Commons Sitting of 17 January 1990

Preamble
The House met at half-past Two o'clock
PRAYERS
[MR. SPEAKER in the Chair]
PRIVATE BUSINESS
  GREATER MANCHESTER (LIGHT RAPID TRANSIT SYSTEM) (No. 3) BILL [Lords]
  Read a Second time, and committed.

  BROMLEY LONDON BOROUGH COUNCIL (CRYSTAL PALACE) BILL
  Ordered,
  That the proceedings of 7th December 1989 on consideration of the Bromley London Borough Council (Crystal Palace) Bill be null and void.—[The Chairman of Ways and Means.]

Oral Answers to Questions
  TRADE AND INDUSTRY

    English Estates
    Mr. Cunliffe: To ask the Secretary of State for Trade and Industry if he will make a statement on the future of English Estates.
    The Secretary of State for Trade and Industry and President of the Board of Trade (Mr. Nicholas Ridley): As already announced, a consultant's study is looking at a variety of aspects of English Estates' activities.
    Mr. Cunliffe: Given that his father was a founder director of the enterprise as long ago as 1936, does the Secretary of State accept that there must be some remorse and resentment because the Government may dismantle the corporation in the near future when the consultant's report is produced? Will the Secretary of State make a statement on that? About 5,000 factory units provide a large amount of employment in areas such as the north-west that are experiencing industrial decline. At 1989 prices, since the last year of the Labour Government—1979—the north-west has suffered to the tune of about £180 million through lost regional selective assistance and regional development grants.
    Mr. Ridley: I shall take the hon. Gentleman's points in the reverse order. First, 1979 was a bleak time indeed for the north-west and the regions, but the situation has greatly improved since we have had 10 years of sound Conservative Government. I am grateful for the hon. Gentleman's acknowledgement of that. Secondly, I have no intention of dismantling English Estates. It might be of value to use the large amount of capital that is invested in factories in more productive directions in future, but that will not affect the factories themselves. Thirdly, I am
    274
    extremely grateful to the hon. Gentleman for the tribute that he paid to my father for responding to the needs of the time when he assisted in setting up English Estates. I, too, intend to respond to the needs of the time in the most helpful way possible.
    Mr. Trotter: My right hon. Friend will be aware that the headquarters of English Estates is on Tyneside. May I draw his attention to the considerable part that English Estates has paid in the success story of the transformation of industry and commerce in the north-east? In particular, I commend the quality of management of English Estates. We should retain that asset in future.
    Mr. Ridley: I am grateful to my hon. Friend. I agree that the cradle of English Estates' birth was in the north-east, and its activities there have been immensely beneficial to that region. Needs and requirements change at all times, and it is correct that we should look at how best to help the regions, particularly through the vehicle of English Estates and, if necessary, make changes. I have not received the consultant's report, but when I do I shall report to the House on the Government's conclusions on it.
    Mr. Caborn: Hon. Members are interested in what the Secretary of State has said, but there are bleak times ahead for small and medium-sized businesses. It has already been pointed out that English Estates operates about 5,000 small and medium-sized businesses around the country, with a value in excess of £400 million. Will the Secretary of State give a clear commitment that English Estates will not be privatised and that, when he receives the consultant's report, he will consult widely with people who have been assisted and people who, in future, will look to English Estates to help small businesses with a technology base?
    Mr. Ridley: I do not believe that there are bleak times ahead for small and medium-sized businesses in this country. The future holds great prospects, provided that the hon. Gentleman and his colleagues are kept out of office.
    Mr. Barry Field: My right hon. Friend will be aware of the considerable success of English Estates in my constituency, the only county in the United Kingdom that is a development area under the Rural Development Commission. Might an alternative be for English Estates to divest itself of its property on the market and start all over again in areas where private enterprise is still not always providing the nursery units that are essential to the Government's policy of self-employment? The Government have achieved a tremendous record in start-up businesses and self-employment—the largest number in the history of the country.
    Mr. Ridley: The function that English Estates has performed so valuably has been to provide factory space, both large and small, managed and unmanaged, in areas where the economic situation was so unfortunate that the private sector was not prepared to do that. However, that situation has changed in many parts of the country, but not in all. We now want to see how best the large capital that is employed by English Estates can be deployed for the benefit of the nation as a whole.

    Cars (Import and Export)
    Mr. Ashton: To ask the Secretary of State for Trade and Industry how many cars were imported into the United Kingdom in 1988; and how many were exported.
    The Parliamentary Under-Secretary for Corporate Affairs (Mr. John Redwood): A total of 1·357 million cars were imported and 261,000 exported in the period under review.
    Mr. Ashton: Does the Minister agree that those figures are appalling and that they are 27 per cent. worse than when the Government took office? When will the Government get tough, in the same way as the Governments of France, Italy and the USA, against the Japanese imports that pour into this country? Why do we give subsidies to Nissan and allow Toyota to come here to Derby to steal the skilled labour force at Rolls-Royce—[HON. MEMBERS: "No."] Of course that happens, that is why Toyota came—to take the skilled labour force at Rolls-Royce. Why do the Government have a policy of selling off Austin Rover at rock bottom prices to British Aerospace and of using the car industry for the profits of their friends? Why can we not have the same sort of restrictions that we have for farming? Why will the Government invest in and protect farming, but not do the same for manufacturing industry?
    Mr. Redwood: The Labour party, in power between 1974 and 1979, presided over a massive increase in import penetration of cars into this country from 27·9 per cent. to 56·3 per cent. Under the Conservative Government, import penetration has stayed around the 56 or 57 per cent. mark. The Government's policies have seen a remarkable influx of inward investment by three leading Japanese car producers and we are on target for a major expansion of car production in this country. We may well see it expand in this decade from 1·3 million cars to around 2 million cars. That is the best answer of all to the hon. Gentleman's question. Our economic policies are working and Conservative Members welcome the new investment from Japanese companies because they have skills and jobs to offer us.
    Mr. John Townend: To what extent does my hon. Friend estimate that the decline in the British car industry was due to the actions of the trade unions, which refused to accept new industrial practices and favoured restrictive practices, go-slows and strikes? To what extent does he think that the Japanese decided to invest in this country because we have a Government who believe in private enterprise and the open market?
    Mr. Redwood: My hon. Friend is absolutely right. However, the trade unions were aided and abetted in their destructive policies in the 1970s by wrongful Government policies as well, which gave exactly the wrong signals to the car industry. The 1980s have proved much better and we now have a firm base of sounder industrial relations as a result of the new labour relations law, which has proved attractive to inward investors.
    Sir David Steel: Does not the Minister accept that the consumer faces a problem nowadays because the brand names no longer state clearly whether the cars are made in Britain? Nissan cars are made in Newcastle, Peugeot in Coventry and Ford cars are possibly made in Spain or in
    276
    West Germany. Will he encourage the manufacturers that wish to promote British goods to put the necessary stickers on their windscreens?
    Mr. Redwood: I thought that the right hon. Gentleman and his party—whatever it may be called—welcomed the integration of the European market. It has long been the case that various manufacturers that assemble in the United Kingdom also import components for their cars, and sometimes whole vehicles. It makes sense for a company such as Ford to choose where to produce in the European Community. We obviously welcome more investment from that company and expansion of the car lines that it thinks are best suited for this country.
    Mr. Beaumont-Dark: Does my hon. Friend accept that over the years many of us have fought the importation of cars, especially from the Japanese, who would not allow our exports into their country? However, if we continue with what looks like happening now, when the Ford workers here are demanding a 14 per cent. increase, compared with the Ford workers in West Germany who have accepted 3 per cent. with much greater productivity, many of us who have said that we should not allow car imports must recognise that the British people have a right to buy cars and that if the Ford workers in the United Kingdom will not work, the British people should still be able to buy cars that might mean more imports and lost British jobs.
    Mr. Redwood: My hon. Friend speaks from experience. He is right that it is in the hands of Ford managers and workers to set the right level of pay in relation to output and productivity. I hope that they can settle on a good level of pay, which reflects the underlying improvement in productivity. That is the way to protect and expand jobs and to give the customer a good deal.
    Mr. Henderson: How does the Minister square his previous comments on the supposed recovery of the British car industry with the trade deficit in automotive products of £6·5 billion for the first 11 months of this year? Does he accept that the principal cause is that cars such as Vauxhalls and Fords are stuffed with components made in Europe? Is he prepared to open talks with companies such as Ford and Vauxhall and to insist that they increase the sourcing of components from the United Kingdom?
    Mr. Redwood: I want companies here to make the best commercial decisions. That is the way to secure jobs and a good package for the costomer. The hon. Gentleman should note that several major investments in British components manufacturing have been announced as a result of our success in attracting assemblers and new car production. The important point about the 1980s is that import penetration did not rise, but the total market expanded. That is why we have imported more cars. People are better off under a Conservative Government and they choose to use their purchasing power to buy new cars.
    Mr. Riddick: Does my hon. Friend agree that it is extraordinary and appalling that Opposition Members do nothing but criticise and knock the car industry although there is good news on the horizon? Was not the only contribution that we ever had from that lot, the £400 million investment in Dundee being stopped by their paymasters in the Transport and General Workers Union?

