about the effect of my right hon. Friend's answer to my hon. Friend the Member for Eastleigh (Sir D. Price). Can my right hon. Friend assure the House that action against charities whose activities are against the public interest, because they are anti-social or oppressive, will be easier to take than it has been hitherto?
Mr. Hurd: The powers exist, but I do not believe that they are widely recognised, which is why we put stress on them in the White Paper. We also propose to strengthen them. My hon. and learned Friend will find that in paragraph 5.11 especially of the White Paper we propose those powers which bear, as he knows, on what registered charities actually do rather than attempting to redefine the definition of a charity.
Mr. D. N. Campbell-Savours: Is the Home Secretary satisfied that the arrangements that he wishes to introduce will deal with the widespread failure of many charities nationally to present accounts to the Charity Commission, as identified in the reports of the Public Accounts Committee and the National Audit Office, and the Charity Commission's failure to examine the accounts of 96 per cent. of charities in a particular year at which the National Audit Office looked? Will the right hon. Gentleman assure us that all charities will be required to submit their returns annually and that, if they fail to do so, they will be subject to penalty? Will he also assure us that the Charity Commission will have the resources to examine the accounts of a far greater proportion of charities than is currently the position?
Mr. Hurd: As a result of the work mentioned by the hon. Gentleman, and in which he probably participated, and the Woodfield scrutiny, it is proposed in the White Paper, and it will be an obligation under the law, that registrable charities should make an annual return of their accounts to the Charity Commission, and in the case of all but the smallest those should be audited. I have already given the numbers and how they are employed, which show that in advance of legislation the Charity Commission is shifting its resources to deal with those accounts.
Mr. Ian Gow: Did my right hon. Friend share my sense of shame when he read the report of the Comptroller and Auditor General and the Public Accounts Committee about the Charity Commission? Does he understand that, welcome and long overdue though these reforms are, they will amount to nothing unless my right hon. Friend is able at once to instil into the Charity Commission that level of competence and efficiency that has been so grievously lacking for far too long?
Mr. Hurd: I believe that that is already happening. If my hon. Friend went alongside the present Charity Commission—on behalf of the commission I warmly invite him to do so—he would find already a substantial change of the kind that he has advocated. Obviously it is limited in what it can do in advance of legislation, because the Charities Act 1960 to some extent imposed upon the commission a method of working and a choice of duties which are really not sensible in 1989, and probably my hon. Friend was right when he said that they have not been sensible for some years.
Mr. Tam Dalyell: As one who called for the reform of charities during several Finance Bills, may I defend the Charity Commissioners, who have an extremely complex job to do? I welcome the fact that the Home Secretary has introduced this White Paper and the manner in which he has put the proposals before the House.
With regard to Scotland and paragraph 11.4, what investigation of abuse has taken place? I imagine that it is the same in Scotland as in England. What has the Home Office found to be the major cause of this most worrying abuse?
With regard to paragraph 4.11 and the question of malpractice what appropriate publicity will be given to default markings and how will that be arrived at?
The Home Secretary referred to charity land transactions, but will that cover the thorny problem of inalienability? Is inalienability to be respected in relation to land transactions?
The Home Secretary referred to acting not to the public benefit, but how is the public benefit to be defined?
With regard to paragraph 4.12, how will assets be assessed? It is easy to load logical schemes on charities, but given that they have limited resources, will not they be overwhelmed by the sheer difficulty of working out proposals, particularly on the estimation of assets as outlined in paragraph 4.12?
Mr. Hurd: I am grateful to the hon. Gentleman, but I do not intend to venture into Scotland, which has a different system without a Charity Commission. As I have said, my right hon. and learned Friend the Secretary of State for Scotland will be making his proposals on that known fairly shortly.
I cannot add to what the hon. Gentleman has already spotted in paragraph 4.11. Default markings are clearly intended to give publicity to a failure on the part of the trustees and we shall have to work out in greater detail what form that publicity takes.
Land transactions are meant not to touch on the question of alienability or inalienability, but simply to withdraw from the Charity Commission the duties which it has now and which to a large extent duplicate the trustees' present duties.

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I did not haul on board the hon. Gentleman's final point about paragraph 4.12, but I will, and I shall write to him on it.
Mr. Michael Morris: Is my right hon. Friend aware that one of the difficult areas in religious charities is created by the so-called cults, not so much because of their religious activities as such, but because of the way in which they impinge on society, families and individuals? I have not had the opportunity to see the White Paper, but is it his intention, under chapter 5, to address the rights of individuals and families within those organisations and how they may, in effect, escape from them?
Mr. Hurd: My hon. Friend puts that fairly. This matter has a long rather unhappy history. As he says, it is not so much the aim of a body that is called into question—it is difficult to argue about or define aims in statutes—but rather the way in which such organisations treat individuals. It is their activities in pursuit of the objectives that they define that is offensive to many people, and that is what we must concentrate on. The law already gives the commissioners stronger powers than most people realise to remove a body from the register if its activities are not for the public benefit, and we propose in chapter 5 to strengthen that in a number of ways.
Mr. Dennis Skinner: Does the Home Secretary recall the discovery about 12 months ago of the river companies that were laundering money to the Tory party? Under the proposals contained in the new report, will they be able to launder that money to the Tory party, disguised as charities? Has he noticed that the first recommendation says that the Chief Charity Commissioner should appoint a project officer'? There is a charity in here that needs a job, a national charity—the leader of the SDP. Is he going to show some charity? Here is a man who appeals to everyone. He should think about it.
Mr. Hurd: I have no recollection of the first point about which the hon. Gentleman tries to remind me. I am not sure whether the right hon. Member for Plymouth, Devonport (Dr. Owen) has quite the necessary element of charity in his own nature to make him suitable for the appointment.
Mr. Roger Gale: My right hon. Friend obviously recognises the genuine contribution made to charity by many religious organisations. Will he assure the House that he intends that the full weight of the law should now be brought, as it has not been previously, against quasi-religious and bogus cults which use charitable status as a tax haven and are nothing more than a front for international fraud?
Mr. Hurd: My hon. Friend will remember the statement that my right hon. and learned Friend the Attorney-General made about a particular case not long ago. I shall return to the central point of this issue; my hon. Friend was right about the concern that it arouses. We are talking about the activities of certain bodies which may have got on the charitable register. What we need to make clear and strengthen, as the White Paper proposals do, are the
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commissioners' power to remove an organisation from the register if it pursues its objectives in ways which do not benefit the public.
Mr. Alex Carlile: While it is reassuring to hear what the right hon. Gentleman said about the deregulation of cults that act against the public interest, does he recognise that, once registered, a cult can remain on the register for a considerable period, sometimes years, while it goes through a pyramid of legal procedures? Therefore, will he give the Charity Commission powers to examine and regulate religious charities before they are registered to ensure that they act in the public interest from the moment of registration?
Mr. Hurd: That is the purpose of registration. Due to the shift in its priorities, the Charity Commission will be increasingly able to monitor and investigate at an earlier stage. I shall look into the point made by the hon. and learned Gentleman about enforcement procedures because that is important.
Mr. Michael Latham: Is my right hon. Friend aware that those of us who served on the Public Accounts Committee for some years thought that the inquiry into the Charity Commission came to some of the most woeful findings that we have seen, which is saying something? The commission was extraordinarily complacent and passive, and needed a jolly good boot up the backside. Is my right hon. Friend satisfied that the proposals will instil into the staff the new attitudes which are required and which were certainly lacking then?
Mr. Hurd: Yes, Sir, I am.
Mr. Ian McCartney: Will the Secretary of State give some assurances about those charities which operate in the front line of social controversy, particularly in view of the recent statement by the Secretary of State for Social Security about the Low Pay Unit, Child Poverty Action Group, Shelter and War on Want? Will he give an absolute assurance that, when dealing with cults, the Government will not widen the issue into an all-out attack on charities such as those which I support and which campaign for social justice in the United Kingdom?
Mr. Hurd: I have already read to the House, and shall forbear doing so again, the guidance which the Charity Commission puts out about the political activities of charities. It is crucial for the health and reputation of the charitable sector that it should respect this guidance and not tread beyond it. Many of us have occasionally been worried by charities which seemed to tread beyond the clear guidance which I have laid down.
Mr. Andrew Rowe: Is my right hon. Friend aware that after that trailer I cannot wait to read his interesting document? Will he consider the possibility that, when a charity is under investigation, its fund-raising activities might be suspended? Will he also consider the fact that when small charities are asked to return their accounts on an annual basis, those accounts should be accepted in a simple form? If they are not returned, will the power to suspend or roll up those charities be used? In the past, the problem has been that, although the powers existed, nothing was done.
Mr. Hurd: I will look at my hon. Friend's first point. It might be considered rather high-handed and, perhaps,

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subject to judicial review, if the commission attempted to suspend a body's activities before making any findings against it.
As for my hon. Friend's second point, the whole purpose and thrust of the White Paper is precisely what some of my hon. Friends have urged that we should do—to brisk up the activities of the commission so as to strengthen its powers of investigation and enforcement.
Mr. Jonathan Sayeed: My right hon. Friend will be aware that some organisations have used their charitable status to hoodwink and to milk a kind-hearted British public in order to line the pockets of the organisers. They have used their charitable status as a vehicle to evade the proper payment of taxation. When there is clear evidence of a major abuse, can my right hon. Friend confirm that draconian powers will be used—including the repayment of tax that has been avoided by a so-called charitable organisation, and quite possibly the imposition of Mareva injunctions to freeze assets and the institution of criminal proceedings against the organisers?
Mr. Hurd: These matters often depend on evidence, and if my hon. Friend has evidence about recent activities of this sort, I am sure that he will let us or the police know.
The whole point of the existing law, which, I acknowledge, is rusty and creaking, of the reinvigoration of the Charity Commission which has already started, of the proposals in the White Paper, and of the legislation that we hope to introduce after it has been digested, is to safeguard the charitable sector by making it easier to spot and then to deal severely with any charity or individual connected with a charity who is tempted to act in the way that my hon. Friend has criticised.

EUROPEAN COMMUNITY DOCUMENTS
Mr. Speaker: With the leave of the House, I shall put together the two motions relating to European Community documents.
Ordered,
That European Community Document No. 10449/88 relating to Community financial procedures be referred to a Standing Committee on European Community Documents.
That European Community Documents Nos. 5211/88 and 10166/88 relating to health and safety be referred to a Standing Committee on European Community Documents.
—[Mr. Chapman.]

Private Residential Special Schools (Registration)
4.11 pm
Mrs. Gillian Shephard: I beg to move,
That leave be given to bring in a Bill to require the registration with local authorities of private residential special schools in respect of their use and residential facilities.
I am grateful for this chance to raise this important and topical matter in the House. It is important because it is about the welfare of children who are amongst the most vulnerable people in society—those with learning or behavioural difficulties or with physical or mental handicaps. It is important, too, because it concerns their placement in such schools by local authorities at tax and ratepayers' expense, and it is topical because, although the vast majority of these schools in England and Wales do a very good job, there have been some notorious cases in the past few years and recently which illustrate that, because of the current state of the law, those responsible have been unable to prevent such cases from occurring, to discover them promptly, or to take swift and effective action when they have been discovered. This Bill seeks to suggest ways of putting that right.
Children in need of special residential education are dealt with in one of three ways. They can be educated in a special school run by a local authority; they can be maintained by a local authority in a non-maintained special school, of which there are now 88 in England and Wales—they are non-profit-making concerns, usually run by trusts and in receipt of direct grant from central Government; or they can be educated, often on placement by a local authority, in a private residential special school.
Stringent requirements, in the form of the Education (Approval of Special Schools) Regulations 1983, govern the setting up and running of special schools run by LEAs and non-maintained special schools. Among other things, these regulations require that schools and their government be approved by the Secretary of State; that the premises must satisfy statutory requirements; and that non-maintained schools must not be run for profit. There are also requirements governing pupils' health, diet and religious worship. Regular reports have to be made to LEAs on statemented children and the teaching and care staff must be "suitable and sufficient".
In the case of non-maintained schools access must he allowed to representatives of local authorities which maintain a child in school, and the Secretary of State may withdraw his approval of a school if it fails to comply with the requirements either in these regulations or those in force under either section 10 of the 1944 Education Act or section 27 of the 1980 Education Act.
The contrast between these requirements and the regulations for the third category of school, the private residential school, could hardly be more striking, yet the same vulnerable group of children is involved. Private residential special schools are merely required to register and make annual returns under the Education (Particulars of Independent Schools) Regulations 1982. These, with their schedule, require information on numbers of pupils, details of public examinations, change of ownership and address, and any dismissals of staff on the grounds of misconduct. The numbers of statemented pupils, with staff qualifications, also have to be reported.

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Section 11 of the 1981 Education Act points out that where an LEA makes arrangements for the provision of a statemented child at an independent school, the Secretary of State must approve it as suitable for statemented children and must consent to the child being placed there. There are 170 such private residential special schools in England and Wales at the moment, and of these 135 are approved under this section.
Schools are approved as suitable as a result of an inspection by Her Majesty's inspectors, who expect the school to meet the same standards as local authority schools and, according to the Department of Education, the inspection covers all the arrangements for the welfare of the children outside the classroom. An inspector may be accompanied by members of the social services inspectorate.
I make no criticism of either Her Majesty's inspectors or social services inspectors, but it must be accepted that nowhere in the legislation are there any requirements other than those criteria laid down 40 years ago in section 71 of the 1944 Act, that registration may be refused or withdrawn if the premises are unsuitable; if the accommodation is unsuitable or inadequate; if efficient and suitable instruction is not provided, or if the proprietor or any teacher is not a proper person. There is no mention anywhere of the arrangements that should be made for the care and welfare of the children or for their physical or moral wellbeing.
I have already tried to draw the attention of the House to the contrast between the regulations for this category of school and those governing local authority or non-maintained special schools, but there is an even more striking contrast between the paucity of regulation of these special schools and the arrangements for registration, to be enacted, I hope, through part 8 of the Children Bill, now in Committee, for registered children's homes. These arrangements are comprehensive and drawn up in accordance with professional realities, and indeed, could apply to private residential special schools, were these not already registered under section 11 of the 1981 Education Act, yet, I repeat, the same group of vulnerable children is involved. If these children require the care and protection afforded to them by the provisions made for local authority and non-maintained special schools and for residental homes, they cannot and should not be denied that same care and protection if they happen to be placed by a local authority in a residential special school run privately.
Unfortunately, examples of disaster are not difficult to find. In Norfolk events at the Buxton Red House school five years ago and at the then Walker Foundation school
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in Burston caused immense concern. In Suffolk, tragically, at the Four Elms school, consistent abuse of the children was discovered to have taken place over a long period, and eventually the home was closed, but not before one distraught parent, who had learned that her mentally handicapped child had been regularly abused, arrived at the home and shot the teacher and officer in charge. Only last week, according to a press release from the West Mercia police, the co-proprietor of the Castle Hill school in Ludlow appeared before Ludlow magistrates on 14 charges of serious child abuse.
The law must be changed to allow more control to be exercised more effectively and with more accountability. If the state places children, especially vulnerable children, in a school at public expense, the state must provide an effective legal framework to protect them. To expect her Majesty's inspectorate or social services inspectors to perform a monitoring role at such schools when the law does not require them to do so and, in any case, her Majesty's inspectorate does not have the necessary expertise, is simply unrealistic. What is needed is expert monitoring carried out locally and on a regular basis.
The Bill therefore proposes that the Secretary of State for Education through her Majesty's inspectorate should retain responsibility for the education in private, residential special schools. Requirements for them should be brought into line with those expected of local authority and non-maintained special schools. The responsibility for registering the care, residential and welfare facilities of such schools should be placed with the social services department of the local authority in which the school is situated. Such dual registration would be welcomed by social services, would provide a balanced appraisal of the schools, retain a consistent role for both the Secretary of State for Education and for social services departments and, most importantly, would protect the interests of these vulnerable children. I hope that the House will support the Bill.
Question put and agreed to.
Bill ordered to be brought in by Mrs. Gillian Shephard, Mr. Andrew Mitchell, Mr. Ian Taylor, Mr. Simon Burns, Miss Ann Widdecombe, Mr. Tim Boswell, Mr. Anthony Coombs, Mr. Steve Norris, Mr. Keith Mans, Mr. David Evans, Mr. David Davis and Mr. Christopher Gill.

Private Residential Special Schools (Registration)
  PRIVATE RESIDENTIAL SPECIAL SCHOOLS (REGISTRATION) BILL
  Mrs. Gillian Shephard accordingly presented a Bill to require the registration with local authorities of private residential special schools in respect of their use and residential facilities: And the same was read the First time; and ordered to be read a Second time upon Friday 7 July and to be printed. [Bill 141].
Opposition Day
  10TH ALLOTTED DAY

    Government Publicity (Cost)
    4.21 pm
    Mr. Frank Dobson: I beg to move,
    That this House deplores the soaring cost of the Government's publicity machine; and calls for an end to its deployment for party political purposes.
    Mr. Speaker: I must announce to the House that I have selected the amendment in the name of the Prime Minister.
    Mr. Dobson: There is widespread and growing concern about the scale, propriety and timing of much Government publicity and advertising. It is an issue that goes to the heart of the relationship between political parties, the people, public servants and the state. In 1985 the Government acknowledged that in their evidence to the Widdicombe inquiry when they said:
    "The unregulated use by any public authority of highly developed media techniques, particularly for persuasive purposes with a strong political undertone, is perceived as a dangerous trend in a democratic society."
    At the time the Government were talking about local authorities. Since that statement, spending on Government publicity has soared. The regulations laid down to minimise the party political content in Government publicity have been partly ignored and secretly relaxed. It has become increasingly difficult to distinguish between Government publicity and Tory propaganda, in terms both of the content and of the personnel and agencies producing it.
    Since that statement was made, without the benefit of statute, industries owned by the public have run privatisation advertising campaigns co-ordinated with those of Government Departments and the Tory party. The only good feature of that is the growing public revulsion against some of the more patronising claptrap that they see on television. People believe that this has gone too far. In particular, they object to the £30 million of their money that is being spent on advertising by the water industry which has a monopoly product that none of us can do without. As The Economist asked last week:
    "Who benefits from the campaign? The ten authorities' tied customers will not get cleaner or cheaper water, merely bigger bills. The authorities themselves can hardly increase their sales or market share. Indeed, after the dry winter, some of them might be glad to be asked to supply less, not more, water."
    That advertising appears to have been counter productive because after the milk float water advertisement, some people thought that privatised water would be sold by the bottle. That may turn out to be right.
    Spending on Government publicity has continued to soar, and that fact cannot be disputed. Publicity spending by public bodies controlled by the Government will this year total well over £220 million. That is a lot of money. To give only one example, it would pay for building four big new district hospitals. Instead of that, it is all going on paper and television.
    About £120 million of that massive sum will be spent by Government Departments, and the rest by the armed forces, Government agencies and the water and electricity
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    industries. The £120 million spending by Government Departments is a sixfold increase on the £20 million publicity spending by Government Departments in 1979. No wonder the taxpayers are beginning to think that it has all gone too far.
    In 1987, according to The Daily Telegraph, the Government overtook Unilever as Britain's biggest spender on advertising. Strange to think that a Government who proclaim that they want to roll back the frontiers of the state insist that their propaganda rolls into the front room of every family in the land. The Government now spend so much on TV advertising that they get a special discount rate from the TV companies.
    In March of this year, the top five spenders on advertising were B and Q, £3·6 million; Renault, £2·2 million; the Department of Trade and Industry, £2·1 million; Midland bank, £2·1 million; and the water industry, £1·98 million. The Government Departments that spend most taxpayers' money on publicity include the Department of Employment, with £17 million, and the Department of Social Security, with £16 million.
    The Department of Social Security should spend money on publicity in an effort to raise the appalling take-up level of some benefits. It is trying to spend money now to increase the take-up that its incompetent advertising in the past failed to raise.
    This year, though, the star spender is the Department of Health, the spending of which is set to soar from about £10 million to about £19 million, an increase of 87 per cent. At the same time, the Department has given the National Health Service just 5 per cent. to cope with inflation. Yet the Secretary of State for Health has had the gall to go around the country complaining about the money that doctors are spending to campaign against the NHS review. The doctors have one singular merit that the right hon. and learned Gentleman does not have: they are spending their own money.
    Mr. Patrick McLoughlin: I could not understand from what the hon. Gentleman said whether he welcomed the increase in expenditure on advertising by the Department of Social Services.
    Mr. Dobson: There is no Department of Social Services in national Government. There is a Department of Social Security, which has misspent money on pathetic, rather trendy advertising that did not work. It is now halving to spend more money. It would be better, of course, if we saved the money now spent on advertising and gave people benefits which were easy to take up and were not dependent on advertising to get them taken up in the first place.
    The other big spender is the Department of Trade and Industry, headed by Lord Young, who is supposed to be the apostle of Government advertising. I suppose that that is because, being in the House of Lords, he is sure that, however much is spent on Government advertising, none of it will go on his election expenses. Wherever he goes, Government publicity expenditure soars. As the amendment refers to value for money, I suggest that the Government look closely at spending by the Department of Trade and Industry, because it is clear from the figures that the more that Department spends on advertising, the worse our balance of trade gets.
    It is not just the scale of the publicity machine that has changed; it has become much more party political. So

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    much so that in 1988 The Daily Telegraph, describing what had happened in election year 1987, referred to what it called
    "the Government's lavish publicity campaigns on such issues as job training and health education … little more than an expensive vote-catching exercise."
    You will note, Mr. Speaker, that the expense was borne by the taxpayer; the vote catching was to the benefit of the Tory party.
    But it is not just that the old regulatory arrangements are being ignored; they have been relaxed, and they have been relaxed furtively and in some cases secretly.
    The director of the Central Office of Information used to be the head of profession for Government information officers, the person to whom civil servants in information departments could turn if they had doubts about the propriety of what they were being asked to do. Earlier this year that role was handed over to Mr. Bernard Ingham, of whose relationship with professional propriety I shall say no more than that it was amply demonstrated in the Westland affair.
    Mr. Tristan Garel-Jones (Comptroller of Her Majesty's Household): What does the hon. Gentleman know about it?
    Mr. Dobson: The non-silent Whip the hon. Member for Watford (Mr. Garel-Jones) asks what I know about it. I read it in the report of the Defence Select Committee, on which there is a majority of his hon. Friends.
    Until recently the Central Office of Information had what was called a central role in advising on the propriety of Government publicity. In a change made early last year the Central Office of Information lost that central role in advising on propriety and it was handed over to, of all people, the Cabinet Office, the organisation which gave the world the phrase "economical with the truth". The change was kept secret from the Treasury Select Committee, which was then looking into the Central Office of Information. It was not even disclosed in the Treasury response to the Select Committee report when it was published in February this year.
    Finally, the Chief Secretary to the Treasury, we now understand, has been given a special role as a ministerial point of reference on publicity matters. He will advise on propriety. This would clearly be a difficult role for any Minister to fulfil. Obviously, it could not be carried out by anyone who was vindictive, petty minded or highly partisan. Instead, such a role, as we all realise, would require someone with breadth of vision and a willingness to respect the points of view and sensitivities of political opponents; a person capable of distinguishing between the interests of his party and the interests of the country as a whole. In other words, someone who likes mixing it could not possibly properly carry out that job. Hon. Members will be able to judge from his speech today the extent to which the present Chief Secretary meets these not particularly demanding criteria.
    Time after time Ministers, including the Prime Minister, have referred to the conventions published in 1985, but it took a series of questions before the Prime Minister eventually revealed two weeks ago that the conventions had been reviewed at the beginning of last year. Nobody had been told about that—at least, no one outside Government information offices. Notwithstanding
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    those recent changes, the Government conventions on publicity are still supposed to apply to advertising and press notices and other similar material. Section 4(ii) reads:
    "Content, tone and presentation should not be party political. The treatment should be as objective as possible, should not be personalised, should avoid political slogans and should not directly attack the policies and opinions of Opposition parties or groups."
    Those conventions were designed to protect the taxpayer and the public and to protect the integrity of public officials who may be asked from time to time to carry out party political tasks in the name of their ministerial masters or mistresses.
    Mr. Phillip Oppenheim: Relaxed though the hon. Gentleman considers those regulations to be, does he think that those relaxed limitations should be applied to local government?
    Mr. Dobson: As the hon. Gentleman ought to know, the unrelaxed regulations are applied by law to local government and it was the suggestion of the Treasury Select Committee that they should be applied by law to central Government as well.
    Mr. Frank Haynes: Does my hon. Friend agree that double standards operate among Conservative Members? Is he aware that not long ago the Strathclyde local authority in Scotland distributed cards to every household so that people would know of their entitlement to social security benefits? The Government criticised it for doing so, but now we can see how they operate double standards.
    Mr. Dobson: My hon. Friend is spot on, as ever. Having double standards is almost the least of the criticisms that I would make of some Conservative Members. Whenever local authorities throughout the country—mainly Labour, but not exclusively—attempt to increase the take-up of benefits by people who are badly off, they are criticised by a Government who themselves have incompetently spent millions of pounds on advertising while achieving some of the lowest take-up levels in the history of the social security system.
    In 1981, when a Conservative Government were in power, the Central Office of Information published a document on the role of Government information officers marked "For official use." I do not know whether the House of Commons counts as official use but I shall still make use of that document. It states:
    "If a Minister includes in a speech an attack on his political opponents, it would be improper for the Department to issue it as an official text or use the COI news distribution service to distribute it to Fleet Street. Such action would open the Minister and his Department to the charge of using taxpayers' money to further party political attacks. In this case the political attack would have to be omitted from an official handout, otherwise the text must be issued by the party's publicity machine."
    No mention is made of which party. It is rather like something from the Soviet Union in referring to the party. Official documents mean only one party—the Tory party.
    Those rules are being broken. Civil servants complain that they are forced to
    "expound half truths, produce dodgy material, and to leak in the Government's interests."
    We are back to No. 10 Downing street. If civil servants wish to complain about being pressurised, they can always

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    go to No. 10 Downing street and see Mr. Ingham, the head of profession, and see what sort of change they get. Everyone knows that the rules are not observed.
    Another recent example was a press release issued by the Department of Employment in September 1988 containing an attack by the Secretary of State for Employment both on the Leader of the Opposition and on the shadow Employment Secretary by name, in clear breach of the rules I have quoted.
    Mr. Tony Blair: Why was it not stopped?
    Mr. Dobson: Such practices are not stopped but are being encouraged.
    More blatant than that example was the concerted effort by the Department of the Environment's press office earlier this month to back up the poll tax leaflet campaign. The Department faxed syndicated articles to at least 15 local newspapers purporting to he written by the right hon. Member for Suffolk, Coastal (Mr. Gummer)—and for all I know, he did write them. Those articles had a standard content but incorporated local variations. Those sent to Nottingham newspapers contained an attack on my hon. Friend the Member for Nottingham, North (Mr. Allen). Those sent to Leicester included an attack on the chairman of Leicester city council's finance committee. The fax sent to the Leicester Mercury clearly came from the Department of the Environment's press office and was signed by Nick Gammage. Again, that was done in clear breach of the published conventions.
    Government press officers have also been pressured into what I can accurately describe as lying about statements made by my right hon. and hon. Friends and by me. On one occasion a radio reporter quite properly rang the then DHSS press office in my presence for its comments on a report that I issued. The press officer to whom the reporter spoke lied about the figures in my report. When I took the matter up with the Department's head of information, she sought to justify her colleague's lie, and no apology was forthcoming.
    Mr. Tony Banks: My hon. Friend highlights significant abuses of Government power. Had they been perpetrated by a local authority, there would be demands for its councillors to be surcharged. Can my hon. Friend say what recourse the taxpayer has to get back from Ministers some of the money that they are clearly squandering on abusive and offensive practices?
    Mr. Dobson: The taxpayer has no redress in such matters because the Government have no statutory authority to carry out any advertising; as far as I understand, they do it under their prerogative powers. There are no statutory restraints on what they do, but they have imposed statutory restraints on everyone else who might be involved in publicity.
    One recent publicity campaign cost a lot of money—more than was originally intended—broke the conventions and blurred the distinctions between the Government, the Tory party and its public relations advisers. As for value for money, which Lunderstand is the main interest of the Chief Secretary to the Treasury, it was a washout. I am talking about the launch of the National Health Service review, which was more unpopular after it was launched than it had been when it was just a leak.
    The campaign had no statutory backing and was scheduled to cost £1 million. It actually cost £1·4 million
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    —a 40 per cent. overspend. Unless the parliamentary answers on the matter are misleading, the vast bulk of the money was paid to one agency. I understand that in the trade, if an agency bids to do something for £1 million and spends £1·4 million, the extra £400,000 is paid by the agency and does not come out of the funds of those for whom it is carrying out the work. But that did not apply here. The money was spent on eight tele-conferences totalling £440,000, six road shows costing £179,000, communication packs at £302,000 and videos at £174,000.
    The rules say that publicity campaigns should not be personalised, but it has to be said that that campaign was heavily personalised around the Secretary of State. For example, copies of NHS Management Bulletin No. 19 were sent to all GPs. The envelopes containing the bulletin were marked in the way usually reserved by the Department of Health for letters notifying GPs of vital clinical matters such as outbreaks of infectious diseases or warnings about contaminated batches of vaccine. It may be appropriate that there was some warning, because the envelopes contained a document emblazoned with no fewer than five pictures of the Secretary of State. His name was mentioned 10 times on the first page and more than 30 times in total. However, it is a serious matter when, for the sake of trying to make sure that every doctor opened his or her bit of propaganda, the Government devalued the franking that they normally reserve for matters which are important to doctors and patients. If the Secretary of State wants to know why the doctors are so offended by what has been going on, that is one reason.
    But we should consider who mounted the campaign for the Government. That substantial contract was given to a little-known company, NML Presentations Ltd. The company's accounts show that it declared no dividend in 1986 or 1987. It made a loss in 1987, but its report said 1 hat the directors expected it to be profitable in 1988. The net value of its assets excluding motor vehicles was just £7,286. On the face of it, that outfit does not seem to have very much going for it, certainly not enough to justify getting a £1 million contract that the Government considered very important. But it did have one vital asset—it had close connections with the Tory party. Its ultimate holding company was Lowe Howard Spink and Bell plc—the Bell in question being Tim Bell, who masterminded the Tory general election campaign. It is a pity that he did not do that as badly as this campaign; if he had, we would all be better off.
    Many of the problems that Government Departments, some decent Ministers and a lot of decent civil servants face spring from what appears to be an increasing inability on the part of the Prime Minister to distinguish between the interests of the Tory party and the interests of the country. The motto seems to be that what is good for the Tory party is good for the country, and vice versa.
    Dr. John Reid: Does my hon. Friend agree that it is one of the supreme ironies of history that at the same time as the Tory Benches are praising President Gorbachev for trying to separate the party from the state, they are doing exactly the opposite in Britain? Did my hon. Friend ever think that the day would come when any political party in Britain would take lessons from the Soviet Union and would bring in corrupt practices using taxpayers' money?
    Mr. Dobson: I recall as a student having to learn about the government of various overseas states. I found it difficult to unravel the relationship between the Communist party of the Soviet Union and the Soviet Government because such a close, interwoven relationship had not occurred in western democracies. My hon. Friend is right. Perhaps it is not just Mr. Gorbachev who is learning something when he comes here; the Prime Minister seems to have been learning quite a bit about how to run the state when she goes there.
    The confusion between the interests of the Tory party and the state leads one to think of the one-party state which is a threat to our democracy, as the Government have said. The curious, interwoven relationship is best exemplified by the interchanges of publicity advisers between the Government, the Tory party and those industries scheduled to be privatised. As my hon. Friend the Member for—
    Mr. Harry Greenway: The hon. Member should not lose his place.
    Mr. Dobson: I have not lost my place. I hesitated because I was trying to remember the constituency of my hon. Friend the Member for Sedgefield (Mr. Blair). As my hon. Friend pointed out, Mr. Brendan Bruce used to be a senior executive of D'Arcy Masius Benton and Bowles, known as DMB and B, the agency that had the contract for the present softening-up round of the water campaign. He was recently appointed director of communications at Conservative Central Office, we understand, to mastermind the party's media coverage in the run-up to the next election. DMB and B, which was responsible for the Tory party political broadcast on the Health Service—that does not say a lot for it—and for the current phase of the Department of Trade and Industry 1992 campaign—that does not say a lot for it, either—is engaged simultaneously in a bid to get the contract for the Conservative party election campaign.
    Mr. Tim Bell, who has already been involved in these sordid matters, and who is a long-time image builder of the Prime Minister and the Conservative party, is now employed as a public relations adviser to Thames Water, the most profitable of the water authorities. Perhaps the Chief Secretary, when looking at getting value for public money, could tell us whether it was Mr. Tim Bell who suggested to Thames Water that it should spend some of my money as a Thames Water user to pay for a water privatisation advertisement in the booklet "Thatcher—the first 10 years" obtainable from the Tory Central Office at £1·95. I do not think that there has ever been a closer relationship between party and Government than that, even in the Soviet Union. The appointment of Mr. Bruce may eventually fulfil the headline in The Times in August 1987:
    "Propaganda role for Tory headquarters".
    That rather startled some of us who wondered what else would happen while the right hon. Member for Chingford (Mr. Tebbit) was chairman of the Tory party. [HON. MEMBERS: "Winning elections."] Are Conservative Members suggesting that they had a propaganda role at the time, or that they did not? I think that that press briefing—clearly from the Tory party to The Times—suggested that the Government would have to take over the propaganda role that it had ceded substantially to the public sector and the public purse in the run-up to the 1987 general election.
    Mr. Ian Gow rose—
    Mr. Dobson: I do not think that I should give way to someone to whom one of the Whips has run up and said, "Please intervene on Mr. Dobson's speech", or words to that effect.
    That brings me to the question of the timing of some of this spending. During general elections, by convention, all Government advertising is suspended, in the words of the Independent Broadcasting Authority,
    "to avoid any risk of controversy about the use of public money for electoral purposes".
    Mr. Gow: I am grateful to the hon. Gentleman for giving way. I think that he will want to adjust this part of his speech to take account of the judgement of the High Court, delivered this afternoon, in which both judges found in favour of the Government and against the London borough of Greenwich. Furthermore, an order of costs was made against the borough. Perhaps the hon. Gentleman, who referred to the matter earlier, will now adapt his remarks to take account of his new-found friends the judges in the High Court.
    Mr. Dobson: I was aware of the outcome of the case of Greenwich v the Department of the Environment before the debate began. The fact is that, as every Conservative Member knows, it is extremely difficult for anyone to succeed in an action against a Government Department, even over a breach of statute and even with the right hon. Member for Cirencester and Tewkesbury (Mr. Ridley) in charge of the Department. When what is being questioned is expenditure carried out under the royal prerogative, the chances of success in the courts are fairly poor, and they were always poor in this case.
    Let me point out to Conservative Members that the judge in the initial hearing said that he believed that aspects of the leaflet were capable of misleading people.
    Mr. Harry Greenway: If, as the hon. Gentleman predicted, the money of taxpayers and ratepayers of the London borough of Greenwich was so grossly wasted, why did the borough bring the action in the first place?
    Mr. Dobson: I did not suggest for a moment that the action of Greenwich council was a waste of time, effort or money. What the council did was observe and then seek legal advice on the basis that aspects of the leaflet were inadequate, and that one important aspect was mentioned in the Welsh leaflet but not in the English leaflet. The borough succeeded in the courts initially; now it has failed. The odds are against success in any court case against a Government who are relying on prerogative powers, as Conservative Members know. But there is always a chance, and it was wholly proper and reasonable for Greenwich council to do what it did.
    Dr. Reid: Does my hon. Friend recall the judgment by Judge McCowan some years ago, when he decreed that the interests of the state were synonymous with and identical to the interests of the Government of the day—a view also held, apparently, on the Conservative Benches? Does my hon. Friend recall that, when that judgment was put to a jury of 12 good men and true, they threw it out of court and released Clive Ponting?
    Mr. Dobson: It seemed to me at the time that any judge who, in advising a jury, came to the conclusion that the interests of the state coincided with the interests of those

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    who, for the time being, were in government was getting on to rather dodgy ground. As my hon. Friend has pointed out, however, the common sense of the Old Bailey jury overrode the rather peculiar and absolutist advice of the judge. [Interruption.] I have now got as far as provoking the ultimate Trappist, the Government Chief Whip. He has asked me whether I was pleased with the judge's judgment. The judge made no judgment in that case: it was the jury who made the judgment. What was wrong was the judge's advice to the jury.
    The Parliamentary Secretary to the Treasury (Mr. David Waddington): I was talking about the current case.
    Mr. Dobson: If the Chief Whip wants to ask me about this case he should understand, as a lawyer, that more than one judge has been involved. It was reasonable for me to assume that he was talking about the case involving only one judge.
    I can sum up my response to what has happened in court today by saying that it was perfectly reasonable for Greenwich council to challenge the Government, and most people in this country will be glad that it did so. Greenwich knew, however, as we all know, that the chances of success in an action involving the prerogative powers are not very good.
    Let me repeat what I said earlier, as it was shouted down before. During general elections, by convention, all Government advertising is suspended, in the words of the Independent Broadcasting Authority,
    "to avoid any risk of controversy about the use of public money for electoral purposes."
    I have been in touch with the IBA to find out whether it proposes to stop the Government and public bodies from advertising on television during the forthcoming European elections. The IBA tells me that that is a matter for the Government rather than for it.
    The convention that Government advertising stops during a general election is, of course, only a convention; it has no statutory authority, just as there is no statutory authority for the general conventions on Government advertising. Nor, for that matter, is there any statutory authority for the Government to advertise in the first place. The Government acted to restrict by law the use of publicity by local councils, and we believe that whatever restrictions are applied by law to local councils should be applied by law to Government Departments. We now call on the Government to cease their advertising and publicity throughout the period of the European election campaign, following precedents set in previous general elections. If the Government refuse to do that, we call on the IBA—in observance of its own code of advertising standards and practice, which states that no advertisement may be directed towards any political end—to prevent the showing of privatisation and other Government advertising during the European elections, because we are convinced that it is impossible to look on any such advertising as not being directed to a political end.
    Mr. Ian McCartney: My hon. Friend should refer to the six-week run-up to the local government election campaign, when £8 million was spent on advertising the privatisation of the water industry, which was a major issue in the elections. If the Government are prepared to spend that kind of money to promote themselves for local government, how much will
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    be spent to paper up the cracks between the right hon. Member for Old Bexley and Sidcup (Mr. Heath) and the Prime Minister over European issues?
    Mr. Dobson: I agree entirely with my hon. Friend about water advertising. However, it so irritates people that it is probably counter productive for the water industry and for the Government.
    In the longer term, the Government should give statutory force to the conventions governing Government publicity. In the meantime, they should change their behaviour and ensure that the existing conventions are enforced. They should reinstate the Central Office of Information as the centre of advice on propriety. They should publish full details of all publicity campaigns that they intend to mount. The contracts for Government publicity campaigns should be awarded only on the basis of open and competitive tenders. Above all, the Government should stop using taxpayers' money to promote party interests. Finally, they should direct the water and electricity industries to desist from their profligate and preposterous campaigns.
    Dame Elaine Kellett-Bowman: What about Greenwich?
    Madam Deputy Speaker (Miss Betty Boothroyd): Order. If the hon. Lady wants to make an intervention, perhaps she will say so.
    Dame Elaine Kellett-Bowman: The hon. Gentleman referred to taxpayers' money. Taxpayers contribute money to the borough of Greenwich, which spent money on a fruitless exercise.
    Mr. Dobson: Greenwich council is perfectly entitled to bring legal actions within the statutes, just as Governments are entitled to appeal against judgments—although it was not an appeal in this case. If we were to suggest that public authorities could not bring legal actions, we would apply that not only to local authorities, but to Governments. However, we are saying, in short, that publicity at public expense has gone too far and it is about time it stopped.
    5.1 pm
    The Chief Secretary to the Treasury (Mr. John Major): I beg to move, to leave out from "House" to the end of the Question and to add instead thereof:
    "recognises the responsibility of Government to provide advice and information to the public; and commends the Government's firm adherence to the long standing conventions governing propriety and value for money."
    Let me make it clear to the House at the outset that I reject without qualification the criticisms made this afternoon by the hon. Member for Holborn and St. Pancras (Mr. Dobson). The worst thing that I can say, having heard his speech, is that the speech was worthy of him. In recent weeks, the hon. Gentleman has been engaged in what one can only call a campaign of misinformation and misrepresentation on a scale that merits parliamentary rebuttal. I am pleased, therefore, that he has at last brought his campaign to the House, so that it can be examined—pleased, but a little surprised that the Opposition regard this subject as more important than defence, when they have a brand-new review about which they want to talk. To express a concern about political propaganda and then to seek to avoid discussing their defence policy seems very odd.