    277
    Is it not the case that, as a result of inward investment by Japanese car manufacturers, there will be a massive increase in car exports from Britain in coming years? Does my hon. Friend agree that there is now a serious threat from eastern Europe and that we must ensure that the economic and industrial conditions here remain attractive to those who wish to invest in this country?
    Hon. Members: Too long.
    Mr. Speaker: That was a long question and it leads to a long answer, which is problem.
    Mr. Redwood: I agree with my hon. Friend that the trade unions have a role to play in helping, rather than hindering, inward investment in Britain. I agree that the industry should remain competitive. I am not surprised at the attitude of the Labour party. It belongs to the wining and dining school where wining is spelt with an "h". It believes that it should issue lunchtime directives to car companies. When it tried that policy in Government, it met with disaster.

    Washing Machines
    Mr. Graham: To ask the Secretary of State for Trade and Industry if he will estimate the percentage of the home market of washing machines supplied by imports.
    Mr. Redwood: Imports of washing machines are estimated to be 38 per cent. of home market sales by value in 1988—the latest full year for which figures are available.
    Mr. Graham: During the past 10 years have not the Government presided over the decimation of the electrical manufacturing industry in Britain? Are they proud of the fact that the British public have to rely on foreign goods to clean their dirty linen? When will they take action to bring manufacturing of electrical goods back to Britain and allow the British public to do their washing in British washing machines? When the trade figures are published on Friday, will the Minister ponder that we have a massive import bill, while thousands of unemployed men and women are desperate to work to produce much-needed electrical goods, which would reduce the import bill?
    Mr. Redwood: I am pleased to say that most British people still wash their dirty washing in British machines rather than machines imported from overseas. There were high imports in the 1970s. The Government have a sound and firm economic policy that will allow companies to compete and to manufacture the things that people wish to buy. Naturally, I wish the washing machine industry and other British industries every success.
    Mr. Roger King: Does my hon. Friend agree that the only way in which British manufacturing can compete is by producing better goods than those produced by overseas competition? Does he share my delight that the consumer magazine Which? has judged a British washing machine, the Hotpoint 800 series, as joint best value and best buy? For once, it is clear that we can fight back with the right type of goods at the right price.
    Mr. Redwood: I am delighted to hear that news and I hope that my hon. Friend's message has been heard more widely, beyond the House.

    British Steel
    Mrs. Margaret Ewing: To ask the Secretary of State for Trade and Industry what representations he has received about his use of the golden share in British Steel.
    Mr. Sillars: To ask the Secretary of State for Trade and Industry what representations he has received about his use of the golden share in British Steel.
    Mr. Ridley: The answer is none.
    Mrs. Ewing: Does the Secretary of State accept that the golden share was introduced to protect vital national interests? In the Scottish context, that means the preservation of the Scottish steel industries. Is he aware that British Steel is starving Ravenscraig and its associated works of investment and that, without that investment, any paper guarantees given are worse than useless? Therefore, will he make representations to British Steel to ensure that investment is forthcoming in the Scottish steel industry?
    Mr. Ridley: The purpose of the golden share in British Steel was to protect an industry, which had been badly damaged by a long period of public ownership, for a limited time against unwelcome takeovers when it emerged into the private sector. The circumstances where it would have been appropriate to use that golden share have not arisen. The golden share is not available for the purposes suggested by the hon. Lady. It was made clear at the time, and I make it clear again, that the Government had no intention of using that golden share for any purpose other than that for which it was first introduced.
    Mr. Sillars: Is the Secretary of State aware that we are concerned that, in a privatised British Steel, the Scottish plants might be subject to unwelcome elimination? Although British Steel lied in the first instance, it has now confessed that, along with the Davy Corporation, it is storing a second-hand Japanese plate mill at Lackenby. Although the right hon. Gentleman might say that he has no responsibility as the golden share owner, does he accept that he has responsibility as the Secretary of State for Trade and Industry? Therefore, will he press upon British Steel that, should it go for a single-plate strategy, it should be at Motherwell and not at Lackenby?
    Mr. Ridley: I understand that the chairman of British Steel recently reaffirmed that the company statement of 3 December 1987 on the future of the Scottish plants still stands. There is no way in which I can intervene—it would be quite wrong of me to seek to do so—on where plate capacity is located or what happens to a particular plant.
    Mr Batiste: Does my right hon. Friend agree that the concept of the golden share is alien to the work of the stock market? It depresses the value of shareholders' investment and it could have extremely damaging effects on the pension funds that are largely invested in the companies concerned. Will my right hon. Friend confirm that the Government have no plans to extend the use of the golden share and that, unlike the Labour party, they will never extend the golden share into the private sector?
    Mr. Ridley: I have come to agree with my hon. Friend even more strongly since the publication of the Labour party policy review, which states:

    279
    "The Golden Share already establishes the principle of separating voting rights from the other incidents of equity ownership".
    That means that the Labour party thought it had a precedent for telling companies what to do and for overriding the interests of the share owners, without compensation, in the interests of pursuing policies that have been seen to fail in eastern Europe.
    Mr. Favell: Will my right hon. Friend pass on the congratulations of my hon. Friends to the management of British Steel on making it profitable at long last? It is now one of the most profitable steel manufacturers in western Europe. Under no circumstances should it turn itself back into a charitable institution as suggested by the Scottish Nationalists, the hon. Members for Moray (Mrs. Ewing) and for Glasgow, Govan (Mr. Sillars).
    Mr. Ridley: I shall pass on the comments of my hon. Friend, who paid tribute to the management of British Steel for turning it into one of the most successful and profitable companies in the world since it was freed from the shackles of public ownership. I reaffirm that the Government have no intention of doing anything that might prevent that highly successful British company from conquering world markets.
    Mr. Shore: Now that the Government have so recklessly handed over to Brussels the right to decide—to veto or approve—transfrontier mergers and takeover bids, will not the golden share now take on added importance as our one remaining defence against unwelcome takeover bids that are against the national interest?
    Mr. Ridley: Neither of the right hon. Gentleman's propositions is true. First, the Commission has power, and has been using it under articles 85 and 86, to clear or not clear mergers without reference to the United Kingdom authorities on monopolies and mergers. The total confusion about that matter has been brought to an end. Secondly, the golden share in British Steel has only a relatively short time to run, after which it expires. British Steel will defend and protect itself by the excellence of its economic performance—a concept unheard of by the right hon. Gentleman.
    Mr. Ian Bruce: Does my right hon. Friend agree that the privatisation of British Steel made all the shares golden shares, and they have been profitable? Compared to the other steel industries throughout the European Community, British Steel's record, once the dead hand of Government was taken away, has been one of enterprise. We can congratulate it on its excellent progress.
    Mr. Ridley: I agree with my hon. Friend that the only share in British Steel that is not golden is the one held by the Government.
    Dr. Bray: Is the Secretary of State aware that the undertakings given by British Steel about the steel industry in Scotland have to be read carefully? Will he do as the Secretary of State for Scotland has recently done and ask British Steel to explain its plans in Scotland? Is he aware that the trade gap last year and the increased plans for motor car production in the United Kingdom point to a continuing need for steel in the future? It would help greatly if the Secretary of State asked British Steel to update its commitments in that sector.
    Mr. Ridley: The hon. Gentleman has seen a policy by which British Steel was nudged, asked, interfered with, intervened in, pushed, pressed and generally mucked about by Government over 20 years with disastrous results. That policy was replaced by one through which the Government privatised it and allowed it to get on with running its own business, and it has subsequently shown itself to be one of the most successful steel companies in the world. I do not understand why the hon. Gentleman wants to return to the policies of eastern Europe, which is what he is advocating.
    Mr. Gordon Brown: Will the Secretary of State confirm that all respectable forecasts for world and European demand for steel in the 1990s confirm that there is a viable future for the steel industry in Scotland, England and Wales? Will he confirm that not only has he received representations about the golden share—he has received them from me—but that the trade Minister of the day in 1988 said that the purpose of the golden share—the Secretary of State has set up more golden shares than any other Minister—was to prevent takeovers and the rundown of British Steel capacity? Therefore, will he join me and his colleague the Secretary of State for Scotland in supporting the detailed plans for new investment in Scottish steel? Will he assure the House that normal regional grants will be available to prevent another great industry from being run down?
    Mr. Ridley: The point that I want to get across to the hon. Gentleman is that British Steel is now a highly successful corporation. I wish to allow it to take decisions about where to invest and how to plan its business. I believe, with great humility, that British Steel knows the answers to those questions much better than I do and, I suspect, than even the hon. Gentleman does. That is why he should join me in encouraging British Steel to do what it believes to be right, in its commercial interests. I should not for one moment go further than that. The British Steel special share is time limited.

    Manufacturing Industry (Defence Sector)
    Mr. Andrew F. Bennett: To ask the Secretary of State for Trade and Industry if he has any plans to help the defence sector of manufacturing industry to seek alternative products in view of the military implications of developments in eastern Europe.
    The Minister for Industry (Mr. Douglas Hogg): My Department has no such plans.
    Mr. Bennett: I thank the Minister for that answer, which is a bit of an improvement on his answer last time, when he was extremely glib.
    Does the Minister accept that the major problem in Britain is that more than 500,000 people are employed in the defence industry which, in the past three years, has earned the country an average £1 billion in foreign exchange? Does he accept that if the defence talks and the changes taking place in eastern Europe continue, our defence manufacturers will have to look for alternative products? The Government should be assisting them in that and encouraging them to look for peaceful collaboration in eastern Europe.
    Mr. Hogg: The hon. Gentleman is at least persistent: he asked precisely the same question on 1 November 1989. That suggests that he is running out of ideas and in need of early retirement.
    The motive behind the question has absolutely nothing to do with industrial strategy. The Labour party is up to its old tricks of cutting defence expenditure but trying to make it sound respectable. If anyone doubts that, he should bear in mind the fact that the hon. Member for Denton and Reddish (Mr. Bennett) is a long-standing unilateralist who prides himself on having voted against the Defence Estimates long before the relaxation in international tension.
    Mr. Mans: Does my hon. Friend agree that the defence industries have a good record of diversifying into other commercial products, and that that diversification is being held up only by damaging strikes of the sort from which British Aerospace is suffering at Preston near my constituency?
    Mr. Hogg: My hon. Friend is entirely right. The Labour party is committed to a form of central economic planning. Page 88 of its policy review says on the subject:
    "A Labour government will therefore consult unions and employers about the establishment of an Arms Conversion Agency which, within Labour's national industrial strategy, could take on the special role of providing new industries and new jobs."
    That is the sort of central economic strategy and planning that eastern European countries are throwing away with contempt.
    Mr. Hoyle: Will the Minister return to the peaceful developments in eastern Europe and confirm that since 1979 our trade with almost every country in eastern Europe has gone into deficit? This flatfooted Government have been left at the starting line while the West Germans, the Japanese and most of our other competitors have been building up trade with eastern Europe. What will the Government do about that?
    Mr. Hogg: Let us focus on the real issue; let us not waste our time with red herrings of the sort advanced by the hon. Gentleman. The Opposition say that they are better at industry than the major companies which have been doing so well in the defence sector. That is rubbish. There may be a case for adjusting markets and seeking new products, but that is a matter for the companies concerned, not for Opposition Members.
    Mr. David Shaw: Does my hon. Friend agree that the United Kingdom defence industry has been a major success over the years and that that is one reason why democracy is breaking out all over eastern Europe? Does he agree that defence is a legitimate purpose for any country, and that British defence exports have helped to support the defence capabilities of many countries? Does he further agree that 500,000 jobs in the industry would be jeopardised if Labour came to power and implemented the proposals in the question of the hon. Member for Denton and Reddish (Mr. Bennett)?
    Mr. Hogg: It is much worse than that. The Labour party conference committed itself to a reduction of £5 billion in defence spending, or a 30 per cent. reduction in Britain's conventional defence capacity. That would lead to massive unemployment.
    Ms. Quin: Does the Minister recall the Prime Minister saying that Mr. Gorbachev was a man whom she could do business with? Given that, is it not very disappointing that the Department of Trade and Industry seems to have been so unsuccessful in taking advantage of the new industrial opportunities in the large market of 420 million people in eastern Europe and the Soviet Union? Is not the Government's policy one of unilateral industrial disarmament, and are they not failing to take advantage of the new market that is on offer?
    Mr. Hogg: I am sorry that the hon. Lady, who I always thought was a rather respectable character when it came to the point, should be speaking in terms of unilateral disarmament of any kind. I clearly remember what my right hon. Friend the Prime Minister said about Mr. Gorbachev, and I have no doubt that the relaxation in international tension is due, at least in part, to what the Prime Minister has done in that connection. I also remember what the Prime Minister said about the dangers of relaxing our defensive capacity until we see how this matter will end.
    Mr. Key: Will my hon. Friend examine the speed at which his Department issues defence export licences? Delays in issuing those licences are a brake on successful export industries, notably in my constituency. Does he agree that the best thing for our defence export industries and especially for the Property Services Agency, which is being privatised, would be to allow them to compete internationally for the excellent defence-related services that they provide?
    Mr. Hogg: I am concerned at my hon. Friend's suggestion that there is unreasonable delay in the DTI over issuing licences. If my hon. Friend has specific points, I should be pleased to hear them. I hope that he will give me or my colleagues the details of the complaints.
    Mr. Speaker: We are making slow progress today. If we had briefer supplementary questions we might get briefer answers and could make more progress.

    Northern Development Company
    Mr. Cousins: To ask the Secretary of State for Trade and Industry what grant he proposes to offer to the Northern Development Company in 1990–91.
    Mr. Douglas Hogg rose—
    Hon. Members: Oh, no.
    Mr. Hogg: I know that hon. Members will enjoy this. As I told the House on 6 December in answer to my hon. Friend the Member for Tynemouth (Mr. Trotter), I expect to announce the level of grant in March.
    Mr. Cousins: Does the Minister accept that his answer has more twists in it than the Lambton worm? We do not have a development agency in our region. We have built one ourselves using the resources of local people. We need another £2·5 million over the next three years to promote the second industrial revolution in the region. We want to do it for ourselves, but the Government will not give us the money. The Minister should spare us the lectures and put the cheque in the post.
    Mr. Hogg: The hon. Gentleman is an engaging character, but in two respects he does himself no credit.

    283
    First, as he has not told us about the very substantial increase in DTI funding for the Northern Development Company over the past few years, I shall do so, In 1981–82 funding of the NDC was £230,000. In 1989–90, inclusive of core funding, it is £1·182 million, which is a fivefold increase.
    Secondly, unemployment in the hon. Gentleman's region has fallen by 3 percentage points during the past 12 months. The hon. Gentleman might have mentioned that.
    Mr. Trotter: Does my hon. Friend acknowledge the self-support provided by the region to the Northern Development Company and the funding provided by local firms and local authorities? May I remind him of the development corporation's success story, and ask him to support it on a longer-term basis? I point out to my hon. Friend the difficulties of budgeting for only one year at a time, and ask for his support for the suggestion that there should be a three-year finance programme.
    Finally, may I ask my right hon. Friend to recognise the excellent support—
    Mr. Speaker: Order. I asked for briefer questions, and the hon. Gentleman has asked at least three.
    Mr. Hogg: My hon. Friend deserves some good news, and that is what he shall get. As to the rolling programme to which he refers, he will know that on 2 October 1989, I wrote to the regional development organisations accepting the proposal for a three-year funding programme which meets precisely the point that my hon. Friend so eloquently put.

    Manufactured Goods
    Mr. Soley: To ask the Secretary of State for Trade and Industry what was the increase in import penetration of manufactured goods from 1979 until the most recent date for which figures are available.
    Mr. Redwood: Import penetration in manufacturing industry rose from 27 per cent. in 1979 to 36 per cent. in the year ending March 1989.
    Mr. Soley: Is it not a disgraceful record for the Government of the world's first industrial power to turn the manufacturing trade surplus of £1 billion achieved under the previous Labour Government into a £20 billion deficit this year? Although the service sector is important, the Government must understand that we cannot rely on it alone. We should follow the example set by the Germans and Japanese, who plan for, support and invest in their manufacturing industries. Why have the Government failed so abysmally?
    Mr. Redwood: The hon. Gentleman does not appreciate that although our commitment to the European Economic Community means rising import penetration, it means also an increasing proportion of exports. Both have risen because of increasing European and worldwide trading. Six Community countries have a higher import penetration than the United Kingdom, but that does not mean that those countries or Britain have weak economies. It means instead that we are benefiting from a more open and competitive market, that our customers have greater choice, and that British businesses have more discretion in whether to produce for the home or export markets. The important point is that unemployment has fallen
    284
    dramatically and is well below the EC average—it is particularly low in the hon. Gentleman's constituency. Living standards have reached new records, and consumers have unprecedented choice.
    Mr. Oppenheim: Will my hon. Friend remind the Opposition that manufacturing exports have increased by 40 per cent. since 1986, whereas manufacturing output fell under the previous Labour Government, as did our share of exports? Does my hon. Friend agree that protectionism is no way to make British industry more efficient and competitive? Will he commit himself to dismantling the pernicious gentlemen's agreement that limits car imports, and so put timely pressure on the unions at Ford?
    Mr. Redwood: My hon. Friend is right to say that the open trading system offers more prosperity than restrictions—as the events unfolding daily in eastern Europe show. Car imports are a matter for EC deliberation and not specifically for the British Government, and they will be debated within the Community's Councils.
    Mr. Matthew Taylor: The Minister will be aware that one way of overcoming high import penetration is to assist British regional development in areas where unemployment is high and incomes are low—such as my own. Will he study the example of the Bretons, who tackled the problem very successfully? They enjoy a thriving export business, but only on the basis of a regional development fund and agency.
    Mr. Redwood: Our policies have been much more successful in reducing unemployment than those of many other European countries. It is well below the EC average as a consequence of our open market and competitive policies. As the hon. Gentleman knows, we already have a regional policy. The main contributors to improved prosperity are an open trading system and sound economic policies that allow rapid growth of the sort seen in this country in recent years.
    Mr. Grylls: Will my hon. Friend give more help to smaller companies, many of which could win exports if given greater encouragement through the British Overseas Trade Board and the commercial departments of British embassies? Will he also examine the potential of eastern Europe, and ascertain whether our commercial departments there could be expanded to help British exporters, as it is difficult to export to the East at present?
    Mr. Redwood: I am grateful to my hon. Friend for raising this important subject. There are a number of initiatives to encourage exports. The DTI has an export initiative for smaller companies, which should get in touch with regional offices if they would like help.
    I and my right hon. and hon. Friends are active in taking companies and industrialists to see the opportunities in eastern Europe. Extensive briefing is available from our embassies and from the DTI in London and the regional offices. There are enormous opportunities in eastern Europe for British business, and we would welcome companies taking up our offer of advice and help here and in the embassies abroad.