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    I am surprised, too, that this artificial debate is more important than parading their new tax and public spending policies about which they have been boasting, or explaining their new policy of "activity funding" for the National Health Service, which caused such mirth in the House last week. If misleading propaganda concerns them, they might have brought those matters before the House, rather than the trivial conspiracy theories the hon. Gentleman has described.
    This debate was clearly timed to coincide with the court case brought by Greenwich council over the community charge leaflet issued by the Department of the Environment. As my hon. Friend the Member for Eastbourne (Mr. Gow) has already told the House, judgment has been delivered this afternoon. I understand that both judges gave unqualified support to the Government. The Government have always believed that the leaflet was clear, concise and accurate and we are pleased by the vindication of our position in the High Court. It is highly desirable that the public should have early information about the community charge and we are anxious to resume distribution of the leaflet. However, despite the fact that we are now entirely free to do so, as a result of the court's decision, we have given an undertaking not to resume distribution before tomorrow, during which time Greenwich council will consider whether to appeal. If it does appeal, we shall not resume distribution until the Court of Appeal has decided the case, provided that the appeal can be heard within the next few days. I am pleased to see that my right hon. Friend the Secretary of State for the Environment is here with us this afternoon while the House is informed that he and his Department have acted wholly properly.
    It has long been accepted by successive Governments that they have a responsibility to ensure that members of the public are properly and fully informed about their rights, entitlements, responsibilities and duties. One way of achieving that has been to use publicity and advertising in the press, on television and through leaflets. That responsibility has led to campaigns on matters such as crime prevention and benefit entitlements, which have run throughout the 1970s and 1980s. The hon. Gentleman seemed to oppose the advertising of benefit entitlement, although I recall many of his hon. Friends suggesting that the campaign might have been extended. There is nothing new about such campaigns and I trust that they are not a matter of contention today—indeed, we are often asked to increase them.
    Mr. Harry Greenway: Before my right hon. Friend leaves the subject of the leaflet, will he accept that it is urgent for delivery to be resumed as soon as possible as an honest means of countering the highly mendacious leaflets about the community charge put out by many Labour authorities at huge cost to taxpayers and ratepayers?
    Mr. Tony Banks: Which ones?
    Mr. Greenway: Greenwich and Ealing in particular.
    Madam Deputy Speaker: Order. I remind all right hon. and hon. Members that the motion and the amendment relate not to local authorities, but to the Government's publicity machine and cash.
    Mr. Major: I take your point, Madam Deputy Speaker, so I will not read the long list of Labour local authorities that have provided misleading information about the community charge. However, I accept without qualification what my hon. Friend had to say.
    Dr. Reid: Will the Chief Secretary accept that no Opposition Member is opposed to supplying information, especially on benefits, although I am surprised that he should cite that example? As my hon. Friend the Member for Holborn and St. Pancras (Mr. Dobson) pointed out earlier, when Strathclyde regional council issued information on benefits, the Government were the first to criticise.
    Can the Chief Secretary tell us what information or useful function is provided by the large billboard hoardings we see throughout the country advertising the employment training scheme? Can he tell us why every firm used in the advertisements is also a huge financial benefactor to the Conservative party?
    Mr. Major: It must be clear even to the hon. Gentleman that the purpose of those advertisements was to bring the scheme to the attention of those who might benefit from it. The hon. Gentleman should welcome that advertising.
    Some elements of advertising have long been accepted and are not parti pris or contentious and nor are many other large areas of publicity. The Government have a clear responsibility to promote health education and safety campaigns and the extensive AIDS campaign is an example of that. Energy conservation and training programmes are further examples of the Government's responsible use of publicity, both to inform and influence behaviour. Other examples of more general information campaigns are those on road safety, Government recruitment and the statutory advertising that all Governments are obliged to carry out.
    The misinformation we have heard in recent weeks has been of two kinds. First, there have been comments about the propriety of expenditure and, secondly, about its cost.
    Mr. Dobson: If energy conservation is so important, why has spending on publicity by the Department of Energy—excluding expenditure on privatisation—been reduced?
    Mr. Major: The hon. Gentleman cannot play it both ways. He cannot on one hand complain about levels of expenditure and on the other hand ask for more. However, he has drawn attention to a point that needs to be clearly understood. The advertising in which the Government are engaged is legitimate, proper, necessary and serves a good and useful purpose.
    Mr. Tony Banks: Will the Chief Secretary give way?
    Mr. Major: I will give way a little later.
    I want to turn to the matter of propriety, because the hon. Member for Holborn and St. Pancras made some contentious comments about it. He told the House that the conventions on Government publicity had been secretly relaxed. I must tell him that they have not been, nor will they be. The basic conventions applied by successive Governments for many years have remained in place and their operation has been tightened up. The conventions have a clear purpose—to ensure that public funds are not used to finance publicity for improper or party political purposes. We are firmly committed to those conventions and observe them strictly on all occasions.

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    Nor do Ministers act without professional, independent advice from the Civil Service on propriety. Until July 1988, advice on propriety was the responsibility of the Central Office of Information. That responsibility was removed from the COI solely because of the changing nature of the COI's business relationship with Departments. The more contractual basis on which COI now operates made it inappropriate for it to act as an authoritative and final source of advice on propriety. The responsibility for this advice was therefore transferred to the Cabinet Office, which has traditionally been the source of advice in Government on other questions of propriety.
    That has been the case for many years under many Governments. The responsibility is not located where the hon. Member for Holborn and St. Pancras suggested. The responsibility is located in the machinery of Government division, within the Office of the Minister for the Civil Service, under the ultimate direction of the Cabinet Secretary, the head of the Home Civil Service. That is where the responsibility lies.
    The established conventions governing Government publicity remain unchanged, and publicity campaigns must continue to meet important tests. First, they must deal with a subject for which the Government are responsible and on which they need to communicate with the public. Secondly, they must provide good value for money. Thirdly, they must not be open to question that the primary purpose, or principal incidental purpose, of a campaign is party political advantage.
    The primary responsibility for ensuring that the conventions on propriety are observed, and that value for money is being achieved, rests with Ministers and their Departments. All Governments have accepted that. In the light of the strengthened guidance we have given, most issues under the conventions will in practice be sorted out in Departments, or between them and the COI. There will be a residual category of cases, not many, on which Departments look either to the Cabinet Office or to the Treasury.
    As the hon. Gentleman trailed, at ministerial level I have been asked to act as a point of reference on Government publicity matters, and am responsible for the adjudication of conflicting departmental approaches to the presentation of Government publicity. My services in that respect are seldom required but, if and when they are, I look to the machinery of Government division for advice on propriety, and to my Treasury officials on value for money. I should make it clear to Opposition Members that when I have been asked to make a ruling I have not hesitated to turn down a proposal which seemed possibly inconsistent with the guidelines. I or my successors with that responsibility will no doubt continue to do so if it seems appropriate.
    Several Hon. Members rose—
    Mr. Major: I give way to the hon. Member for Linlithgow (Mr. Dalyell).
    Mr. Tam Dalyell: Before we leave the question ofpropriety, does the Chief Secretary believe that his predecessor, Sir Leon Brittan—[Interruption.] I am asking a factual question. Does the Chief Secretary believe Sir Leon Brittan when he said that approval was given by Mr. Powell and Mr. Ingham for the improper disclosure of a Law Officer's letter? Does the Chief Secretary believe Sir Leon?
    Mr. Major: The hon. Gentleman raises this matter repeatedly but it is not within this debate and I have no intention of getting involved in that debate.
    Mr. James Wallace: Although the right hon. Gentleman was not the Chief Secretary at the time, he may recall that shortly before the last general election the Ministry of Defence issued a video and a publicity pack that not only argued why Britain should have an independent deterrent, but stated why it should be Trident as opposed to any other possible deterrent. Clearly that was politically contentious, no matter what the rights and wrongs of the matter were. What was the need for that information to be imparted to members of the public?
    Mr. Major: If the hon. Gentleman wants to run that sort of argument, I shall ask why, in the past, his party supported the publicity produced by Labour Governments on, for example, a new deal in Europe, on devolution—which is hardly uncontentious—and on the attack on inflation—"A Policy for Survival". The hon. Gentleman has wholly misunderstood the conventions and he is wholly and entirely wrong.
    Mr. Tony Banks: The hon. Member for Orkney and Shetland (Mr. Wallace) is not a member of the Labour party.
    Mr. Major: In early 1988—[Interruption.] Hon. Members may shout "Don't bring in the Labour party," but I do not need to bring in the Labour party and nor will the electorate for many years—if ever.
    Mr. Banks: I realise that the Minister is getting a bit hysterical, but I did not say, "Don't bring in the Labour party," I said that the hon. Member for Orkney and Shetland who was accused of being a member of the Labour party has never been a member of the Labour party.
    However, since the Minister has graciously given way, will he tell me what recourse the taxpayer has if he believes that money has been spent on something that is essentially party political advertising? In local government such people can go to the district auditor, so what is the machinery that allows the taxpayer to make a formal complaint? Finally—I know that the Minister will never give way to me again—why do all these Government publications have to include a picture of the Minister concerned?
    Mr. Major: On the central point in the hon. Gentleman's question, the recourse is the recourse that we are exercising this afternoon—the fact that Ministers are answerable to this House and to Members of Parliament. That is the central recourse and that is the distinction between central and local government—
    Mr. Bruce Grocott rose—
    Mr. Major: I shall give way to the hon. Gentleman later if he can contain himself for a moment.
    On the first of the three points to which the hon. Member for Newham, North-West (Mr. Banks) referred in his intervention, I was referring to the period of the Lib-Lab pact, and on his third point, as many of my right hon. and hon. Friends are highly photogenic, it seems entirely reasonable that their photographs should be on such publications.
    Mr. Grocott: Which does the Minister think is the most effective sanction—having to appear before this House in a debate or being bankrupted by surcharges?
    Mr. Major: If one appears before the House in such a debate or, in case of need, before the Select Committee on the Treasury and Civil Service and other Committees of the House, that is a significant sanction that cannot be beaten anywhere. It is a sanction that no Member of the House would overlook at any stage or would treat lightly.
    In early 1988, the Government reviewed the arrangements needed to ensure the compliance of Government publicity campaigns with the accepted conventions, as well as the role of the COI in those matters which I have already mentioned.
    The review confirmed that the conventions had stood the test of time well, and led to strengthened and tighter guidance to Departments. This covered the interpretation and operation of the conventions such as the use of public relations consultants and direct marketing, and the need for professionalism, both of presentation, and in making sure that publicity expenditure provided value for money. This covers aims, the means used, the cost proposed, and proper measurement of the results. The guidance was widely circulated to heads of Departments and Ministers and is available in the Library.
    The reality, therefore, is that the principles of propriety and value for money on which we operate are unchanged and fully observed—I repeat to the hon. Member for Holborn and St. Pancras that the principles are unchanged and fully observed—notwithstanding the general background of rapidly developing publicity techniques and the fact that the Government need to compete for attention with a vast array of messages from others. We have also clarified and tightened up the operation of these conventions and set new machinery in place to ensure compliance, both in terms of propriety and value for money. Nothing that the hon. Member for Holborn and St. Pancras has pointed to or can point to can shake that fact.
    Mr. Dobson: Why did it take the passage of 14 months and some questions from me before the fact that the review had taken place was disclosed and the document published?
    Mr. Major: There was nothing whatsoever secret about the review, which was predominantly about the internal workings of the COI and other bodies. The moment that the matter was raised, the documents were made fully available. Although I accept that in retrospect it might have been better if the Government had unilaterally produced them before the hon. Gentleman asked his question, the reality is that the moment the question was asked, the information was made available. However, it was essentially an internal review, predominantly about the role of Government Departments rather than necessarily about the conventions which remain unchanged.
    As the hon. Member for Holborn and St. Pancras mentioned the codes of conduct for local authorities under the Local Government Act 1986, he should put that in proper perspective. Indeed, if the rules and conventions that govern central Government operations had been observed as closely and honourably in local government, there would have been no need for the Widdicombe report and the subsequent legislation, but they were not observed.
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    The hon. Member for Holborn and St. Pancras mentioned publicity by local government on benefit entitlement. The reality is that Widdicombe was needed to correct abuse of the ratepayers by local authorities—predominately Labour—on a monumental scale. Quite apart from extravagance and inefficiencies, many Labour local authorities had also badly misused public money for advertising. Lambeth council spent thousands of pounds of ratepayers' money on anti-Government propaganda, and Haringey council ran an advertisement out of ratepayers' money that said that it would campaign for the next Labour Government to repeal all privatisation laws. The next Labour Government, mark you! So it was not even campaigning against Government policy. It was using ratepayers' money to campaign against Labour policy.
    Madam Deputy Speaker: Order. I must remind the Chief Secretary and other hon. Members that I have already put down a marker that the debate concerns the Government publicity organisation machine and does not refer to local government.
    Mr. Major: Of course, Madam Deputy Speaker, and I shall obey that injunction. I am happy to concede to the hon. Member for Holborn and St. Pancras that I obey it reluctantly in essence, because the amount of information, which indicates clearly the way in which Labour local authorities have behaved in recent years, is massive and deeply embarrassing for them. However, in any event, there is plainly no need for statutory control of Government publicity, because Ministers are firmly committed to the conventions, which have been fully published so that the House can always call on Ministers to justify their actions. That discipline cannot be applied to local government, and that is why legislation was necessary to deal with local authority abuses.
    The hon. Member for Holborn and St. Pancras made much of the increase in expenditure since 1979. But he is neither making sensible comparisons over time nor dealing with the merits of the expenditure. In cash terms, of course, he is right. Expenditure on behalf of Departments by the COI has moved from £35·4 million in 1978–79 to £151·6 million, including flotations, in 1988–89. There are good reasons for that increase. The elements that must be taken into account include general inflation over the period, the introduction of VAT on press advertising, and an even more substantial rise in the cost of buying time on television and radio and space in newspapers and magazines. For television, for example, which is increasingly important in effectively communicating to the public, that increase is estimated at up to two and a half times the general rate of inflation. In addition, there is included in those figures the new item of flotation advertising in pursuit of privatisations.
    The hon. Member for Holborn and St. Pancras and some of his hon. Friends have referred to the water authorities' current campaign as being "propaganda for privatisation". That attack is nonsense, and the water authorities have made clear that it is nonsense. We should be clear, too. The water authorities, like other nationalised industries, must make their own commercial judgment about corporate advertising within overall levels of finance set by Government. The present corporate campaign is run by the water authorities, and they pay for it.

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    The water authorities have made clear that the purpose of their campaign is to improve consumer awareness of the industry and the industry's image. Of course, it is true that, in planning it, the industry recognises that the circumstances in which it operates will change radically. It knows—subject to Parliament's approval—that it will be privatised and that its efficiency and standards of service will come under close scrutiny by consumers. Of course, it knows that. But, irrespective of that, it knows that the environmental concerns of the public are growing, and that it will have to meet those concerns. It knows, too, that a great deal of attention has been focused on the water industry in recent months and a great deal of nonsense has been talked about it and the services that it provides—often by the Opposition. It is its judgment that the current campaign will go some way to improving customers' knowledge of the industry and the Government share that view. The Opposition criticise the corporate campaign on entirely false grounds. The only reason that they do so is that they are opposed to the Government's policy towards the water industry.
    Mr. McCartney: Will the right hon. Gentleman give way?
    Mr. Major: I will not give way to the hon. Gentleman. This is a brief debate and I have given way on a number of occasions. I hope that on this occasion hon. Members will excuse me.
    Opposition Members, of course, dislike denationalisation—as I prefer to call privatisation—as a principle. We understand that. They prefer state ownership with rigid control. We understand that, too. That is the nature of their philosophy. That is why they have been critical of the spending on flotation advertising that has accompanied privatisation. I cannot agree with them about that. Flotation advertising campaigns are designed to publicise a forthcoming offer for sale, and convey information about the availability of prospectuses and the application procedures. The Government believe that it is important that the opportunity to gain a direct and personal stake in the future of British industry is given to all investors, large and small alike. It must, therefore, be brought to everyone's attention and not just to the attention of the large institutions, and those familiar with the markets. Indeed if it were not, the Opposition could rightly criticise us for that. But advertising on flotations is undertaken only after Parliament has approved the policy and in order to carry it out successfully.
    It is also eminently justifiable expenditure. All costs incurred by Government in relation to a privatisation, including advertising costs, are netted off against the proceeds that advertising the sale brings in. Nor is the advertising excessive. The overall Government cost of those advertising campaigns has represented only a small percentage of those proceeds—0·3 per cent. for British Telecom, 0·4 per cent. for British Gas, British Airports Authority and British Petroleum. They help the Government to get a good price for the sale and represent, therefore, a very good bargain for the taxpayer, and a popular one, too. More than 2 million people bought shares in British Telecom and around 5 million in British Gas, and the number of shareholders has tripled, largely due to the privatisation programme.
    Of course, some justified publicity takes place in areas of political contention, as the hon. Member for Holborn
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    and St. Pancras said. That is not new or unique to the Government. What is new, and I hope will be unique, is the hon. Gentleman's argument that, because he does not like the Government's policies, publicity for them is wrong. Provided the conventions are observed, that is not so. But, if we take his line, we find that the 1974–79 Labour Government, with its Liberal support, must have had some difficulty with the conventions. I wonder on the hon. Gentleman's argument whether their publicity on counter-inflation or selective price control would have passed a value for money test. I very much doubt it. Would their material on devolution for Scotland and Wales have got very far? I doubt it; that was hardly uncontentious then or now. The hon. Gentleman would have to argue that the European Economic Community referendum was done in order to get that Government out of a party political hole. That is the result of the hon. Gentleman's logic when applied to his own party when in government. However, I do not take that view. I exonerate the Labour Government of impropriety. The better view is the one that we hold. They took their responsibilies for the conventions on Government publicity expenditure seriously and responsibly, just as we do, and they took advice, just as we do, on propriety. The hon. Gentleman cannot have it both ways.
    Mr. Dobson: The right hon. Gentleman should concede that, both in the case of the money spent on the European referendum campaign and on the national devolution referendum campaigns in Wales and Scotland, money was provided for both sides to put their cases. In the document published in 1981, the then Government justified the Labour Government's expenditure on the counter-inflation campaign, because a very big majority of supporters of all the main political parties agreed with the points made in the advertisements. That does not apply to the contentious political advertising of this Government.
    Mr. Major: I think that the hon. Member for Holborn and St. Pancras has missed the point of what I was saying, which was specifically to exonerate the then Labour Government from impropriety in those advertising campaigns. That is what I expressly said just a few moments ago. What I said was that, if the hon. Gentleman criticises us now, he should have condemned the last Labour Government even more roundly. If he does so, in the spirit of Robespierre-like purity I can tell him that he was wrong about them then just as he is wrong about us now.
    The hon. Member for Holborn and St. Pancras set out a number of criticisms. None is justified. All should be rejected. Our systems ensure that spending must come from within departmental budgets, and that it meets strict tests of value for money and cost-effectiveness. All publicity expenditure is also subject to the scrutiny of the House, of the Treasury Select Committee, and of the Comptroller General in the National Audit Office. We welcome that, and, of course, that scrutiny will continue.
    In addition, the Government not only support the traditional principles of propriety and strictly observe them, but in recent months they have strengthened their operation and published the guidelines implementing them. The controls are rigorous and the propriety is absolute. The Opposition's criticisms are baseless, they are shallow, and I invite my hon. Friends to reject them.
    5.29 pm
    Mr. Brian Sedgemore: The Minister presented his case today with a grace and charm that few hon. Members can rival. He is more confident at the Dispatch Box than he is when he answers questions to the Treasury and Civil Service Select Committee, of which I am a member. I remember him telling me two years ago that he had had a hard life, with no education and that he was ignorant on complicated matters such as economics. Having heard him today, nor does he seem to know how to bring the Government's publicity machine under control.
    The Minister said a lot about water, but, if he will allow me, I shall make that my last point. My first point is that many years ago Bertrand Russell, the philosopher, wrote a prophetic book on the Government's attitudes on expenditure and publicity. The book was called "Mysticism and Logic". In it Bertrand Russell said:
    "Better the world should perish than that I or any other human being should believe a lie…that is the religion of thought in whose scorching flames the dross of the world is being burnt away."
    Today's debate is about the Government's rejection of Russell's rationalist creed.
    Much later Gerald Kersh, in a book called "Night and the City", caught the flavour of the Government's unacceptable treatment of and expenditure on propaganda and publicity when he said:
    "The habitual liar always imagines that his lie rings true. No miracle of belief can equal the childlike faith in the credulity of the people who listen to him: and so it comes to pass that he fools nobody as completely as he fools himself."
    Which Minister, I ask myself, will step forward today and admit to being Kersh's habitual liar? If truth prevails, there will be a positive stampede from the Government Benches.
    As I look at the huge and burgeoning amount of money spent on publicity by the Government, I am reminded of Swift's aphorism that
    "All political parties die of swallowing their own lies."
    But, of course, I try to be fair minded. I try to give the Government the benefit of the doubt. God knows, I try. But every time that I pick up a Government leaflet or see a television advertisement on a controversial issue, my mind turns first to she who is in charge at Downing street, and then to Somerset Maugham, who said of the constant wife:
    "She's too crafty a woman to invent a new lie when an old one will do."
    Then, as images of the villain of the piece—the Secretary of State for the Environment—whom people have tried to exonerate today, I am reminded of Harry S. Truman who, in an ugly mood, said of Richard Nixon:
    "I don't think the son-of-a-bitch knows the difference between truth and lying."
    We are told that the Secretary of State has been exonerated by the courts today. As a barrister, my advice to Greenwich would be that it should appeal. With the greatest respect, I say to m'luds that they have forgotten Robert Louis Stevenson's perceptive aphorism:
    "The cruellest lies are often told in silence."
    It is basically the omissions from that pamphlet to which m'luds have not properly directed themselves today and to which I imagine the Court of Appeal will direct itself shortly if Greenwich has the money to appeal.
    I want to intervene briefly, but let me give one example of what I consider to be expenditure on publicity that has
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    got completely out of hand. It relates to the Government and the water industry. We all know that the same Minister is involved. I was in my car today—a Vauxhall Cavalier—coming in from Hackney, when I saw a little crowd in Kingsland road looking at a poster that was 50 ft high and about 105 ft across about water privatisation. I thought that I would make some inquiries today and find out exactly how that poster got up there and how the Government, or the water industry, or both, or the Conservative party, or all three of them, justify its existence. I shall not say now what is in it; I shall keep that for the moment.
    I do not want to give away confidences, but I understand that the water industry employed an advertising agency which gave the job to two of its crack whizzkids, people with the finest intellects in the land, whom I shall call Jeremy and Nigel because all whizzkids in the advertising industry are Jeremies or Nigels. Jeremy and Nigel met together and they had with them the Cabinet Office guidelines. Jeremy was sitting over the table with his head in his hands looking pig sick. He was trying to think what advertisement he could do for the privatisation of the water industry. My hon. Friend the Member for Holborn and St. Pancras (Mr. Dobson) quoted the annexe of those guidelines, but paragraph 2 says that the advertisement must be relevant to Government responsibility, objective and explanatory and should be produced and distributed in an economic and relevant way having regard to the need to justify the cost as expenditure of public funds.
    Then Jeremy turned to paragraph 5 and he thought, "Oh my God, what am I going to do?" That paragraph says that Government publicity should always be objective and should be directed at informing the public even where it also has the objective of influencing the behaviour of individuals and particular groups. Jeremy did not know how he was to inform the public. What was he to inform them of about the Water Bill? He had in front of him a series of tables on the test discount rate and the real discount rate in the water industry; diagrams of sewage works and chemical formulas for purifying water. He had everything, but, as he said to Nigel, "There's no buzz in this, Nigel." A good advertisement needs buzz and it needs information.
    Then—I have not yet said what is in the advertisement —a flicker came into Jeremy's eye, a smile came across his face, and he started to jump up and down excitedly. He said, "I've got it. I've done it. It's brilliant. It's super." He hugged Nigel and there were tears streaming down his face because that is the way that genius works in the advertising world. It was extraordinary. He said, "We'll tell the public that water comes from rain". And so it is that in Kingsland road and in every borough in the land we can look up and see these posters. This is not a joke. Those posters have nothing other than a picture of a cloud. The whole thing is one picture of a cloud and underneath it says, "This is the beginning of our production line." Millions of pounds of taxpayers' money, our money, is being spent on telling the public that water comes from rain—can anyone believe the perceptive abilities, the limits of human intellect?—and that rain comes from clouds. Surely that is the grossest example of waste in the history of the world. I defy the Minister to tell us what that is about when he replies.
    I have one last brief point which refers to the letters that my hon. Friend the Member for Holborn and St. Pancras has written to the Treasury and Civil Service Select

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    Committee about the fact that we were grotesquely misled. Civil servants from the Central Office of Information gave evidence to the Select Committee and referred to the 1985 guidelines. They made no mention of the fact that new and more extensive guidelines were published in 1988 concerned with all kinds of new advertising which opened up a hornet's nest of questions which would have embarrassed the Government. The Government's response also referred to the 1985 guidelines and made no mention of the fact that those guidelines were no longer in force but had been replaced by the 1988 guidelines.
    I want to he fair. I do not think that that was a cock-up or a cover-up; I think that it was a nasty conspiracy on the part of the Executive to deceive Parliament. We shall call those Ministers and civil servants to account, bring them back in Committee, and challenge them in the Lobby tonight.
    5.39 pm
    Mr. Phillip Oppenheim: I know that Conservative Members will stand up one by one during the debate and bitterly criticise the Opposition's attitude and their calling of this debate. They would be wrong to do so. Conservative Members should welcome the Opposition calling this debate. They should certainly welcome their new-found vigilance on behalf of the taxpayer. It is right that Opposition Members should be vigilant on behalf of the taxpayer, although there are few of them here to support their Front Bench spokesmen. However, it is a shame that the Opposition's vigilance slips a bit on local authority spending. I can see the Opposition Front Bench spokesmen twitching at the very thought that the subject of local government's high spending on publicity will be raised.
    I hope that you, Madam Deputy Speaker, will not rule me out of order if I mention the fact that the Department of the Environment decided to issue this leaflet partly to counter the smears and misinformation about the community charge that were being put out by local government. Strictly in that context, I shall point out that, over the past couple of years, Derbyshire county council has spent huge, almost unaccountable sums of money on criticising the Government about the community charge.
    So-called free newspapers contain headlines such as "Your privacy invaded—poll tax threat". That sort of expensive misinformation has not been considered a suitable subject for the Opposition's new-found vigilance over the spending of public money on so-called political publicity. On one occasion, when Derbyshire county council spent more than £1 million on a television publicity campaign, the county council's leader said that that was a "mere pin-prick."
    Mr. Joseph Ashton: Is not the difference that the national Government virtually tell the newspapers what to print and do not need to buy adverts for their policy, whereas Labour councils, which are in an overwhelming minority and face a predominantly Tory press, even in the regional newspapers, not to mention the national newspapers, have no option but to buy advertising?
    Mr. Oppenheim: I am pleased that the hon. Gentleman raised that point. In our county of Derbyshire, much of the local press toes the council's party line. I and many other people in Derbyshire believe that one reason for that is
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    that certain newspapers in Derbyshire receive huge sums in advertising revenue from the county council, which encourages them to toe the line of the council's ruling group.
    May I remind the hon. Gentleman that the rules on publicity which bind local government are far less strenuous, tight and onerous than the Treasury and Civil Service rules which bind the Government. That is why it would have been especially appropriate if Opposition Members had raised the subject, and were as vigilant about local government's spending on publicity as they are about the Government's spending. I would hazard a guess that my right hon. Friend the Minister for Local Government has not received a single representation about local government spending from the Opposition.
    I fully agree with the Opposition's vigilance on the spending of public money on publicity. However, I cannot agree on one point. They have persisted in mixing the spending of public money on the promoting of privatisation issues with more general spending to inform the public about the Government's policies and legislation. The money spent on privatisation issues has been recouped many times over. Opposition Members would have been the first to criticise the Government if they had not spent money on promoting those issues and, as a result, had not gained the best possible price for those issues for the taxpayer.
    The attitudes of Opposition Members have also changed sharply since 1977, when they were forced by the International Monetary Fund to sell part of their stake in British Petroleum. The then Labour Government spent millions of pounds, at today's prices, promoting their forced share sale of part of their stake in British Petroleum. I ask any Opposition Member: was that Labour Government wrong to spend money on promoting the privatisation of their stake in British Petroleum in 1977? If that Labour Government were not wrong to spend the money then, why are this Government wrong to do so now?
    It boils down to the fact that Opposition Members do not mind one little bit if public money is spent, as long as it is spent in propagating their point of view. However, they object vigorously, vehemently and strenuously when the Government spend money promoting information to the public about their policies and legislation. I do not criticise them for that, nor do I think it hypocritical; it is merely the stuff of politics. At the same time, it is not a matter that Conservative Members have to take seriously.
    I welcome the Opposition's new-found vigilance and the calling of this debate today. The Opposition have shot themselves badly in the foot by drawing attention, not only to their double standards, but to the millions of pounds spent by Labour councils in promoting Labour policies.
    5.47 pm
    Mr. James Wallace: I disagree with what the hon. Member for Amber Valley (Mr. Oppenheim) said about the disciplines imposed on local authorities as opposed to the Government. Government Ministers, unlike local authorities, are not surcharged if they overstep the law. One wonders if anyone might have been disciplined for the £500,000 campaign that was mounted at the end of last year to rehabilitate the egg, following some disastrous words uttered by the then Under-Secretary of State for Health. The hon. Lady might

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    have thought twice before opening her mouth if she thought she would be surcharged for the public expenditure consequences of her mutterings.
    When I intervened in the speech of the Chief Secretary to the Treasury he thought that he had scored a bull point in return when he talked about the Labour Government. However, I was not a member of that Government. He talked about two issues: the devolution referendum, which took place six months after the Lib-Lab pact, and the European referendum which took place two years before the Lib-Lab pact. As the hon. Member for Holborn and St. Pancras (Mr. Dobson) has already mentioned, in both those cases, both sides were given the chance to put their argument. There is no suggestion from Conservative Members that public funds will be made available to allow people up and down the country to put forward their arguments about why the poll tax is not good. In the previous cases, there was an element of fairness.
    In the few moments that I have had, I have thought back, and I suspect that the last major publicity campaign mounted by a Liberal Government was that with the poster showing the face of Lord Kitchener, with the message "Your Country Needs You". I suspect that that was good value for money because we still remember Lord Kitchener. Who, in 70 years' time, will remember Sid? Given the straitened circumstances of that time, perhaps the Minister will exonerate the last Liberal Government in the way in which he has exonerated the last Labour Government.
    In the past 10 years there has been a sixfold increase in the amount of money spent on Government advertising, which, by any stretch of the imagination, is a significant development. Four years ago, the Government were in tenth place in terms of general advertising spending. They are now in first place, ahead of Unilever. That has been at a time when the Government have embarked on a crusade against public expenditure.
    I recall the words of Mr. Robert Harris, a journalist, who, of one of the privatisation issues, said:
    "People are being forced to pay for adverts they do not notice in order to buy shares they do not want in an industry they already own."
    He could have added that they had been asked to do so with their own money. As the Government regularly tell us, it is not the Government's money but the money of the people and the taxpayers that is being used.
    At the same time, there has been a whiff of hypocrisy. I shall not stray into the subject of local government, but you, Madam Deputy Speaker, have no doubt heard the comments, which are a good example of the kettle calling the pot black.
    We have heard other examples of hypocrisy. The Secretary of State for Health launched an attack on the British Medical Association for trying to spell out to patients what the Government's proposals mean. It is hypocrisy for him to attack it when the mere launch of the White Paper involved more than £1 million. It involved a relay with his face being flashed up on screens across the country, a specially produced video and a video designed specifically for Scotland that featured the Secretary of State and the Under-Secretary, the hon. Member for Stirling (Mr. Forsyth). I am told that nurses were flown in from various islands to Kirkwall in my constituency to see this. Afterwards, some of them said that they had never
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    seen anything more like a Conservative party political broadcast; it was counter-productive, too, as the nurses also told me that it was the best recruiting advertisement for the opposition parties that they had seen in a long time. It failed to hit its target.
    Increasingly glossy brochures have also been mentioned. I have here a White Paper. Once, they were really white. The Beveridge White Paper sold tens of thousands of copies, printed on ordinary white paper. Now they are all glossy and contain photographs—there is inevitably one of the Secretary of State for Scotland at the front. I remember the day when "Scottish Enterprise" was announced. I was sitting here with my hon. Friend the Member for Caithness and Sutherland (Mr. Maclennan), who noticed a rather nice picture of his brother's flat in the document. He did not know what relevance it had to "Enterprise Scotland", and five months later we are none the wiser. It was just another example of Government money being spent on glossy publicity.
    Then there was the White Paper on the ending of the dock labour scheme. I make no bones about it: our party supports the Government on that, but to introduce a White Paper at great cost on one day and then bring in a Bill the next begs the question of what is being done with public money.
    I turn next to the ministerial presentations on the inner cities initiative and on the Government response to the Settle-Carlisle line. Those glossy presentations were made at press conferences, not in the House, and should have been delivered at the Dispatch Box, from which the Ministers would have had to answer questions from hon. Members on both sides of the House. That is another abuse of publicly funded Government PR work—
    Mr. Ashton: Has the hon. Gentleman forgotten the wining and dining that takes place when Ministers meet the press off the record? That is what the Secretary of State for Transport did over an expensive lunch; he gave the press a story and frantically denied it two days later. It happened again when the Chancellor of the Exchequer gave the press a briefing that was recorded on tape and then denied that the tape had been switched on. That is a mammoth waste of public money to impart a message that does not get across.
    Mr. Wallace: I share the hon. Gentleman's view, but I suggest that the lunch to which he referred was paid for by the journalists, not the Secretary of State for Transport. Whether they got value for their money is another matter.
    Of course, we accept that there is a serious dividing line between genuine advice and information and what might be described as propaganda. Information advertising campaigns to bring to public attention the fact that smoking can damage people's health are, we would all agree, legitimate, as are advertising campaigns to encourage the take-up of social security benefits. I encouraged the Minister of State at the Scottish Office to advertise the availability of and opportunities under the agriculture development programme in my constituency after the storms which greatly damaged agriculture there. The Government said that there was no special scheme, but they were willing to promote the programme that already existed to help farmers. That was legitimate.
    The Chief Secretary mentioned the sums spent on energy conservation, but I notice that the Department of Energy's budget for advertising has shrunk. The

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    Government are cutting back on promoting energy conservation at a time when they claim to be concerned about the greenhouse effect. However, through their agencies, British Nuclear Fuels Ltd. and the Atomic Energy Authority, the Government are promoting day trips to Windscale, or Sellafield. That is another PR trick —when Windscale became unpopular, they changed the name to Sellafield, just as the poll tax has been changed to the community charge. All this is part of the Government's use of slick PR.
    The conventions that have already been referred to state:
    "Public funds may not, however, be used to finance publicity for party political purposes; this rule governs not only decisions about what is and what is not to be published, but also the content, style and distribution of what is published."
    The contents should include not only the truth, but the whole truth. I am not surprised that the judges decided the Greenwich case today as they did, but it cannot be denied that, even if there was no abuse of spending which, in their view, merited an injunction, the whole truth was not told.
    As a Scottish Member of Parliament, I have witnessed in the past year the sending out of the registration forms. One aspect which especially alienated people was the statement on the forms that a person who was designated a responsible person was not liable for anyone else's poll tax. The form omitted the fact that a spouse in the house could be jointly liable for the tax. The leaflet that was the subject of the Greenwich case will misinform people in the same way.
    The original GP's contract was sent out containing helpful diagrams showing what would happen to a GP's pay, especially in rural areas. The contract said that a GP with a list of 1,000 would receve an increase in pay. It was less clear that he would also suffer a drop of £10,000 in basic pay, which he would have to make up with special payments. The contract did not say, either, that the examples of special payments in the diagrams related to doctors with lists of well over 2,000. Such misinformation strays over the dividing line of legitimacy.
    At present, there is a campaign in Scotland by the Scottish Office to encourage parents to stand for school boards. A lady in my constituency wrote to say:
    "I have just watched a government advert for school boards. At one point it says 'Every parent can stand for election and every parent can vote'. I think I can vote but I have been led to believe I do not have the right to stand for my son's school board.
    Whalsay only has the one primary school and I teach in it, therefore I believe I do not have the same rights as my friend up the road whose son will start at the same time as my son."
    She is right—she does not have the same rights, but the Government advertising does not make that clear, and the letter that I sent the Minister asking him to clarify and explain remains unanswered.
    Objections have been raised to advertising the privatisation of water. I am told that there is now more advertising of water than of any other product—more than of Pepsi-Cola or Nescafé. The problem is that Parliament has not yet approved the privatisation plans. They may well be Government policies but they have not been put into operation and the Bill has not completed its passage through both Houses. That is an abuse of public money.
    The guidelines mention not only content but style, which I should like to examine in the context of the Department of Employment's promotion of "Action for
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    Jobs". It is a classic example of what the Government complain about when done by local authorities. It is persuasive about controversial issues and it tends to promote the Department. What is more, it can hardly be said to be a sober presentation of factual information. The title, "Action for Jobs", was used at the same time as the "Action" slogan appeared as the theme at the Conservative party conference.
    I am also advised that the Department of Trade and Industry has taken it upon itself to advertise the enterprise initiative with a soaring arrow, a logo that also appeared in a remarkably similar form in Conservative posters in the recent county elections.
    We are told that the Scottish Office is to be given a face-lift by PR consultants to improve its image. Everyone in Scotland knows that that has much to do with the Government's need to give their party a political lift there. We need independent advice which is seen to he independent and not to come from the Government. There is a dangerous blurring of public information and party propaganda, of the state and the party. Perhaps we should not be surprised, because in 1987 the Prime Minister took about £600,000 more from the Exchequer to run her office than the Queen, and last year the gap widened to almost £1 million.
    5.58 pm
    Mr. David Tredinnick: The hon. Member for Holborn and St. Pancras (Mr. Dobson) closed his remarks by saying, "Publicity at public expense has gone too far and should stop." I suggest that that is humbug. The hon. Member for Orkney and Shetland (Mr. Wallace) talked about the pot calling the kettle black, but the deception practised by the Opposition in this matter is more like a cauldron calling the kettle black.
    The Labour party has abused public funds disgracefully to promote its political causes in the past. Perhaps the most striking example of that, as my right hon. Friend the Chief Secretary mentioned, was the campaign from 1975 to 1977 under the last Labour Government. Hon. Members will recall that their economic policies were in complete disarray. They then decided to try to spend themselves out of trouble, I am not thinking of the attempt to pay the taxpayers' money in the normal sense through the Treasury; this was a new device. This was the device of the so-called counter-inflation publicity campaign. It must be one of the most disastrous publicity campaigns in the history of advertising because, of course, by 1979 inflation was running at more than 27 per cent.
    It is well worth studying what the papers said of the Labour Government's campaign at the time. The Guardian said:
    "The Government's campaign to win support for its anti-inflation policy begins officially tomorrow, when all national newspapers will carry full-page advertisements paid for by the taxpayer, and Mr. Wilson will return briefly from his Scilly Isles holiday."
    In The Times we read that:
    "…the Government's anti-inflation publicity campaign, the largest since the days of Sir Stafford Cripps more than a quarter of a century ago, will enter its third phase."
    This is December 1975. Already £1·5 million has been spent, and the specially created counter-inflation publicity unit has another £1 million at its disposal. If that is not an instance of a Government using publicity to get their way and to get themselves out of trouble, I do not know what