    Information Technology
    Mr. Bidwell: To ask the Secretary of State for Trade and Industry what is the current balance of trade in information technology with Japan.
    The Parliamentary Under-Secretary of State for Industry and Consumer Affairs (Mr. Eric Forth): According to the latest figures available from the business statistics office, the United Kingdom had a trade deficit with Japan in manufactured products of the electronics and information technology sector of £1·8 billion in 1987 and, provisionally, £2·2 billion in 1988.
    Mr. Bidwell: Why is a major competitor like Japan ahead in production, and why are we, who are often in the forefront in invention, lagging behind? The Government appear to be unable to resolve that major problem. Is the Minister aware that there is a major deficit with Japan, much of it in high-technology goods? Does not that require urgent action by the Government and why do they not get on with it?
    Mr. Forth: The hon. Gentleman highlights the important phenomenon that all the major OECD countries, except Japan, have a trade deficit in information technology. The sad truth is that most countries are unable to compete with Japan and certain other countries in that sector, partly because the Japanese have been very successful in identifying the sector and promoting it. Our export performance, which, as my hon. Friends have pointed out, is excellent, is across a wide range of goods. I see no incompatibility between our excellent performance across the range and the Japanese specialising, for example, in information technology.
    Mr. Ian Taylor: Does my hon. Friend share my disturbance at the deficit with Japan? Will he note that in my constituency several companies in this sector are selling successfully into the Japanese market, which seems to show that what companies need most is not Government assistance but being based in Esher?
    Mr. Forth: I congratulate my hon. Friend on the fact that companies in his constituency are capable of developing and making products in this sector which can be exported everywhere, including Japan. There are many such cases throughout the United Kingdom. I see no reason why, with a liberal economic regime and liberal Government policies, a low tax base and a skilled and trained work force, companies should not be able to compete in the sector and export throughout the world, including Japan.
    Dr. Moonie: Will the Minister try to answer the question posed by my hon. Friend the Member for Ealing, Southall (Mr. Bidwell)? What does his Department intend to do about the problem other than beating its breast and sitting on its hands?
    Mr. Forth: A moment ago I told the House what it is appropriate to do: we shall continue to provide an invigorating economic climate in which companies are free to make their decisions about investment, to develop their products and to seek the most effective markets for them. I hope that the Government will not propose a latter-day interventionist policy of the sort which people throughout eastern Europe have realised, belatedly but welcomely, is a total failure. We hope to continue the excellent trend of
    286
    policies that we have established over the past 10 years to liberate our industries and give them every opportunity to continue to succeed.

    House of Fraser
    Mr. Teddy Taylor: To ask the Secretary of State for Trade and Industry what representations he has received regarding publication of the report on House of Fraser.
    Mr. Ridley: I have received a number of representations, the great majority of which are in favour of my publishing the inspectors' report into the affairs of House of Fraser Holdings plc. I will do so as soon as possible.
    Mr. Taylor: It is five years since the alleged irregularities and fraud took place, and 18 months since the previous Secretary of State received the report. Nothing can be done about alleged wrongful transfers of assets because of the previous Secretary of State's decision not to refer the issue to the Monopolies and Mergers Commission. Does my right hon. Friend accept that it is almost an insult to open government and justice not to publish the report and not to tell people exactly what went on?
    Mr. Ridley: As I have already told my hon. Friend, I will publish the report at the earliest moment consistent with the even-handed administration of justice.
    Mr. Heffer: How early is the earliest possible moment? Is the Secretary of State aware that many of us who knew little about the matter until we saw television programmes have been shocked at what has been happening? Is it not time that not only the House but the entire population had a proper report of what happened in that case?
    Mr. Ridley: How early is as soon as possible? It is as soon as I can do so. The hon. Gentleman should reserve judgment until it is possible to publish the report, which I have already said I will do as soon as that is appropriate in the light of possible proceedings.

    North Devon Manufacturers Association
    Mr. Speller: To ask the Secretary of State for Trade and Industry what assistance he is giving to the North Devon Manufacturers Association.
    Mr. Douglas Hogg: Through my south-west regional office, which maintains excellent relations with the North Devon Manufacturers Association, my Department has supported and will continue to support events sponsored by the association whenever possible.
    Mr. Speller: Will my hon. Friend accept my thanks and congratulations on the good work of his Department in sponsoring a genuine multinational, locally based collection of industries, which is leading the way in skills training, information technology and happy co-existence to provide a good basis for prosperity in north Devon?
    Mr. Hogg: I accept my hon. Friend's comments. Our efforts have been very successful. I recently studied the unemployment figures for the Barnstaple and Ilfracombe travel-to-work area and for Bideford, and then contrasted the figures for November 1984 with those for November 1989. In November 1984, the respective figures for Barnstaple and Ilfracombe and for Bideford were 14·7 per

    287
    cent. and 17·2 per cent. In November 1989, the figures were 6·7 per cent. and 8·1 per cent. That is a dramatic improvement.
    Mr. Madden: What representations has the Minister received from employers in Devon about the difficulties that might face their employees should they be forced into short-time working? Is the Minister aware that, as a result of changes in Government regulations, if an employee earns more than £43 a week on short-time working he is prevented from claiming unemployment benefit for the days that he is not employed?
    Will the hon. Gentleman urgently investigate the impact of the regulations in Devon and elsewhere? Will he ensure that the Secretary of State for Social Security changes the regulations soon so that they do not force short-time workers to be penalised in that way?
    Mr. Hogg: I am sorry to disappoint the hon. Gentleman, but none of the members of the North Devon Manufacturers Association has made representations to that effect. However, they are pleased with the substantial improvements to the infrastructure in north Devon and, in particular, the large sums of money that the Government are spending on improving road links—for example, the £109 million spent on the north Devon link road.