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    is. This shows quite clearly the large degree of hypocrisy among Opposition Members. In this campaign they spent £300,000 on television advertising and £800,000 on press advertising in 1975–76 alone.
    Another campaign supported by the Opposition a Parliament ago was the campaign of the late, unlamented Greater London council to denigrate the police in London. I know that you do not want me to stray into local government politics, Madam Deputy Speaker, but it suited the Labour party to use the GLC to get at the Government during the presentation of the Police and Criminal Evidence Bill 1983 and the subsequent Bill, which they did by spending money on a spurious magazine, of which the name escapes me—it might have been "Policing London". They put out propaganda which was intended to prevent local groups from using the new consultative procedure Lord Scarman had suggested should be set up in his historic report into the Brixton disorders.
    That was a disgraceful misuse of public funds, but perhaps it pales into insignificance when one looks at the attempt by the GLC to save its now unlamented neck by spending £12 million of the taxpayers' money, despite the fact that Londoners had voted at the previous general election to abolish the GLC. The view at county hall went blatantly against the democratically expressed wishes of the voters.
    The hon. Member for Hackney, South and Shoreditch (Mr. Sedgemore) mocked the privatisation of water. He talked about adverts for clouds. Some of us might have said that he had his head in the clouds. The whole point of the advertising campaign is to stress the purity of water. [Laughter.] Opposition Members may laugh, but they have been the first to try to make mischief by suggesting that there are problems with the purity of our water. I know that there is concern in my constituency about the purity of water, but surely it is right for the water boards, which are being privatised, to point out the good things which will happen as a result of my right hon. Friend the Prime Minister's policy. That seems to me perfectly reasonable.
    The Government are introducing reforms in areas of life which the Labour party has never even tackled, such as moving from rates to the community charge. Are we really supposed to do that without any publicity? The pamphlet which has been so criticised says in the first paragraph:
    "This leaflet tells you about the main points of the new community charge system."
    It is hardly propaganda. It is giving people an overview to counter the propaganda of the Labour party, which has frightened in particular elderly people in my constituency. The Labour propaganda makes out that everyone will pay the same, whereas we know, of course, that with the community charge there will be protection for poorer people. [Laughter.] Opposition Members may laugh but it is the truth, and it is quite right that we should make that point.
    There is categorical evidence that the Labour party abused public funds during its last administration and aided and abetted local government organisations. We on the Government Benches have an absolute right and duty to present the very important reforms of our Government and party, and our constituents want to know what they are.
    6.5 pm
    Mr. Tam Dalyell: I begin with what is meant to be a non-party point. When I first arrived in the House of Commons in 1962, if a motion of this sensitivity and potential importance had gone down on the Order Paper, the Prime Minister of the day would probably have been present and Hugh Gaitskell certainly would have been.
    If there are to be motions like this on the Order Paper, they should be regarded, in my opinion—which may be old fashioned—with the utmost gravity, because the charge is extremely serious and this is a weighty matter. If people do not mean them, they should not put them down in the first place. [Interruption.] I said that it was a non-party point, and I was speaking, I hope, as a House of Commons man on this issue. Unless it is a major debate, I do not think that the Chief Secretary—incidentally, I do not entirely blame him for this—should feel that, having spoken, he can go off to some Cabinet Committee meeting or some other doubtless important engagement. If there is a Cabinet Committee meeting, the business of the House of Commons on an issue like this should take precedence.
    On 8 May I tabled a question asking the Prime Minister to publish in the Official Report the text of Mr. Ingham's letter to Mrs. Elizabeth Jenkins on a code of ethics for Government information officers. Mrs. Jenkins is the professional civil servants' representative most concerned, and we are to understand that this was an important policy letter, inside the Civil Service at any rate. The answer was a monosyllabic "no". Letters like that should be made available to Parliament because Parliament has few more important internal matters than to reflect on the ethics of the Civil Service.
    My first question to the Minister is why was this important letter not published in the Official Report, or at least put in the Library of the House? Secondly, is it true, as we read in the press, that a number of senior information officers in Whitehall—I will not name them; their names are in the press—are leaving? There may be personal reasons, it may be coincidence, but we are at least entitled to ask why so many seem to be leaving at this moment. I do not jump to conclusions about the recent appointment of Mr. Ingham in this respect because, frankly, I do not know and I do not make assertions about matters I know nothing about. This is a genuine question about why it is happening.
    Thirdly, at 14 minutes past five this afternoon I interrupted the Chief Secretary. I am sorry that he is not in the Chamber. I asked whether, in the context of propriety, he believed Sir Leon Brittan when he claimed that Mr. Powell and Mr. Ingham had fully approved—I repeat the word "approved"—the improper disclosure of a Law Officer's letter in January 1986. The Chief Secretary's reply was that he had no intention of getting involved. That is often the reply that we get in one form or another from other Ministers. Hon. Members can check the actual wording in Hansard, but I do not think that I am distorting it when I say that his reply was, "I will not get involved in that."
    Three or four minutes later the Chief Secretary said that the principles of propriety were unchanged and fully observed as between Governments. That is simply not so. Never before has a chief press officer or, much worse in a way, a senior private secretary to the Prime Minister authorised and approved, knowing that it was improper,

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    the disclosure of a Law Officer's letter for the specific purpose of damaging another Cabinet Minister—in this case the right hon. Member for Henley (Mr. Heseltine). To my knowledge, or to the knowledge of anyone I have talked to, that has never happened before.
    My hon. Friend the Member for Hackney, South and Shoreditch (Mr. Sedgemore) made his point brilliantly earlier in the debate. He is a former civil servant and a private secretary to a Minister. He nods in agreement when I say that never has a senior private secretary behaved in that way.
    Such behaviour is corrupt and quite improper. I do not yah-boo the word "corrupt" across the Chamber. I stick to what I said in a lead letter to The Times some weeks ago —I never shout, bawl or interrupt from a sedentary position. However, I mean every word that I say. If Mr. Ingham and Mr. Powell behaved in that way, their behaviour was corrupt.
    I gave the Chief Secretary every opportunity to say that Sir Leon Brittan was wrong, but he did not say anything of the kind. No one in a responsible position has ever said that. They might have thought that Sir Leon was a bit of a cad to do it, but they did not say that he was factually wrong. This issue touches the most sensitive and delicate areas of the propriety of the way in which 10 Downing street and the leadership of our country operate.
    This matter should be cleared up, and I shall tell the House how it can be done. The Prime Minister must come to the House to do one of two things. She must explain either that Mr. Ingham and Mr. Powell did this off their own bat or they did not. I am not a man of malice or vengeance, but I say that if they did it off their own bat without telling the Prime Minister, Mr. Ingham has no right to occupy this unique position. After all, there is the issue of example and propriety.
    However, if he acted on authority with the approval of the Minister responsible—and only one Minister is responsible—that Minister must come to the House and say, "Yes, Mr. Ingham and Mr. Powell kept me fully informed about the progress of my quite improper idea to get the Solicitor-General to write a letter and then leak it. Mr. Powell and Mr. Ingham kept me fully informed about the role of Sir Leon Brittan." The Prime Minister must also say to the House, "On 27 January, when I was under pressure, I told a self-preserving lie to the House of Commons." Parliament cannot operate properly if senior Ministers and the most senior Minister can get away with lying to the House on a matter of losing two Cabinet Ministers.
    6.16 pm
    Mr. Patrick McLoughlin: I shall not try to follow the arguments advanced by the hon. Member for Linlithgow (Mr. Dalyell). It was strange to hear him complain about the absence of the Chief Secretary when the lead speaker on the hon. Gentleman's own Front Bench was absent for a good part of the debate. The hon. Gentleman did not level any criticism at his hon. Friend.
    I welcome the debate on the Government's publicity machine. Some of us feel that it is not the most crucial issue that our constituents write to us about. I have received no letters from my constituents complaining about the cost of the Government's publicity machine. However, I have received letters complaining about the cost of publicity. Perhaps that is one of the reasons why the Government
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    have felt in necessary to spend a certain amount on trying to put over a particular case. I have a letter from a constituent, or from somebody whom I think is a constituent. It says:
    "I enclose a copy of Workforce. Surely something can he done about this blatant abuse of ratepayers' money for Labour propaganda. This practice is rife. Note particularly the name on the back of this publication. I dare not reveal my name for fear of victimisation as I work for Derbyshire County Council."—[Interruption.]
    Opposition Members seem to find that quite funny.
    When the Education Reform Bill was passing through the House a leaflet was issued by the county council and shortly after that the Government issued a booklet on the Education Reform Act 1988. The council leaflets were distributed in schools and children were asked to take them home to their parents. The use of pupils in such an outrageous way should be wholly condemned. It is noticeable that the Labour party, deliberately and perhaps understandably, tries to distance itself from some of the things that Labour local authorities have done and the way in which ratepayers' money has been spent.
    My hon. Friend the Member for Amber Valley (Mr. Oppenheim) has adequately listed some of the abuses relating to the community charge. I do not want to go over that ground again because the argument has been ably advanced. I asked the Library for some figures about the amounts spent on Government publicity over the past three years, and I asked about the increase between 1986–87 and 1988–89. I was slightly surprised to find that during that period there was not an increase but a reduction of 10·4 per cent. That did not compare favourably with financial assistance to Opposition parties, commonly known as the Short money. From 1986–87 to 1989–90 that amount has increased by 54 per cent. In other words, the provision for Opposition parties increased from £632,000 in 1986–87 to £1,164,000 in 1989–90. So the idea that the Government have not been assisting Opposition parties, or that those parties do not now have their own vastly increased finances, is a strange idea to put about.
    Mr. Wallace rose—
    Mr. McLoughlin: I will not give way because time is short and a number of hon. Members still wish to take part in the debate.
    It is interesting to consider some of the leaflets that were put out by previous Governments. I, too, have examined the document:
    "Britain's new deal in Europe"
    —and whatever might be said about money having been provided for the opposite view to be put, nothing could have been more blatant than that pamphlet. Lord Wilson, who was then Prime Minister, stated on the front of that document:
    "Her Majesty's Government have decided to recommend to the British people to vote for staying in the Community."
    On the final page appeared this absolutely misleading statement, about which we have heard nothing in the debate:
    "When the Government came to power in February 1974 they promised that you, the British voter, should have the right to decide—for continued membership of the European Community…or against."
    That gave the impression that the referendum was to decide whether or not we stayed in the Community. That was nonsense; at the end of the day no referendum could tell Parliament what it was or was not going to do—[Interruption.] That pamphlet stated at the beginning:

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    "The Labour Party manifesto in the election made it clear that Labour rejected the terms under which Britain's entry into the Common Market had been negotiated, and promised that, if returned to power, they would set out to get better terms."
    That clearly said that the document was part of the Labour party's pledges.
    Mr. Dobson rose—
    Mr. McLoughlin: I will not give way in view of the shortage of time. In any event, the hon. Gentleman spent far too long at the beginning of the debate giving his side of the story. He can now listen to what others have to say.
    I regard that document as a blatant use of Government money. The Chief Secretary was generous in his remarks not to say that he found some of the wording in that document open to question, to put the matter no higher. I regard as wholly right the Government's use of taxpayers' money to put over factual matter concerning legislation, particularly in view of some of the propaganda put out by Labour local authorities which has been blatantly untrue and which has stirred up worries and fears which people need not have.
    I understand that under the rules by which the Government are bound, they can spend money on legislation only once it has become law. While prospective legislation is going through its Committee and other stages in Parliament, literature explaining it to the public cannot be put out. I regret that, and suggest that in future we should pay more attention to putting forward the reasons why we are making some quite radical changes.
    I refer again to the letter which accompanied the leaflet on education that I cited earlier. It said:
    "this Bill will not deliver the improvements needed and I hope this short document will illustrate some of the problems."
    That was clearly party political. It was paid for by the ratepayers of Derbyshire. The document was even printed in the Labour party colours of the time, although Labour seems to change its colours quite regularly these days.
    The Government have nothing for which to apologise. Indeed, we have strong grounds for saying that the money we have spent has gone some way to counter the false claims that have been made by some local authorities. We should be proud of the radical reforms that we are making, and at the same time we should be explaining fully to the public what we are doing.
    6.24 pm
    Mr. Thomas McAvoy: My hon. Friend the Member for Holborn and St. Pancras (Mr. Dobson) outlined the Opposition case extremely well. I shall expand only on the Scottish dimension of the issue.
    I wish at the outset to hark back to the atmosphere that previously existed between Government and Opposition in matters such as we are discussing today. At the time of the February 1974 general election, the "Switch Off Something" campaign was allowed to continue under an agreement between the Government and the then Labour Chief Whip. That contrasts starkly with the current situation and illustrates how dramatically it has changed. I fear that that change has been to the detriment to standards of conduct in public life.
    The Chief Secretary referred to civil servants. I feel duty bound to state that when Labour is next in government, I
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    shall press for an inquiry to be conducted into the behaviour of Ministers now in office, and civil servants, to discover how they conducted various negotiations in the sphere of publicity, particularly from the point of view of public propriety. I promise them that it will be no excuse for them to say in the future, as they have said in the past, that they were only carrying out orders. We will get to the bottom of how the Government and their Ministers have brought down standards in public life.
    When we look at the Scottish scene, it is interesting to peruse a document issued by the Scottish Office. It refers to the activities of that Department and states:
    "One of the objectives of the new Government advertising campaign in Scotland is to publicise Ministers by showing how services in Scotland derive from the Scottish Office under the direction of the Secretary of State and his Ministers."
    It goes on:
    "The aim is to show how the work of Scottish Office agencies reflects the policies and decisions of the Secretary of State and his ministerial colleagues in the Scottish Office."
    It adds:
    "It is the wish of Ministers that the benefits of Government action in Scotland should be more clearly attributed."
    I assure the Government that they do not need an advertising campaign to put that point across. We know the details only too well.
    Scottish Ministers are now clearly crossing the dividing line between publicising Scotland and advertising themselves. They are no longer just imparting facts but are pushing out propaganda about themselves. The new campaign clearly breaches the rules set out in central Government conventions, which tell us that the achievement of Government policy issues should not be personalised and that the presentation of publicity, as well as the concept and tone of it, should not be party political.
    The present purely party political use of Government money in Scotland—this has a bearing on the inquiries that we will institute when Labour is in government—is confirmed by the fact that a Government Minister, the hon. Member for Stirling (Mr. Forsyth), led the briefings of an advertising agency on a publicity job that he wanted done. It was not left to civil servants to tell the advertising agents what was required. A Minister chaired the meeting and made sure that the agency was well aware of what he —a politician and a Minister—wanted to achieve.
    The figures were made clear on 15 March 1989 when we were informed—the details appear at column 226 of the Official Report for that date—that the budget for the Scottish Office for information campaigns had been £2·1 million in 1988–89 and was £2·9 million for 1989–90, an increase of £800,000. I suppose that one must bear in mind the information about the poll tax that the Government have been putting out. I assure them that it has all been to no avail. We in Scotland know who to blame for the poll tax. We do not want it. As soon as Labour takes office, we will get rid of it.
    The Scottish Office asked a consultancy to carry out the survey of parents' views on skill education. According to a written answer, the consultancy is due to report in June 1989. Therefore, it will be reporting after the Self-Governing Schools etc. Bill has been initiated by the Government. The Opposition therefore believe that the survey has been commissioned for political reasons. Comments and submissions to the survey will be selectively quoted and misinterpreted to give retrospective justification for the schools legislation. This is quite clearly political use on the Government's part.

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    It seems to be common knowledge that senior Scottish Office civil servants are becoming increasingly concerned that the boundary between Government and party propaganda is being eroded rapidly, especially since the appointment of the hon. Member for Stirling as a Scottish Office Minister. According to the central Government conventions, publicity and advertising should not be personalised, but the hon. Member for Stirling is constantly to the fore in these surveys I should have thought that the Secretary of State for Scotland would be extremely wary of allowing his hon. Friend any scope for personal publicity, because it is clear that the hon. Member for Stirling is determined to replace the Secretary of State irrespective of whether the Secretary of State finds another post.
    In the Glasgow Herald of 14 March 1989 there was an article which I have not seen denied by any Government source, although I am ready to be corrected on this point. The article quotes a senior civil servant in the Scottish Office as saying:
    "My impression is that there has been more use of public funds for things like publicity and polls than was the case in the recent past. The consciences of some senior civil servants are being tested more than has ever been the case previously."
    To my knowledge, that has never been refuted by any Minister. It is a serious situation when senior civil servants go to the press and make statements such as that.
    I heard the Chief Secretary to the Treasury being magnanimous and exonerating the past Labour Government from any misspending or abuse. If that attitude has been genuine, bearing in mind the delicate nature of this subject, there would have been consultation between those on the Front Benches, taking in the minority parties, too. That did not happen. They tried to keep it quiet and it was only through the persistent pursuing by my hon. Friend the Member for Holborn and St. Pancras that this was exposed publicly.
    The Government are treading a dangerous path. They are abusing their power in a classic illustration of elective dictatorship. It seems to us that there are no voices of fairness and sanity on the Government side to call a halt to this business of politics on the taxes. One would have thought that, merely in the interests of self-preservation, the Conservatives would call a halt, because there is no doubt that they have initiated a course of action that contains the seeds of their own doom. The Government have demeaned the standards of public life and have added to the list of their squalid actions, cutting corners and sailing close to the wind. All these actions combine to expose this Government as one of the seediest in the western world. It is that aura of shadiness and shiftiness that will ultimately lead to a Conservative defeat in the next general election.
    6.32 pm
    Mr. Irvine Patnick: It is a fact that some of the Government publicity is born out of the activities of Labour councillors. I had expected the hon. Member for Holborn and St. Pancras (Mr. Dobson) to draw attention to, dissociate himself from and condemn the councillors responsible for this misinformation and propaganda that is being pushed out.
    Mr. Tony Banks rose—
    Mr. Patnick: I have five minutes. With the greatest—
    Mr. Banks: I know something about liberty—
    Mr. Patnick: The only liberty the hon. Member knows is the statue of liberty.
    I had expected the hon. Member for Holborn and St. Pancras to notice the real scandal of the gross abuse of ratepayers' money being perpetrated by members of his own party.
    I welcome the fact that the Government give a balanced view to counter some of the activities of Sheffield city council, which seems to think that the community charge will vary from some gross figure to another gross figure based on what it would have been if it had been levied in 1987. We all know that that is nonsense.
    Surely the Government have a clear responsibility to provide advice and information to the public about their rights, entitlements and duties. That responsibility has led to campaigns on such things as crime prevention, health education, the prevention of car tax evasion, rabies prevention, job clubs, income support and teaching as a career. None of those was mentioned by the hon. Member for Holborn and St. Pancras.
    The Widdicombe conventions governing the form and content of Government publicity were published in 1985. I accept that the Government have a duty to ensure that citizens of places such as Sheffield have the facts presented to them in a way that is non-party-political, as opposed to some of the rubbish disseminated by some councils. The council of the hon. Member for Newham, North-West (Mr. Banks) and my friend Councillor Jones is one of the greatest exponents of this. The Government have to communicate effectively—
    Mr. Banks: Give way.
    Mr. Patnick: Government-funded publicity has to compete harder for public attention.
    Some Government publicity which clearly passes the test of propriety inevitably relates to subjects that have been politically contentious. This is neither new nor surprising. The truth is that Labour is running a campaign of misinformation and misrepresentation about legitimate publicity campaigns that wholly meet the test of propriety and value for money simply because it is opposed to these policies, but the public have a right to know about policies that affect them. The Government must continue to ensure that those policies are explained to the public.
    6.35 pm
    Mr. Ian McCartney: I know that my hon. Friend the Member for Newham, North-West (Mr. Banks) wants to put the final nail in the coffin of the Government on this subject but I want briefly to remind the Chief Secretary that in his reply to my hon. Friend the Member for Linlithgow (Mr. Dalyell) he denied any involvement by the Government in expenditure on water privatisation or the Water Authorities Association. Yet I have in my possession, as have other hon. Members who served on the Standing Committees on the Electricity Bill and the Water Bill, confidential minutes of meetings including officers of the Treasury and the Department of the Environment in negotiations with the Water Authorities Association on the level of expenditure, the types of expenditure and the dates on which that expenditure would be made.
    For example, on 18 May 1988 a Mr. Hood, a latter-day Robin Hood who robbed the poor to promote the rich, indicated in minute WAA/C/88/20 that a recent meeting

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    between the Treasury and the water authorities had come to an agreement about the nature of the publicity and the possible split of costs on a 50:50 basis with the Department of the Environment and the water authorities prior to the bill going through the parliamentary process and getting the approval of the House.
    The consequence of that has been an unprecedented use of public resources this year on the privatisation of the water authorities. Something like £8 million has been spent in the last six weeks alone by the water authorities, and presumably under the secret agreement the taxpayer is picking up at least 50 per cent. of the cost of the television advertisements. Over 3,300 spots across the 15 ITV regions in Britain have been purchased by the Water Authorities Association with the explicit agreement of the Treasury and the Department of the Environment. That agreement was reached as far back as 18 May 1988.
    The Minister has deliberately misled the House on this matter. It is not the first time that Ministers have misled the House about expenditure on the promotion of privatisation. The whole issue stinks. The Government are prepared to spend millions on the flotation of public assets at knock-down prices to people who wish to speculate on assets owned by the public.
    If this debate has shown anything, it has shown the extent to which Ministers will go to hide the activities that are taking place involving so-called independent civil servants being embroiled in party political activities, and consultants, some of whom are now employed at Conservative Central Office, who are prepared to organise and promote party political propaganda so long as the cost is met through the public purse. The scandal of paying for that publicity out of the public purse should be ended.
    I hope that the debate will mark the beginning of the end of the Government's attempts to utilise public resources and millions of pounds to promote the Conservative party in the run-up to the next general election.
    6.39 pm
    Mr. Bruce Grocott: It is remarkable that throughout the debate no Conservative Member has attempted to refute the Opposition's central proposition that the cost of Government public relations and advertising is soaring. Although it is extremely difficult to obtain accurate figures, we estimate that spending on publicity is six times greater than when the Government came to office. However, as the Government would be reluctant to accept my figures, it is worth establishing what the advertising industry itself thinks of the Government's various advertising accounts. Recommended reading on that subject is the advertising industry's house magazine, "Campaign," which listed advertising's big spenders in one of its April issues.
    The reference to Government advertising in "Campaign" is particularly interesting, when it comments that
    "the Government was still the third biggest advertiser last year. Criticisms of waste and politicking hid a maturing relationship with its agencies. And there is more—much more —to come."
    One can imagine the industry licking its lips at the prospect of the advertising that is yet to come. In that article, the
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    Government are listed as a holding company, appropriately enough, together with Unilever and Proctor and Gamble. The "Campaign" article continues:
    "Many senior figures in the industry believe that the Government's rush to embrace advertising has happened so fast that it was in serious danger of spinning out of control."
    The feature goes on to make predictions about the level of Government advertising expenditure in the years ahead, saying that
    "there is no evidence to suggest that the Government's love affair with advertising is showing any signs of becoming less ardent or that 1989 will see any let-up in its activity…The poll tax and proposals to reform the NHS will also give Whitehall a lot of explaining to do. `One thing is certain,' says one COI agency man, 'this year's spend is going to be astonishingly high'."
    That is how the advertising industry views Government expenditure.
    Mr. Martin M. Brandon-Bravo: Will the hon. Gentleman confirm that the advertising expenditure he mentions will include campaigns on road safety, crime prevention, benefit take-up, and protection against AIDS—all of which are perfectly legitimate subjects of publicity as part of that advertising budget?
    Mr. Grocott: If the hon. Gentleman has been present for the entire debate, clearly he has not listened. Why is six times the amount of money required to undertake essential factual campaigns, about which nobody argues and which any Government must undertake? Our argument is that under the present Government the content and style of that advertising has changed, and it is that which I find particularly sinister. I find most worrying of all the comment in "Campaign" that
    "it is equally true that the style and content of that advertising will change as the Government matures into a more sophisticated client…'It really works on its agency relationships. Also, government departments themselves are more experienced and ad literate'."
    I do not know what is meant by "ad literate" but I can guess, and it sounds pretty unpleasant to me.
    The Government are moving from conveying factual information into that murky area of changing the public mood. They are massively increasing their expenditure on television advertising. We all know well enough that television advertising is not good at communicating factual information, but it is very good at conveying a mood—perhaps a false one, such as the impression that industry is prospering or that one can find a job if one only looks hard enough.
    It is surely a legitimate exercise for any hon. or right hon. Member to obtain information about the way in which various Government Departments use their budgets for commercial television advertising. I put down a fairly simple question asking each Government Department to say how much it spends with the independent television companies. The replies come back, one after another, "This information is commercially confidential." I am sure that it is also politically embarrassing, and that is why the Government will not spell out those figures.
    Being a persistent soul, I tried again. Knowing that the Departments would not reveal their expenditure, I thought that they might at least divulge how much air time they purchased, so that I could then do the sums for myself in calculating how much they spent with Tyne Tees, TVS, Yorkshire Television and the other commercial

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    companies. This time, the reply was even more sophisticated. The Minister of State, Department of Employment, replied:
    "Information on TV advertising expenditure in the form requested is not held by my Department, nor is it available centrally through the Central office of Information and can only be supplied at disproportionate cost. It is also commercially confidential."—[0fficial Report, 15 May 1989; Vol. 153, c. 51.]
    The Department hit me with both barrels with that one. I am surprised that the Department did not say also that it is a matter of national security.
    It is an abuse of ministerial power not to answer a simple question with an answer that can be obtained by anyone owning a video recorder. However, one answer did slip through the net. It came, surprisingly enough, from the Department of Trade and Industry, which responded in rather more detail. It could not have been part of the conspiracy. Although the DTI would not spell out the names of the independent TV companies with which it places advertising, it did reveal that its total expenditure on television advertising in 1984–85 was £32,000; 1985–86 and 1987–87, amazingly, nil; 1987–88, £4·;6 million; and 1988–89, the absolutely staggering figure of £13£2 million.
    As right hon. and hon. Members know from their own appearances on television, people often say, "I thought that you were good"—or bad, as the case may be—"but I cannot remember a word that you said." Television is simply to do with changing the public's mood, which is what has been attempted in the Government's constant advertising recently. If the Government's sixfold increase in television advertising was part of an overall mission to inform, I would have greater respect for it.
    The truth is that in just the same way as the Government increased the slick packaging of their policies, they run away from examination of those policies in any forum in which their worth can be challenged. The Prime Minister has a perfect opportunity to spell out Government policy in this House any time that she wants, and receive massive publicity when she does so. However, she shows a marked reluctance to come anywhere near the place. Between 1979 and 1983, she spoke in the House 20 times, or an average of once every two and a half months. Between 1983 and 1987 she spoke 10 times, or once every five months. Since the 1987 general election she has spoken twice, or just once a year. That was once a year too often for my sensitivity, but such an attendance record is a barely acceptable minimum. We know that the last thing that the Prime Minister wants is television coverage of her performance reading her notes at the Dispatch Box.
    A measure of the increase in the Government's spending on advertising illustrates that they are trying to sell an increasingly shoddy package in an increasingly glossy envelope. Even the advertising industry admits that. The copy of "Campaign" to which I referred earlier quotes the industry's view of the Government:
    "Too often the products being advertised have been found wanting."
    That is a commentary on the Government's products. The Government find it impossible to distinguish between the national interest and party interests, and, more disgracefully, find it almost impossible to distinguish between the national interest and the survival of one individual in Downing street, and that is even more dangerous. Our central proposition has been unchallenged by the Government and I urge my hon. Friends to vote for it.
    6.50 pm
    The Minister of State, Privy Council Office (Mr. Richard Luce): The Opposition's motion focuses on two main points—first, that the cost of Government publicity has increased and, secondly, that some of that publicity is becoming increasingly party political. On both counts I strongly recommend that the House should reject the motion.
    The hon. Member for Linlithgow (Mr. Dalyell) said that the Opposition and the Government should treat such a motion extremely seriously. I noticed that throughout the debate only a smattering of Opposition Members have been present. If they really treated the motion seriously, they would have taken the trouble to attend the debate. That almost answers their case. As for the rest, my right hon. Friend the Chief Secretary to the Treasury has given clearly the reasons why we reject the motion.
    First, on the matter of costs, my right hon. Friend made it clear that in the past 10 years or so publicity costs have increased within tightly drawn up rules and regulations which are available to the public. But I must emphasise strongly that the Government have a duty to inform the public, and people want to be better informed. The public are entitled to be better informed. My hon. Friend the Member for Sheffield, Hallam (Mr. Patnick) made that point extremely strongly. I suggest that an informed democracy is a stronger democracy, and that the Opposition, who hope and aspire one day to be in government, should hold the same opinion.
    The Opposition's second point was that much of the advertising is party political. The conventions are properly and fully laid down in detail, and that was never the case when a Labour Government were last in office. They are in the Library for the House to see. It is forbidden that any publicity of that nature should be party political. Throughout the debate, the Opposition have failed to produce any evidence of any abuse whatsoever. That is in marked contrast to the tendentious propaganda that Labour councils have distributed around the country in the past year.
    Mr. Robert Hughes: Will the Minister give way?
    Mr. Luce: No. I am here to answer the debate.
    My hon. Friends the Members for Hallam, for Derbyshire, West (Mr. McLoughlin) and for Amber Valley (Mr. Oppenheim) made those points extremely effectively.
    I stress that one of the reasons for the Widdicombe inquiry which led to the 1986 Local Government Act was the abuse by a large number of Labour authorities using party political propaganda. That led to the Widdicombe proposals and the 1986 Act which tightened the rules. If I did not think that you might rule me out of order, Mr. Speaker, I should have drawn attention to some of the unbelievable examples of the propaganda put out by Labour councils. I had such an experience concerning libraries in Derbyshire, where the Labour leader, who has the unusual name of Mr. Bookbinder, put out some propaganda on behalf of the council which was totally and utterly tendentious and misleading.
    Mr. Speaker: Order. I hope that the Minister will not pursue that line. The debate must focus on the motion on the Order Paper.
    Mr. Luce: I accept your ruling, Mr. Speaker.
    I shall move on to answer one or two of the specific points raised in the debate. The hon. Member for Linlithgow raised a number of issues. He asked whether there were a large number of resignations among information officers. There is no clear evidence of a large number of resignations. Indeed, the resignation rate today is lower than it was in the period 1976–82. Three senior information officers have recently left the service, but the rate of turnover and the rate of resignation is not high. I hope that reassures the hon. Gentleman.
    Without being drawn into issues that are well beyond the terms of the motion, I shall respond once again to the implication that some civil servants—the hon. Member for Linlithgow mentioned Mr. Powell and Mr. Ingham—are corrupt officials. That must be utterly rejected. Let us take Mr. Ingham as an example. Mr. Ingham served for many years as press officer to the right hon. Member for Chesterfield (Mr. Benn). He also worked in the press office of Barbara Castle. If he can do that and then serve my right hon. Friend the Prime Minister, he must be a man of the utmost impartiality and the highest calibre.
    Mr. Dalyell: On a point of order, Mr. Speaker. I did not refer to any officials being corrupt. I asked a very much more precise question as to whether it was proper—
    Mr. Speaker: Order. That should not be raised with the Chair under the guise of a point of order.
    Mr. Luce: Reference has been made to the conventions. The House knows that the various conventions that are set out and have been revised and supplemented are extremely thorough. They are available to the House and they set out quite clearly the parameters and the guidelines for Government publicity. There is no evidence that there has been any abuse.
    The Opposition cannot have it both ways. They continually say that they want more information from the Government. They always want the Government to reveal more. When we have more publicity to reveal more information, they turn round and criticise us.
    Mr. A. J. Balfour once said that democracy is Government by explanation. The Government have a positive duty to inform the nation, and to do so within very clear rules. We have clear rules on costs. We must have proper value for money and the expenditure on publicity must be within departmental budgets. We have clear rules on propriety. It is stated quite clearly that there must be no publicity which is party political.
    If we examine the publicity that the Government put out and that we have been discussing today, are the Opposition really saying that it is not right to inform the public about the benefits to be derived from the single market in 1992? Are they seriously saying that it is not right that people should be informed about employment and training opportunities? Are they seriously saying that it is not right that we should put out information about crime prevention, about AIDS and about health? Are they really saying that it is not right that we should put out information about benefits, pensions and other public information about road safety or about expenditure on recruitment to the services, or, taking education as an example, the new rules for school governors? The hon. Member for Blackburn (Mr. Straw) recently pointed out
    220
    that he thought that the Government should spend more money, not less, on such publicity. The charge that we are wrongly spending money is absolutely refuted.
    It has been pointed out that in the 1970s the Labour Government, supported by the Liberal party, spent money on advertising about issues that were politically controversial—counter-inflation policies, selective price controls, devolution and the European referendum. Those were politically controversial matters but this Government in no way disputes their right to publicise them.
    The tactic of the Opposition is hypocritical. They should get their own house in order first. Of course, the abuse by Labour councils led to the Widdicombe inquiry and to the 1986 Act.
    On propriety, the conventions are clear, thorough and detailed. More than ever before on any aspect of the guidelines for Government publicity, there are clearly laid out parameters; for example, the activity should not be party political. Ministers are accountable to the House, to Select Committees and to the Public Accounts Committee for their own publicity. The Government set the highest possible standards.
    The real problem for Her Majesty's Opposition is not one of cost or of propriety; it is the message itself. They do not like Government policies but they know that the public broadly support the Government. They know that the message is succeeding. That is what the debate is really about. They do not like it. That is why they initiated such a spurious debate. I therefore ask the House to reject the Opposition motion.
    Question put, That the original words stand part of the Question:–
    The House divided: Ayes 204, Noes 287.

    Division No. 201]

    [7.01 pm

    AYES

    Abbott, Ms Diane

    Clay, Bob

    Allen, Graham

    Clelland, David

    Anderson, Donald

    Clwyd, Mrs Ann

    Archer, Rt Hon Peter

    Cohen, Harry

    Armstrong, Hilary

    Coleman, Donald

    Ashley, Rt Hon Jack

    Cook, Frank (Stockton N)

    Ashton, Joe

    Cook, Robin (Livingston)

    Banks, Tony (Newham NW)

    Corbett, Robin

    Barnes, Harry (Derbyshire NE)

    Corbyn, Jeremy

    Barnes, Mrs Rosie (Greenwich)

    Cousins, Jim

    Barron, Kevin

    Cryer, Bob

    Battle, John

    Cummings, John

    Beckett, Margaret

    Cunliffe, Lawrence

    Benn, Rt Hon Tony

    Dalyell, Tam

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

    Davies, Rt Hon Denzil (Llanelli)

    Bermingham, Gerald

    Davies, Ron (Caerphilly)

    Bidwell, Sydney

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

    Blair, Tony

    Dewar, Donald

    Blunkett, David

    Dixon, Don

    Boateng, Paul

    Dobson, Frank

    Boyes, Roland

    Doran, Frank

    Bradley, Keith

    Douglas, Dick

    Bray, Dr Jeremy

    Duffy, A. E. P.

    Brown, Gordon (D'mline E)

    Dunnachie, Jimmy

    Brown, Nicholas (Newcastle E)

    Dunwoody, Hon Mrs Gwyneth

    Buckley, George J.

    Eadie, Alexander

    Caborn, Richard

    Eastham, Ken

    Callaghan, Jim

    Ewing, Harry (Falkirk E)

    Campbell, Menzies (Fife NE)

    Ewing, Mrs Margaret (Moray)

    Campbell, Ron (Blyth Valley)

    Fatchett, Derek

    Campbell-Savours, D. N.

    Faulds, Andrew

    Canavan, Dennis

    Fearn, Ronald

    Carlile, Alex (Mont'g)

    Fisher, Mark

    Cartwright, John

    Flannery, Martin

    Clark, Dr David (S Shields)

    Flynn, Paul

    Clarke, Tom (Monklands W)

    Foot, Rt Hon Michael

    221

    Foster, Derek

    Mitchell, Austin (G't Grimsby)

    Foulkes, George

    Morgan, Rhodri

    Fraser, John

    Morris, Rt Hon A. (W'shawe)

    Fyfe, Maria

    Mullin, Chris

    Galbraith, Sam

    Murphy, Paul

    Garrett, John (Norwich South)

    Nellist, Dave

    George, Bruce

    Oakes, Rt Hon Gordon

    Golding, Mrs Llin

    O'Brien, William

    Gordon, Mildred

    O'Neill, Martin

    Gould, Bryan

    Orme, Rt Hon Stanley

    Graham, Thomas

    Parry, Robert

    Grant, Bernie (Tottenham)

    Pendry, Tom

    Grocott, Bruce

    Pike, Peter L.

    Hardy, Peter

    Powell, Ray (Ogmore)

    Haynes, Frank

    Primarolo, Dawn

    Heffer, Eric S.

    Radice, Giles

    Hinchliffe, David

    Randall, Stuart

    Hogg, N. (C'nauld &Kilsyth)

    Redmond, Martin

    Home Robertson, John

    Rees, Rt Hon Merlyn

    Hood, Jimmy

    Reid, Dr John

    Howarth, George (Knowsley N)

    Richardson, Jo

    Howell, Rt Hon D. (S'heath)

    Roberts, Allan (Bootle)

    Howells, Geraint

    Robertson, George

    Howells, Dr. Kim (Pontypridd)

    Robinson, Geoffrey

    Hughes, John (Coventry NE)

    Rogers, Allan

    Hughes, Robert (Aberdeen N)

    Rooker, Jeff

    Hughes, Roy (Newport E)

    Ross, Ernie (Dundee W)

    Hughes, Simon (Southwark)

    Rowlands, Ted

    Illsley, Eric

    Ruddock, Joan

    Ingram, Adam

    Salmond, Alex

    Janner, Greville

    Sedgemore, Brian

    Johnston, Sir Russell

    Sheerman, Barry

    Jones, Barry (Alyn &Deeside)

    Sheldon, Rt Hon Robert

    Jones, leuan (Ynys Mén)

    Shore, Rt Hon Peter

    Kaufman, Rt Hon Gerald

    Short, Clare

    Kennedy, Charles

    Skinner, Dennis

    Kinnock, Rt Hon Neil

    Smith, Andrew (Oxford E)

    Kirkwood, Archy

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

    Lamond, James

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

    Leadbitter, Ted

    Smith, J. P. (Vale of Glam)

    Leighton, Ron

    Snape, Peter

    Lewis, Terry

    Soley, Clive

    Litherland, Robert

    Spearing, Nigel

    Livsey, Richard

    Steinberg, Gerry

    Lloyd, Tony (Stratford)

    Stott, Roger

    Lofthouse, Geoffrey

    Strang, Gavin

    Loyden, Eddie

    Straw, Jack

    McAllion, John

    Taylor, Mrs Ann (Dewsbury)

    McAvoy, Thomas

    Taylor, Matthew (Truro)

    McCartney, Ian

    Turner, Dennis

    McFall, John

    Vaz, Keith

    McKay, Allen (Barnsley West)

    Wall, Pat

    McKelvey, William

    Wallace, James

    McLeish, Henry

    Wai ley, Joan

    Maclennan, Robert

    Wardell, Gareth (Gower)

    McNamara, Kevin

    Wareing, Robert N.

    McWilliam, John

    Welsh, Andrew (Angus E)

    Madden, Max

    Welsh, Michael (Doncaster N)

    Mahon, Mrs Alice

    Wigley, Dafydd

    Marek, Dr John

    Williams, Rt Hon Alan

    Marshall, David (Shettleston)

    Williams, Alan W. (Carm'then)

    Marshall, Jim (Leicester S)

    Wise, Mrs Audrey

    Martin, Michael J. (Springburn)

    Worthington, Tony

    Maxton, John

    Wray, Jimmy

    Meacher, Michael

    Meale, Alan

    Tellers for the Ayes:

    Michael, Alun

    Mr. Allen Adams and

    Michie, Bill (Sheffield Heeley)

    Mr. Martyn Jones.

    NOES

    Adley, Robert

    Baldry, Tony

    Allason, Rupert

    Beaumont-Dark, Anthony

    Amery, Rt Hon Julian

    Bennett, Nicholas (Pembroke)

    Amess, David

    Blaker, Rt Hon Sir Peter

    Amos, Alan

    Body, Sir Richard

    Arbuthnot, James

    Boswell, Tim

    Arnold, Jacques (Gravesham)

    Bottomley, Mrs Virginia

    Arnold, Tom (Hazel Grove)

    Bowden, Gerald (Dulwlch)

    Atkins, Robert

    Bowis, John

    Baker, Nicholas (Dorset N)

    Braine, Rt Hon Sir Bernard

    222

    Brandon-Bravo, Martin

    Hamilton, Hon Archie (Epsom)

    Brazier, Julian

    Hamilton, Neil (Tatton)

    Brooke, Rt Hon Peter

    Hanley, Jeremy

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

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

    Bruce, Ian (Dorset South)

    Hargreaves, Ken (Hyndburn)

    Buchanan-Smith, Rt Hon Alick

    Harris, David

    Buck, Sir Antony

    Haselhurst, Alan

    Budgen, Nicholas

    Hawkins, Christopher

    Burns, Simon

    Hayhoe, Rt Hon Sir Barney

    Burt, Alistair

    Heddle, John

    Butcher, John

    Heseltine, Rt Hon Michael

    Butler, Chris

    Hicks, Mrs Maureen (Wolv' NE)

    Butterfill, John

    Hicks, Robert (Cornwall SE)

    Carlisle, John, (Luton N)

    Higgins, Rt Hon Terence L.

    Carlisle, Kenneth (Lincoln)

    Hill, James

    Carrington, Matthew

    Hind, Kenneth

    Carttiss, Michael

    Hogg, Hon Douglas (Gr'th'm)

    Cash, William

    Holt, Richard

    Channon, Rt Hon Paul

    Hordern, Sir Peter

    Chapman, Sydney

    Howard, Michael

    Chope, Christopher

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

    Churchill, Mr

    Howarth, G. (Cannock &B'wd)

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

    Hughes, Robert G. (Harrow W)

    Clark, Sir W. (Croydon S)

    Hunt, David (Wirral W)

    Colvin, Michael

    Hunt, John (Ravensbourne)

    Conway, Derek

    Hunter, Andrew

    Coombs, Anthony (Wyre F'rest)

    Irvine, Michael

    Coombs, Simon (Swindon)

    Irving, Charles

    Cope, Rt Hon John

    Jack, Michael

    Cormack, Patrick

    Jackson, Robert

    Couchman, James

    Janman, Tim

    Cran, James

    Jessel, Toby

    Critchley, Julian

    Johnson Smith, Sir Geoffrey

    Currie, Mrs Edwina

    Jones, Gwilym (Cardiff N)

    Curry, David

    Jones, Robert B (Herts W)

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

    Jopling, Rt Hon Michael

    Davis, David (Boothferry)

    Kellett-Bowman, Dame Elaine

    Day, Stephen

    Key, Robert

    Devlin, Tim

    King, Roger (B'ham N'thfield)

    Dorrell, Stephen

    Kirkhope, Timothy

    Douglas-Hamilton, Lord James

    Knight, Greg (Derby North)

    Dover, Den

    Knight, Dame Jill (Edgbaston)

    Dunn, Bob

    Knowles, Michael

    Durant, Tony

    Knox, David

    Dykes, Hugh

    Latham, Michael

    Emery, Sir Peter

    Lawrence, Ivan

    Evans, David (Welwyn Hatf'd)

    Lawson, Rt Hon Nigel

    Evennett, David

    Leigh, Edward (Gainsbor'gh)

    Fairbairn, Sir Nicholas

    Lennox-Boyd, Hon Mark

    Fallon, Michael

    Lightbown, David

    Favell, Tony

    Lilley, Peter

    Fenner, Dame Peggy

    Lloyd, Sir Ian (Havant)

    Field, Barry (Isle of Wight)

    Lloyd, Peter (Fareham)

    Finsberg, Sir Geoffrey

    Lord, Michael

    Fishburn, John Dudley

    Luce, Rt Hon Richard

    Fookes, Dame Janet

    McCrindle, Robert

    Forman, Nigel

    Macfarlane, Sir Neil

    Forsyth, Michael (Stirling)

    MacKay, Andrew (E Berkshire)

    Forth, Eric

    Maclean, David

    Fowler, Rt Hon Norman

    McLoughlin, Patrick

    Fox, Sir Marcus

    McNair-Wilson, Sir Michael

    Franks, Cecil

    McNair-Wilson, P. (New Forest)

    Freeman, Roger

    Madel, David

    Gale, Roger

    Major, Rt Hon John

    Gardiner, George

    Malins, Humfrey

    Garel-Jones, Tristan

    Mans, Keith

    Gill, Christopher

    Maples, John

    Glyn, Dr Alan

    Marlow, Tony

    Goodhart, Sir Philip

    Marshall, John (Hendon S)

    Goodlad, Alastair

    Marshall, Michael (Arundel)

    Goodson-Wlckes, Dr Charles

    Martin, David (Portsmouth S)

    Gorman, Mrs Teresa

    Mates, Michael

    Gow, Ian

    Maude, Hon Francis

    Greenway, Harry (Ealing N)

    Mawhinney, Dr Brian

    Greenway, John (Ryedale)

    Mayhew, Rt Hon Sir Patrick

    Gregory, Conal

    Meyer, Sir Anthony

    Griffiths, Peter (Portsmouth N)

    Miller, Sir Hal

    Grist, Ian

    Mills, Iain

    Gummer, Rt Hon John Selwyn

    Miscampbell, Norman

    Hague, William

    Mitchell, Andrew (Gedling)

    223

    Mitchell, Sir David

    Smith, Tim (Beaconsfield)

    Moate, Roger

    Speller, Tony

    Monro, Sir Hector

    Spicer, Michael (S Worcs)

    Montgomery, Sir Fergus

    Squire, Robin

    Moore, Rt Hon John

    Stanbrook, Ivor

    Morris, M (N'hampton S)

    Stanley, Rt Hon Sir John

    Morrison, Sir Charles

    Steen, Anthony

    Morrison, Rt Hon P (Chester)

    Stern, Michael

    Moynihan, Hon Colin

    Stevens, Lewis

    Mudd, David

    Stewart, Allan (Eastwood)

    Neale, Gerrard

    Stewart, Andy (Sherwood)

    Nelson, Anthony

    Stewart, Rt Hon Ian (Herts N)

    Newton, Rt Hon Tony

    Stradling Thomas, Sir John

    Nicholls, Patrick

    Sumberg, David

    Nicholson, David (Taunton)

    Summerson, Hugo

    Nicholson, Emma (Devon West)

    Taylor, Ian (Esher)

    Norris, Steve

    Taylor, Teddy (S'end E)

    Onslow, Rt Hon Cranley

    Tebbit, Rt Hon Norman

    Oppenheim, Phillip

    Temple-Morris, Peter

    Page, Richard

    Thompson, D. (Calder Valley)

    Paice, James

    Thompson, Patrick (Norwich N)

    Parkinson, Rt Hon Cecil

    Thorne, Neil

    Patnick, Irvine

    Thornton, Malcolm

    Patten, John (Oxford W)

    Thurnham, Peter

    Pawsey, James

    Townsend, Cyril D. (B'heath)

    Peacock, Mrs Elizabeth

    Tracey, Richard

    Porter, David (Waveney)

    Tredinnick, David

    Powell, William (Corby)

    Trippier, David

    Price, Sir David

    Trotter, Neville

    Rattan, Keith

    Twinn, Dr Ian

    Raison, Rt Hon Timothy

    Vaughan, Sir Gerard

    Rathbone, Tim

    Waddington, Rt Hon David

    Redwood, John

    Wakeham, Rt Hon John

    Renton, Tim

    Walden, George

    Rhodes James, Robert

    Walker, Bill (T'side North)

    Riddick, Graham

    Waller, Gary

    Ridley, Rt Hon Nicholas

    Walters, Sir Dennis

    Ridsdale, Sir Julian

    Ward, John

    Rifkind, Rt Hon Malcolm

    Wardle, Charles (Bexhill)

    Roberts, Wyn (Conwy)

    Watts, John

    Roe, Mrs Marion

    Wells, Bowen

    Rossi, Sir Hugh

    Wheeler, John

    Rost, Peter

    Whitney, Ray

    Rowe, Andrew

    Widdecombe, Ann

    Sackville, Hon Tom

    Wilshire, David

    Sainsbury, Hon Tim

    Winterton, Nicholas

    Sayeed, Jonathan

    Wolfson, Mark

    Scott, Nicholas

    Wood, Timothy

    Shaw, David (Dover)

    Yeo, Tim

    Shaw, Sir Giles (Pudsey)

    Young, Sir George (Acton)

    Shaw, Sir Michael (Scarb')

    Younger, Rt Hon George

    Shelton, Sir William

    Shephard, Mrs G. (Norfolk SW)

    Tellers for the Noes:

    Shepherd, Colin (Hereford)

    Mr. John M. Taylor and

    Sims, Roger

    Mr. David Heathcoat-Amory.

    Skeet, Sir Trevor

    Question accordingly negatived.
    Question, That the proposed words be there added, put forthwith pursuant to Standing Order No. 30 (Questions on amendments), and agreed to.
    MR. SPEAKER forthwith declared the main Question, as amended, to be agreed to.
    Resolved,
    That this House recognises the responsibility of Government to provide advice and information to the public; and commends the Government's firm adherence to the long standing conventions governing propriety and value for money.

Manufacturing Industry
Mr. Speaker: I have selected the amendment in the name of the Prime Minister.
Many right hon. and hon. Members wish to participate. If it had been possible, I would have applied the 10-minute limit on speeches, but unhappily that would have caught the Front-Bench speakers as well, so I have not been able to do so. I hope, however, that Front-Bench Members will bear that limit in mind, and that Back Benchers will limit their speeches to 10 minutes or less.
7.15 pm
Mr. Bryan Gould: I beg to move,
That this House, alarmed at the huge deficit in trade in manufactures and at continued closures and job losses in industries as varied as textiles, electronics, shipbuilding and aircraft, reaffirms the vital importance of manufacturing to the country's economic future; and calls on Her Majesty's Government to abandon the policies which have done, and are doing, so much damage to manufacturing output, investment, employment and trade.
The significance of manufacturing industry may be a matter for debate and the future of manufacturing industry may be open to question, but I hope that the facts about manufacturing industry and its present circumstances will not be disputed.
Let us first consider manufacturing output. Most people, I think, would accept that manufacturing industry was thrown over a precipice in the first couple of years of this Tory Government. As a consequence of quite avoidable mistakes in economic policy—which I believe in their more honest moments even Ministers would acknowledge—fully one fifth of British manufacturing industry was simply wiped out. No other industrial country has ever suffered such a sharp fall in output.
Since then, inch by inch, we have clawed our way painfully back up the cliff face over which we were thrown; and, as we reached the top—the point that we left in 1979 —the bands played, the drums were beaten and the flags were waved. It was proclaimed an economic miracle. Throughout the period of the present Government, however, manufacturing output has been no less than 6 per cent. lower than under the previous Labour Government. I think that it must be a record for any 20th-century Government to establish a level of manufacturing output lower than that established by their predecessor.
Mr. Phillip Oppenheim rose—
Mr. Gould: I will not give way. I have already accepted from Mr. Speaker an injunction to be brief.
The pity of it is that the mistakes that led to that slump in output are now in danger of being repeated. At 1985 prices, manufacturing investment in 1988—the last full year—was £11·035 billion, still short of the level established in 1979 when the Government began their term of office. That has applied in every one of the 10 years of Tory government, despite—even in recent times—constant investment intention surveys showing an intention on the part of industry to increase investment. Throughout the period of the Thatcher Government, manufacturing investment has been 16 per cent. lower than it was under the preceding Government.
As for manufacturing employment, I hope that I need hardly remind the House that nearly 2 million jobs have been lost in industry since 1979. Every advanced industrial country has found that manufacturing has shown a

225
declining proportion of employment because other sectors —services and so on—have tended to take up the slack. What has not happened in other countries is the huge and quite unnecessary slump that we have suffered, and from which we have still not fully recovered.
Perhaps the saddest story resides in the figures that tell us what has happened to our manufactured trade. We all know that this country once prided itself on being the great workshop of the world and the leader of the industrial revolution. For 200 or 300 years, we paid our way and built our living standards on the strength of what we could make and sell from our factories. That remained true until 1979, when the Government took office. In 1979, we enjoyed a surplus of almost £5 billion in today's prices. I hope that I need not remind the House that last year that surplus had not only already turned into a deficit—I believe that it turned into a deficit in 1984 for the first time in our history—but that deficit had grown to the staggering proportions of £14·5 billion. A turnround of £19 billion in our manufactured trade is so immense that it is difficult for the ordinary person to grasp what that represents. Perhaps I can help the House by saying that by my calculation—which would be the general calculation —if we were to set about producing £19 billion of manufactured goods, which we now import, in British factories, we would have to take on no fewer than 1·5 million extra full-time workers. That is the significance of the turnround in our trade in manufactures.
Not surprisingly, although the Government try to obfuscate our true position, our share of world trade in manufactures has also declined. The world trade in manufactures over the period has risen by 48·5 per cent., but our exports of manufactures have risen by only 36·6 per cent. I hope that I do not need to convince Ministers or Conservative Members that the market place is the test, as the Government constantly tell us, of how well our economy is doing. The answer that the market place gives is that Britain is no longer paying its way and that British industry cannot meet the competition.
At first sight, the trade figures may cause some puzzlement. The immensity of the trade deficit took even Ministers by surprise. They were, after all, forecasting only a year ago a deficit of £4 billion for 1988. There is an explanation, although it is not a full rationalisation. Unfortunately, it runs directly contrary to much of the propaganda that Ministers constantly put out. The House and the British public are always told by Ministers in every interview that whatever the pain, whatever the difficulties we have been through and however many problems British industry has faced over the past 10 years, at least British industry is now leaner, fitter and more competitive. Day after day I hear that phrase on the lips of Ministers.
Neither I nor the Labour party bother to keep the statistical series that measure the competitiveness of British industry but the Government and the Department of Trade and Industry do. There are at least five that are often used and two are especially widely used. It is astonishing that on each one of the five indices, British manufacturing industry today is not more but less competitive than it was in 1979, and that is true not only of today, but of every year throughout the period of Tory government. The indices that show the greatest loss of competitiveness are those which are the most widely used. Relative export prices for manufactures show that we are now 15 per cent. less competitive than we were in 1979.
226
The International Monetary Fund index of normalised relative unit labour costs shows that we are 24 per cent. less competitive than we were in 1979.
The mystery about why, despite the wonderful success story, we are running such a huge balance of payments deficit that we cannot hold on to our own markets or retain our export markets is now unravelled. The Government's own statistics show that British industry is less competitive than it was when they came to power. I could go on about that subject, in which I take a particular interest, but even those indices understate the loss of competitiveness of an economy whose competitiveness has declined over a period. First, the index on relative export prices for manufactures, for example, measures only what we try to charge at—id- the prices we actually obtain in the market place. It does not tell us about all the products that have become so uncompetitive in price terms that we have simply ceased to make them and offer them in the international market.
Secondly, the labour cost indices measure cost right across the economy. They take no account of the fact that in the really successful exporting economies, such as Japan and Germany, costs in export-oriented industries are razor sharp and the cost structure is more favourable than in the economy as a whole. Any index that measures costs across the economy simply understates the competition we face from the successful exporting nations.
I now offer the Government a little ray of light or a twig to hold on to. They will raise, rightly and understandably, the question of productivity and they will say that, despite this gloomy picture, productivity in manufacturing has risen extremely sharply. I am the first to concede that it is a good story to tell on that, but productivity is not as good as the Government would have us believe and it is not as good as in the much maligned 1960s, when manufacturing productivity was higher than it has been in recent years. One also has to take account of some of the statistical peculiarities of the figures and the fact that today much that used to be counted as manufacturing is now contracted out, including peripheral services such as cleaning and canteen facilities, which were low productivity areas so they do not affect manufacturing productivity figures. I would also point out that if one constantly eliminates one's weaker capacity, without anything else changing, there will be an improvement in productivity —or at least an apparent improvement in productivity—for what remains. It is rather like a cricket captain claiming that because he has shot his tail-end batsman he can congratulate himself on the fact that the batting average has risen, although he is ignoring the fact that the team is scoring fewer runs and has lost the match. That is what our productivity record largely shows.
Mr. Peter Thurnham: Will the hon. Gentleman give way?
Mr. Gould: No. I would like to, but I am under a time constraint.
There is a more important point to explain another paradox. If the productivity figures are to be believed—and I am prepared to give them some credence—it is hard to see why the economy in the other respects I have mentioned has performed so badly. The reason is—and I admit that this is no more than a supposition, but it answers the paradox and is increasingly attracting the attention and support of many expert commentators—

227
that in Britain a great deal of investment in manufacturing industry is designed to replace labour, rather than to improve and increase output. That is why in the bits of the economy that remain as a result of some new capital application, but have fewer jobs than previously, productivity has risen, whereas in those bits of the economy where that effort has not been made the capacity has simply disappeared. That means that we have the appearance of high productivity in the bits of the economy that survive, but the economy as a whole is producing less well, its output is sluggish, it is able to compete less effectively and we are having to import so many more manufactured goods.
I ask Conservative Members to agree with me in one respect. Surely there cannot be a single Member who has not had the experience of visiting factories in his or her constituency or further afield and noticing, if he or she has eyes to see, that all the modern machine tools are made abroad. If one asks the factory managers why a particular machine is made in Germany, Italy, Canada or the United States, they say sadly, with a shake of the head, "We would like to buy British, but there simply isn't a British manufacturer who can supply us". That gives some support to my contention that large parts of British industry have simply passed out of existence as a consequence of what has happened to manufacturing industry in recent years.
Productivity may have been a miracle in those parts of industry that have survived, but it has failed to produce a manufacturing economy which does what is essential—to compete, to increase output and to provide good, well-paid jobs for an increasing number of people. We cannot congratulate ourselves on a productivity achievement if the only end result is that we now produce about the same quantity of goods with far fewer people and that we are therefore able to compete much less comprehensively across the board.
As we face not only our present but our future, we are faced with an economy that is ill-equipped, badly trained and under invested. We face our future in that condition with the cushion of North sea oil much less comfortable and reliable than it was—I accept that North sea oil is not yet running out and that it will be with us for some time —with 1992 and the single European market, meaning much more intense competition in what will be our home market, with newly industrialised countries around the Pacific basin and south-east Asia coming on stream. We face our future in all those circumstances and, although the race will go to the technologically proficient, we have not made the effort. We have wasted the oil. We are under-invested and are woefully ill-prepared for that competitive future.
As is probably wearyingly familiar by now, we spend less on research and development than the West Germans, the Japanese, the Americans, the Swedes and the French. In terms of civil research and development, we spend less than the Italians. Uniquely, half of what we spend goes on defence. I was at a seminar this morning where I saw a breakdown of the way in which the West Germans spend their much greater total and the way in which we spend ours. The Germans said, apologetically, "Our R and D defence expenditure has been rising recently and we are worried about it. It is now as high as 20 per cent. of our
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total R and D expenditure." However, we spend 50 per cent. of our pitiful R and D expenditure on relatively unproductive defence spending.
The Germans have a much clearer answer—[Interruption.] I am talking about the spin-off for the rest of industry. The Germans have a much clearer idea of the correct priorities. While they spend on R and D, on industry, in the higher research institutions and the universities and on major issues such as the environment, we make mistakes by concentrating our puny efforts on unproductive defence. We spend less on basic science and pitifully less on training. We do not invest in our manufacturing industry. As I have pointed out, such expenditure has been 16 per cent. lower during the past 10 years than it was even when the Tories came into office. We do not spend on the infrastructure that we shall need if we are to compete technologically in the coming decade.
The pity of it all is that, having brought us to this position, where the North sea oil bonus has come and has largely gone, having left us with a legacy of ill-preparedness, we are now trying to re-establish the Chancellor's control of an economy of which he has lost control. We are in danger of repeating the same old mistakes which destroyed one fifth of British manufacturing between 1979 and 1981. They are again on the agenda, wreaking their damage, exercising their malign influence and doing damage by way of the closures, job losses and lost output with which we were so bitterly familiar in the early 1980s.
The evidence is there. Surveys by the Confederation of British Industry which for so long were held up as great proclamations of confidence now show a sharp fall in expectations for export orders and a sharp decline in the confidence felt by business men about the future course of the economy. Specialist manufacturing employers' organisations, such as the British Textile Confederation, express again, as they did in the early 1980s, their lively fears about what will happen to their industry as a consequence of the appreciation of the exchange rate against their major competitors.
That is why a programme of closures is already beginning in the constituencies of some of my hon. Friends, and it is not limited just to textiles; it applies across the board. I fear that unless we can persuade the Government to change their policy and to avoid those mistakes, we will again face a programme of closures and a lengthening total in the number of people unemployed. Indeed the mistakes are already there. High interest rates are a disincentive to investment. The CBI has complained but the Government take no notice because they do not believe that the voice of manufacturing industry really counts or should be heard. As a consequence of the high interest rates, not only is investment damaged, but the exchange rate is held at an uncompetitive level and is crippling competitiveness.
Only a few months ago and earlier last year, the Chancellor was telling us—at least by implication—that his preferred rate of exchange against the deutschmark was 3 deutschmarks to the pound. He then said specifically that, in his view, a rate of 3 deutschmarks 10 pfennigs would be unsustainable. However, for many months now, we have had a rate that is above 3 deutschmarks 18 pfennigs. Little wonder then that we are finding it increasingly difficult to meet the competition in Europe. Little wonder that we find it difficult in the wider markets around the world when our exchange rate has appreciated against the American dollar by 40 per cent. in the past four

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years. One cannot put up prices against major international competitors by 40 per cent.—or even by 10 per cent. as in the case of the West Germans—and expect the customer not to notice. Such rises have an immediate, direct and calamitous effect on investment, output, employment and manufacturing industry. Indeed, they show the Government's contempt for manufacturing industry that they believe that they can introduce such policies without causing the sort of damage that is now being so painfully felt across the country.
An over-valued exchange rate does many damaging things. It not only destroys our competitiveness; it does something perverse in respect of the Chancellor's stated objectives. It damages the competiveness of the corporate sector and it stimulates consumption because it means that every pound in the consumer's pocket will buy more imported goods than it should. That is why over-valuation not only stops us exporting, but sucks in the imports that are doing so much damage. [Interruption.] Of course, that does not cause concern to Ministers who can laugh if they wish, but such over-valuation sucks in the imports that put British workers in the dole queue and close British factories.
Does any of it matter? We have already had part of our answer from the guffaws of Ministers who clearly find it difficult to take the subject seriously. Indeed, that has betrayed their attitude to this matter throughout the 10 years of their period of office. They have treated the decline and difficulties of manufacturing industry with cavalier insouciance. They have simply maintained that it does not matter. When I taxed the Chancellor of the Exchequer some months ago about the turnround in our trade in manufactures, he remarked from a sedentary position that it was "neither here nor there." Let him try telling that to business men who are trying to keep their enterprises afloat. Let him try telling it to workers whose jobs are now threatened or being lost as a consequence of those foolish policies—
Mr. Frank Haynes: What about small businesses?
Mr. Gould: My hon. Friend mentions small businesses, which in particular are suffering. The regions, which are so dependent on manufacturing, are where the burden will be felt most keenly. That is where the branch-plant economy that the Tories have allowed to develop during their period of office will come home with a vengeance because those branch plants will be closed first when the bite is felt. That is the problem with the Chancellor's current policies.—[Interruption.] Yes, of course manufacturing matters to us because we can no longer rely on North sea oil to keep us afloat.
Our wealth creation for the future depends on the strength of our manufacturing industry and it depends on that manufacturing industry being in the right condition, in the right areas, with the right equipment and the right skills. To use another of the Chancellor's notorious phrases, we cannot afford a "low-tech economy". If we are to compete, we must compete with new skills and with new technology. We must be clear that the new technology has a role to play, not just in new industries, but in old industries, too. It is in textiles, shipbuilding and car manufacture that the new technology has its most direct and important application. That new technology must be
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applied and we must invest in it. That is the important element of our future and of our capacity to earn our living in the future decade.
We were told that we need not rely on the old pejoratively described sunset industries, because it would be the sunrise industries that would take us forward. I wish that that were true. I wish that we could say that other industries may have suffered some difficulties, but, at least, the electronics and information communication industries have done well. However, again the facts are against such an argument. I believe that any attempt to scrutinise the trade figures would demonstrate clearly how fatuous has been the Government's claim. Last year our trade deficit in electronics was £3·9 billion. It has risen by 40 per cent. over the past four years. So much for preparing us for that technological future and so much for an economic miracle. We know the immense importance of manufacturing to wealth creation and to our national prosperity. It will need a Labour Government to put that right.
7.30 pm
The Chancellor of the Duchy of Lancaster and Minister of Trade and Industry (Mr. Anthony Newton): I beg to move, to leave out from "House" to the end of the Question and to add instead thereof:
"welcomes the renewed strength of manufacturing industry, reflected in major increases in productivity, record levels of output, increased exports, greatly improved profitability and a sustained high level of investment; and notes that the flow of inward investment testifies to the substantial improvement which the policies of Her Majesty's Government have brought about in the climate for doing business in the United Kingdom.".
I suppose that I should not have been surprised—though I must confess that I was—that the Opposition should choose to debate a proposition so totally divorced from reality as one entitled the "Decline of Manufacturing Industry". So it was with some corresponding interest that I waited to see how the hon. Member for Dagenham (Mr. Gould) proposed to delineate this so-called decline. It was clear, despite his contorted efforts, that it could riot conceivably be by reference to production. Output in the manufacturing industries has risen in every single year since 1980, and in the past two years alone by more than 12 per cent. It is not only higher than in 1979, when the Government first took office; it is higher than in 1974, when the preceding Labour Government took office. That is, of course, another way of saying that, whereas that Labour Government departed unlamented with manufacturing output lower than when it arrived, under this Government it has reached a record level. I am certainly not surprised that we have heard little about that.
Equally clearly—and the hon. Member for Dagenham fairly acknowledged this—that alleged decline could riot be by reference to productivity. Productivity in manufacturing industry has so far improved in this decade by no less than 50 per cent. and, by comparison with our major competitors, that represents a quite astonishing improvement in our relative performance.
Mr. Gould: Where do we rank?
Mr. Newton: The hon. Gentleman asked me where we rank and I shall tell him.
In the 1960s our productivity growth was lower than any other of the seven major industrial countries, and only about two thirds of their average. In the 1970s, it was again lower than in any of them, and less than half of their

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average. So far in the 1980s—and my figures are for 1980–88—it has been far and away the highest of those self-same seven: substantially higher than in France and Japan and more than twice as much as in Germany.
Nor could the hon. Member for Dagenham justify his talk of decline by reference to the profitability in manufacturing industry. I do not think that he even sought to do so, because, of course, the profitability in manufacturing industry is at its highest level for 20 years. That in turn is reflected in the powerful revival in manufacturing investment, which has grown by not far short of half since 1983, by more than 9 per cent. last year alone, and is expected to show a further healthy increase in the present year. Moreover, that revival in manufacturing investment is an important contributor to one of the most important and significant changes for the better which has taken place in the British economy in recent years. That is the shift from a pattern in which we persistently tended year in year out to increase consumption faster than investment to one in which, over the past seven years, total investment—I want to make it clear that I am talking about total investment and not just in manufacturing—has grown at more than twice the rate at which consumption has grown, and more rapidly than in any other country in the European Community. In other words, after decades in which we persistently tended to let our consumption run ahead of our willingness to put money into developing industry in the future, that picture has changed and the growth in investment in manufacturing industry is a part of that change in the picture.
One thing that I did expect in this debate—I have not been disappointed—was that the hon. Member for Dagenham would make the most that he could of the fact that investment is still fractionally lower than in 1979. I will make two points about that. First, I think that events will take even that fig-leaf of argument away from the hon. Gentleman before too much more time has passed. Secondly, I hope that he will direct his attention not only to the total, but to the pattern within the total.
The pattern of the late 1970s in particular was one in which we put great quantities of investment into industries which manifestly were among those that the hon. Member for Dagenham described—it is not a phrase that I would have chosen—as sunset industries, usually in the form of massive taxpayer-financed subsidies of one kind or another and which in consequence made it difficult for the industries that were manifestly the growth industries of the future to find the resources that they needed to invest.
What is of more practical importance than just looking at the quantity of investment is the quality of manufacturing investment and the efficiency with which it is used. Undoubtedly, in that area there has been a large improvement. A good deal of industrial capacity was scrapped at the beginning of the decade. Much of it was technically and economically obsolete and, frankly, had been for some time. Most manufacturing investment since then has been for replacement purposes, but the standard of the new capacity for such things as operating costs, quality standards, its impact on the environment and energy use is far higher than that of the old equipment. That improvement in the quality of investment has made
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a major contribution to the improved productivity to which I have referred and to the greater competitiveness of British manufacturers.
The hon. Member for Dagenham made some play of competitiveness figures. I have in front of me those figures that the IMF produces, which are based on relative unit labour costs. I am not sure whether those were the ones to which the hon. Gentleman referred. Certainly, on the figures that I have, there was little change on that single statistical measure between 1979 and 1988. There are some fluctuations in between. However, the point that the hon. Gentleman misses, and, indeed, all his colleagues persistently miss, is that competitiveness in the real world is not something that can be measured in such statistics. It is a matter of people's confidence in whether British goods will be delivered, because of the bad industrial relations record during the late 1970s. It has to do with quality and reliability and all the things that have manifestly improved in British manufacturing industry in the past few years. Improvements in working practices, in maintenance standards and in the timely availability of material components cannot be so readily measured, but I have no doubt—nor do I believe does any serious observer of the scene—that improvements in those factors over the past decade have greatly increased both effective manufacturing capacity and British competitiveness on the world markets.
So we come then to the line of argument on which the hon. Member for Dagenham sought to build so much, which is the deficit on the balance of payments current account, and within it the deficit on manufactures.
Whatever else may be said about those figures, I do not believe that any serious analysis of them—alongside the figures that I have already given—could sustain the case that they show a decline of manufacturing industry in this country. If they could be shown to result from a failure of exports, perhaps that could be so, but they cannot. On the contrary, exports of manufactures have been rising strongly—by nearly 18 per cent. in value in the past three years and by over 5 per cent. last year alone. If the figures could be shown to be associated with a fall in our share of world trade in manufactures, perhaps that could be said. But that cannot be shown either. On the contrary, the signs are that that decline has been halted or even reversed.
Mr. Thurnham: Will my right hon. Friend give way?
Mr. Newton: If my hon. Friend will forgive me, in the light of what Mr. Speaker said at the beginning of the debate, it is right that I should press on.
The most important single factor in the deficit, far from being the weakness or decline of our manufacturing, arises from the growing output and the increasing investment to which I referred earlier. Some three quarters of it is the corresponding rise in imports of raw materials, of components and semi-manufactures and of capital equipment. In other words, it is associated with the recovery of our industries and the strengthening of their capacity to expand production and exports still further in the future.
Inevitably, it takes time for that to feed back on the other side of the account, but I see no reason to doubt that it will. Indeed, there are already some signs of that. If we take the first three months of this year against the last three months of 1988, the volume of manufactured exports rose faster than that of imports, and that is against the