    Exports
    Mr. Hind: To ask the Secretary of State for Trade and Industry if he will make a statement on the actions he is taking to improve the levels of British exports.
    Mr. Ridley: One year ago today my noble Friend Lord Young of Graffham launched a package of measures offering a wide range of help, advice and support to firms at each stage of the exporting process. Staff in the embassies and regional offices are always available to give information and advice.
    I am encouraged to note that the volume of non-oil exports in the three months to November 1989 was 13 per cent. higher than a year earlier.
    Mr. Hind: My right hon. Friend's news is much appreciated. He will no doubt recognise the importance of the 20 per cent. increase in exports last year, and he is to be congratulated on his recent announcement on the Export Credits Guarantee Department. Is he aware of the importance of the export credits guarantee to the north-west of England? Can he give us a timetable for the implementation of his plans?
    Mr. Ridley: I am glad that my hon. Friend recognises the remarkable export performance of British industry in the past year. It represents a remarkable gain in our share of exports, to which the whole House will wish to pay tribute.
    On the ECGD, my announcement before Christmas will have the effect of giving added impetus to the credit insurance industry in the long term by making sure that credit insurance will be available to our exporters within and without the Community. It will be necessary for legislation to be introduced, but I cannot estimate when it will be introduced. Apart from that difficulty, the Government will proceed with urgently required plans for the future of the ECGD as soon as possible.
    Mr. Tony Lloyd: What would be the impact on unemployment nationally if the Government's export promotion allowed the balance of payments to trade in surplus?
    Mr. Ridley: I could not be expected to answer that off the top of my head. The balance of payments includes the capital account, which produces a large amount of inward investment—about £1·5 billion from Japan alone last year—and which in turn is a major contributor to United Kingdom employment. The calculation that the hon. Gentleman seeks is somewhat wider than he would like to acknowledge.
    Mr. Burt: Does my right hon. Friend agree that exports will increase in the years to come as the significant investment in manufacturing, domestic and foreign, comes on stream? Does he further agree that this is a sign of great confidence in our economy, and that if Opposition Members truly wished to support their constituents and their jobs, they would welcome that inward investment instead of carping about it, as they often do?
    Mr. Ridley: My hon. Friend is right. In addition to the 13 per cent. volume increase in exports in the past 12 months, export order books have been showing a distinctly healthy trend, even in the past few months. British exports in the future will embarrass Opposition Members because they never like to hear good news.
    Mr. Gordon Brown: Will the Secretary of State confirm that we have not only the biggest trade deficit of all our European competitors but the highest interest rate and the worst inflation, and that that is hitting exporters? What will he do to prevent Britain from becoming the only country in Europe, in the run-up to 1992, according to CBI figures, in which manufacturing investment this year is falling?
    Mr. Ridley: I would not accuse the hon. Gentleman, in the words of the hon. Member for Kirkcaldy (Dr. Moonie), of being sufficiently clever to sit on his hands and beat his breast at the same time, but he was attempting to do something very similar in that supplementary question. Investment is keeping up extremely well and, in addition to the list of factors that he suggested, we have the lowest taxation on industrial payroll companies. Why does he wish to add a 0·5 per cent. payroll levy, which would raise a further £1 billion from British industry, thus severely debilitating it at a time when he says British industry needs help not hindrance?
    Mr. Nicholas Winterton: Is my right hon. Friend aware that we must increase our manufacturing exports and that, to achieve it, the Government cannot ignore the need for a strategy for manufacturing industry? Is he further aware that unless we increase our manufacturing exports, our balance of trade deficit will continue, and there will be ongoing pressure on the pound, which will contribute to inflation and the country's economic problems?
    Mr. Ridley: We have a strategy for manufacturing industry, and that is to let companies get on with the job without interfering with them. I suspect that that played a large part in the highly successful performance of British exports to which I referred.

    Regional Assistance
    Mr. Hardy: To ask the Secretary of State for Trade and Industry what is his estimate of the value of grants paid by his Department in pursuit of regional assistance plans during 1989; and what was the level of such assistance in real terms during 1979.
    Mr. Douglas Hogg: In 1989 expenditure on regional assistance in England totalled £326·6 million; in 1979 the figure was £297·6 million. Expressed in terms of 1989 prices, the expenditure in 1979 was £594 million.
    Mr. Hardy: Does the Minister deny that the combined total from regional assistance and regional development grants was £1,130 million in 1979 and £470 million last year? Given the enormous increase in economic and environmental needs, does the Minister realise that that is an example of negligence and irresponsibility?
    Mr. Hogg: The hon. Gentleman has failed to analyse the component elements of the figures. We have discontinued regional development grant, and quite right too, because it was an automatic grant which took no account of the jobs created, or of need. We are relying on regional selective assistance, which is based on need, jobs created and economic viability. That is the way forward.

    Sawmilling Industry
    Mr. Gill: To ask the Secretary of State for Industry what representation he has received about overcapacity in the sawmilling industry.
    Mr. Douglas Hogg: Apart from the points that my hon. Friend raised in his recent correspondence with my Department, I am not aware of having received any other representations about overcapacity in sawmilling.
    Mr. Gill: In view of my hon. Friend's answers to my question and to the preceding one, what assurance can he give the House that regional selective assistance will not lead to displacement and overcapacity? Does he agree that such commercial decisions are best left to the market?
    Mr. Hogg: My hon. Friend illustrates the value of having moved away from regional development grants to regional selective assistance. When considering applications for regional selective assistance, one can take into account displacement in employment opportunities and overcapacity in existing plants. That was not the case with regional development grants.

Hong Kong
3.31 pm
The Secretary of State for Foreign and Commonwealth Affairs (Mr. Douglas Hurd): With permission, Mr. Speaker, I shall make a statement on my visit to Hong Kong from 13 to 16 January.
I went to show this country's continuing commitment to Hong Kong, to meet a representative cross-section of the community, and to discuss the issues of prime importance to Hong Kong in the period before 1997—the operation of the nationality package, which I proposed to the House on 20 December, and the pace and extent of democratisation in Hong Kong.
I also discussed the problem of the Vietnamese boat people, and visited a refugee camp and a camp at which boat people are screened for refugee status.
Hong Kong has become the world's 11th largest trading entity because of the unique combination of British administration and justice, and the talent and energy of its people. The immediate sense of fear caused by the events in China last June has lifted, but those events dealt a substantial blow to Hong Kong's self-confidence, and the exodus of the talent which is needed to keep Hong Kong prosperous has continued. We believe that it is vital that those people should stay.
Everyone to whom I spoke—in the Executive and Legislative Councils, one of the district boards, the business community, public servants and other groups—had hoped that the package that I proposed on 20 December would have made provision for more people. But they also welcomed what we had proposed as a measure that would give key people the confidence to remain in Hong Kong. They recognise that it was not an easy step to take, and they are following carefully the discussion in this country. They all hoped that it would be possible for Parliament to give its approval and for the scheme to begin to operate. I assured them that the Government were fully committed to the proposal.
The second issue that we discussed was the repatriation of Vietnamese boat people. No one in Hong Kong involved in the repatriation takes satisfaction in what had to be done, but the result achieved was necessary. Having seen the camps for myself, I am more than ever convinced that return to Vietnam, in carefully controlled conditions, is preferable to camp life, with no hope of resettlement elsewhere.
Hong Kong has paid a heavy price for its principled policy of first asylum. We cannot expect it to receive this year the same number of boat people—over 30,000—that they received last year. There is nowhere for those boat people who are not refugees to go. The policy of repatriation is therefore the right one, and I hope that this may soon be endorsed by the international community.
I am grateful to my right hon. Friend the Member for Aylesbury (Mr. Raison) and to Lord Ennals for their thorough and expert report on the first 51 who were repatriated before Christmas. I would welcome monitoring by the United Nations High Commissioner for Refugees, and other agencies, of all who are repatriated in the future.
No one in Hong Kong seriously disputes the validity of the joint declaration as a basis for Hong Kong's future after 1997, but confidence in the concept of "one country, two systems" was undermined by the events of last June.
292
Since then the Chinese Government have reaffirmed their commitment to the joint declaration, and I believe that we must make it work.
An important element in that is the extent and pace of movement towards democracy in Hong Kong before and after 1997, which as I have discovered, is the subject of intense concern and debate in Hong Kong, and we are discussing it with the Chinese Government; those discussions are continuing, and I would prefer not to go into detail today. I can say, however, that our goal is to set a system in place—beginning with elections to the Legislative Council in 1991—which will satisfy Hong Kong's aspiration for democracy and which will endure after 1997. [Interruption.] There seems to be some disarray on the Opposition Benches.
I hope to be able, after further discussion, to announce a decision within the next few weeks.
As all who know it agree, Mr. Speaker, Hong Kong is the economic success story of a region that boasts several economic miracles. As you look across the border into China you see that that economic success has spread to the neighbouring province of the mainland. China is Hong Kong's largest trading partner, and Hong Kong is also one of Britain's biggest markets in the region. All that could continue after 1997—and the plans are dramatic—or it could be lost.
The future of 5·7 million people after 1997 depends on three things. First, it depends on the talent and energy of Hong Kong's own people, and they are not in doubt. Secondly, it depends on the attitude of the Chinese Government, who need to do much more to reassure Hong Kong. But dialogue has been re-established, and we must do our best to maintain it. Thirdly, Hong Kong's future depends on Britain, as the responsible sovereign power until 1997.
After last June, the House rightly voiced its support for Hong Kong—and that, of course, must mean more than words. The people of Hong Kong are realists: for example, they accept, although reluctantly, that we cannot give passports to all. They look to us, as the sovereign power, to make the necessary decisions over the coming years, and to follow an active and understanding policy towards Hong Kong. I hope that I convinced them that we shall do so.
Mr. Gerald Kaufman: We thank the Foreign Secretary for making a statement to the House so soon after his return from Hong Kong. Four questions arise from his visit, from today's statement and from the statement made in Guangzhou today by the deputy director general of the Basic Law drafting committee.
First, what are the Government's intentions with regard to the progress of democratisation in Hong Kong? Everyone now accepts the timid inadequacy of the Government's decision in February 1988 that only 10 members of the Legislative Council should be directly elected in 1991. Opposition Members took the view that the first elections should have taken place in 1988. After the Tiananmen square massacre, we urged an increase in the number of next year's directly elected members to 30, with a full 100 per cent. by 1995.
The Government recognised the need for an increase, but they have done absolutely nothing. They have therefore left the field free for decisions by the Peking Government, who, as the right hon. Gentleman knows, have proposed only 18 directly elected members by 1997