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background of official and independent forecasts which suggest a greater improvement in the volume of manufactured exports in 1989 than in 1988, alongside a much smaller increase in the volume of manufactured imports than we experienced last year.
The other point on which the hon. Gentleman based a good part of his argument was the numbers employed in manufacturing industry. It is indisputable that there has been a substantial decline since 1979, but that is in part the consequence of tackling the overmanning and the under-productivity which nobody could seriously question the existence of up to that time. That improvement in productivity and removal of overmanning was essential if our industry was to restore its competitive position.
No less important, as the hon. Gentleman fairly acknowledged, is the fact that it is a feature of virtually all modern industrial economies that the balance of employment shifts away from the production of goods towards the supply of services. I think that the hon. Gentleman referred to an expectation that it should be possible to employ more people in manufacturing, but he put no particular period on that. However, I know of no major industrial country which has not seen employment in manufacturing decline as a proportion of total employment since the early 1970s. Since 1979, to take the period that is at issue in the debate, in most such countries the absolute number employed in manufacturing has fallen, as it has here.
Those facts are also reflected in the fact that in virtually all advanced industrial countries the percentage of GDP accounted for by manufacturing has fallen and that of services has risen. We are no exception to that, nor should we seek to be. The figure fell from just over 25 per cent. in 1979 to just under 22 per cent. in 1986, the most recent year for which comparative figures are available. The comparable figures in the United States were a fall from 23 per cent. to just under 20 per cent. and in Italy from just over 30 per cent. to just over 23 per cent. Only Japan is an exception to that general trend.
The hon. Gentleman referred to the Government being in some sense contemptuous of the CBI, or the CBI making remarks completely different from the picture that I have sought to set before the House this evening. As it happens, I was on the same platform as the Director General of the CBI in Sheffield barely two weeks ago and I have with me the text of the speech that he delivered on that occasion. He said:
"The last five years have seen a major turnaround in the UK manufacturing sector, and this has of course spun off into demand for services and jobs. Output, export volumes, productivity and business investment—in skill-training, plant and equipment and innovation—are all at record levels. So are profits, which makes investment possible and worthwhile."
That is what the CBI was saying a fortnight ago. Mr. Banham went on to make the point that we export some 20 per cent. more per person than Japan. Opposition Members may like to reflect upon that.
Let me make one other point which will lead me to the conclusion of my speech in a moment or two. The most conspicuous omission from the hon. Gentleman's speech was any reference to inward investment. Whatever his view of manufacturing and the strength of the British economy may be, some of the best companies in the world are voting with their feet by coming to do business in Britain. In one week alone we heard recently of major cases of inward investment totalling well over £1 billion in various parts of
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the country. It is not just the Japanese who are coming, even though they have tended to make the biggest headlines. A third of all American investment in the Community comes to the United Kingdom. Over the past year investment from other European countries, particularly Germany, has also been particularly strong. I wonder how many German firms would have invested in Britain 10 years ago.
I want to make it clear tonight, as I have on other occasions, that we welcome that inward investment and will continue to do so, both for the balance of payments boost that it brings to the United Kingdom and for the added competitive spur that it provides to industry already here. Wherever such firms locate in the Community, and many of them will come anyway, the impact of the extra competition will be felt in Britain. But when they locate in Britain as so many of them are now doing, we have riot only the jobs and the economic activity but the stimulus of new manufacturing methods, quality standards and management techniques in our economy. We shall continue to try to attract as much of that mobile investment as we can.
Those firms are at times almost queueing up to come here as a direct result of the Government's policies which have given priority to curbing inflation, to restraining the weight of public expenditure and public borrowing, which have reduced the rates of taxation on companies and individuals, improved industrial relations and made Britain a country in which people, whether British or from abroad, want to invest and are investing.
The Opposition's motion invites us to abandon those policies in favour, as is increasingly clear, of returning to precisely the policies which made their time in office a period of overmanning and inefficiency, of misdirected investment, of roaring inflation and dismal industrial relations, when the only reason for business men from overseas to come here was not to take part in our economy but to try to learn how not to run an economy. Neither the House nor the country will want to go back down that path.
7.58 pm
Mr. Stanley Orme: Listening to the Minister, I do not recognise the area that I represent in Greater Manchester which has lost tens of thousands of jobs in manufacturing. My city of Salford, which had a large engineering base, has virtually no engineering industry left. Just across the canal, Trafford Park has become a storehouse. Before the war it was a rival to the Ruhr as a major world industrial centre. That is the difference that the Minister fails to recognise.
I declare an interest in the debate as a Member sponsored by the Amalgamated Engineering Union. That union has 750,000 members in manufacturing industry and 2 million workers in the engineering industry, and it wants a share in Britain's prosperity and in manufacturing industry.
We cannot just dismiss the disappearance of 2 million jobs and say that the same thing is happening in Japan or West Germany. The same thing is not happening in those countries. I accept that there has been a reduction and an inevitable change in some of the older industries because of the decline in those industries. The Government have made the notion of small is beautiful one of the key factors in their approach, but it should be remembered—
Mr. Thurnham rose—
Mr. Orme: I shall not give way to the hon. Gentleman.
It should be made known that 60 per cent. of Britain's gross national product is contributed by 150 of the large firms. Nobody denies that small firms are important, and we welcome them into our areas and constituencies. However, they do not replace the tens of thousands of jobs that have been removed from the basic industries.
The Minister said that Britain is booming, and investment and output are up. He made great play of productivity. Assuming that what he said was correct, the important factor is that we are starting from a much smaller base. The problem facing Britain is that its manufacturing base has shrunk. In terms of productivity we are, perhaps, equal to the Germans, Americans and even the Japanese, but our base is small. Therefore, we are faced with the problem of importing many goods. With that small base we cannot produce the products that our economy wishes to consume and, therefore, we have to import them.
The Minister made great play of inward investment. We must be careful when we consider that investment. At the moment, as everyone acknowledges, the balance of trade deficit is horrendous. The manufacturing industry is at the centre of that trade deficit. Last year, the deficit on manufactured goods was £14·4 billion compared with a £2·7 billion surplus in 1979. Imports jumped 127 per cent. between 1979 and 1988, and by 13 per cent. last year. During that period, exports increased by only 2 per cent.
Despite what the Minister says, part of the problem is the underinvestment in the manufacturing industry which is still below the 1979 levels and now forms only 2·7 per cent. of GDP, compared with 3·6 per cent. in 1979. That compares badly with our main competitors in Germany, Japan and the United States.
The opportunity to use oil revenues for such investment has been lost and, instead, they were used, as we know, to fund the increasing unemployment that was created by this Government. That is one of the crimes that the Government have committed. They have left us with a weak economy. The rundown in manufacturing industry is visible for all to see. We were a great manufacturing centre in which the industrial revolution started. However, the rundown that has taken place within that manufacturing centre is now evident for all to see. The new industries that have been introduced have not proved sufficient to prevent that rundown.
The motor car industry is one of the prime causes of our inflated imports. It is worth noting that the cost of our imports of road vehicles in 1987 was greater than the cost of our total imports of food and live animals. The Minister did not refer to that comparison. Japanese firms such as Nissan and Toyota have moved into Britain. Why are they doing so? They want to move inside the ring fence of the Europe of 1992. On the surface—[Interruption.] If hon. Members will allow me, I shall continue. On the surface, that looks a welcome development because it creates manufacturing jobs, which we all want. However, we should insist that those firms do not become screwdriver firms, mere assembly plants. The engines should be made in the United Kingdom. There should be a foundry content, and, above all, research and development should not rest solely in Japan. If we allow that to happen, we shall be at the mercy of foreign and inward investment.
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Car imports form a major part of our trade deficit. In 1982, there was a deficit in the car industry of £1 billion, which rose to £6·1 billion in 1988. That forms a substantial part—about 40 per cent.—of our overall deficit.
The Engineering Employers Federation has estimated that mechanical engineering, which is one of the United Kingdom's consistent exporters, will move into deficit in 1989. That is another tragedy. One effect of Britain becoming an assembly plant is that we shall lose a skill which is so essential for modern industrial development. We are losing ground in new technology and computers.
As somebody who served an apprenticeship in industry and who is a skilled engineer, I think that it is an absolute tragedy that we have thrown away existing skill. Who closed the skillcentres and cut back training boards? If ever there was a short-sighted policy, it was that. At the moment, in the south-east, where there is a demand for labour, there is also a shortage of skilled workers. If we are to get the economy moving again and get people back to work, where are the skilled workers to come from? Training to obtain skills and apprenticeships are essential. While there may be high flyers in the City, in an area in which we need to expand in order to live, we are cutting our own throats, and the Government should take note of that.
People who work in the manufacturing industry are often seen as the poor relations in our society. That is not true in West Germany, the United States or Japan. In those countries, people who work in the manufacturing industry, both factory workers and management, are at the top of the tree. Here, they are hidden away and people seem to be ashamed of those who work in industry. That is one of this country's problems. How can that happen in the country in which the industrial revolution began?
The Minister referred to certain industries. I shall quote what Sir John Harvey-Jones, the previous chairman of ICI, said on 16 April:
"the huge areas of activities on which our industrial foundation was founded are being destroyed … where are the British Engineering firms to rival the Germans or the Japanese, where is our machine tool industry, our car industry, our electrical engineering and our electronic industries?"
The report by the House of Lords Select Committee, on which people such as Lord Weinstock served, asked the same question, and the Minister did not answer it tonight.
Manufacturing industry is a major priority and the Minister should have a policy for it which would include planning, investment, research and development and skills—they should all be brought together. The policy being pursued now of high interest rates and a balance of payments deficit should be recognised as wrong and destructive of our seed corn. The Government have got it wrong, and the only alternative is a Labour Government.
8.10 pm
Mrs. Maureen Hicks: I welcome a debate on manufacturing, but I must confess to a certain disappointment at the negative response from the Opposition on this important subject. Where have they been all these years? Industrialists who read the Opposition motion tomorrow in Hansard will despair because Labour has learned nothing. They would panic at the thought of a Labour Government continuing blindly to advocate failed policies that so largely contributed to the weakening of British manufacturing industry in the

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1970s. Secondary picketing and the thought of Labour threatening to undo all the good that has been done would distress them immensely.
I did not hear a single constructive policy on how to move forward and build for the future from the hon. Member for Dagenham (Mr. Gould). Everything he said was destructive. I suggest that we bring the Opposition back to the real world of the 1980s, in which manufacturing output is at its highest ever and manufacturing productivity has risen by more than 50 per cent. since 1980—faster than any other major industrial nation, including Japan. Those statistics floor the Opposition's motion. If we are the failure that Labour continues to suggest, why are foreign companies flocking to invest here? We are their favourite country in which to invest now, but under the Labour Government we were the laughing stock of Europe. Imagine trying to compete in 1992 under a Labour Government!
I do not ask the Opposition to believe me or the industrialists; I do not even ask them to believe the foreign investors. I ask them to join me on a tour of the west midlands and see for themselves what is commonly described as a manufacturing miracle. More than 20 per cent. of all foreign firms setting up here have chosen the west midlands, compared with only 6 per cent. in 1983. Manufacturing industry in the west midlands has made greater progress in the past 10 years than it did between the end of the second world war and 1979. Unlike Labour Members, I am proud to shout that success from the rooftops to future investors.
Business is booming and there is a renewed faith in the region and its huge investment, new jobs, new factories, full order books, record productivity, record profitability, investment in training and investment in research and development. Acres of derelict land have been turned around under this Government and put to good use. I welcome the Government's support for the heartland of the industrial United Kingdom in the shape of a black country urban development corporation which will produce 1 million sq ft of industrial premises, create 20,000 new jobs and attract £1 billion of new investment. One has only to go around the west midlands to hear the buzz of thriving industry in small and large companies and to feel the excitement. I feel it regularly as I mingle with workers who are now associated with success. It is wonderful to hear from one-time shop stewards—in private—that they are thankful for the trade union reforms that the Government had the guts to instigate.
I speak as a Member representing a black country constituency which, admittedly, was devastated during the recession. Not a week went by in those days without bankruptcies and redundancies and it was hard to imagine how a recovery could ever take place. But families who suffered first hand have had the honesty to recognise that good has come out of bad and that the Government have created the conditions in which industry can flourish. Many of them were longstanding Labour supporters, but they recognise that the country was crying out for strong leadership to deal with the decline of our traditional manufacturing industry and to create an atmosphere in which workers would care about the success of their companies and produce British goods that could compete successfully throughout the world.
In the black country, we used not to be able to give land away. Industrial land values in 1988 doubled because of the demand for sites. A few years ago jobs could not be
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found for love or money. Now, with the biggest reduction in unemployment in the west midlands, the vacancies cannot be filled. What is more, firms cannot keep up with the demand for skills to meet the demand for their goods. We continually hear of companies training their workers only to have them poached by other companies down the road. Industry and Government together must continue to tackle that problem and ensure that we provide the skills necessary to fill those vacancies.
Given the reduction in the number of school leavers, we must devote even greater efforts to forging links between schools and industry. I take the point made by the right hon. Member for Salford, East (Mr. Orme) about the anti-industrial culture that has grown up; we must ensure that industry gets its fair share of the declining market of school leavers.
I am happy to report that in the manufacturing industries we still employ 33—2 per cent. of the working population of the west midlands, which is more than any other region. It will be a great tragedy for our region if excessive wage demands and days lost through industrial action are allowed to hamper our remarkable progress. Against a background of success and falling unemployment it is often too easy to forget the way things used to be. It is worth quoting an industrial analyst of the early 1970s in this connection. He said that 90 per cent. of a manufacturing manager's time here was spent in industrial relations, as opposed to his Japanese counterpart, who used to spend 10 per cent. The Government have redressed the balance, and that can nowhere be seen more clearly than in the major industries in my constituency.
I shall not quote the sort of hollow statistics that we heard from the Opposition tonight: I shall cite living, breathing industry. Goodyear, a flagship industry producing tyres in my constituency, struggled for survival in the 1970s, when the local Labour council did not want industry and was pushing Goodyear out of the region by setting high rates. Then, in the 1970s, Goodyear's labour force was more than half as big again as it is now and its manufacturing costs were well above those of its competitors and sister Goodyear companies. In the 1980s, the company has embarked on a major modernisation, in the form of a multi-million pound investment and rationalisation programme which has led to reduced manufacturing costs and a realistic attitude to success among the work force.
I can report in 1989 that that company is now so successful that it has switched from a five to a seven-day a week operation, 24 hours a day, which has resulted in an extra 1,000 jobs, taking the work force to well over 4,000. Similarly, another company, employing 750, Marston Palmer in the aerospace industry, whose markets in the 1960s and early 1970s centred in the United Kingdom, is today a leading company. It is well known and respected both in Europe and the United States for its technical excellence and is well prepared to compete favourably with the opportunities to be provided in 1992.
These are just two success stories from hundreds I could quote. They are examples of the manufacturing progress we are now witnessing under this Government, and long may it last. I say to the gloom and doom merchants on the Opposition Benches, "Open your eyes and see the success story once considered impossible." In the words of John Banham, the Director General of the Confederation of British Industry:

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"We have made a quantum leap from our dismal performance in the 1970s."
8.20 pm
Mr. Stan Crowther: I do not claim to know very much about economics. I used to think I knew a little about it until I learnt from experts such as the Chancellor of the Exchequer and the Chancellor of the Duchy of Lancaster that a record trade deficit, massive unemployment, rising inflation and very high interest rates are actually indicators of a strong economy. I always thought it was the other way around; now I realise that I got it all wrong.
However, no one needs to be an economist in an area like mine to see the appalling social cost of the decline of our manufacturing industries, because the ghastly physical evidence is there for all to see. The hon. Member for Wolverhampton, North-East (Mrs. Hicks) is inviting us to go and see for ourselves. Perhaps she would like to come and see for herself what I am talking about, because between Rotherham and Sheffield there are great areas of dereliction and desolation where once stood wonderful steel-making and engineering plants, which were in the old days the very backbone of the British economy. They have largely gone, and up to now at least they have not been replaced.
Of course, we are still making steel in Rotherham, but nothing like as much as we did. About 3,000 people are still working in the steel industry at a very high rate of productivity, but in steel alone my area has lost 10,000 jobs in the last 10 years, plus many thousands of other jobs in the coal industry and other industries—some manufacturing industries, but all directly related to manufacturing, whether in the manufacturing sector itself or in the energy-creating sector on which manufacturing depends. This collapse of manufacturing has led to a massive loss of jobs in my part of the world.
Some new jobs have been created, of course, many of them in a very unsightly, out-of-town retail development in the enterprise zone, where people are employed largely part time on very low wages in monstrous blue boxes pretending to be buildings, and they contribute precious little to the local economy. I am very pleased to say that there are a number of new small businesses in manufacturing and, like my right hon. Friend the Member for Salford, East (Mr. Orme), I strongly support small business. I am very much in favour of helping small companies to get established. However, it would take literally 300 new small firms, each employing 40 to 50 people, to create the jobs we need in the Rotherham area not in five years, not next year, but now; that is the measure of the problem. Quite clearly, with the best will in the world, these new small firms, which I strongly support, will not be able to solve that.
Everyone knew a long time ago, and we do not need to be told, that the traditional manufacturing industries would not be able to continue employing the number of people they once did. We all knew technology would take care of that because, of course, the whole purpose of technology is to reduce the need for labour. No one disputes that. Even if manufacturing were booming in Britain today, which it certainly is not, we would still be shedding jobs. However, the tragedy is that the benefits of technology and the potential wealth that technology can
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create have been dissipated, just like the wealth from North sea oil. That wealth ought to have been harnessed and used to develop new industries and create new jobs, but that has not happened. That is the great tragedy of the last 10 years. Where are the sunrise industries that we ought to be developing with the benefit of the wealth we have produced? They are not here, or not many of them are.
Mr. Richard Holt: They are in Cleveland.
Mr. Crowther: The hon. Gentleman says they are in Cleveland. He is extremely fortunate if they are in Cleveland, but there are not very many or we would not be running this massive trade deficit in information technology, electronics and telecommunications, the very industries on which any advanced country has to depend in the future to be able to revive the manufacturing base. It is an appalling tragedy that the country which led the first industrial revolution is now trailing so far behind many other countries in the world in the second industrial revolution.
Much of the problem stems from the fact that successive Secretaries of State for Trade and Industry—and, my goodness, we have had an awful lot in the last 10 years—have all failed to take the slightest interest in manufacturing. The Minister shakes his head, but it is a fact. We have met them all in the Select Committee on Trade and Industry. We have never managed to persuade any of them that manufacturing really matters. We have drawn attention to this problem time after time.
Lack of time will not allow me to quote very much, and I draw the attention of the House to only one of our reports, produced in May 1984, when we were very concerned about the great imbalance in trade in manufactures between this country and the rest of the EEC. It was already running at £8 billion a year, and our Select Committee, in its unanimous report, found it necessary to describe the attitude of the then Secretary of State, the right hon. Member for Chingford (Mr. Tebbit), as short-sighted and complacent, which indeed it was.
The essence of what we were saying in that report five years ago was that if we did not do something urgently to revive our manufacturing industries, we would be in very serious trouble in a few years' time. The question we were putting to the House and to the Government was: what do we live on when the North sea oil starts to run out? Of course, the chickens have come home to roost in this record and still rising trade deficit.
I had always understood that this country was a trading nation—Nye were all told that at school—and I cannot, for the life of me, understand how it can be argued that a trading nation which spends enormously more buying goods than it receives for the goods it sells can be regarded as successful. I may be taking a very simplistic view, but that is certainly a simple concept, which I should have thought would be easily understood by the grocer's daughter who leads the Conservative party and has the benefit of being Prime Minister for another couple of years or so. I do not think that Alderman Roberts of Grantham would have stayed in business very long if he had operated on the basis of developing a huge and increasing deficit year by year. Traders do not stay in business that way, and I do not think that the Government can pretend that we are doing nicely on that basis.

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I greatly admire the companies that are exporting manufactured goods and struggling against the enormous difficulties created by high interest rates, for example, and the quite unrealistic exchange rate, to increase those exports, but they cannot compensate for the fact that we have an absolute flood of imports coming into the country, largely because our manufacturing industries in many important sectors have been completely wiped out; they are just not there any more. In other fields they are being run down to the point at which they can no longer even meet the demands of the home market. When we relate all that to the profligacy of the Chancellor of the Exchequer's taxation policy, no one should be surprised at this huge inrush of imports.
Ministers frequently proclaim the virtues of private enterprise. If the Government had been managing any ordinary private sector company in the way that they manage the country, they would have been sacked years ago.
8.30 pm
Mr. Lewis Stevens: The hon. Members for Dagenham (Mr. Gould) and for Rotherham (Mr. Crowther) may have given to our competitors in Europe and elsewhere a picture of the British economy which they will be delighted to see. All the gloom that they portrayed was such that no one could believe that we now have a manufacturing industry that is likely to be able to compete with any worthwhile economy in the world. As my hon. Friend the Member for Wolverhampton, North-East (Mrs. Hicks) said, the picture of doom and gloom is completely false.
The pessimism of the Opposition about manufacturing industry is that it has not over the past 10 years come out of the shadows of the trade union domination in which it suffered for 20 years. In the last 10 years, improved technology, productivity and industrial relations have brought British industry to the position where it is able to engage in genuine competition better than at any time since the last war.
The impression that we do not want to invest in industry, that people do not want to know about engineering and that manufacturing is always the poor relation has perhaps an element of truth in it. Many things said by the Opposition often have. However, it is the emphasis on that which is so wrong. Companies such as Rolls-Royce have not only developing technology but are able to compete in world markets much more successfully than one would have envisaged even 10 years ago. The orders won by Rolls-Royce in the last few months are some of the most substantial that the company has ever had. We must congratulate the company, the workers on the shop floor and those in design and development and in other departments on their success.
I have a Rolls-Royce company in my constituency. It manufactures marine engines, but in the near future it will move to other products. The Opposition tried to talk down the privatisation of Rolls-Royce. They said that it would not be able to do its job in the private sector, but it has proved that it can do a very good job indeed. The Opposition talk about the loss of manufacturing jobs, and the right hon. Member for Salford, East (Mr. Orme) mentioned textiles. Certainly the textile industry went through a rough time during the major recession. It is
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interesting to note that in my constituency some of the developing industries are textile companies that are competing and exporting.
The second largest employer in my constituency is a textile company. It has built a new factory, is bringing in new techniques and is able to employ more staff than i t did a few years ago. Not only are existing companies developing because of the better climate, but new companis are coming into an industry that was always in decline. Many companies, including those in textiles, have developed in the last 10 years because the Government have provided a framework that has encouraged large and small companies to develop and take part in the necessary development of our total economy.
Manufacturing has many more problems than most other types of industry, and it is necessary for Government to be conscious of the importance of an industrial base to the total economy. The wealth-creating aspect of manufacturing is fundamental to a country's development in terms of jobs and the balance of payments and in the general wealth of people. We can ensure that wealth creation only by continuing the attitude to development that we have adopted in recent years.
Some years ago we had a machine tool industry, in which, among others, I worked, but it largely disappeared. However, there should not be too much gloom about that, because anyone who attended the machine tool exhibition at the National Exhibition Centre will have seen that independent British manufacturers and British manufacturers in collaboration with other companies have developed British machine tools. Those tools have started to appear again on the market and to compete. From the ashes of the former machine tool industry there is now a growing industry. It is not as big as it was before, but it is growing.
We must also recognise that in order to develop as fast as we should like manufacturing industry may sometimes need special Government measures. The Government have provided such measures to help manufacturers, especially small companies to which they have given various grants, particularly to those involved in high technology projects. However, we may have to look at other measures to encourage some of the smaller companies. Measures that will assist cash flow and perhaps tax delays or even VAT delays may be necessary to allow some of those companies to develop rather faster.
At one time, old-style apprenticeships were the best that we had, but that is no longer true. Some of the apprenticeships were superb, but others were weak, and that also applied to many of Britain's other training schemes. The Government have now developed a range of training that is wider than we have ever had, and it is available for people from the age of 16. That should greatly help manufacturers, because it brings together industry and education within the orbit of Government training. Such co-operation did not exist before, and that was why we had weak training systems in the 1950s, 1960s and 1970s.
We have also encouraged the higher education available at polytechnics and universities where courses are geared more to the needs of individuals and industry than they were in the past. They are not purely academic courses. That is the kind of development that we want. Local polytechnics are now running courses which 10 years ago could not have been envisaged, but yet they are necessary because they provide engineering courses that

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are directly relevant to local companies. The picture is not gloomy. We can look forward to making all our industries competitive in Europe and in wider markets. If we adopt an attitude of, "Oh dear, we have problems, perhaps we had better stop", we will get nowhere. That often happened in the 1960s and when a company came up against a problem about introducing new technology or faced difficulty in finding workers projects were sometimes put off. I do not say that that was due to trade unions being awkward. It was a mixture of difficulties created by unions and management.
Today there is an acceptance by unions of flexibility within companies and an acceptance by management of the need to generate a movement that keeps going forward. The Opposition skipped over productivity, but it is one of the most fundamental aspects of competition. Productivity is not a static concept. One does not improve productivity, sit back and say, "We have done it. We are better now." It is an ongoing process, and manufacturing and all industries must recognise the need for continual productivity improvements as part of their businesses. That must be a major priority if business of all sorts is genuinely to compete in the markets.
We have a future in manufacturing. That is not to overlook the need for help and a drive on training and education. Much remains to be done, but a good start has been made under Conservative rule. The whole issue was ignored by the last Labour Government and the fact that a problem existed was not even realised by some Governments before that.
The Conservatives in recent years have appreciated the need for manufacturing to develop, and help has been provided in many ways and in various areas. By recognising the needs of manufacturers, we have already come a long way. There is still a long way to go before we are truly competitive, but the path which the Government have set will prove to be the path to a more successful and reliable manufacturing base.
8.41 pm
Mr. Charles Kennedy: Despite some of the optimistic tones that predictably have been emanating from Conservative Members, I cannot but feel that an initial comment on those tones is to ask why, if things are so good, things are so bad, certainly in the part of the country from where I come.
I cannot claim to speak with knowledge of the part of the country represented by the hon. Member for Wolverhampton, North-East (Mrs. Hicks), but it sounds as though the manna from the Government is falling weakly from heaven there. The extremely encouraging picture she painted of her constituency is not mirrored in many other constituencies, particularly the further north one goes in Britain. Apart from being extremely supportive of Government policy, her remarks represented an eloquent underlining of the extent to which Britain has become a deeply divided nation, socially and politically, under Conservative rule.
The nation and its industrial base has been hit twice by the Government. It was hit first between 1979 and 1981 when they pursued massive deflationary Budget strategies which resulted in the wholesale rundown and closure of large sections of manufacturing industry. That was bad
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enough. But as a result, any figures that are now cited in support of the apparent manufacturing recovery begin at such a low base, as a result of the 1979–81 collapse, that it is easier to make any recovery look better than it is.
The economy has been, and is being, hit for a second time—and all the harder from the point of view of our economic base—by the tax-cutting strategies of the last two Budgets and by the consumer boom sucking in consumer imports. The Government have always displayed a tendency to change the basis of calculation when the figures show an unhealthy story. That has happened with unemployment; there have been a series of changes in the method of calculating the totals. The Chancellor now wants mortgage interest costs to be removed from the inflation index because it puts up the index too high for his liking.
Casting one's mind back to the previous debate today and the willingness of the Government to indulge in propaganda at the taxpayers' expense, one wonders whether, if the balance of trade continues to decline, they will try to withdraw imports from the equation, so making our balance of trade position look not nearly so bad.
Mr. Crowther: The hon. Gentleman may be giving the Government ideas.
Mr. Kennedy: If I get a 10 per cent. return for feeding in that idea to the propaganda machine that Saatchi and Saatchi has developed in recent years, I shall be able to retire happy almost immediately.
What can we do to improve our industrial performance and manufacturing base? There are three key problems to which I wish to refer—low productivity, high unemployment and high inflation, which is linked to poor competitiveness.
In 1960 we were the equals of France and Germany in productivity. We have now slipped way behind. Our productivity has a real impact on our people's standard of living, so we have by far the lowest pensions, we spend less on health and we have the smallest proportion of young people in full-time education. Our closest competitors in Europe are leaving us standing in all those respects.
Four main factors cause low productivity: shortages of skills and basic education, poor industrial relations at times, inadequate research and development and inadequate competition. Given our skill shortages and low levels of basic education, we should be moving towards a right to numeracy in our education system. In other words, it should become increasingly unacceptable for the teaching of maths in schools and colleges without ultimately a certificate of competency.
There should be training incentives. Employers who train less than the average for their industry—the Government should start thinking in these terms—should pay a tax equivalent to the extent of the under-training. Employers who train more than the average should be reimbursed to the extent of that extra training. The amount of training should be measured in terms of expenditure as certified by a company's auditors.
The Companies Bill began its Committee stage this morning. The Government displayed their open-mindedness in the first two and half hours of the Committee's deliberations by removing an amendment on political donations which was inserted in another place. I hope that

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the Government use some of the remaining time that the Bill has for its passage through Parliament by pursuing some of the ideas that I am putting forward.
Next, there should be a right to training. Anybody employing a person under 18 years of age should be encouraged to release that youngster for at least one day a week for education and training at the employer's expense. In the past, the Government have hesitated to introduce such a concept for fear of causing youth unemployment. Under the training incentive proposal that I have outlined, using the tax system based on a company's audited accounts, employers would no longer have an incentive to avoid employing young people with whom they had to enter into training commitments.
Those are some proposals by which the Government could begin to shake up the industrial base and contribute towards industrial, and particularly manufacturing, recovery. They should also look to civil research and development. Our education structures, compared with those of our main industrial competitors, are such that we are failing woefully to provide anything like the tertiary and skill education that, for example, Japan and north America manage to provide in competition with us.
It is attitudinal, and I agree with what hon. Members on both sides have said about education. About a year ago I spoke before a high school audience in Edinburgh, most of whom were going on to some form of tertiary education. One thinks of the proud and distinguished engineering traditions of Scotland. When I asked that audience how many would be going into law, medicine, the arts and so on, it was clear that the number going into engineering was a minute fraction of the total. In Japan, "engineer" is a social handle. It is a position in society in the way "doctor of medicine" is in this country. Our attitude must change.
High unemployment, high rates of inflation and poor competitiveness have dogged this country throughout the period of Conservative rule. We should be looking to full United Kingdom membership of the European monetary system.
There is a very interesting debate developing within the Conservative party, although I do not think that I can dignify it with the description "debate". There is a full stand-up, drag-'em-out fight going on in the Conservative party. There is no doubt that the SLD had the good sense to get our little skirmish behind us in the first half of this Parliament and we will spend the second half being constructive. The Government look as if they are going to spend the second half of this Parliament involved in their own internal punch-up and I welcome that because it will help the Opposition parties generally.
We should be working towards full EMS entry because that would help our industrial base, help our exporters and create far better conditions for them to operate. Conservatives advocating that approach will, I suspect, by the time of the next election or not long after it be proved to be on the correct side in that argument. That, on an international basis in terms of the ability of this country to compete better internationally, would be a major attainment. It is well within the grasp of the Government.
It now seems to be fashionable to assume that a move back towards something much closer to full employment is not attainable whatever economic system one adopts or whatever political goals one sets. But we should look at countries such as Sweden, where unemployment is close to being under 1·5 per cent., which is effectively zero unemployment given the flexibility of the labour market.
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I hope that, despite all the fiddling and fixing of the figures and the misplaced economic optimism of the Government about the economy, they will not lose sight of their tremendous, overriding social obligations to the millions who have lost gainful productive employment during their decade in office and of how important a priority it must remain to bring down unemployment by the production and creation of real jobs in the future.
I have one constituency appeal to make to the Minister. The greatest single manufacturing setback in my constituency was the closure of the Invergordon aluminium smelter. I will not rehearse the history now, but it closed because of a world slump in the price of aluminium and the inability to achieve—[Interruption.] That plant went there with Conservative support in the 1960s. If the hon. Member for Langbaurgh (Mr. Holt) was not so woefully ignorant of recent political history he might know that.
It also failed because of the inadequacy, or ineffectiveness, of the power supply contract that had been negotiated. World aluminium prices have now substantially increased and British Alcan has commented publicly that electricity privatisation may create flexibility for a more favourable power contract to be negotiated. That being the case, I should be glad if the Minister would at least promise to keep his eye on that developing situation, because he will appreciate that any move towards reopening that plant in my constituency would be a major psychological and financial shot in the arm.
8.53 pm
Mr. Charles Wardle: It seems to have become inevitable that whenever the House debates the state of British manufacturing industry an internecine clash follows about the correct interpretation of what has happened to manufacturing in the recent past. Today has been no exception. Opposition Members have made some strident claims about what they describe as the disintegration of our industrial base, the dramatic fall-off in manufacturing employment and the trade deficit in manufactured goods. My right hon. and hon. Friends point with much justification to a freer labour market, vigorous growth in output, greater productivity, higher profits and increased capital investment.
On both sides of the House, to my way of thinking, a rather too euphoric gloss is sometimes placed on industry's short-term prospects in Europe without what I would regard as sufficient concern for the devastating speed with which changes in technology will shortly be consigning even some of our more enterprising companies to iron-age-style obsolescence, and without enough awareness of what it will take to acquire a greater market share in the single European market ahead.
The trouble with a debate about what has already taken place is that it distracts attention from the important issues for industry's future and particularly the opportunities and challenges over the next decade. Nevertheless, any realistic assessment of where manufacturing industry's best strategy lies in the 1990s has to spring from an analysis of the key factors in our past performance. I shall try to keep my comments about that analysis as brief as possible.
There can be no doubt on either side of the House that captive markets in post-war Europe and the Commonwealth left British manufacturers complacent

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about order books in the 1950s and 1960s. That meant that they were later into new technology than our German and Japanese competitors. That had disastrous consequences for this country in the microchip revolution. But the real killer was inflation from 1972 or 1973 onwards because too many companies simply made for stock and watched paper profits accumulating on the shelf. Products remained unsold and simply rose in value, and that in turn encouraged poor cash-flow management, soft wage settlements and overmanning—a situation that was exploited with mindless shortsightedness and selfishness by many trade unions.
Ironically, one of the first people to signal the impending crisis was a trade union leader, Clive Jenkins of ASTMS—the Association of Scientific, Technical and Managerial Staffs. In a book that he published in 1979, before the winter of discontent—I think its title was "The Collapse of Work"—he predicted unemployment of 5 million or 6 million in the 1980s because he recognised the problems of overmanning. So, when the world recession began in 1980, British companies with too much stock, tight liquidity and bloated payrolls fell like ninepins and only the better managed companies managed to come through and survive.
No matter what Opposition Members may claim, from that time on the future of many traditional, steel-based, smoke-stack industries suddenly lay in the far east and the Third world, because even with automated production plant and efficient materials handling Europe could no longer compete with the direct and indirect labour costs of the developing world. So manufacturing in the west midlands and elsewhere was reduced to a rump eight or nine years ago. But, since then, with trade union legislation that has liberated individual workers, deregulation, lower inflation and more individual incentives, growth has accelerated, particularly in the defence field and in the hitherto sluggish state-run companies now in private hands.
The Government have skilfully created a more positive business climate, with record output now being achieved from a much truncated manufacturing base. We have a leaner and fitter industry, better equipped and tightly controlled, but is it geared to win a greater market share in Europe, to ease the balance-of-payments gap and to make up the leeway on product innovation and manufacturing technology?
With continued realism and determination, it is certainly possible, but it will not happen if inflation is allowed to rise and recent hard-won progress is squandered. Nor shall we succeed unless industry and Government come to a clear understanding about several vital areas in which both have a part to play. I am talking not about collectivist nostrums or central planning but about the harsh realities of a highly competitive market place and the ability to create wealth.
First—with no disrespect to our excellent civil servants—Government have to take into account the importance of including in their official ranks people who understand markets, money-making and line management to add to Government's understanding of the realities of the task of running industry. Not that Government should run industry, but they need to understand how it is done and all too often there is a gap in that understanding.
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Secondly, industry must grasp the significance of research and development if our future is to be anything but that of a neo-colonialist subcontractor and national assembly plant in the medium-term future. Companies are making profits and they have to put a large share of those profits into research and development if we are to have businesses in the future. It is the companies' responsibility.
Thirdly, Government have to shed their dirigiste inhibitions in at least one respect. They simply have to understand that the creation of new standards for the European single market must be achieved in a way that helps British competitiveness. That cannot be ignored.
Fourthly, excellent recent advances in training must be accelerated by employers, not by the Government. Employers must go to schools and colleges and participate in training programmes to woo the industrial workers of tomorrow. Fifthly, vast investment is required in our hopelessly inadequate transport infrastructure. We must emulate the efforts of our EC partners, and the swiftest and cheapest means of doing that is to give the job to the private sector and to private finance wherever it is practicable.
Finally, the City—and banks and institutional investors in particular—must grasp the fact that, while takeovers can be strategically important and worthwhile, the companies meriting the highest esteem are those which successfully invest in in-house product development and marketing strategies of their own. Too many companies in our highly sophisticated stock market look for next year's growth in earnings per share from the issue of additional equity for acquisitions, whereas the real glamour should attach to the businesses that ruthlessly seek internal growth and expansion. That is the way to create market winners and perhaps even to win back our European market share of consumer goods.
If those challenges—which are management challenges for private industry and Government alike—are met, we have a realistic chance of taking the lead in Europe by means of our own competitiveness before the turn of the century. If we do not do so, this country, which led the way to the first industrial revolution, will be relegated to the second division of manufacturing in the second industrial revolution in the next century. We have the opportunity to succeed. It is up to us.
9.1 pm
Mrs. Alice Mahon: Try as I might, I cannot find an economic miracle in manufacturing, but some extraordinary claims have been made tonight and, with a first name like mine, I am reluctant to talk about wonderland, white rabbits and mad hatters. However, listening to the contributions of some Conservative Members, I feel that I am in that kind of world.
I will not tolerate the Minister or anyone else saying that the fine industries that were lost to my constituency in the earlier years of the Government's reign were lost simply because they were overmanned or obsolete. We made the finest machine tools in the world and could be doing so still had there been a decent economic policy and a Government committed to industry. Nevertheless, tonight I will settle for a reassurance that the Government will at least take manufacturing's next period of crisis seriously. Sadly, I do not think that they will. Everyone else seems to be doing so. A report from the British Textile Confederation published this week states:

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"It is staggering to realise just how much of trade in textiles is distorted, often by interventionist policies by governments world-wide rather than being carried out on the basis of normal commercial principles."
There is a message for the Government that has nothing to do with competitiveness but has everything to do with British business saying to the Government, "Will you help and stop unfair practices?
Mr. Peter Booth of the Transport and General Workers Union textile group reports that 15,000 jobs were lost in the textile industry last year and predicts that another 20,000 will he lost this year. In a very good debate on manufacturing in another place recently, Lord Ezra commented that:
"unless we have a very strong manufacturing industrial base we shall not be able to balance our trade and our payments with the rest of the world. In order to achieve that, we have to build up that base."—[Official Report, House of Lords, 26 April 1989; Vol. 506, c. 1313.]
Those who took part in that debate, almost without exception, expressed the same sentiments. Concern was also expressed about Britain's £15 billion trade deficit. I add my voice to their warnings. I am pleased that we are having this debate. I asked my party to arrange it.
In the travel-to-work area of the district council that covers both my constituency and Calder Valley, 1,000 jobs have been lost since Christmas across various manufacturing industries, including engineering, machine tools, a new brush company that opened with high hopes, bedding, furniture, and textiles.
One of the saddest cases is that of Crosrol, specialists in textile machinery, which lost hundreds of jobs in the early 1980s but fought back. As my hon. Friend the Member for Dagenham (Mr. Gould) might say, it became leaner, fitter and more competitive. Last year it won the Queen's award for industry, but is now again announcing job losses. All those firms attribute their situation to some of the Government's economic policies.
In 1987–88, we were already feeling the chill wind of the need to be more profitable in the run-up to 1992. In my constituency, there was a major closure with the loss of 1,000 jobs at KP Foods. Even though that company was profitable, it was not profitable enough to cope with the competition it anticipates that 1992 will bring. A further 500 jobs are still to go at that company. The Government know full well that their one-club economic policy of high interest rates seriously damages industry, particularly small companies.
A town such as Halifax relies on the success of small companies. A large carpet mill, Dean Clough, closed, but was reopened, housing a number of small businesses. However, the Government's policy of high interest rates and high energy and water charges is harming those small businesses, which are finding it very difficult to compete. Towns such as Halifax suffer because the Government have no regional policy. The Government view local unemployment statistics as reliable indicators of the local economy but conveniently ignore the army of invisible unemployed, whose identity in the labour market disappeared down a departmental black hole of statistics as the need to get people off the unemployment register became paramount.
The Government do not allow councils such as Halifax capital budgets sufficiently large to help industry through infrastructure. No money is available except to inner cities or urban development areas. We have pleaded with the Minister for objective 2 status as a town surrounded by
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others having assisted areas status, and we suffer greatly from that situation. The economy is overheating in the south-east, with companies looking to relocate, but the Government's response is yet another local government Bill that will curtail the power of local authorities even further. They will not be allowed to help with infrastructure or assist industry to relocate.
As to manufacturing, the market has failed people miserably—[Interruption.] I am glad that the hon. Member for Wolverhampton, North-East (Mrs. Hicks) has such a happy story to tell. Sadly, I have not. I am sorry that Conservative Members see fit to laugh. If they had seen 1,000 jobs lost in three months in their constituencies they would not find it very funny. Another 500 jobs are still to be lost, and the economic indicators are against further employment.
We face a skills shortage in the run-up to 1992 in many of the industries that are doing well, which must raise questions about the Government's much-publicised training schemes, especially YTS and ET. We have not invested in research and development. Two years ago, the Prime Minister boasted that £210 million would be spent on the Link scheme, but only £60 million has been spent. I suspect that it is because the Government are not really interested in research and development or training for the manufacturing industry. The Government have to face up to the seriousness of the situation. Perhaps the very short debate this evening will enable them to do that but quite frankly, given the attitude of some Conservative Members, I seriously doubt it.
9.9 pm
Mr. Alistair Burt: This evening we have had a good debate, sharpening up attitudes on both sides of the House, but with a good deal of moderation and acceptance of the basic ills in the manufacturing sector over the years.
As the House will know, my constituency is in a traditional manufacturing area, south-east Lancashire, the cotton workshop of the world, but no longer are Bury, Ramsbottom and Tottington exclusively manufacturing towns. We have not talked very much about the development of a more mixed pattern of employment in traditional manufacturing areas. In my constituency the index of manufacturing and service industries reveals that there are more than 1,000 firms in my constituency and the area immediately surrounding it. That represents a large number of companies of a wide variety of natures. The fact that manufacturing is becoming less important is balanced by developments in other sectors.
In a traditional manufacturing area there are bound to be mixed views about the changing nature of the towns. Tradition dies hard and industrial closures have hurt the area. When I first became a Member of Parliament unemployment in my constituency was something like 13 per cent. and rising. Now it is down to something like 6 per cent., but recently there has been one closure and some jobs have been lost in another firm. Unemployment hurts and is still hurting. In the past few years unemployment has fallen, but the Government must maintain their goal of reducing unemployment as much as possible.
There has been nothing sudden about the changing nature of my constituency. It has not happened post-1979. That is why I feel that the central thrust of the Opposition motion is misguided. The true damage to manufacturing

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industry occurred in the years of decline this century when the golden age of British manufacturing came to an end, either through no fault—as the closed markets of empire were opened up to other nations or as developing nations improved their economies—or through fault—learning late the post-war lessons about proper management, and failing to get industrial relations right on both sides of the industry. If the Opposition are genuinely looking for a Government to make a scapegoat, they should look nearer home, at the Labour Government between 1974 and 1979. The hon. Member for Dagenham (Mr. Gould) was talking about competitiveness and productivity. How did the appalling trade union legislation of 1974–79 improve our productivity? How much did secondary picketing do to improve British competitiveness and what part did double-digit inflation play in industrial regeneration? All those factors did enormous damage to manufacturing industry but have been neatly passed over by Opposition Members.
Since then areas such as mine have changed and have moved away from manufacturing. We should remember that some 200 years ago manufacturing businesses and companies were new. When John Kay's flying shuttle was invented in Bury, Bury had something like 2,089 inhabitants. There have been many changes. We look back nostalgically to that great industry. But at that time it was new. Therefore, we should welcome the new industries and the new employment into our areas. It may not be as romantic to look back at the creation of an Asda superstore or the construction of a Warner Brothers' multi-cinema complex, but they represent jobs and investment and will exist for a long time to come.
There has been nothing short of a reconstruction of the manufacturing industry in the north-west in the past 10 years. Of course the bulk orders to easy markets have gone, but in the wake of the protection that existed in the past we now have new technology, innovation, and improved attitudes towards design and customer relations. There have been improvements in quality and an increase in the manufacture of value added products.
Some firms in my constituency illustrate that change. In the textile industry, Bury is no longer involved in bulk textile manufacture, but it produces high value-added goods and companies such as Elton-Cop, part of the Coates-Viyella group, have followed the practice of good long-term investments that are now paying dividends. In the paper industry, Bury no longer manufactures paper in bulk, but specialises. A company called Cromptons specialises in teabags and sausage skins. The sausage skins are exported to Germany. If my right hon. Friend the Prime Minister ever does anything as indelicate as eating a sausage with Chancellor Kohl in Germany, I would bet a pound to a penny that the sausage skin was made in my constituency. In the paper-making industry, companies such as Holder-Pamac have developed their own market over the past 10 years because the quality of design and innovation are better than many of their competitors. In the ventilation and ducting industry, Henry Hargreaves has a world wide reputation because it is the best in its field.
In areas such as my constituency and other parts of the north-west, the manufacturing industry has survived because it has learned the basic lessons of good
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management, good labour relations, and a better attitude to success from the shop floor to the boardroom and an understanding that they are all in it together. I do not believe that there are two sides of industry any longer. Those that believe in two sides believe in conflict and division which bring industry to a halt. But more often people feel that they are all in it together. Politicians may talk, but those in the industry do not want to see division and know how important it is to fight the world markets together. Lastly, companies in the north-west have learnt the value of good decent investment over a long period of time.
I should like to flag up some vital issues to make sure that the Government get it absolutely right in future. There is no doubt that the reconstruction of the north-west has been helped immeasurably by Government policies. But in the short term the Government must address some vital issues. First, there is no doubt that the high value of the pound causes difficulty to our exporters. Secondly, our manufacturers need stability in the exchange rates. Thirdly, interest rates should be lower, but we already know that. Fourthly, the Government should take a more aggressive attitude to unfair foreign competition. The textile industry has been through a miserable time recently, particularly with Turkey. It has taken time to order an EC investigation, which is now taking place. But the Government must be more tough when they are confronted with unfair opposition from abroad.
Finally, I should like to refer to something that has been mentioned by other hon. Members—education and training. Last year, the Bow Group commissioned a survey among 160 major industrialists. We asked a range of questions about a variety of issues, but we were surprised at the emphasis that employers placed on education. We are surprised that the emphasis given to the role of education outstripped the more obvious targets for attention. We felt that it showed
"an acute grasp of a depressingly old problem—how to stimulate and prepare the young for an interest in industry in a nation whose culture has too often been seen as anti-industry".
We were impressed that of all the policies discussed, education was considered most important for the future.
The lesson is very clear. We have to prepare our children better for the manufacturing industry of the future. It is a disgrace that the British manufacturing industry is held in such poor esteem. The hon. Member for Ross, Cromarty and Skye (Mr. Kennedy) referred to that. It is true that for some reason, in a world which has been built by industry and in a region such as the north-west which has been built on the back of manufacturing industry, engineers are still despised as men in blue cotton overalls with oily hands wiping away the cotton waste. That is not the reality, nor will it be the reality in future. We must all get our attitude right towards education and towards industry.
In that same summary by the Bow Group 160 industrialists who were questioned said that the Government's performance was
"highly rated and was considered to have been better in the second term of Government than in the first."
There is no doubt that the policies on which manufacturing industry is based are sound and will provide a good base for the future. If the Government take note of short-term concerns, manufacturing industry will have a strong and secure base, providing, solid employment in the future.
9.19 pm
Mr. James Lamond: Government Back-Bench Members have tried to support their Minister's speech by painting a rosy picture of what is happening in their constituencies. It is not difficult to pick out one or two firms where productivity, efficiency and profitability have improved and investment has increased. But one or two such firms do not mean that the whole of manufacturing industry is doing well.
The unfortunate and important fact that spoils the rosy picture is what is known as the bottom line—the manufacturing industry deficit of over £14 billion a year. That cannot be ignored by any hon. Member. I remember great play being made in the 1970s by the Tory party and the press of a monthly deficit of £35 million that was to bring the country to its knees. No doubt the publicity given to that fact cost us many votes. It was important then and it is much more important now when £14 billion worth of manufactured goods are coming into the country each year. If all those firms are expanding so well, why must people go abroad to buy the things that they want?
I am glad that the hon. Member for Bury, North (Mr. Burt) came at last in his speech to criticism of the Government. I had begun to think that he had forgotten that he represents an area where textiles are still important. Employment in textiles represents 9 per cent. of manufacturing employment. Hon. Members do not need to believe me when I tell them that things are bad in the textile industry; they have only to read the annual statement of the British Textile Confederation that was issued this week. The president, Mr. Spencer, put his finger fairly and squarely on two matters that are causing problems—high interest rates and the over-valued pound. Both those are the direct responsibility of the Government. If they want manufacturing industry, and in particular textiles, to expand and provide employment, they have to revise their economic policy. It is the policy of the Chancellor to maintain high interest rates and to threaten us with even higher interest rates unless inflation comes down.
Tory Back Benchers have attempted to demonstrate that the trade union movement was responsible for all the difficulties in the past. Let me draw attention to the record of the trade unions in textiles. I admit immediately that there has been a small labour problem in the textile industry recently. Very unusually, the textile industry had its first strike for decades. What did the workers achieve? What were they determined to obtain that would bring the industry to its knees? At the end of their struggle and all the trouble they caused, they had to accept an increase in minimum earnings from £85 to £95 for a 39-hour week. I want anyone who says that the industry is being bled by the workers employed in it to tell me what his salary is and whether he could live on £95 a week.
The hon. Member for Bury, North mentioned other matters that concern the textile industry. The hon. Member for Macclesfield (Mr. Winterton), the employers in the industry and I are to see the Minister responsible for textiles at the end of the week to draw his attention to the inaction of the Government in protecting the industry against Turkish imports. In the opinion of Mr. Spencer and myself, Turkey's behaviour has been outrageous. The increased imports that we can expect in the EEC from China will kill the textile trade in this country and will end the manufacturing industry which employs 9 per cent. of
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our people. I hope that the Minister, in whom I still have some faith, will get some action. Now and again he shows a little independence and determination to stand up for the country. I look to him to do something when we come to see him on Thursday.
9.25 pm
Mr. Richard Holt: It is my privilege to be the only Member from the north-east of England to speak in the debate. I suppose that that in itself is significant. The Labour party in the north-east has abandoned debates on this subject because it does not wish to cross swords. We have not had a debate but rather a series of well-read, or in some cases not so well-read, speeches. That disappoints me when we are supposed to be a debating Chamber, with the cut and thrust of debate. The tone of the debate was set by the hon. Member for Dagenham (Mr. Gould) who opened for the Opposition. He did not wish to be interrupted because he did not want to have to answer any of the questions that would have been put to him by Government Back Benchers.
Last week there was a television programme on Tyne Tees produced by the Northern development corporation. It was a debate in the north-east about the north-east, dealing with why we are not projected nationally as well as we should be. It must have been an important debate because Brian Redhead was imported to compere the programme. The cat was let out of the bag during the debate when the regional organiser of the Transport and General Workers Union, Joe Mills, said:
"Of course things are better in the north-east now. It hurts me to have to say so but begrudgingly I have to say that Margaret Thatcher has been responsible for this."—(Points of order, col. 958, 24 May 1989.)
Up to 1980, a total of 47,000 people worked in British Steel and ICI on Teesside. After 1980 the numbers went down. Now only 12,000 work in those two industries. I was interested to hear John Harvey-Jones' virtue being extolled by the Opposition. He did a magnificent job for ICI. He saved the company and made it into the great world leader that it is today, but he did it at the expense of putting 18,000 to 20,000 people on the dole in two years. If we consider the history of British Steel, we see that overmanning continued in that industry until we grasped the nettle in 1979 and 1980. The result is that the figures for British Steel today show that it is producing 110, 115 and 120 per cent. of what was being produced when the labour force was four times greater. That is a measure of the improvement in productivity that we have seen over the past 10 years.
I hear Opposition Members say, "They are speaking for their own little patch." I can speak for the entire area of Cleveland, and I am not quoting from the Conservative piece of literature. The headline reads: "Teesside economy still booming". It is booming, as hon. Members will see if they go up there and have a look. The trouble is that very few Opposition Members bother to go and see for themselves.
Only last week it was announced that a new American company, Millecom, was coming to Darlington and bringing with it 1,000 jobs. That is on top of all the other investment that has come into the north-east over the past six years. The area still has high unemployment—judged, perhaps, according to different yardsticks from one day to

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another—but, if I may speak parochially, unemployment in my constituency has fallen by 41·66 per cent. in the past five years, and that is quite a reduction.
Opposition Members may say that we are talking only about small areas. The pharmaceutical industry in the north-east now receives 50 per cent. of all the fixed investment in the region. More than 200 new electronics firms have been established, along with more than 300 companies associated with offshore technology. We have 60 companies working on advanced materials. Investment is coming in all the time: £300 million of investment and 4,000 jobs. Fujitsu is said to be the latest, but it has been superseded by Millecom, and I believe that British Telecom itself will be making a similar announcement in the not too distant future.
What is new and remarkable about what has happened in the north-east is that self-employment has become an option that people take up. Historically, people in the north-east have left school, gone to work, taken their apprenticeships and worked for one company all their lives until they retired. Those days, however, are no longer with us; that type of industry is gone. [Interruption.]
Mr. Patrick McLoughlin: Opposition Members are not interested.
Mr. Holt: I know that. I was more interested in the fact that Mr. Speaker was looking at me, because I was told that I could speak until 9.35 pm. As I am now receiving different indications, I apologise. I accept your stricture, Mr. Speaker, and I will stop speaking if another hon. Member wishes to speak.
Let me say merely that the message from the north-east is not gloom and doom; it shows a future built on new industries. Our old, overmanned heavy industries have gone. The future is ours, and that is why the Conservative party will sweep the north-east of England from now on.
9.31 pm
Mr. Michael J. Martin: I am interested in the rosy employment pictures painted by Conservative Members when they talk about their areas. I do not think that anyone would deny that Glaswegians are triers: they have tried immensely hard to improve their city, and have succeeded in many respects. But hon. Member should not kid themselves by painting such rosy pictures. Unemployment in my constituency is more than 24 per cent., which is a national disgrace.
My hon. Friend the Member for Oldham, Central and Royton (Mr. Lamond) spoke of the decline of industry. I served my apprenticeship as a young sheet metal worker in my constituency. It was a small company employing 70 people, surrounded by others employing 300 or 400—foundries and heavy engineering firms. The only company left now is the one in which I served my apprenticeship. All the others have gone, partly because of the decline caused by the present Government.
An interesting fact of which I have been told by the secretary of the sheet metal workers branch of my union is that there is a shortage of skilled sheet metal workers in the Glasgow area. As my hon. Friend said, we have not invested in training, and as a result firms are desperate for skilled workers. When I arrived here 10 years ago as a new
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Member, I said that if the economy improved we would need skilled people, and that we should already be investing.
It is nonsense to say that the training schemes that we have are the best that the Government can offer. We cannot obtain good apprenticeships unless people are working with the materials and tools of the trade, and rubbing shoulders with skilled workers. This Chamber would not have been built if it had not been for the traditions passed on by craftsmen, and the same is true of industry. We would be failing in our duty if we did not think more carefully about adult apprenticeships. Australia, New Zealand, Canada and America are interested in adult apprenticeships, yet we have people who have been without a proper job for five or six years and who are not getting the opportunity to serve an apprenticeship, which would be the least we could do for them.
It is nonsense to say that industrial relations improved only when we had a Tory Government. The Government should tell that to the people who work in the shipyards, to the women and the contract cleaners who have been exploited. Tory legislation has done away with the rights of the low paid, who had few rights to start with. Let no one fool anyone that Tory legislation brought about good industrial relations. In my constituency, factories have closed despite excellent industrial relations and increases in productivity. The companies wanted to centralise and so closed down their Glasgow offices. It is nonsense that factories that were profitable and had increased productivity were closed.
I hope that the Minister will take on board the views that we have expressed in this debate.
9.36 pm
Mr. John Garrett: This has been a brief but important debate. I do not think that anyone could deny that there has been a decline in manufacturing industry. One fifth of it disappeared between 1980 and 1982 and the growth thereafter has not replaced that loss. We have had examples from my right hon. and hon. Friends of the continuing loss in manufacturing. My right Friend the Member for Salford, East (Mr. Orme) talked about engineering and car manufacturing, my hon. Friend the Member for Rotherham (Mr. Crowther) spoke about the steel industry, my hon. Friend the Member for Halifax (Mrs. Mahon) spoke about the textile and other industries, my hon. Friend the Member for Oldham, Central and Royton (Mr. Lamond) spoke about textiles and my hon. Friend the Member for Glasgow, Springburn (Mr. Martin) spoke about engineering.
The decline in manufacturing industry derives from major structural changes in our industrial base for which the Government appear to have no remedy. In addition to adverse structural changes, we have wholly inadequate management and vocational training systems, which are required to support a modern manufacturing country. Clearly, that is the Government's responsibility. The immediate problem is the remarkable deterioration in the United Kingdom trade balance last year, which was caused primarily by a massive increase in the import of consumer goods such as cars, clothing, textiles and household electronic goods. The Government's claim that rising imports are largely capital goods to re-equip British industry simply is not true. Even if it were, it would simply

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illustrate the collapse in our capital goods and equipment industries and our inability to supply. I have never understood why the Government feel that that is something to boast about.
This country now has to import machinery to equip our industries and we pay for those imports of equipment in oil exports. In other words, we import equipment and export commodities—a trade pattern far more common in an underdeveloped country than a modern manufacturing country. The late Austen Albu, who some may remember as a Labour Member of Parliament, said some years ago that we export bulk and import refinement. The problem he identified then is much worse today when we import equipment and export oil.
The three large sectors of manufacturing in which we are weakest are cars and parts, where the deficit was £5 billion last year, clothing and textiles, in which the deficit was nearly £2 billion, and consumer electronics, in which the deficit was £1·5 billion. Twenty years ago those were staple industries in Britain and a decade ago we still had a substantial international presence in all of them. We no longer have a major international volume car manufacturer. The French have two and produce twice as many cars, trucks and other vehicles as we do. The penetration of imported cars into the domestic market reached 56 per cent. last year and commercial vehicle imports reached 40 per cent. As a percentage of the domestic market, imports of buses and coaches rose in the past decade from 3 per cent. to 38 per cent. When I worked in the motor industry, we used to be the suppliers of trucks and buses to the world. The standard truck throughout the world was the Bedford truck, made by Vauxhall. Today we import most of our vehicles. It is remarkable that our vehicle manufacturing industry has declined so much that we now have only a minor share of our home market.
Domestic market penetration of imported textiles and of footwear has reached 50 per cent. Footwear used to be the basic manufacturing industry in my constituency but it is now reduced to one tenth of its former size. We are still losing jobs because of the exchange value of the pound and because of interest rates. That is what my local footwear manufacturers tell me.
All that could have been judged as a necessary or natural adjustment as we got out of industries for which we were no longer suited and moved into new industries. One could understand that, but our performance is no better in the new technically advanced industries. Let us take as an example information technology, in which we were pioneers. We now have an adverse balance of payments in information technology equipment and services of £2 billion per year. That is now the basic industry of a modern manufacturing country. That growing deficit occurs in a number of other high-tech R and D sectors, such as medical equipment in which, again, we used to be pioneers but where 60 per cent. of the home market is now accounted for by imports. Import penetration in chemicals, in which we have one of the world's leading companies, is now 41 per cent., up from 28 per cent. 10 years ago.
The Government make other claims about the health of our manufacturing industry. The recent increase in manufacturing investment, which appears now to have petered out, and about which we hear so much, has taken investment to barely the 1979 level. Manufacturing investment today is still well below its 1979 level as a percentage of GDP. The Government boast of the rapid
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growth in manufacturing productivity, but the fact is that at absolute levels our manufacturing productivity is still the lowest of any of the Group of Seven countries.
The Government clearly consider that our manufacturing trade balance, our manufacturing investment, our productivity, and our R and D should be left to the free play of market forces and that they have no duty to produce an industrial strategy, objectives or programmes of action. They may feel that they have no responsibility in those areas, but surely they have a responsibility in providing the education and training infrastructure for manufacturing. Indeed, from time to time, the Government appear to recognise their responsibilities for creating the skills that we need. I am deluged by press releases from the DTI and only the other day I noticed that the Government are giving their full backing to management training and to what is called the "management charter initiative". It is in that area that our weaknesses are most obvious.
The Confederation of British Industry recently carried out a comparative study of British and West German industrial performance. The reasons for our markedly inferior productivity compared with the Germans were not the traditional ones of older machinery, higher overheads, bad industrial relations, higher tax burden, less spending on R and D. The main reason was that West Germany's work force is better educated and better trained and is led by a management boasting a higher percentage of university-trained managers and using more advanced information technology. Germany has three times our percentage of workers with post-school qualifications, double our percentage of supervisors with post-school qualifications and double our percentage of managers with degrees. In Britain, only one in three managers has ever had any training and 70 per cent. of that was for less than five days a year.
A British Institute of Management survey in 1987 showed that half our managers started work at the age of 17 or younger and received no subsequent education. Professor Handy's report for the National Economic Development Office on management education said:
"much of executive education is the teaching of sixth form subjects to middle aged executives; it is remedial education instead of executive education."
At all levels British managers and workers have inferior education and training than our competitors. We no longer have the education and training to meet the needs of a manufacturing nation.
In autumn 1988, the Oxford Review of Economic Policy summed it up when it stated that Britain is
"trapped in a low-skills equilibrium in which the majority of enterprises, staffed by poorly trained managers and workers, produce low quality goods and services".
With 1992 on the horizon, those weaknesses will become more apparent. I am sure that hon. Members of all parties will have received complaints that West Germany's industrial interests are dominating the engineering product standard-setting processes. Apparently representatives of the French chambers of commerce and of the West German trade associations turn up to the committees that set standards where, more often than not, we are not represented. We shall find our engineering industry dominated by German product quality standards.
Another worry about 1992 is the susceptibility of British firms to takeover, because of the relatively strong reliance of British companies on equity finance. There is a strong possibility of takeovers of British companies in

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areas of strong comparative advantage by predators from Europe, the United States and Japan, who want to establish themselves within the boundaries of the EEC in order to launch their attack on western Europe. That will be of no great advantages to our manufacturers, especially if the research and development and design is done back in the home countries of those predators.
Once the barriers are removed in 1992, price will become more important. The Government's cost burdens on industry—water, gas, the unified business rate and interest rates—will continue to be a massive handicap. Without any strategy for our manufacturing industry, and with a complete disregard of the need for industrial training and management education, the Government are leaving British manufacturing industry grossly under-prepared for 1992.
If we lurch along as we are at present, underinvested, under-researched and under-trained, British manufacturing industry's future is clear. We shall be an EEC bridgehead for the Japanese. We shall be assembling cars and electronics imported as kits from Japan. In addition, what is most valuable in British manufacturing industry will be under German or American control in joint ventures or in merged corporations in which Britain has a nominal share. Control—what the Germans call mind and management, of which they rarely let go—will be in foreign hands. It is our contention that the Government are presiding over the end of Britain as a manufacturing nation.
9.46 pm
The Parliamentary Under-Secretary of State for Trade and Industry (Mr. Robert Atkins): We have had a fascinating debate, albeit that one would not have guessed from the number of Opposition Members present that there was a three-line Whip for Opposition Members. None the less, many interesting points have come out of the debate, not least those contained in the speeches of my hon. Friends the Members for Wolverhampton, North-East (Mrs. Hicks), for Nuneaton (Mr. Stevens), for Bexhill and Battle (Mr. Wardle), for Bury, North (Mr. Burt) and for Langbaurgh (Mr. Holt). They all spoke with a considerable knowledge of the real world as they see it and of the industrial achievements in their constituencies.
One point that I suspect would be agreed across the party divide is the need to get across to young people the importance and the attraction of manufacturing industry. Perhaps if we were to get them a little younger—for example, in the primary schools—to realise that manufacturing industry and things that are made by hand are important to the future of our country—
Mr. Dobson: The hon. Gentleman should teach the Chancellor of the Exchequer first.
Mr. Atkins: The hon. Member for Holborn and St. Pancras (Mr. Dobson), who has just walked in, missed the part of the debate in which his hon. Friends also made that point. The hon. Gentleman would be wise to consider the position before making interventions from a sedentary position.
Unlike my hon. Friends, the Opposition have sought to paint a picture of unrelieved gloom. As one who is in daily
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contact with industry and who travels the country every week talking to those involved in manufacturing industry, that is a picture that I do not recognise.
I want to turn my attention to one or two touchstones of economic success which highlight the achievements of the Government and which perhaps have not had the attention that they deserve. Hon. Members may not be surprised to learn that my first example is that of the aerospace industry. The Opposition's motion suggests that there is something wrong with the aerospace industry. The British aerospace industry is by any standards among the world leaders. The picture here is anything but gloomy.
The output of our aerospace companies has been growing at about 10 per cent. a year since 1983. In the 1960s our share of world trade in aerospace products was about 10 per cent. It is now 17 per cent. More than 60 per cent. of the industry's output is exported. In 1987 the industry had a balance of trade surplus of £2 billion.
This year, as with last year, will see record orders for civil aircraft. British industry will receive a large share of that business. [Interruption.] Opposition Members should listen to the facts about some of the successes instead of muttering and ignoring what is in front of their faces. British Aerospace will share in the success of the A320, the A330 and the A340.
Mr. Rhodri Morgan: Will the hon. Gentleman give way?
Mr. Atkins: I do not have time. At least I have provoked the hon. Gentleman into listening.
Rolls-Royce is now supplying engines to all three major airframe manufacturers and a wide range of equipment companies are consolidating—
Mr. Morgan: What about launch aid?
Mr. Atkins: The hon. Gentleman is wrong. He should do his investigations.
The industry is also investing in the future—[Interruption.] Opposition Members should listen. It is no good ignoring the facts. I am telling them about a success story and they do not want to hear it.
Let us compare the aerospace industry in 1979 with 1988. In 1979 it had a turnover of £3·1 billion and exports of only £1·2 billion. Now it has a turnover of £10·3 billion and exports of £6 billion, the highest of all time. We did not hear much mention of that from Opposition Members. There has been no decline in the aerospace industry and the House—at least, Conservative Members—will want to join me in congratulating the aerospace industry on its excellent record and to spur it on to even greater efforts in the future.
The steel industry illustrates more clearly than almost any other the transformation of Britain's industrial climate and its prospects. There were no great days here in the late 1970s and early 1980s. Steel production has grown by almost 30 per cent. over the past two years. In 1980 British Steel achieved notoriety with an entry in "The Guinness Book of Records" for the largest ever company deficit—£1·8 billion over the year. No one could have seriously believed that that position could be reversed, but the company is now making a profit and 500,000 private investors have bought a stake in it. It has gone from being Europe's least successful company to being one which others envy—another success story to which Opposition Members do not want to listen.

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There has been much mention of vehicles. The vehicles industry is another barometer of change for the better. Since 1980, productivity has risen by 70 per cent. and all the United Kingdom's industries in that sector have been in profit since 1986. The production of cars has been rising strongly in recent years and the performance of the commercial vehicles sector has been particularly encouraging. [Interruption.] I suggest that Opposition Members consider one company that I know well and which featured large in their considerations in years gone by. Leyland is the name of the company, with its headquarters in my constituency. Following the merger between Leyland Trucks and DAF in 1987 the output of trucks has increased from 8,000 in 1986 to 15,500 in 1988—an 83 per cent. increase in productivity. That is another success story that Opposition Members will not accept.
Not all our manufacturing successes have been stories of recovery. The chemical industry has been successful throughout, with an annual trade surplus of over £2 billion since 1985.
In 1979 production in the telecommunications industry was about £800 million, with exports of about £81 million. Last year production was £1·839 billion and exports £266 million—another success story. There is success story after success story, and the Opposition do not like it.
But the proof of the pudding is in inward investment. In 1979, inward investment in the United Kingdom was running at about 183 companies a year. It is now up to 330 companies a year. More than 2,500 companies from abroad have invested in the United Kingdom, and in so doing they have protected or created about 300,000 jobs.
I have recently returned from the United States where I conducted an inward investment tour on behalf of this country. Some of the companies that I saw—[Interruption.] Why is it that when Ministers tell the truth as they see it and give the success stories the Opposition do not want to listen? I would remind the House that this is an Opposition Supply day debate, on which they have a three-line Whip, but they cannot even be bothered to turn up and if they do they do not listen. I am telling the House about inward investment.
The companies that I saw in the United States wanted to provide about 10,000 or more jobs in the course of the year. I heard comments from the chairmen of the Ford Motor Company, Chrysler and General Motors. They told me that attitudes amongst the work force had been transformed in the past 10 years. The hon. Member for Glasgow, Springburn (Mr. Martin) referred to our concerns about industrial relations. In 1979, 29·4 million working days were lost in strikes. In 1988, the figure was only 3·7 million. That demonstrates what Americans think of this country.
The chairmen of those major companies also said that Britain was the best location in Europe for siting manufacturing plants in terms of cost and good labour. Ford has invested £1·1 billion in Bridgend. Nissan, Toyota, Bosch, Fujitsu and Millecom are just a few of the companies which, in recent months, have recognised that Britain is the place to come to because of what the Government have achieved in manufacturing industry over the past 10 years.
There has been a depressing familiarity about the Opposition's contributions to this debate. We might have hoped for some constructive comments about areas in which manufacturing industry still has scope for improvement, as it always must have. Instead, we have
262
been treated to selective statistics and misinformation—[Interruption.] Oh, yes. We have been given misinformation about aspects of manufacturing industry which my hon. Friends have demonstrated to be facile and to have avoided the point.
Opposition Members' comments belittle the achievements of British industry rather than help it. They should recognise that they will not serve their country or industry well by continuing with that approach. My hon. Friends from the north, west, east and south of the country have all spoken with authority about what has been achieved by industry throughout the country.
The Opposition's interventions have spoken volumes about their ignorance of what is happening in manufacturing industry. They have not been prepared to listen to the facts that they know demonstrate all too clearly the sterility of their arguments. When it comes to industry, the Labour party is still living in the late sixties and seventies.
The hon. Member for Dagenham (Mr. Gould) represents a south-east constituency. Those of us who represent the north-west and Lancashire wear the red rose of Lancashire with the pride that it deserves. If the hon. Member for Dagenham and his hon. Friends have anything to say to the electorate, they should open their eyes and realise the transformation in performance and morale that has taken place in manufacturing in recent years and understand the reasons for it. Until they realise what has been achieved, and until they speak with the authority that is needed on the subject, they will not: be taken seriously and will not, in any circumstances—[Interruption.] Opposition Members may intervene, but the fact is that they are ignoring what I have said and ignoring the success stories throughout the country of the past 10 years. The Opposition's motion is such that we can vote against it with every confidence that our story will demonstrate the success achieved by this Government over the past 10 years.
Question put, That the original words stand part of the Question:—
The House divided: Ayes 201, Noes 274.

Division No. 202]

[9.59 pm

AYES

Abbott, Ms Diane

Campbell, Ron (Blyth Valley)

Allen, Graham

Campbell-Savours, D. N.

Archer, Rt Hon Peter

Canavan, Dennis

Armstrong, Hilary

Carlile, Alex (Mont'g)

Ashley, Rt Hon Jack

Clark, Dr David (S Shields)

Ashton, Joe

Clarke, Tom (Monklands W)

Barnes, Harry (Derbyshire NE)

Clay, Bob

Barnes, Mrs Rosie (Greenwich)

Clelland, David

Barron, Kevin

Clwyd, Mrs Ann

Battle, John

Cohen, Harry

Beckett, Margaret

Coleman, Donald

Benn, Rt Hon Tony

Cook, Frank (Stockton N)

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

Cook, Robin (Livingston)

Bermingham, Gerald

Corbett, Robin

Bidwell, Sydney

Cousins, Jim

Blair, Tony

Cryer, Bob

Blunkett, David

Cummings, John

Boateng, Paul

Cunliffe, Lawrence

Boyes, Roland

Dalyell, Tam

Bradley, Keith

Davies, Rt Hon Denzil (Llanelli)

Bray, Dr Jeremy

Davies, Ron (Caerphilly)

Brown, Gordon (D'mline E)

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

Brown, Nicholas (Newcastle E)

Dewar, Donald

Buckley, George J.

Dixon, Don

Caborn, Richard

Dobson, Frank

Callaghan, Jim

Doran, Frank

Campbell, Menzies (Fife NE)

Douglas, Dick

263

Duffy, A. E. P.q

Marek, Dr John

Dunnachie, Jimmy

Marshall, David (Shettleston)

Dunwoody, Hon Mrs Gwyneth

Marshall, Jim (Leicester S)

Eadie, Alexander

Martin, Michael J. (Springburn)

Eastham, Ken

Maxton, John

Evans, John (St Helens N)

Meacher, Michael

Ewing, Harry (Falkirk E)

Meale, Alan

Ewing, Mrs Margaret (Moray)

Michael, Alun

Fatchett, Derek

Michie, Bill (Sheffield Heeley)

Faulds, Andrew

Mitchell, Austin (G't Grimsby)

Fearn, Ronald

Morgan, Rhodri

Field, Frank (Birkenhead)

Morris, Rt Hon A. (W'shawe)

Fisher, Mark

Mullin, Chris

Flannery, Martin

Murphy, Paul

Flynn, Paul

Oakes, Rt Hon Gordon

Foot, Rt Hon Michael

O'Brien, William

Foster, Derek

O'Neill, Martin

Foulkes, George

Orme, Rt Hon Stanley

Fraser, John

Parry, Robert

Fyfe, Maria

Pendry, Tom

Galbraith, Sam

Pike, Peter L.

Garrett, John (Norwich South)

Powell, Ray (Ogmore)

Garrett, Ted (Wallsend)

Primarolo, Dawn

George, Bruce

Radice, Giles

Golding, Mrs Llin

Randall, Stuart

Gordon, Mildred

Redmond, Martin

Gould, Bryan

Rees, Rt Hon Merlyn

Graham, Thomas

Reid, Dr John

Grant, Bernie (Tottenham)

Richardson, Jo

Grocott, Bruce

Roberts, Allan (Bootle)

Hardy, Peter

Robinson, Geoffrey

Harman, Ms Harriet

Rogers, Allan

Hattersley, Rt Hon Roy

Rooker, Jeff

Healey, Rt Hon Denis

Ross, Ernie (Dundee W)

Hinchliffe, David

Rowlands, Ted

Hogg, N. (C'nauld & Kilsyth)

Ruddock, Joan

Home Robertson, John

Salmond, Alex

Hood, Jimmy

Sedgemore, Brian

Howarth, George (Knowsley N)

Sheerman, Barry

Howell, Rt Hon D. (S'heath)

Sheldon, Rt Hon Robert

Howells, Geraint

Shore, Rt Hon Peter

Howells, Dr. Kim (Pontypridd)

Short, Clare

Hughes, John (Coventry NE)

Skinner, Dennis

Hughes, Robert (Aberdeen N)

Smith, Andrew (Oxford E)

Hughes, Roy (Newport E)

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

Ilisley, Eric

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

Ingram, Adam

Smith, J. P. (Vale of Glam)

Janner, Greville

Snape, Peter

Johnston, Sir Russell

Soley, Clive

Jones, Barry (Alyn & Deeside)

Spearing, Nigel

Kaufman, Rt Hon Gerald

Steinberg, Gerry

Kennedy, Charles

Stott, Roger

Kinnock, Rt Hon Neil

Strang, Gavin

Kirkwood, Archy

Straw, Jack

Lamond, James

Taylor, Matthew (Truro)

Leadbitter, Ted

Turner, Dennis

Leighton, Ron

Vaz, Keith

Lestor, Joan (Eccles)

Wall, Pat

Lewis, Terry

Wallace, James

Litherland, Robert

Walley, Joan

Livingstone, Ken

Wardell, Gareth (Gower)

Livsey, Richard

Wareing, Robert N.

Lloyd, Tony (Stretford)

Welsh, Andrew (Angus E)

Lofthouse, Geoffrey

Welsh, Michael (Doncaster N)

Loyden, Eddie

Wigley, Dafydd

McAllion, John

Williams, Rt Hon Alan

McAvoy, Thomas

Williams, Alan W. (Carm'then)

McCartney, Ian

Wilson, Brian

McFall, John

Wise, Mrs Audrey

McKay, Allen (Barnsley West)

Worthington, Tony

McKelvey, William

Wray, Jimmy

McLeish, Henry

McNamara, Kevin

Tellers for the Ayes:

McWilliam, John

Mr. Frank Haynes and

Madden, Max

Mr. Allen Adams.

Mahon, Mrs Alice

NOES

Aitken, Jonathan

Amery, Rt Hon Julian

Allason, Rupert

Arbuthnot, James

264

Arnold, Tom (Hazel Grove)

Gorman, Mrs Teresa

Atkins, Robert

Gow, Ian

Baker, Nicholas (Dorset N)

Greenway, Harry (Ealing N)

Baldry, Tony

Greenway, John (Ryedale)

Beaumont-Dark, Anthony

Gregory, Conal

Bennett, Nicholas (Pembroke)

Griffiths, Peter (Portsmouth N)

Blaker, Rt Hon Sir Peter

Grist, Ian

Body, Sir Richard

Gummer, Rt Hon John Selwyn

Bottomley, Mrs Virginia

Hague, William

Bowden, Gerald (Dulwich)

Hamilton, Hon Archie (Epsom)

Bowis, John

Hamilton, Neil (Tatton)

Braine, Rt Hon Sir Bernard

Hanley, Jeremy

Brandon-Bravo, Martin

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

Brazier, Julian

Hargreaves, Ken (Hyndburn)

Brooke, Rt Hon Peter

Harris, David

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

Haselhurst, Alan

Bruce, Ian (Dorset South)

Hawkins, Christopher

Buchanan-Smith, Rt Hon Alick

Hayes, Jerry

Buck, Sir Antony

Heathcoat-Amory, David

Budgen, Nicholas

Heddle, John

Burns, Simon

Heseltine, Rt Hon Michael

Burt, Alistair

Hicks, Mrs Maureen (Wolv' NE)

Butcher, John

Hicks, Robert (Cornwall SE)

Butler, Chris

Higgins, Rt Hon Terence L.

Butterfill, John

Hill, James

Carlisle, John, (Luton N)

Hind, Kenneth

Carlisle, Kenneth (Lincoln)

Hogg, Hon Douglas (Gr'th'm)

Carrington, Matthew

Holt, Richard

Carttiss, Michael

Hordern, Sir Peter

Cash, William

Howard, Michael

Channon, Rt Hon Paul

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

Chapman, Sydney

Howarth, G. (Cannock & B'wd)

Chope, Christopher

Howell, Rt Hon David (G'dford)

Churchill, Mr

Hughes, Robert G. (Harrow W)

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

Hunt, David (Wirral W)

Clark, Sir W. (Croydon S)

Hunt, John (Ravensbourne)

Colvin, Michael

Hunter, Andrew

Conway, Derek

Irvine, Michael

Coombs, Anthony (Wyre F'rest)

Irving, Charles

Coombs, Simon (Swindon)

Jack, Michael

Cope, Rt Hon John

Jackson, Robert

Cormack, Patrick

Janman, Tim

Couchman, James

Jessel, Toby

Cran, James

Johnson Smith, Sir Geoffrey

Currie, Mrs Edwina

Jones, Gwilym (Cardiff N)

Curry, David

Jones, Robert B (Herts W)

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

Jopling, Rt Hon Michael

Davis, David (Boothferry)

Kellett-Bowman, Dame Elaine

Day, Stephen

Key, Robert

Devlin, Tim

King, Roger (B'ham N'thfield)

Dorrell, Stephen

Kirkhope, Timothy

Douglas-Hamilton, Lord James

Knight, Greg (Derby North)

Dover, Den

Knight, Dame Jill (Edgbaston)

Dunn, Bob

Knowles, Michael

Durant, Tony

Knox, David

Eggar, Tim

Lamont, Rt Hon Norman

Emery, Sir Peter

Latham, Michael

Evans, David (Welwyn Hatf'd)

Lawson, Rt Hon Nigel

Evennett, David

Leigh, Edward (Gainsbor'gh)

Fairbairn, Sir Nicholas

Lennox-Boyd, Hon Mark

Fallon, Michael

Lester, Jim (Broxtowe)

Favell, Tony

Lilley, Peter

Fenner, Dame Peggy

Lloyd, Sir Ian (Havant)

Field, Barry (Isle of Wight)

Lloyd, Peter (Fareham)

Finsberg, Sir Geoffrey

Lord, Michael

Fishburn, John Dudley

Luce, Rt Hon Richard

Fookes, Dame Janet

McCrindle, Robert

Forman, Nigel

Macfarlane, Sir Neil

Forsyth, Michael (Stirling)

MacKay, Andrew (E Berkshire)

Forth, Eric

McLoughlin, Patrick

Franks, Cecil

McNair-Wilson, Sir Michael

Freeman, Roger

McNair-Wilson, P. (New Forest)

Gale, Roger

Madel, David

Gardiner, George

Major, Rt Hon John

Garel-Jones, Tristan

Malins, Humfrey

Gill, Christopher

Mans, Keith

Glyn, Dr Alan

Maples, John

Goodhart, Sir Philip

Marlow, Tony

Goodlad, Alastair

Marshall, John (Hendon S)

Goodson-Wickes, Dr Charles

Marshall, Michael (Arundel)

265

Martin, David (Portsmouth S)

Raison, Rt Hon Timothy

Mates, Michael

Rathbone, Tim

Maude, Hon Francis

Redwood, John

Mawhinney, Dr Brian

Rhodes James, Robert

Meyer, Sir Anthony

Riddick, Graham

Miller, Sir Hal

Ridley, Rt Hon Nicholas

Mills, Iain

Ridsdale, Sir Julian

Miscampbell, Norman

Rifkind, Rt Hon Malcolm

Mitchell, Andrew (Gedling)

Roberts, Wyn (Conwy)

Mitchell, Sir David

Roe, Mrs Marion

Moate, Roger

Rossi, Sir Hugh

Monro, Sir Hector

Rost, Peter

Moore, Rt Hon John

Sackville, Hon Tom

Morrison, Sir Charles

Sainsbury, Hon Tim

Morrison, Rt Hon P (Chester)

Sayeed, Jonathan

Moynihan, Hon Colin

Scott, Nicholas

Mudd, David

Shaw, David (Dover)

Neale, Gerrard

Shaw, Sir Giles (Pudsey)

Nelson, Anthony

Shaw, Sir Michael (Scarb')

Newton, Rt Hon Tony

Shelton, Sir William

Nicholls, Patrick

Shephard, Mrs G. (Norfolk SW)

Nicholson, David (Taunton)

Shepherd, Colin (Hereford)

Nicholson, Emma (Devon West)

Sims, Roger

Norris, Steve

Skeet, Sir Trevor

Onslow, Rt Hon Cranley

Smith, Tim (Beaconsfield)

Oppenheim, Phillip

Speller, Tony

Page, Richard

Spicer, Michael (S Worcs)

Paice, James

Squire, Robin

Parkinson, Rt Hon Cecil

Stanbrook, Ivor

Patnick, Irvine

Stanley, Rt Hon Sir John

Patten, John (Oxford W)

Steen, Anthony

Pawsey, James

Stern, Michael

Peacock, Mrs Elizabeth

Stevens, Lewis

Porter, David (Waveney)

Stewart, Allan (Eastwood)

Powell, William (Corby)

Stewart, Andy (Sherwood)

Price, Sir David

Stewart, Rt Hon Ian (Herts N)

Raffan, Keith

Stradling Thomas, Sir John

266

Sumberg, David

Walden, George

Summerson, Hugo

Walker, Bill (T'side North)

Taylor, Ian (Esher)

Waller, Gary

Taylor, John M (Solihull)

Ward, John

Taylor, Teddy (S'end E)

Wardle, Charles (Bexhill)

Temple-Morris, Peter

Watts, John

Thatcher, Rt Hon Margaret

Wheeler, John

Thompson, D. (Calder Valley)

Whitney, Ray

Thompson, Patrick (Norwich N)

Widdecombe, Ann

Thorne, Neil

Winterton, Nicholas

Thornton, Malcolm

Wolfson, Mark

Thurnham, Peter

Wood, Timothy

Townsend, Cyril D. (B'heath)

Woodcock, Dr. Mike

Tracey, Richard

Yeo, Tim

Tredinnick, David

Young, Sir George (Acton)

Trippier, David

Younger, Rt Hon George

Trotter, Neville

Twinn, Dr Ian

Tellers for the Noes:

Vaughan, Sir Gerard

Mr. David Lightbown, and

Waddington, Rt Hon David

Mr. David Maclean.