293
—the year of the handover. OMELCO—the Hong Kong representatives—asked for 20 next year as a prelude to 30 by 1997 and the full 60 by 2003. The Foreign Secretary in Hong Kong gave an elliptical off-the-record interview in which he said that there would be 20 by next year, but he did not look further than that. Today he has given the House no information whatsoever, and that is simply not good enough.
The right hon. Gentleman said today that we are the responsible power. He said in Hong Kong that it is a decision for us and for the Government of Hong Kong to make. What does that mean? Will the Government have a phased programme of democracy in Hong Kong—not just elections next year but an increased number before the handover? He must at least tell the House clearly today.
Secondly, what has happened to the Bill of Rights? The right hon. Gentleman's predecessor, the present Leader of the House, who is sitting beside him, said on July 13:
"The proposed Bill of Rights will ensure that there is one fundamental legal text which sets out all the rights and freedoms that the people of Hong Kong currently enjoy."—[Official Report, 13 July 1989; Vol. 156, c. 1169.]
He promised that it would form part of the existing law and continue after the transfer of sovereignty in 1997.
As we know, the draft Bill of Rights has been thrown out by the Executive Council in Hong Kong as inaccurate, and reports from Hong Kong during the right hon. Gentleman's visit stated that the Government were now playing down the Bill of Rights. Today he has said not a single word about the Bill of Rights. Will he make it clear to the House? Is the Bill of Rights now expendable, or are the Government proceeding with it? We must know.
Thirdly, what international discussions are taking place on the boat people and when will they be resumed? Have the Government of Vietnam indicated whether they are ready to receive more boat people if they are sent forcibly? What action are the Government taking to provide incentives for voluntary repatriation? What action are the Government taking to provide direct economic aid for Vietnam, which is the most sensible way of giving the Vietnamese confidence to remain in their own country as it is assisted to escape from its abject poverty?
The right hon. Gentleman said in Hong Kong that he had not yet had time to read the Amnesty International report about the treatment of the boat people. He will know that that report alleges partial strangulation, kicks and beatings of boat people by Hong Kong police and that a boat person died as a result of indiscriminate kicking and the use of batons. Those are grave charges by an organisation of international repute.
Will the right hon. Gentleman set up an independent inquiry into those allegations, and will he re-examine the screening procedures, which Amesty International says contain critical shortcomings?
Finally, has the right hon. Gentleman seen the statement today by Mr. Lu Ping, the deputy secretary general of the Basic Law drafting committee, which he made in Guangzhou in which he is reported as saying that under the Basic Law top officials in Hong Kong's post-1997 Government will not have the right to live abroad and in which he further says that Hong Kong residents with British passports will not be allowed to seek British consular protection while in the territory after it returns to Chinese rule. Is that not a torpedo right through the Government's ill-conceived plans to award United Kingdom passports to 50,000 so-called key people? Does
294
not the statement made on behalf of the Chinese Government mean that, if the British Government's plan is enacted, everyone awarded a passport will inevitably seek to come to Britain before 1997, thus making nonsense of their claim that the purpose of their plan is to anchor those people to Hong Kong?
Everyone in Britain has welcomed the magnificent moves to democracy in eastern Europe. Are the people of Hong Kong to be denied that clear progress to democracy that has been won by the Poles, Czech and Romanians? That would be a sorry epitaph to British rule in Hong Kong, and we look to the right hon. Gentleman to reassure the House and the people of Hong Kong.
Mr. Hurd: The right hon. Member for Manchester, Gorton (Mr. Kaufman) asked four substantial questions. First, he asked about the progress to democracy. It is certain that that will start with elections to the Legislative Council next year, and from a substantially higher base than that proposed in the White Paper in February 1988. Hong Kong will start next year on that substantial road. I gave no figures in Hong Kong, and I have given no figures to the House, because we are still seeking what is clearly the best solution, which is that that start next year, and then in the elections in 1995, should continue after 1997, and for it to be incorported in the Chinese provisions. If someone is contemplating standing for election to the Legislative Council, it is clearly desirable and makes sense to have that upward curve, if possible, to ensure that the process which will certainly start next year will assuredly be continued after 1997.
We have been discussing that in Hong Kong and with the Chinese Government, but those discussions have not yet finished. I said in Hong Kong, and in the House today, that as soon as they have finished—they must end before long—I will let the House know. It would be a great mistake to take a decision that made impossible the longer-term progress to democracy, if such progress is attainable. If it is not, as I said in Hong Kong, we and the Hong Kong Government will have to take decisions and announce them for 1991 and for 1995.
Secondly, the right hon. Gentleman asked about the Bill of Rights. That idea was first put forward by my right hon. and learned Friend the Lord President of the Council. It has been taken up in Hong Kong, and its institutions are considering its text. The drafting of the Bill of Rights is a matter for the Hong Kong Government. The Chinese have not made any representations to us, but if they want to comment on the draft Bill once it is published, they will be entitled to do so. That matter is progressing through the institutions of Hong Kong.
With regard to what will happen after 1997, the two United Nations covenants on human rights will, as the joint declaration makes clear, continue to apply to Hong Kong after 1997. There is no dispute about that, and that provision is fully reflected in the current draft of the Basic Law.
Thirdly, the right hon. Gentleman asked about the boat people. He asked for specific information about the next meeting of the steering committee in Geneva. I have been told today that it will be held on 23 and 24 January, about a week later than was originally supposed. I hope that the international community will agree at that meeting to accept in practice what is already accepted in principle—that the right place for Vietnamese who are not refugees is Vietnam. As the right hon. Gentleman said, while it is