Question accordingly negatived.
Question, That the proposed words be there added. put forthwith pursuant to Standing Order No. 30 (Questions on amendments), and agreed to.
Mr. SPEAKER forthwith declared the main Question, as amended, to be agreed to.
Resolved,
That this House welcomes the renewed strength of manufacturing industry, reflected in major increases in productivity, record levels of output, increased exports, greatly improved profitability and a sustained high level of investment; and notes that the flow of inward investment testifies to the substantial improvement which the policies of Her Majesty's Government have brought about in the climate for doing business in the United Kingdom.

Procurement Procedures
10.15 pm
The Paymaster General (Mr. Peter Brooke): I beg to move,
That this House takes note of European Community Documents Nos. 8803/88 and the Supplementary Explanatory Memorandum submitted by Her Majesty's Treasury on 10th May 1989, 8804/88 and 8805/88 relating to procurement procedures in the water, energy, transport and telecommunications sectors; and endorses the Government's view that the broad approach of the Commission should be supported but that changes are desirable in the proposed directives to prevent the imposition of unnecessary burdens and constraints.
Mr. Speaker: I must tell the House that I have not been able to select the amendment standing in the name of the hon. Member for Thanet, South (Mr. Aitken) and his hon. Friends. However, those points may be raised if the hon. Members are called during the course of the debate.
Mr. Brooke: We debated proposals for directives on public procurement only recently. Those before us tonight come in the same series, and like the earlier ones form part of the Commission's programme to complete the single market by 1992. The earlier proposals mainly affected Government Departments and local authorities. Those in the motion before the House strike out much more widely, and cover nationalised industries and a number of companies in the private sector. Important issues are at stake, and I am glad that the House is able to consider the proposals at this still relatively early stage in their progress through the Community institutions.
I begin by noting the reasons which have led the Commission to make these proposals, one of which relates to the water, energy and transport sectors and the other to telecommunications. The Commission believes that major savings can be achieved by removing the influence of Governments on procurement in these sectors. It quotes the results of studies which it has undertaken and which show the costs to be as much as £15 billion a year. This is a large amount, even allowing for a considerable margin of error. So because we want to create a single market which is strong and efficient, we should welcome the fact that the Commission has made proposals in these areas.
I note, too, the boldness of what is proposed. In 1971, when the works directive was adopted, it was agreed that the different ways in which the sectors were organised in the various member states made it best not to attempt at that stage to apply Community directives to them. In 1977, when the supplies directive was adopted, the same conclusion was reached. Now we have proposals which together cover purchasing worth several hundreds of billions of pounds a year, and which provide a framework of rules which it is hoped will ensure that undertakings buy competitively and that suppliers have confidence that they will do so.
Because of what is at stake—in terms not only of the savings but of the sheer amount of purchasing and the advanced technology which much of it involves—it is vital that the Community gets the directives right. I am sure that the Commission recognises this. In the last couple of years, it has put a lot of work into developing its proposals. It has spent a considerable amount of time talking to those who might be affected by them. If member states believe
268
that there is further to go before we get it right, that is not to belittle the contribution which the Commission has made.
At the core of the Commission's proposals is what is said about the procedures that undertakings should adopt in their purchasing. A considerable effort has been made to ensure that undertakings which need to act commercially have a degree of flexibility. Except in particular circumstances, which are listed, there has to be what is described as a call for competition. But this need not involve an advertisement before each contract is awarded. It is permitted to select participants in a competition from among those who ask for information relating to particular contracts which are mentioned in a so-called periodic indicative notice.
Participants can also be selected from lists of qualified buyers provided that those lists are established following advertisements and on the basis of objective criteria. Unlike Government Departments and local authorities, the undertakings covered by the present proposals would be allowed to choose which of particular types of procedures to use for a particular contract. This means that, besides being able to accept tenders from anyone who responds to an advertisement or inviting firms to tender from those which apply to participate, an undertaking can negotiate the terms of a contract with one or more firms chosen on the basis of a call for competition.
There are problems, none the less, despite the Commission's efforts and I wish to say a few words about the difficulties which the Government see in the Commission's proposals. Then I want to describe ways in which I hope the proposals can be developed.
I will begin with what they cover. The Commission's intention is to cover those areas of activity where there are barriers to competition, and Governments may have a capacity to influence procurement. Since, in the Commission's view, it is impossible to measure these factors, it had to find criteria for determining which undertakings or classes of undertakings should be covered. It has chosen for private sector undertakings the possession of special or exclusive rights granted by the Government. It has chosen as relevant activities the management of a network or the exploitation of a given geographical area. The latter brings in exploration for natural resources and the exploitation of them. In the United Kingdom many of the undertakings that would be covered will be in the private sector and will be responsible to their shareholders for getting value for money in their procurement. In itself that will not let us justify their exclusion from proposals which will be adopted only if other member states believe they are getting broadly equivalent procurement covered in each country. But where there is strong competition the need for applying detailed rules is far from clear, particularly in the case of upstream oil and gas, and the United Kingdom has therefore opposed its coverage by the Commission's proposals.
Whichever sectors we may be thinking of, the present proposals contain elements of bureaucracy which the Community would do well to avoid. This is partly a matter of the timetables laid down for the various contract procedures. These are based on those in the new supplies directive which came into force this year. In the industries now involved they could easily lead to costly delays. Then there is the need for undertakings to notify the Commission of activities not covered by the proposals in

269
order to obtain exemption. This applies also to purchases intended for selling on to third parties. Purchasers baulk at the information systems they would need to set up and at the possible need to qualify large numbers of potential suppliers. Clearly there has to be a balance with the interests of suppliers, who need to have information in order to compete and time in which to do so. But there are parts of these proposals which cannot be justified on that basis.
The proposals require purchasers to base their specifications on European standards where they exist. These standards, once they have been adopted, have to be implemented by national standards bodies as national standards. The Government fully support the development of European standards, which we believe have an important part to play in the development of the single market. We have accepted the principle of making standards mandatory in the supplies and works directives for purchases by Governments and by local authorities, but we cannot so easily do so for purchasers which are commercial undertakings. Many of them have important responsibilities for the safety of their operations, which in the case of the energy industries are among the most hazardous in the world. They need to be able to give due weight to professional judgments.
It is possible that some of the difficulties in this area have arisen from a lack of understanding as to what the proposals mean. We do not know for certain how far defining by reference to a standard prevents a purchaser from going further to describe his own particular requirements. Instead of making standards mandatory, we should encourage the willing acceptance of European standards on a voluntary basis. It is significant that when the Council of Ministers adopted the new approach on standardisation in 1985 its guidelines said quite specifically that standards should retain their voluntary status; any exceptions should be quite specific and decided on the basis of proven need.
The proposals also include particular constraints with regard to offers originating in major part from countries outside the Community. Purchasers will be required, whenever offers are equivalent, to choose an offer which has at least half its value added within the Community. The proposal goes further and treats offers as equivalent even if the Community offer costs 3 per cent. more. These provisions will not apply to offers of third country origin where the Council so decides on the basis of an agreement between the Community and the Third country concerned. We understand and share the Commission's goal of achieving a wider understanding on procurement in the sectors covered by the proposal. We support the work being done in the GATT to broaden the existing agreement on Government procurement. We want to avoid unnecessary intervention in the operation of commercial undertakings.
Mr. Teddy Taylor: Will my right hon. Friend say clearly whether the Government support the proposal in article 24 that empowers any purchasing agent throughout the Community to reject contracts from America, Japan, the Middle East or anywhere else, simply on the basis that half the information of goods to be provided comes from outside the Community? Does my right hon. Friend agree that that is simply another example of blind protectionism and of fortress Europe that I
270
understood the Conservative party and the Conservative Government to be against? Will he endeavour to get rid of that wretched article and ensure real free trade?
Mr. Brooke: I hoped that my hon. Friend would infer from the tone of my remarks that the Government share his views in seeking to prevent Europe developing as a fortress Europe in the way he suggests. In that respect, we are at one with my hon. Friend.
Mr. Taylor: Will my right hon. Friend endeavour to remove article 24 or will he not? Does the Conservative party believe, or does it not, that article 24 is contrary to everything for which Conservatives stand, and that it should be removed? It is all very well talking about the Government's general intentions, but what are the views of my right hon. Friend and of the Government on article 24?
Mr. Brooke: In my earlier answer, I sought to convey to my hon. Friend that we are at one with him in seeking to prevent protectionism being developed in respect of the puchasing arrangements. Earlier, I alluded to the fact that the Government are opposed to such a proposition.
Mr. Dennis Skinner: As the right hon. Gentleman will not answer his hon. Friend's specific question, and as he is not just a Minister but Chairman of the Tory party, will he confirm that the Government's anti-Common Market tirades of the past few weeks are nothing short of electioneering until 15 June, that when that date is passed the right hon. Gentleman will not be at one with his hon. Friend the Member for Southend, East (Mr. Taylor), and that the Government are just playing games for about a month?
Mr. Brooke: I am conscious that the hon. Member for Bolsover (Mr. Skinner) is also the chairman of a political party. My understanding is that the hon. Gentleman's party also has difficulty in determining its position on Europe. I understand the hon. Gentleman's views, but I understand also that attack is the best form of defence. The fact remains that, as we all know, there are problems on the Opposition Benches—
Mr. Bob Cryer: Not on this Bench.
Mr. Brooke: I am glad that the hon. Member for Bolsover has a powerful ally seated close to him.
Mr. Frank Haynes rose—
Mr. Brooke: I always welcome the hon. Gentleman's contribution to European debates, but perhaps he will permit me to get my initial speech out of the way.
Mr. Haynes: On that point, if we force a Division arid vote against the proposals, will the right hon. Gentleman join my right hon. and hon. Friends and me in the Noes Lobby? I want an answer.
Mr. Brooke: The answer is perfectly straightforward. The Government have put down a motion, and the Government will support it in the Lobby.
Mr. Haynes: Double standards again.
Mr. Brooke: Industry has shown considerable interest, which I believe is because the stakes are so high. The extent to which member states will open up public procurement will be a litmus test of commitment to the single European market. The stakes are high for purchasers, in that they

271
face administrative costs that they do not believe to be necessary. Suppliers share that concern but insist that any measures introduced must be enforced effectively. They want a prominent role for the Commission and a complaints system that they can invoke without drawing attention to themselves. Purchasers want any measures that are adopted to sit well with good purchasing practice and not involve unnecessary constraints or introduce new uncertainties. Suppliers need confidence that it is worth their while to try to break into new markets. Both purchasers and suppliers point to the need to be able to build up relations with each other. This can be handled in ways which do not involve discrimination but which the Commission's proposals would obstruct.
Suggestions for improving the proposals have been many and various. We are grateful to all who have provided them. Many of those who have commented have wanted the values above which contracts would be covered to be raised. They have said that thresholds could be found which would make a significant reduction in the number of contracts which are covered—and hence the administrative burden—while still catching a high proportion of the value. On the other hand, some of those who have commented have wanted to keep the thresholds low so that small firms can benefit. Many have said that the system most likely to be effective is one which is in line with business methods. They want the system to call for changes in commercial practices only to the extent that is necessary to show that purchasing is conducted without discrimination.
The CBI, which has played an important role in bringing purchasers and suppliers together to discuss the opening up of procurement, has come out in favour of a system of audit. Others have reached similar conclusions. Such systems offer a means of achieving the Commission's goals by way of adapting firms' own procedures and not imposing new ones on them; of avoiding unnecessary regulation; and of providing assurance to suppliers that the objectives of equal opportunity and fair consideration are being achieved.
Other member states, as well as ourselves, have difficulties with the current proposals. We believe that the difficulties are such, and the importance of taking action so great, that it is necessary to develop the line of thinking I have just described to complement that in the proposals put forward by the Commission. The basis of that thinking is that methods can be found of ensuring non-discriminatory purchasing by laying down principles which can be followed instead of detailed rules. The principles would form the basis of independent tests of purchasing procedures which, if satisfactory, would be accepted as enabling an undertaking not to follow the detailed rules. The independence of the tests would be important.
The most basic requirement would be that suppliers throughout the Community should have the same opportunity to be considered for contracts. That means that they must have proper access to qualification procedures. There must be objective criteria for the selection of candidates to tender and for the award of the contract. Single tendering should be avoided wherever possible, and purchasers should try to ensure there are enough participants in a competition to make it genuine.
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Reasonable time limits must be set for potential suppliers or contractors to apply to participate in competitions and to submit actual tenders.
That should not be all. The principles should also cover such points as whether contracts are advertised in large blocks or whether newcomers are given a chance to compete for manageable portions. They should cover the extent to which information is provided to candidates whose applications to bid are not accepted or whose tenders are rejected. They should also include the handling of negotiations in such a way as not to distort competition.
Mr. Anthony Beaumont-Dark: Night after night, week after week, just after the 10 o'clock vote we have to discuss Common Market recommendations. Does my right hon. Friend agree that if we are to have sensible debates on these awful matters, it would be better if each week we set aside an entire day for discussing the various EC recommendations? Although the way in which my right hon. Friend read his speech did him great credit, he did not seem to agree with what he was saying any more than the rest of us did. If we are to discuss this rubbish week after week, would it not be a good thing if we had one day in which to discuss what is happening to the country, instead of these measures being shoved in surreptitiously late at night, when we all know that, like death by a thousands cuts, the country is being cut down by one measure after another?
Mr. Brooke: My hon. Friend's question should be addressed to the business managers rather than to me. But as I see the Chairman of the Scrutiny Committee the hon. Member for Newham, South (Mr. Spearing) sitting opposite me, I should stress that a quite separate dialogue takes place between the Chairman of the Scrutiny Committee and me to ensure that appropriate debates are conducted at an opportune moment in the process. I hope that the hon. Gentleman will agree that we are fulfilling that obligation on this occasion.
The principles could also include the extent to which information was made available for the benefit of subcontractors and small firms.
In short, we are talking about a professional code for purchasers. It is likely to need to be supported by guidelines. These would help both those engaged in purchasing and those whose task is to test their observance of the code. Purchasers would be saved from having to observe detailed rules which may or may not fit their particular circumstances. But they would have an interest in demonstrating that the way they conducted their business was in accordance with the kind of principles I have outlined. If they failed to do so, they would have to follow the detailed rules.
There are a number of questions which need to be resolved before the system that I have described could be set going. They include the way in which the principles are formulated and whether they are included in a directive or perhaps in a European standard to which a directive might refer. They concern the method and frequency of testing, and include the possibility that the Commission might institute special checks on the basis of complaints. They include the identity of those who conduct the tests, who in the last case I have mentioned might be engaged by the Commission. There must clearly be a rigorous form of accreditation so that high common standards are applied.

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As well as all this, it will need to be decided how information should be provided to suppliers. One possibility would be for the Official Journal of the European Communities to give publicity to the issue of certificates attesting to satisfactory procedures. This could be done alongside notices informing suppliers of the types of purchases being made. Information could also be given through the Official Journal whenever a qualified audit report or the loss of a certificate triggered a requirement to follow the detailed rules.
We see work of this kind as benefiting all who have an interest in procurement. Purchasers should be able to avoid the disruption to their normal purchasing procedures which the current proposals may involve. Suppliers would gain, since they would know that purchasers needed to act responsibly in order to maintain their freedom from regulation. The less the degree of regulation, the greater the economic potential which the single market will release.
I have dealt at some length with these ideas because I believe that they point to how the Community can achieve the objective of open procurement. We are putting them to the Commission with the suggestion that it takes them forward as part of the next stage in developing the present proposals. Other work that must go forward includes that on the detailed provisions of the rules now before us, which we see as being available as an alternative to audit and as applying in cases where audit proves unsatisfactory. Then there is the question of ensuring that there is satisfactory compliance with the rules. The Commission is producing a further proposal on this, with suggestions which we understand will be different from those in the proposal relating to the supplies and works directives which we debated a fortnight ago.
The Internal Market Council has not so far had a detailed discussion of the proposals. Working group discussions took place in December, January and February. The real preparation for the common position has to await the European Parliament's opinion. If this is delivered at the plenary next week, it is expected that the Commission will submit modified proposals in June-July. This will enable the incoming French presidency to work for a common position in, say, November. If this target is achieved, it will be possible to get the directive adopted by June 1990. This was the objective set for works in the excluded sectors when the Internal Market Council agreed a common position on changes to the works directive last autumn. This timetable could be upset if the European Parliament decides next week to send the proposals back into Committee. This could happen as a result of the very large number of amendments understood to be tabled.
The proposals are subject to qualified majority voting, with unanimity required for the Council to amend the proposals against the wish of the Commission. In practice, the Commission may itself amend the proposals if it sees difficulty in getting a qualified majority for them.
We believe that, against this background, our contribution to the debate in the wider Community is timely. We are still at a relatively early stage in the legislative process in the Community so far as the present proposals are concerned. Nevertheless, much has to be done in a relatively short time to ensure that the directives which are adopted are those which produce the fullest benefits.
10.39 pm
Dr. John Marek: As this is a short debate, I shall try not to delay the House too much.
The Opposition feel that—give or take a few points that I shall make later—the motion would have been improved by the addition of the amendment: it would then have commanded our support. The Paymaster General has explained admirably the details of the rules and regulations in the European Community documents and the supplementary explanatory memorandum submitted by Her Majesty's Treasury. I hope that he will forgive me if I do not take up his explanation and argue with him about whether individual details should or should not have been included, and how his Department should proceed in negotiations with the Commission later this year.
The motion asks the House to endorse
"the Government's view that the broad approach of the Commission should be supported".
That surprised me. Judging by what the papers have said over the past two or three days, I thought that nothing was less likely than a Government motion asking the House to support the broad thrust of the Commission's proposals.
An article in today's Guardian having caught my eye, wondered where the motion could have come from. It certainly could not have come from the hon. Members for Southend, East (Mr. Taylor) and for Thanet, South (Mr. Aitken), both of whom are present. The Guardian describes them as "night watchmen", and indeed they are: every time I have attended a debate on European Community documents late at night, they have been in their places. Could the motion have been tabled by members of the No Turning Back group—identified by the article as the hon. Member for Southampton, Itchen (Mr. Chope), the Parliamentary Under-Secretary of State for the Environment, the hon. Member for Mitcham and Morden (Mrs. Rumbold), the Minister of State, Department of Education and Science, and the Economic Secretary to the Treasury. Perhaps the Paymaster General can enlighten US.
I did not really think that Ministers would put down such a motion, but the article went on to mention vet another group in the Conservative party—the Bruges group—and I wondered whether members of that group could have persuaded the Government's business managers to put it down. But the only member mentioned was the hon. Member for Stafford (Mr. Cash), and having thought about it I decided that that was not the answer.
Certainly members of the Tory Reform group would not have been allowed to table such a motion. Perhaps it was the Prime Minister, I thought; but, if history is to be believed, the Prime Minister does not look at such motions very carefully. There is usually a fuss at some stage when she realises that something has been done, says, "I must put a stop to this" and tries to make changes too late.
I suspect that the motion has been put down because no one in the Government has paid much attention to it, and it has been tabled by some civil servant who has been allowed to draft it because the matter does not fall neatly into any one Department. The Treasury led and still leads negotiations on amendments to the existing supplies and works directive, and this proposal is basically an extension of that directive, but it is also concerned very much with matters relating to the Department of Trade and Industry. It does not surprise me, therefore, that the Government do

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not seem particularly interested in what the motion contains. Certainly, if some of the Conservative Members who have been quoted in the newspapers had their way, I doubt very much if such a motion would have been tabled at all. Conservative Ministers, ex-Ministers and ex-Prime Ministers are more interested in squabbling among themselves about which way the Common Market is going than in looking after the nitty-gritty of ensuring that, as we are now in the Common Market, the Government look after our interests and ensure that we do not lose by default.
The Prime Minister has declared that battle has been joined over the pace of political and economic change in the European Community. But the right hon. Member for Old Bexley and Sidcup (Mr. Heath) has told her that she is talking absolute rubbish about the advance of a Socialist super-state. That allows other hon. Members to join in. They were in their places a little while ago, but as soon as the Paymaster General stood up, they left. The hon. Member for Luton, North (Mr. Carlisle) said that the right hon. Member for Old Bexley and Sidcup should be put out to grass. The hon. Member for Macclesfield (Mr. Winterton) said that what the right hon. Gentleman had said was beneath contempt. [HON. MEMBERS: "Hear, hear."] I hear Conservative Members saying "Hear, hear". Clearly, there is no moderation or sensible argument. I do not know whether my hon. Friend the Member for Bolsover (Mr. Skinner) is right in this matter, but I suspect that there are the seeds of real discontent in the Conservative party at present. I foresee that as soon as the European elections come near, the Government will put a stop to the squabbles in the newspapers. The country is no better for these disagreements, because the Government are squabbling among themselves about the way forward within the European Community.
Mr. Jonathan Aitken: May a veteran night watchman, as The Guardian and the hon. Gentleman kindly called me, help with this long, rambling whodunnit? One would think that the hon. Gentleman came from a party that had never known internal argument or squabbling. I remind the hon. Gentleman of the words of Milton:
"who ever knew Truth put to the worse, in a free and open encounter?"
In our party, we are studying the phrases in this bran tub of a motion, which says:
"the broad approach of the Commission should be supported but…changes are desirable … to prevent the imposition of unnecessary burdens".
There is plenty to argue about, so everyone can eventually unite in supporting the motion.
Dr. Marek: I agree with the hon. Gentleman that there is plenty to argue about, but some of us are surprised by the personal nature of some of the comments. The Opposition are no strangers to such arguments, but even we have been surprised by the personal comments. That is the difference between us. I do not believe that the country is being well served as a result of the argument among Conservative Members. While the argument is going on in this country, important decisions are being made in Europe in which we should be involved. We should be negotiating for the benefit of this country. There is no moderation here.
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Like the Prime Minister, when I stand on Westminster bridge, I see the skyline of Parliament. But when I turn round I see the empty shell of county hall, the building that housed the regional strategic local government authority, which was abolished by this Government. One sees the architecture of liberty from Westminster bridge, but with a turn of the head one sees the architecture of a Government who will brook no dissent, suffer no argument and listen to no different points of view. We have to remember that attitude when considering the proposals before us.
Can we really believe that the motion means
"that the broad approach of the Commission should be supported"?
I suspect the same will happen to these proposals as has happened to the proposal to introduce tougher health warnings on cigarette packets. The Government allowed the proposal through because one Department did not know what another Department was doing. Lo and behold, the Secretary of State for Health disrupts the efficient working of the Commission—and there is no harm in any bureaucracy or administration that we set up and for which we pay taxes working efficiently—[Interruption.] This is relevant to our debate on procurement. It is precisely the attitude of the Conservative party to issues in Europe that suggests what it may do on this issue in due course.
The Secretary of State for Health disrupted the efficient working of the Commission by an 11th hour change of mind, no doubt after an argument in some Cabinet committee. The same situation has arisen over the EEC scheme to encourage foreign language teaching in British schools. Proposals were almost ready and had almost been agreed to by the United Kingdom when a sudden turnaround undid a great deal of effort and threw everything into chaos. One should not think that it will end there and that that turmoil will not be repeated with the present proposals for a Communitywide pass for pensioners which would give them an automatic right to concessions that would be offered to retired people throughout the Community—[Interruption.] It has not gone through in the United Kingdom. The problem that we face is one of inattention and hostility by the Government to many of the attractive measures that are proposed by Brussels—
Mr. Beaumont-Dark: Does the hon. Gentleman agree that last week the hon. Member for Peckham (Ms. Harman), the Opposition spokesman on health, tried to pick things like currants out of a bun, some things that she liked and some that she did not like? Tonight the hon. Gentleman has said that the Opposition like some directives, such as that on smoking, but that they do not like others. Should not the Opposition make up their minds about whether they stand with us, who think that some things are for this Government to decide and are not to be interfered with by the Common Market in Brussels? You cannot have it both ways; you either stand alongside us in believing in Great Britain or you stand alongside those weary people in Brussels who stand only for Brussels. The Opposition must make up their minds about whether they stand with Britain or with Brussels. I am tired of these debates where too often you stand one day on one leg, one day on another, and on the other day you seem to be suspended in mid-air. Where the hell do you stand?
Mr. Haynes: On a point of order, Mr. Deputy Speaker. If I had made such a contribution, you would have shot me down, but you let him carry on.
Mr. Deputy Speaker (Mr. Harold Walker): I am not involved in these matters.
Dr. Marek: I suspect that every Opposition Member, except perhaps the hon. Member for Ross, Cromarty and Skye (Mr. Kennedy) from the Social and Liberal Democratic party, voted against entry into the Common Market 20 years ago, but we now have the good sense—
Mr. Beaumont-Dark: Is it good sense?
Dr. Marek: We have the good sense to see that, although we should keep our options open about what may happen in the future, while we are in the Common Market we should do the best that we can to get the best for this country out of the Common Market, which seems something that the hon. Member for Birmingham, Selly Oak (Mr. Beaumont-Dark) will not recognise.
The European proposal for language teaching throughout Europe—
Mr. Deputy Speaker: Order. The motion before the House relates to procurement procedures for the water, energy, transport and telecommunications sectors. I do not see how language teaching comes into it.
Dr. Marek: I accept your stricture, Mr. Deputy Speaker. The hon. Member for Selly Oak asked me a question that perhaps I cannot answer about why the Opposition can accept some proposals but not others and he asked about where we stood. In view of your comments, Mr. Deputy Speaker, I shall not seek to go along that road but it is important to note that the Conservative Government have said that a number—I shall not mention them—of attractive proposals—attractive to most people in the country—will not be applied in the United Kingdom. That is where the Opposition part company with Conservative Members who inhabit the Government Benches late at night for such debates.
Mr. Edward Leigh: I appreciate that the new-model Labour party is unwilling to take a stand on any issue for fear of irritating any group of voters, but perhaps the hon. Gentleman could tell us whether the official Labour party supports or opposes the motion. The hon. Gentleman still has not told us.
Dr. Marek: I should like to know whether the hon. Gentleman was in at the beginning of the debate. I think that he has just come in.
Mr. Leigh: I have been here all the time.
Dr. Marek: In that case I shall go back. I said at the beginning of my remarks—[Interruption.] I will not start again, but I shall just quote one sentence. The hon. Gentleman must have been asleep. I said that, with the amendment, the motion was a reasonable one and it would have been accepted by the Opposition.
I do not believe that there is any point in ritualistic denunciation of the Common Market, when proposals have been put forward, which may or may not become directives and which we have a chance of improving. However, the Government do not do their job. They leave the proposals alone, so that they end up being unsuitable
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for this country, and then they complain at the 11th hour that we have been robbed. Frankly, the people of this country are fed up with such an attitude. They wish that the Government would enter into negotiations and get something right for once for this country.
The problem that we face is one of inattention or hostility by our Government to many of the attractive measures proposed by Brussels. We also face the same inattention or hostility by our Governmemt to many of the not-so-attractive measures. The problem is that this measure could be made attractive, but it needs detailed examination by the Government, which must be followed by persistent and careful negotiation to ensure that the finished product is right for us in the United Kingdom.
Why, for example, are the standards used in our offshore oil industry not the basis of the relevant part of the proposals? Why are the present discussions in the European Community dominated by the French and the Germans, with very little British input? That criticism can be levied in other areas, too, because it is a general one. Why is so little said about safety? The dangers are clear, but standards will be set that will put our industry at a disadvantage and will involve it in considerable expenditure in order to comply with any eventual directive. Safety standards may be allowed to fall in those of our industries that take a pride in their safety record.
We urge the Government to accept that we are members of the European Community and to take a vital and necessary part in framing the legislation, so that it is good for the European Community and good for the United Kingdom. It is no good creating chaos at the 11th hour. That gets us a bad name, it impedes the work of the Commission and it stops our people receiving benefits from the European Community that could be available.
The proposals clearly need to be adjusted to lessen the bureaucracy and paperwork. We must also be satisfied that covert subsidy by national undertakings and vertically integrated industries will be kept to a minimum. That is especially important where a company or undertaking has exclusive or monopoly rights and, therefore, considerable freedom to choose a tariff for the customer.
Mr. Hugh Dykes: Give us an example.
Dr. Marek: I shall not give an example, because hon. Members must be able to think of examples themselves from the history of monopoly utilities within the United Kingdom.
Mr. Leigh: Let the hon. Member for Newham, South (Mr. Spearing) intervene.
Dr. Marek: My hon. Friend the Member for Newham, South (Mr. Spearing) will no doubt make his contribution in due course, and it would not be right for me to invite him to intervene.
Lower standards should not be accepted and more attention needs to be paid to safety. There is a need to get the balance right, because it is not just a question of insisting that the suppliers hold all the aces and not the nationalised undertakings and private companies supplying services to the consumers. The nationalised undertakings and some private companies have a duty to provide a service to the public. They should be able to do so after the proposals are enshrined in the form of a directive.
11.4 pm
Mr. Quentin Davies: We have just been treated to a model of the discursiveness and obfuscation in which the hon. Member for Wrexham (Dr. Marek) specialises. I rise to speak because the subject before the House is far too important for us to permit the essentials to be lost in a fog of muddle or theology.
Let me start by trying to situate the importance of the subject in terms of figures. I apologise for not having a copy of the Cecchini report which quotes the figures. The Table Office does not have a copy, so I must quote the figures from memory. They will be fairly exact, but the figures that I committed to memory were in dollars and I shall not risk turning them back into ecus.
Out of a total domestic product in the EC of around $4 trillion at the present time, public procurement of goods and services amounts to more than $600 billion—about 15 per cent. of the Community's total income. Rather more than half that sum— $350 billion or $400 billion—would be suitable for international procurement. At present, only about 5 per cent. of that figure—about $30 billion—is procured by public sector organisations in the European Community outside the frontiers of the nation state in which that public sector institution or purchaser is located.
One sees immediately from those broad figures, which I believe to be approximately correct, what enormous scope there is for increasing competition. We have a competitive vacuum in public procurement in the EC. That is undesirable, dangerous and expensive for us all.
The Cecchini report has attempted to estimate exactly what the savings would be if we introduced competition into this currently closed sector. It estimated that the consequences would be a saving of about a half of 1 per cent. of total domestic product in the Community, or approximately $20 billion, or £12 billion or £13 billion at the present rate of exchange—a substantial amount of money.
It might be useful briefly to touch on some of the key sectors, many of which are important for Britain and which have suffered from nationalistic public procurement up to the present time.
I shall take a few examples which will immediately illustrate their great importance for our industry. One is telecommunications. I think that I am right in saying that in neither Britain, nor France nor Germany has a public switching system yet been purchased from a supplier outside those countries. British Telecom has always bought from Plessey or GEC. The Bundespost has always bought from Siemens or SEL or another German supplier, the French from Alcatel, and so forth. They have never gone across their frontiers to procure public switching equipment from a non-national supplier.
There has not been a single case of substantial turbines or generators, or other major equipment for a power station, whether nuclear or conventional, being procured in Britain, France, Germany or Italy outside their own countries. No traction locomotive for a railway system in any of those countries has ever been procured from outside.
Although the nationalistic procurement may not be absolute in other sectors, it has been high. One has only to think of the procurement of hospital equipment or computers and other information technology within the public sector in the different EC countries. This all represents areas of industry which are crucial for
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employment and for the future of technological progress and which have not been exposed to the sort of competition to which they should have been.
As a result, three great costs to our economy have arisen. First, there is the financial cost of having to pay higher prices than we would if there were genuine competition in the procurement of this type of equipment or the associated services. [HON. MEMBERS: "How much?"] I am asked how much. I would refer the hon. Members who asked this pertinent question, for which I am grateful, to the estimates in the Cecchini report. They might find it enlightening and enlivening bed-time reading when they leave the House this evening.
Secondly, we incur costs through the loss of impetus to technological progress which result from the absence of competition. Conservative Members certainly recognise that one of the great spurs to technological progress is competition—the supplier's need continuously to seek to improve his product to gain a competitive edge.
Thirdly, we lose because of the absence of the supply side shock, from which industries would otherwise benefit. That is the simple need for both management and the work force to get up a little earlier in the morning, go to bed a little later at night, to take things a little less for granted, to cut their costs, and to improve their products and marketing skills. If we can open important British industries to this new blast of competition, we shall provide them with the sort of supply side shock which has been so effective in other sectors of the economy which have performed so well under the Government that we are pleased and proud to have.
Mr. Skinner: I am interested to hear what the hon. Gentleman has to say about the shock to the system and the therapy that he advises will be good for us. How much coal shall we sell when we have had this shock?
Mr. Davies: If we really believe in markets, the answer to the hon. Gentleman's question must be determined not by me or the House, but by the market. Human history shows that those who did not believe in markets ended up paying a high price in economic terms, and, ultimately, in political terms as well. I see that I carry my hon. Friends with me.
I emphasise once again the importance of the principle which is at stake. Therefore, I support both sides of the Government's motion. First, I warmly welcome the first serious moves to try to introduce real competition into these key areas of our economy. Secondly—it follows on naturally—we should be particularly careful, cautious and vigilant about the mechanisms that we put into place to secure such an important aim. The question of how we can achieve our objectives is complex.
I congratulate both the Government and the European Commission on all the work they have put into these documents, which obviously reflect many thousands of hours of competent human consideration. That consideration was not in vain because when we succeed in abolishing nationalistic public procurement in the European Community we shall—
Mr. Cryer rose—
Mr. Davies: I am about to conclude my remarks, but I am sure that the hon. Gentleman will catch your eye later, Mr. Deputy Speaker, if he wishes to do so.

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That labour was not in vain because, when we have got rid of nationalistic public procurement in the European Community, we shall have completed an excellent day's work for employment, for prosperity and for the competitiveness of these important British industries in the future.
11.9 pm
Mr. Frank Doran: This is the first time I have ventured into one of these European debates, and it is obvious that they have their own complexities and intricacies. I shall try to keep my remarks simple so as not to incur the opprobrium that other speakers seem to have provoked.
I have a particular interest in the offshore oil industry which is based and centred in my constituency. There is extreme concern in all parts of the industry, on the part of the operators, the oil producers and the contractors who provide services.
I stress the importance of the offshore industry to us. The Government have received £68 billion in tax and royalties from the North sea in the past 10 years. The oil industry spends about £3 billion a year on goods and services in Britain, so it is crucial that nothing be done to interfere with the smooth running of its operations or to undermine the valuable contribution that British industry has made to this area.
We are developing a technology and expertise in this country which is making us world leaders in the offshore industry. It is important to realise that that industry could be undermined by these proposals. That is certainly the view expressed to me by the people involved in the industry at all levels—the producers, the major companies from around the world which have operations in the North sea, and those who provide the technology.
The opposition that the Paymaster General expressed to the proposals was welcome, but the manner in which he expressed it, and the possibilities of defeating the proposals, did not satisfy me. It does not appear that the Government are doing much to fight the corner of my industry in Aberdeen—
Mr. Charles Kennedy: As the hon. Gentleman is speaking on a subject and to a theme that I very much endorse, may I take this opportunity to say, on behalf of Highlands Fabricators Ltd. in my constituency, of which the corporate planning manager is John Wood—also the chairman of the United Kingdom Module Constructors Association—that the company supports the thrust of the hon. Gentleman's comments? I hope that the Minister will seriously consider them.
Mr. Doran: I thank the hon. Gentleman. I know that he shares my worries—
Mr. Nigel Spearing: The motion says that the Commission's broad approach should be supported, but the hon. Member for Ross, Cromarty and Skye (Mr. Kennedy) and my hon. Friend the Member for Aberdeen, South (Mr. Doran), who know about the offshore oil business, say that something is at stake here. Could the broad approach be modified in the way that the Paymaster General described, or does it imperil the prosperity of the industry?
Mr. Doran: The latter. I criticised the Paymaster General's remarks precisely because the industry feels it is being undermined—
Mr. Spearing: The Government are not defending it.
Mr. Doran: No more they are.
Most of the larger fields have now been developed, and we are embarking on a phase in which exploration and development costs will increase, possibly dramatically. The finds that the industry will make will be much smaller, and there will have to be intensive research and development into ways of increasing the recovery rates from the fields. High capital and operating costs will be involved in building, developing and operating safely on ever smaller and more marginal fields. All this may be undermined.
The hon. Member for Ross, Cromarty and Skye (Mr. Kennedy) mentioned what Mr. Ian Wood had said to him. He is a constituent of mine and he has presented me and the Department of Energy with a detailed report on how he views the position. He is the managing director of one of the largest contracting firms in the North sea—an Aberdeen-based, Aberdeen-developed and now international company operating here and in the United States, where it has made some significant acquisitions. It is a tremendous success story for a north-east of Scotland company.
He points out the effects of increased bureaucracy. There is a potential for a hugely increased bureaucracy. The offshore construction industry is entirely dependent for survival on the operating companies letting contracts for their projects. He has given me a step-by-step appraisal of the number of stages involved in contracts, and it is fairly considerable. Most of these contracts are well over £125,000, the limit referred to in the EEC order. As all these stages in the draft directive come into force, at every stage a delay would occur to allow for placing of advertisements and of intent to let a contract. There would be a lengthy tendering period, and after the award of the contract a period to allow for appeals. These are all bureaucratic steps which are unnecessary in what is already a highly competitive industry.
Mr. Wood then talks about the implication for standards. There are two standards in the offshore industry: the American standard and the United Kingdom standard. Over the past 15 to 20 years, through the constant effort of all those concerned in the United Kingdom offshore industry, a great deal of time has been spent in raising standards and quality assurance. This has resulted in a number of British standards being introduced which are considered to be of great value. Where these do not exist, American standards are enforced in the industry throughout the world.
This directive will undermine that process, which has been taking place over the last 15 to 20 years. We shall find that the British standards become less relevant, which would make it much more difficult for our own industry, which has developed its own standards to a very high level, where they are accepted internationally, to compete outside the EEC. That is obviously of considerable concern, particularly to my constituents, looking at when the oil finally runs out.

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We want to encourage the development of a manufacturing and technological industry which can export its expertise to the rest of the world. We do not want to be confined to the European market.
Finally, I come to safety. There are real concerns within the industry that the present close attention to safety which has been forced upon the industry, mainly because of the Piper Alpha disaster, is likely to be undermined because of the possibility of lower standards being required because of the extra cost of these particular measures and the implications of taking them through the industry. This represents a serious threat to the wellbeing of one of our most important industries.
I said earlier that I would try to keep my remarks simple. It is a fairly simple issue. Will this industry, which is vital to the future of our country, be supported or not? It strikes me, having listened carefully to what the Paymaster General said, that it will certainly not be supported by this Government.
11.17 pm
Mr. Teddy Taylor: I should like to ask the Minister two questions. In agreeing 100 per cent. with the wise words of my hon. Friend the Member for Stamford and Spalding (Mr. Davies), I should say that the one thing worrying everyone in the House is what indication we have that there is the slightest possibility of this freedom happening. Our experience of the EEC is that we have the most splendid pledges, the most wonderful promises, the greatest visions, but they do not actually happen.
For example, we had a lot of discussion not too long ago about spending controls. We gave money in exchange for them, and we saw a reference in the Court of Auditors' report, but we might as well not have had them, because, despite having an official limit of 3 per cent. on extra spending, the Commission spent 18 per cent. more. However, it did not matter because an accountancy device was found. We find the same on agricultural reform. We are constantly told that things will change. We were told there would be a price freeze which would mean everyone would get a green pound adjustment and surpluses would disappear. I am afraid we are always being told that next year things will get better, and they never do.
If we had genuine free international competition in public purchasing it would be good for us, good for Europe and good for all the countries of the world. What worries me about the EEC is that, instead of getting free trade, we will simply surround our purchasing agencies with a pile of extra bureaucracy.
The Minister is well aware that two institutes have already expressed fears about the many forms to be filled in and the information to be provided, and have said that genuine free trade simply will not happen. That is not simply a silly point. The Minister must be well aware from the sad occasions on which he has had to admit that his hopes have not been realised, that this is probably what will happen.
As I said to the Minister last week on a similar issue, is there any way in which he can adjust these proposals to allow any kind of easy arbitration so that if someone feels that he is being blocked out or is not getting a fair deal he can get redress? My hon. Friends who love the Common
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Market and hope that it will be a great thing must be well aware in their hearts that there will be no free trade but much bureaucracy, many more forms, and that Britain will give some contracts to companies in Europe but that the same will not happen in reverse.
The Minister may well think that that will happen, but if he has any doubts about it he should consider what happened today on the question of tobacco. We were told by the Common Market that we would have to put different advertisements on tobacco packets to discourage smoking. The same Common Market sent our Government an official letter saying that we had to cut the tax on cigarettes. The Treasury and the Department of Health had to say that that would mean more cigarette smoking. The Common Market spends £500 million every year to subsidise the tobacco industry and pay for research into how European tobacco can be made more palatable to smokers.
Mr. Aitken: Before my hon. Friend gets carried away by the theme that everything is the same, may I draw to his attention one important change? On 14 November the Government refused to accept an amendment suggesting that the basis on which we were asked to endorse the tobacco products labelling directive was contrary to the single market legal requirements, despite Mr. Speaker's Counsel's recommendation. Despite the refusal by the Under-Secretary of State for Health on that date, today the Secretary of State for Health was in Brussels vigorously opposing the very grounds that his hon. Friend had endorsed. There has been—
Mr. Deputy Speaker: Order. We are not debating tobacco advertising.
Mr. Taylor: Most of us are happy that at last the Government appear to be waking up to the realities of the European situation. We do not know what change in policy might come, but at least we know that there is discussion. That is good, even though it is taking place at half-past 11.
Is there anything that the Minister can do to see that something happens apart from extra costs and extra form filling? We should be worried about this. I urge hon. Members to look at the White Paper on developments in the EEC that we are debating on Thursday to see what has happened to our trade. In 1970 our export-import ratio with Europe was 143—
Mr. Deputy Speaker: Order. We are debating procurement procedures in the water, energy, transport and telecommunications sectors. The debate should be confined to those matters.
Mr. Taylor: I am simply trying to say that over that period of 20 years our export-import ratio has gone down from 143 to 72, and that is rather significant for Britain. I hope that we shall not make the same mistake again in these proposals on public purchasing. If we do, we will once again be caught out and will lose. We shall find that our costs will increase because of more form filling and that we will not have the free trade that we want.
What exactly does the Minister mean in relation to article 24? He must be well aware from his visits to America and from the views expressed by American businesses and those in other parts of the world that many people rightly or wrongly suspect that all the 1992 rules are concerned not with free trade and competition but with a

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bit more protectionism. Article 24 is abundantly clear. It says that we can keep out competition if half of it is foreign. I am not quite sure what "foreign" means. Does it mean that we can include EFTA and eastern Europe, the United States and Japan? The Minister must be aware that this is purely a matter of blind protectionism. It is a matter of saying that we may be willing to consider free trade and competition—
Mr. Dykes: I thought that my hon. Friend was in favour of protectionism.
Mr. Taylor: I can assure my hon. Friends that as a Conservative I am totally opposed to blind protectionism. I am in favour of free trade, as I hope my hon. Friends are, although I have doubts about my hon. Friend the Member for Harrow, East (Mr. Dykes), who seems to have some strange ideas which are becoming out of date in the party, with all the changes that are taking place. He may have been in the mainstream at one time. He is certainly not now.
May we be told what the Minister proposes to do about all this? With almost everything we do in the EEC we are damaging the Third world, damaging freedom of trade and undermining GATT. Does the Minister intend to propose to the Council that article 24 be deleted, or is he simply saying in his courteous and gentlemanly way that he agrees with my general sentiments? How do the Government intend to ensure that this provision works, and what will they do to prevent its being used as a means not of providing free competition but of discriminating against the rest of the world?
11.25 pm
Mr. Nigel Spearing: The hon. Member for Birmingham, Selly Oak (Mr. Beaumont-Dark) asked the Paymaster General in an intervention some procedural questions, to which the right hon. Gentleman appealed to the Chairman of the Scrutiny Committee, asking if it was not a discharge of the responsibilities laid on Government by the resolution of the House of 30 October 1980.
I am glad to say that the letter of that resolution is being carried out by this debate, and therefore—as the Chairman of that Committee—I can give the Paymaster General an affirmative answer to his question. There my function as Chairman of the Committee ceases and henceforward I speak as the hon. Member for Newham, South. While I agree that the letter of the law is being carried out, I am far from satisfied with the way in which the spirit of the law is being carried out.
This and similar debates are limited to an hour and a half, which is not sufficient, given the importance of the topic. Tomorrow night we shall be invited to debate mergers and unless there is a motion down to suspend the rule, we shall have to debate that important issue, about which the Select Committee took evidence from Lord Young for an hour and a half, in one and a half hours.
The Paymaster General will remember from years ago that the hour and a half rule was introduced only in 1951 for this country's secondary legislation, or statutory instruments. We are not tonight debating a piece of secondary legislation deriving from a Government statute. It is a piece of super-primary legislation contained in some 300 pages. This is equivalent, therefore, to a Second
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Reading debate of a Bill of that length. So we are having to compress a debate on important matters of principle into an extremely short time.
The hon. Member for Selly Oak wonders whether we can get rid of all this late-night business and have some daytime debates. That may be possible, but we would have to face up to the fact that we would be taking on double or treble the amount of legislation in a normal parliamentary year.
Mr. Beaumont-Dark: Better if we knew.
Mr. Spearing: If the hon. Gentleman thinks it would be better if we knew, would he like two or three days a week to be taken up with EEC business?
Mr. Beaumont-Dark: Yes.
Mr. Spearing: Very well. That would be about the ratio of importance to time that EEC matters would have to be given, and I think I see the hon. Member for Harrow, East (Mr. Dykes) nodding in agreement.
Mr. Beaumont-Dark: If it meant giving up two or three days a week to debate those issues, the country would be alerted to the fact that we were becoming a glorified parish council in relation to what is happening in Brussels. Better for us to do that than for us to do it by surreptitious means.
Mr. Spearing: I refer the hon. Gentleman to the investigation now taking place by the Select Committee on Procedure. If he thinks that that ratio and time scale is right, whatever the result, he—and other hon. Members who feel the same way—should give evidence to that Committee to that effect. He may be right in that it would have the secondary effect of alerting people to something of which they may not at present be aware.
The matter that we are debating is the subject of two explanatory memoranda from the Government. Earlier this year it came before the Scrutiny Committee and we said that we wanted more information. I have to thank the Paymaster General for producing his second explanatory memorandum, which was signed only on 10 May and sent to the Committee and on which we based a report which is in the Vote Office.
But I have to tell him that are getting into very deep water. Here we have the theory of an open market, flat-table theology, well expressed by the hon. Member for Stamford and Spalding (Mr. Davies), and in order to obtain something that we have had on a national basis throughout Europe before we have 300 pages of legislation, all of which has to be administered and checked and for which new machinery has to be installed. In other words, freedom of competition does not necessarily mean freedom from bureaucracy. That is something that free marketeers and enthusiasts for capital competition on the Government Benches ought to bear in mind, because it is not necessarily possible to have one without the other in every respect and there is a classic case of it in this measure.
Market magic when applied to this area may not produce the expected results because this set of regulations is clearly supplier-oriented. We have already heard from the hon. Member for Ross, Cromarty and Skye (Mr. Kennedy) how it will affect the offshore oil industry. How

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do we know that it will not affect many other industries similarly by hog-tying the rights and demands of the purchaser?
The Paymaster General mentioned the CBI evidence. He did not mention, although I think the hon. Member for Southend, East (Mr. Taylor) did, the Institute of Purchasing and Supply. He may have received a memorandum from the institute, but he did not mention it in his speech. It is a very important body because, as I understand it, it represents the corporate interests of the purchasing organisations of public authorities, local government, national Government and publicly funded organisations, as well as private organisations. It represents a huge purchasing power in the nation, and it tells me that this whole organisation is not in favour of the consumer or the corporate interests of the consumer in terms of safety, standardisation and value for money. It should appeal to hon. Members, particularly Government Members, because it is weighted, as I have said, in favour of supplier opportunity and not the convenience of the consumer.
Indeed, if we listened very carefully to the Paymaster General's speech we detected that in the Whitehallese which he trotted out. I would not criticise him personally for that. Why should he, from the Treasury, have to go into the details of the vast range of industries affected by these proposals? Why it has come to the Treasury rather than the DTI I do not know. I would suggest that as a function it would perhaps go more suitably to the DTI because surely the DTI should be more aware of the difficulties that will occur for the purchasing organisation. So I detect from the speech of the Paymaster General that the Government do not really want this at all, for some very good reasons.
I come now to some quotations from the memorandum which the Paymaster General sent not just to the Committee but to the public. I think the newspapers have got it wrong when they say that Government memoranda are not available until the Scrutiny Committee reports; they are available in the Vote Office. Paragraph 4 says:
"Consultation is continuing and will be supplemented over the next few months by a series of briefing meetings with representatives of interested trade associations."
It goes on:
"Many of the principal concerns about the present proposals, however, are shared by both purchasers and suppliers."
So there does not seem to be much enthusiasm in that area.
Paragraph 8, "Main implications for purchasers"—the customers, with whom we are all directly or indirectly involved—says:
"They are concerned, however, that the proposals should be amended to reduce very significantly the constraints on good purchasing practice and to limit the administrative burdens that they believe would result".
That needs quite substantial amendment and, as we said in the report of the Scrutiny Committee—and I quote direct from paragraph 25 of the Minister's own memorandum on a matter which has not yet been raised but is of great current significance:
"A particular concern of UK suppliers and contractors has been the provision allowing concessionnaires in this sector to award contracts to associates and affiliates without going to competition. This is believed to give special treatment to a large part of the French water supply industry."
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Does that mean that it would affect those parts of this country's water supply industry owned by French interests? It is clear that it might.
We must conclude on any objective criteria that the proposals will not be much good for this country or for the collective interests of purchasers, and that they will probably be a burden on suppliers. In short, it is something we could well do without. But unfortunately, as the memorandum states, the measure is subject to qualified majority voting in the Council of Ministers. I hope that a sufficient number of other nations share our doubts.
I am informed that other nations are not so well developed in their public purchasing arrangements. If the interests of purchasers in other countries are not so well organised as they are here, their Governments will not have the same doubts that we have.
Although the right hon. Gentleman did not say as much, he pointed to the possibility of the proposals going the way of tobacco—of which we had a dramatic example this very day. In other words, despite the right hon. Gentleman's words, it is possible that we could be outvoted. We return to the merits of the whole matter, on which my views are well known. I will detain the House no longer, except to say that those right hon. and hon. Members who participated in certain debates 10 years ago are entitled to say to the Government, "We told you then. You haven't seen anything yet. Wait until the next lot. It will get worse and worse."
11.37 pm
Mr. Anthony Beaumont-Dark: The Government's motion states that
"changes are desirable in the proposed directives to prevent the imposition of unnecessary burdens and constraints."
I am happy that my right hon. Friend the Prime Minister has asked all Ministers to be more alert to such proposals. I am worried, as are all right hon. and hon. Members, and not because we are anti-Common Market. It is not true to say that, because one does not speak up for something to do with the Community, one is somehow violently anti-Europe. I recognise that we must play our part in a Europe of which our country is a part. Nevertheless, more and more right hon. and hon. Members genuinely feel that the bureaucrats in Brussels or in Strasbourg, or wherever they hang out from time to time, are concerned with dragging more and more power into the vacuum of their lives—and with sucking out the life of this country, this Parliament, and our people.
All we ask of the Government and of Ministers is that we should not be presented with anodyne motions. We make that request whether the Minister concerned is my right hon. Friend the Paymaster General or—a latter-day convert—my right hon. and learned Friend the Secretary of State for Health, who went to Europe and fought for this country at long last, even though he lost 11 to one, because my right hon. Friend the Prime Minister told him, "For God's sake, go and do something for Britain" If we vote against such motions, as in this case, and such directives are still adopted, it will serve to alert the public that the powers of this Parliament are ebbing away.
We are ultimately elected by British people to represent British interests. There is nothing shameful about standing up for one's country. But if the House is presented with such motions day after day—or should I say, night after late night—we shall in the end become what my right hon. Friend the Member for Old Bexley and Sidcup,

289
shamefully, wishes us to be, and have no more power than the governor of a united European state similar to Arkansas or Iowa. I did not come here to be a governor of Arkansas; I came here to speak for Britain, and what is shameful about that?
11.39 pm
Mr. Brooke: With the leave of the House, I shall respond briefly to the debate.
I welcome the hon. Member for Wrexham (Dr. Marek) to these debates in apparent succession to the hon. Member for Vauxhall (Mr. Holland). There were occasions when I had doubts as to whether he had arrived at the right ground, in the context of his speech tonight. I am sure that he was playing himself in, but I am sorry that his innings did not last long enough for him to score any runs. He and others raised the question about the Government's support for the motion. The Government's support for the motion rests firmly on the connection between the motion and the single European market, and the Government's determination to achieve the single European market. That is completely separate from some of the other ideas from Brussels which are questioned by the United Kingdom Government.
The hon. Gentleman said that we should try to get something right for once. If he re-heads my speech, he will find that the Government's intentions are directed at that purpose. The hon. Gentleman and his hon. Friend the Member for Aberdeen, South (Mr. Doran) mentioned the safety record. He will note that my speech contained specific references to that.
My hon. Friend the Member for Stamford and Spalding (Mr. Davies) concluded by warmly welcoming competition, but said that we should be careful about the mechanisms. I hope that the Government are seeking to do that. The Government have taken the view that the Commission's proposal on upstream oil and gas is not appropriate because of the degree of competition in that industry which the hon. Member for Aberdeen, South mentioned.
Mr. Kennedy: That is fine so far as it goes. What chance is there that the Government will succeed on that exclusion?
Mr. Brooke: It would be mistaken to assume that the Government have not made their position absolutely clear on upstream oil and gas. The argument has been put in Brussels and in discussion with individual member states. I would not want to claim that the Government can take sole credit, but it is significant that the main committee which is involved in the European Parliament has already voted to exclude upstream oil and gas from the directives.
My hon. Friend the Member for Southend, East (Mr. Taylor) asked me whether it would work and said that it was surrounded by bureaucracy. He said that I was constantly having to eat words that I had uttered in previous debates. I know that he will be generous enough in future, when some of the Government's predictions come to pass, to acknowledge them.
The amendment to which he spoke, although it was not possible to select it for debate, implied that it was within the Government's power not to approve a proposed directive, but with qualified majority voting the most that we could do would be to vote against the adoption of a common position. The amendment also urges the
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Government to seek clarification on the enforcement of compliance. We would certainly seek more than clarification in that regard.
My hon. Friend intervened in my speech and returned to the subject of article 24. The Government policy is to ensure that purchasers are not required to give preference to Community offers. In other words, the situation should remain permissive, but it is necessary to recognise that that means taking on strong forces within the Community which seek to make the Commission's proposal more protectionist. We have taken the view that it is right to allow purchasers to reject offers of third country origin, if they wish. Our objective is to obtain a wider agreement in the GATT that will ensure that suppliers from the Community get a fair chance in the third countries concerned.
The hon. Member for Newham, South (Mr. Spearing) referred to the Institute of Purchasing and Supply. I hope that the institute will acknowledge that the purpose which the Government seek to achieve by our proposals for making the directives more effective is in line with its objectives.
I think that my hon. Friend the Member for Birmingham, Selly Oak (Mr. Beaumont-Dark) was speaking to the general spirit of European debates rather than to the motion. He would almost certainly be supportive of the Government's view that a single European market should be achieved.
I know the difficulties of conducting debates of this sort in one and a half hours after 10 o'clock at night. I express appreciation to the House for the amount of ground that we have been able to cover in a relatively short time.
Question put:—
The House divided: Ayes 97, Noes 17.

Division No. 203]

[11.45 pm

AYES

Arbuthnot, James

Gummer, Rt Hon John Selwyn

Bennett, Nicholas (Pembroke)

Hague, William

Brooke, Rt Hon Peter

Hargreaves, Ken (Hyndburn)

Burns, Simon

Harris, David

Burt, Alistair

Haselhurst, Alan

Butcher, John

Hawkins, Christopher

Campbell, Menzies (Fife NE)

Heathcoat-Amory, David

Carlisle, Kenneth (Lincoln)

Hicks, Robert (Cornwall SE)

Carrington, Matthew

Howarth, G. (Cannock & B'wd)

Cash, William

Howell, Rt Hon David (G'dford)

Chapman, Sydney

Howells, Geraint

Chope, Christopher

Hunt, David (Wirral W)

Coombs, Anthony (Wyre F'rest)

Irvine, Michael

Coombs, Simon (Swindon)

Jack, Michael

Cope, Rt Hon John

Johnston, Sir Russell

Couchman, James

Jones, Gwilym (Cardiff N)

Cran, James

Jopling, Rt Hon Michael

Currie, Mrs Edwina

Kennedy, Charles

Curry, David

King, Roger (B'ham N'thfield)

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

Knight, Greg (Derby North)

Davis, David (Boothferry)

Knowles, Michael

Day, Stephen

Lawrence, Ivan

Dorrell, Stephen

Lightbown, David

Dover, Den

Lilley, Peter

Durant, Tony

Lord, Michael

Dykes, Hugh

Mans, Keith

Eggar, Tim

Maude, Hon Francis

Fallon, Michael

Mayhew, Rt Hon Sir Patrick

Fishburn, John Dudley

Meyer, Sir Anthony

Forth, Eric

Miller, Sir Hal

Freeman, Roger

Mills, Iain

Garel-Jones, Tristan

Mitchell, Andrew (Gedling)

Gill, Christopher

Nicholls, Patrick

Gregory, Conal

Nicholson, David (Taunton)

Griffiths, Peter (Portsmouth N)

Norris, Steve

291

Paice, James

Thurnham, Peter

Porter, David (Waveney)

Tredinnick, David

Raffan, Keith

Twinn, Dr Ian

Rathbone, Tim

Waddington, Rt Hon David

Redwood, John

Wallace, James

Sackville, Hon Tom

Waller, Gary

Shaw, David (Dover)

Wardle, Charles (Bexhill)

Shaw, Sir Michael (Scarf)

Wheeler, John

Stern, Michael

Widdecombe, Ann

Stevens, Lewis

Wood, Timothy

Stewart, Allan (Eastwood)

Yeo, Tim

Stradling Thomas, Sir John

Taylor, Ian (Esher)

Tellers for the Ayes:

Taylor, John M (Solihull)

Mr. Alan Howarth and

Thompson, Patrick (Norwich N)

Mr. David Maclean.

Thorne, Neil

NOES

Barnes, Harry (Derbyshire NE)

McKay, Allen (Barnsley West)

Bermingham, Gerald

Mahon, Mrs Alice

Cunliffe, Lawrence

Meale, Alan

Dixon, Don

Parry, Robert

Dunnachie, Jimmy

Spearing, Nigel

Haynes, Frank

Wilson, Brian

Hughes, John (Coventry NE)

Lewis, Terry

Tellers for the Noes:

Lloyd, Tony (Stretford)

Mr. Bob Cryer and

Loyden, Eddie

Mr. Dennis Skinner.

McAvoy, Thomas

Question accordingly agreed to.
Resolved,
That this House takes note of European Community Documents Nos. 8803/88 and the Supplementary Explanatory Memorandum submitted by Her Majesty's Treasury on 10th May 1989, 8804/88 and 8805/88 relating to procurement procedures in the water, energy, transport and telecommunications sectors; and endorses the Government's view that the broad approach of the Commission should be supported but that changes are desirable in the proposed directives to prevent the imposition of unnecessary burdens and constraints.

Lebanon
Motion made, and Question proposed, That this House do now adjourn.—[Mr. Fallon.]
11.56 pm
Mr. Cyril D. Townsend: I am delighted to have this opportunity to draw the attention of the House to British policy towards the Lebanon. Shocked by the plight of the people of the Lebanon, I asked my hon. Friend the Under-Secretary of State for Foreign and Commonwealth Affairs, who will kindly reply to this brief debate, what more the Government could do to assist them. It is foolish and remiss of the House that we do not have more debates on international issues. It is our job to turn the spotlight of public attention on the world's trouble spots and to seek solutions.
Britain is involved directly and indirectly in the Lebanese tragedy, in many and various ways. As I discovered in my visits to that country, the last being in 1982 when I was a British parliamentary observer at the presidential elections, the British are highly regarded—curiously, more so than the French, in some ways. Many Lebanese look to this country in their long drawn-out hour of need.
We should be clear at the outset that the problems of the Lebanon will never be tackled successfully until the Palestinian-Israeli dispute has been settled. The many parties to that grave and historic dispute are using the Lebanon to help to achieve their long-term aims. It is essential, too, that the Lebanese people learn that loyalty to their country must be paramount. Too many people for too many years have given their loyalty either to internal factions at the expense of their country or to other countries. While the international community can and must deal vigorously with the international dimension, the Lebanese must set aside their present and deep divisions—be they religious, political or a combination of both—and unite. If they cannot, they and their children will be condemned to years of further bitterness, despair and degradation.
The political scene in the Levant is like a tangled web. I have time to highlight six major aspects and to put some questions to my hon. Friend the Under-Secretary. First, what further action will our Government take, in concert with other European Community Governments, and through the United Nations, to end the destruction of the once beautiful and highly civilised city of Beirut? The capital was once the Geneva of the middle east. There has been wholesale slaughter of its citizens. Our Government are right to support the initiative of the ministerial committee of the League of Arab States led by Kuwait's Minister of Foreign Affairs and to arrange a ceasefire and a negotiated solution. It is the best bet in the current circumstances, but it is realistic to doubt whether it can succeed when it is weakened by the Iraqi-Syrian dispute.
Are we taking advantage of our transformed relations with the Soviet Union? Did the Prime Minister discuss the Levant with the Soviet Prime Minister when they met in Luxembourg a few weeks ago? United Nations resolution 520 called for
"strict respect for Lebanon's sovereignty, territorial integrity, unity and political independence".
Why do our Government not press for this matter to be raised as a matter of urgency in the Security Council? Is it true that no European Community country, save France,

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is willing to take this crisis to the United Nations? If so, why such prudence when a United Nations resolution is being ignored and hundreds of people are dying each week? Is an international conference a possibility?
Lord Glenarthur has described the crisis as being an "internal dispute", but clearly it is more than that. Ask the Syrians. I trust that we shall set our faces like flint against partition. That would be no solution; it could never be stable.
As Middle East International put it recently in an excellent editorial:
"A tiny Christian enclave in the north, a Syrian protectorate in the centre and an Israeli protectorate in the south would be a prescription for permanent conflict."
Secondly, what more can be done to bring humanitarian aid to the victims of the conflict? Britain has contributed more than £1 million to UNICEF and the International Committee of the Red Cross for projects on health care, water supply, education and other relief operations. Britain also supports UNRWA which does wonderful work in assisting Palestinian refugees in the Lebanon.
There is an urgent need to get medical aid and food supplies into Beirut following a new peak of savagery and destruction. Mr. Perez de Cuellar has spoken of some $87 million being needed to provide assistance to 800,000 people in chronic need of general relief and urgent rehabilitation. There is also an immediate need for $5 million to ensure electrical supplies in Beirut on which the provision of water and hospital services depends. I should like to see the Royal Navy landing supplies by helicopter and other means to both sides as soon as the shelling stops.
Thirdly, turning to southern Lebanon, when did we last draw the attention of the Security Council to Israel's continuing and illegal occupation of a substantial part of the Lebanon following its second and highly destructive invasion? Its activities in that part of the country are outrageous and provocative and UNIFIL must be allowed to operate right up to the internationally recognised border in accordance with Security Council resolution 425. It is not sufficiently known that Britain does a first-class job in supporting UNIFIL from our sovereign bases in Cyprus.
I should like to see UNIFIL's mandate strengthened. I have been appalled by the role being played by the south Lebanese army, Israel's surrogate force. The UN soldiers, more than 170 of whom have been killed since 1978, have been trying to protect the hapless, mainly Shia inhabitants of the border area from brutal attacks by the SLA. In recent months the Israeli army, and the mainly Maronite SLA, have expanded their operations in the south, outside the so-called security zone. In March, Israel's northern front commander stated that he was considering enlarging the security zone to include five villages in the central Bekaa valley. There have also been well-reported recent Israeli incursions close to Beirut.
Who gave Israel a dispensation to invade and maraud in the land of its neighbours? That behaviour must be brought to a halt. That is a matter that the Bush Administration could address, even if it wishes to duck the wider issues. Such violence offers no solution. If the Israelis cannot be moved out, there is no chance that the Syrians will leave.
Fourthly, I am mindful of the breakdown in relations between Britain and Iran over the Salman Rushdie affair, which was made worse by the deplorable and completely
294
irresponsible comments by the Speaker of the Iranian Parliament, Hashemi Rafsanjani, and its impact in the Lebanon. Britain has been forced to close consular and visa offices following a security alert that warned that Iranian-backed fundamentalists in Beirut might be preparing attacks.
I hope that my hon. Friend will tell the House what is the latest position and what more can be done to protect our admirable and courageous ambassador, Alan Ramsay, who is a personal friend, and his dedicated staff. There is also the presence of armed Iranian units to consider.
Fifthly, in all our minds is the continuing plight of the British hostages, who are thought to be held in or near Beirut by the pro-Iranian Hezbollah. We appreciate that there may be little that the Minister can say and that there is always the danger that ministerial comments may lead to dangerous speculation, but has the Minister any news of Mr. Jackie Mann, a former fighter pilot, who was reported missing at the weekend? The sympathy of the whole House goes out to his wife, family and friends.
Finally, and touching all those issues, is the extraordinary role of Syria. Alack, we have foolishly failed to restore diplomatic relations—which in my view had been broken off correctly—so we have minimal influence or ability even to communicate. Its forces were initially invited in and at first were welcomed by the hard-pressed inhabitants of Beirut, who hoped that they might at least keep the armed fanatics off the streets. However, now the Syrian army is the main element on one side of an increasingly bloody and futile war, which is mainly conducted through the random shelling of civilian targets—a completely abhorrent form of military conduct that must be universally condemned. What is the Government's official position on Syria's presence and activities in the Lebanon?
The canvas is a vast one, but I hope that I have made clear the deep concern that I suspect all right hon. and hon. Members have for the people of the Lebanon and also the extent of Britain's responsibility, especially as a permanent member of the UN Security Council. The multinational force, in which the United Kingdom participated, was a failure, and I do not envisage another. However, there may be an enlarged role for UN peace keepers and, indeed, the UN in its many forms.
This is not a quarrel in a far away country between people of whom we know nothing. Television brings its sorrow and savagery nightly before us, and this evening's news of a successful and outrageous brutal bomb attack was no exception. Without a shadow of a doubt, the vast majority of the Lebanese seek peace and the reunification of their country after 14 years of conflict.
Difficult though the problems are, they must not be regarded by us as insoluble. The objective is an independent, sovereign and united Lebanon, at peace with itself and its neighbours. It would be wonderful if the United Kingdom could be seen to have played a leading part in helping the international community to achieve that objective.
I wish my hon. Friend and his fellow Ministers well in that endeavour.
12.10 am
The Parliamentary Under-Secretary of State for Foreign and Commonwealth Affairs (Mr. Timothy Eggar): As my hon. Friend the Member for Bexleyheath (Mr. Townsend) has said, Lebanon's plight is tragic. The fighting there, which has been going on over recent weeks and months, has caused many casualties and deaths and the physical destruction of much of the once beautiful city of Beirut and its surrounding countryside.
The Government's aim, in common with other countries who wish Lebanon well, is to restore peace and stability to that tragically divided country. I am most grateful, yet again, to my hon. Friend for his initiative in calling this Adjournment debate.
I am also grateful for the presence of my hon. Friend the Member for Lewes (Mr. Rathbone). I know that he will join with me and the House in paying tribute to the tremendous work done by the late Lord Chelwood on behalf of the Lebanon and its people. If he were with us, he would share our anguish at the latest developments there.
For reasons of which the House and my hon. Friends are well aware, the situation in the Lebanon is complex. Our powers to help resolve the present crisis are severely limited. The conflicts between the people of Lebanon are deeply rooted. Unhappily, too, their country has also become a battleground for foreign forces.
In the last analysis, it must be our aim to enable the Lebanese people themselves to find ways of restoring peace to their country without foreign interference.
As a sign of support for those working towards a settlement in Lebanon, we have kept our embassy in Beirut open under difficult and extremely dangerous conditions. I know that the House will wish to join me and my hon. Friend the Member for Bexleyheath in paying tribute to the courage and tenacity of our ambassador, Mr. Alan Ramsay, and his small team in Beirut. They are doing an excellent job of work.
The embassy has for a long time had to operate in particularly trying and hazardous conditions. In recent weeks its working conditions have deteriorated even further. The Rabieh district of east Beirut, in which the embassy is located, has experienced its share of the recent heavy shelling. The movement of embassy staff is necessarily extremely restricted and it has become increasingly difficult for the ambassador and his staff to perform all the functions normally expected of it.
The staff are constantly working against a background of specific threats against British targets, and the risk of being taken hostage remains high. The recent death of the Spanish ambassador in Beirut was an all too tragic reminder of the personal risks run by all foreign diplomats working in the uniquely difficult circumstances of present day Lebanon.
A major reason for our embassy remaining is the plight of British hostages in Beirut. The House is already well aware that Alec Collett, John McCarthy, Terry Waite and Brian Keenan have all been the unfortunate victims of kidnapping in Lebanon. We now await with considerable concern news of another British national, Mr. Jack Mann, who disappeared in west Beirut last Friday and whose subsequent whereabouts remain unknown. As my hon. Friend has said, we understand the anguish of his family and sympathise with them.
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We are aware of the anxieties of all the families and friends of those who have been detained and kidnapped against their will. However, we remain firmly convinced that our policy of not making substantive concessions to terrorists is the right one. Within that policy, we have consistently done the maximum possible to ensure the hostages release.
In an environment where basic human rights and civilised standards of behaviour are flagrantly disregarded, our embassy has done, and will continue to do, everything possible to get firm information about the plight and position of the British hostages in the Lebanon. We raised the position of the hostages regularly with the Iranians before the breach in relations with them. It is high on the agenda for all our contacts in the region and elsewhere. We shall continue with those efforts, although we must also acknowledge that recent events have moved against us.
The intensified fighting in Lebanon has, as I have already said, made the task of our embassy even more difficult and dangerous, and the situation within Iran makes it very difficult for us to deal with that Government. This situation is not of our choosing. Nevertheless, we have done, and will do, the maximum possible in the circumstances, and will continue to strive to secure the release of British hostages.
The recent disappearance of Mr. Mann further underlines the vital importance of consular advice that we have given to British subjects in Lebanon. For years, we have strongly urged all those who have no pressing reason to remain in Lebanon to leave while commercial means are available. We have also regularly issued warnings advising British subjects not to travel to Lebanon unless it is absolutely necessary.
Let me return to the political situation in Lebanon which provides the background to the plight of the hostages. The bitter nature of the fighting has been shown in a further tragic twist today, with the news of the murder of Shaikh Hassan Khalid, the Grand Mufti of Lebanon and a Sunni leader of stature and distinction. We deplore this new act of violence, and the loss of a man who has been consistently a force for moderation.
Since 23 September 1988, Lebanon has had two rival administrations, and deepening partition in Government institutions. Since 14 March, this division has led to an outbreak of hostilities unmatched during 14 turbulent years of fighting between rival factions. Our policy, in common with that of most other countries, is to use our good offices with all the parties in order to help bring an end to the carnage without, however, taking sides between the two administrations. We recognise states, not Governments. But to end the 14 years of war and suffering, it is vital that a political solution should be found.
The first thing that is needed is a durable, negotiated ceasefire. Along with our European partners, we repeated our call in a statement on 17 April for all parties, including Syria, to stop fighting and agree to an immediate ceasefire. We were naturally associated with the statement issued by the President of the United Nations Security Council on 31 March, and his further statement on 24 April.
We have fully supported the ministerial committee of the Arab League, chaired by Sheikh Sabah, in its efforts to obtain a ceasefire. The Arab League has come very close to success. It gained an agreement to a ceasefire to begin on 28 April and offered to deploy an Arab League force to police it. Although we were greatly disappointed that the ceasefire broke down after three days, the Arab League

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negotiators helped to nurse a new one into being on 11 May. There has been some sporadic firing, but the ceasefire generally has been holding and we hope and pray that it will prove more durable than the last.
We believe that, for as long as the Arab League is pursuing its initiatives, it should be allowed a free hand before the international community considers alternative approaches. This is in keeping with article 52 of the United Nations charter, which says that every effort should be made to achieve pacific settlement of local disputes through regional organisations before referring them to the Security Council. In any case, it is clear we should have to think very carefully before involving the Security Council actively in what is essentially an internal Lebanese issue.
Once a ceasefire has been established, Lebanon can work towards a period of national reconciliation. We hope that, as a first step, all parties will facilitate an election, in complete freedom and without external pressure, of a president capable of starting this vital national work. We look forward to seeing an independent, united and sovereign Lebanon, able to pursue its destiny without the presence of foreign forces on its soil.
We regret very much the involvement of other forces in the conflict in the Lebanon. All those involved, including the Syrians, should move rapidly towards an immediate ceasefire. One objective of political progress and reconciliation should be the withdrawal of Syrian troops from Lebanon. The Israelis should also withdraw fully from Lebanon and allow UNIFIL to deploy to the international border in accordance with Security Council resolution 425.
The presence of UNIFIL demonstrates that the international community still regards Lebanon as a sovereign state. We remain fully committed to UNIFIL and contribute more than £4 million to maintain the force.
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A withdrawal by UNIFIL would increase the risk of outright confrontation in the area between Israeli, Syrian, Lebanese and Palestinian forces. We do not think anything is to be gained at present by seeking to amend or strengthen UNIFIL's mandate. The important thing is for UNIFIL to be allowed to fulfil its existing mandate, which will be possible only when Israeli troops complete their withdrawal from Lebanon in compliance with Security Council resolution 425.
My hon. Friend has asked what more the British Government can do in a practical way to relieve the terrible suffering of the Lebanese people. We give, as my hon. Friend knows, essential aid through multilateral channels. We continue to support United Nations arid European Community organisations in their efforts. We give nearly £1 million a year through United Nations organisations and the International Committee of the Red Cross. We have also, this year, given more than £750,000 in emergency aid through the European Community budget.
Circumstances on the ground make provision of direct aid difficult. This is why we call on all parties first to agree to a negotiated ceasefire. Then, once this happens, we will know exactly what work needs to be done, how it can be done, and then work out a practical way with our partners to relieve suffering that undoubtedly exists.
I know that the House has welcomed this opportunity to debate the tragic situation in Lebanon. I have taken careful note of the points which have been raised, and I should like to assure my hon. Friends that the Government will take careful account of their views in assessing the contribution we can make towards the resolution of this particularly bitter and fruitless conflict.
Question put and agreed to.
Adjourned accordingly at twenty-three minutes past Twelve o'clock.