295
absolutely right to encourage voluntary return—as the right hon. Gentleman knows, we and the United Nations High Commissioner for Refugees are doing that—that has not proved sufficient, and therefore repatriation is necessary.
The right hon. Gentleman referred to the Amnesty report. Obviously the detailed criticisms in it must be considered by us and by the Government of Hong Kong, as I said in Hong Kong yesterday. Several of the incidents in the Amnesty report have already been investigated by the Hong Kong Government, and the criticisms have not been accepted. I visited the Hai Ling Chau camp yesterday and saw something of the screening. Obviously it was not a thorough inspection, but I was impressed by the initial interview, which was relatively short, and the three hours or so that were spent actually examining the detail. I was impressed also by the way in which, in the camp, it was stated in English and in Vietnamese that there was a clear right of appeal.
The right hon. Gentleman's final point dealt with Mr. Lu Ping's statement. I imagine that I have read the same account as the right hon. Gentleman read. We have looked at that point—it came up while I was in Hong Kong. Under Chinese law, full citizens of another country are not dual citizens. It follows that, in the case of United Kingdom citizens, they are entitled to our consular protection throughout the world. Hong Kong Chinese who are not full United Kingdom citizens are in a different position.
Article 74 of the joint declaration makes it clear that the Government of the special administrative region—the SAR—of Hong Kong may employ British and other foreign nationals in the public service after 1997.
Mr. David Howell: Is my right hon. Friend aware that he conducted his recent visit to Hong Kong with great skill in appallingly difficult circumstances? Frankly, those circumstances are not being helped by the attitude of the right hon. Member for Manchester, Gorton (Mr. Kaufman).
My right hon. Friend spoke the other day about a through train to the future for the people of Hong Kong. Does he accept that the best through train is one marked "freedom and democracy" and that, therefore, his statement today that he will set in place a system of democracy that will satisfy Hong Kong's aspirations is extremely welcome?
Will my right hon. Friend enlighten the House on an important matter about the Opposition's policy? I realise that Opposition policy is not his responsibility, except in the sense that all policy statements in the House are part of the central problem of Hong Kong. Is it correct that the Opposition are now in favour of giving British passports to everyone in Hong Kong?
Mr. Hurd: I am most grateful to my right hon. Friend for his comments. As he knows, there has been a concentration and focus on the figures for the number of democratically elected legislators in the Legislative Council in 1991, which is an important point. The point may have been somewhat obscure, but, in any case, the start to be made next year in democracy in the Legislative Council in Hong Kong will be an important event. It will start from a more substantial base than was suggested and
296
discussed even as short a time as two years ago. The best way is to proceed from that base after 1997. That is why it is sensible to discuss these matters with the People's Republic, as we are doing. If that is not possible, at the end of the day, we will need to make our own decisions.
For fear of wearying the House, I did not press the right hon. Member for Manchester, Gorton (Mr. Kaufman) about Labour policies, because it takes an awfully long time to do so. I am in total confusion. No doubt there will be opportunities to explore that matter. Sometimes the right hon. Gentleman oozes sympathy, and sometimes he says that there is nothing to be done. From all his foggy phrases, I get the strong impression that the right hon. Gentleman and his colleagues have no interest whatever in a sensible future for Hong Kong.
Mr. Paddy Ashdown: I join the right hon. Member for Guildford (Mr. Howell) in congratulating the Foreign Secretary on the personal skill and diplomacy with which he did a difficult job in Hong Kong. However, is not the outlying situation in Hong Kong unchanged? There is no change in the hard facts of Hong Kong's position, for confidence in Hong Kong still rests on a slender thread. Does the Foreign Secretary realise that maintenance of that confidence now depends on his being very tough on two matters: first, democracy, the Bill of Rights, and the Communists in Peking; and, secondly, passports and those who pander to racism in his own party? Does the Foreign Secretary accept that what Hong Kong needs is both of those—not one without the other?
On the issue of the boat people, the Foreign Secretary said that the voluntary repatriation programme was not going fast enough, but is it not the case that UNHCR's voluntary repatriation programme has already repatriated 1,100 people peaceably to Vietnam without any of the brutality of the forced repatriations? That figure is 20 times more than the Government's programme has achieved. Indeed, another 1,300 people have applied for voluntary repatriation. Surely the Foreign Secretary now realises that this is not the time to press ahead with another brutal exercise in forced repatriation, which would not only damage Britain's name and prevent a multilateral solution to the problem, but would probably impede the process of voluntary repatriation which is proving so successful.
Mr. Hurd: I came back with two main thoughts impressed on me by the people of Hong Kong. The first was, as the right hon. Gentleman has said, the enthusiasm among articulate Hong Kong Chinese for greater democracy and for a start towards democracy. The second was their wish to get away from the constant hostile statements from Peking. It will not be easy, but we have to try to reconcile the two messages that I received so clearly.
I have detected no racism on the Government Benches about this matter—[HON. MEMBERS: "Oh."] No. What I have detected—I have tried to read the speeches and to listen to the broadcasts carefully—is a natural anxiety about the consequences of what we propose for immigration in this country. I do not find that anxiety objectionable, and it is because of that anxiety that we have made our package what it is. If we had brushed aside that anxiety as of no importance, of course, we might have gone much further in the direction that the right hon. Member for Manchester, Gorton (Mr. Kaufman) has suggested, but we have not. We have tried to strike a balance, which, as I have said, is disappointing to almost

297
everybody in Hong Kong but which we believe is a reasonable balance, taking into account the reasonable preoccupations here and the reasonable expectations there.
As I have said about the boat people, voluntary return is the best thing and I am glad that voluntary returns are taking place. However, the right hon. Member for Yeovil (Mr. Ashdon) knows perfectly well that the disadvantage and drawback of that is that very few of those who are screened out and who it is decided are not refugees are volunteering. That is why—[Interruption.] It is true. That is why we decided before Christmas to send back 51, and that is why, as I have said several times, unless there is a more dramatic change on the horizon on the part of the international community than is clear at the moment, we shall have to continue that policy.
Mr. Roger Sims: May I join in commending my right hon. Friend for the manner in which he handled a visit in the course of which he was bound to be open to criticism from one quarter or another, whatever he said or did? Does he agree that the predominant concern in this matter is the interests of the people of Hong Kong? In those interests, will he proceed with the package of measures that he has already outlined, confident that he will have the support of the vast majority of his hon. Friends? Accepting that the reality is that the Chinese Government will be taking over Hong Kong in 1997, is it not clear that antagonising them would be counterproductive? At the same time, in his discussions with the Chinese Government, will my right hon. Friend be robust in representing the interests and aspirations of the people of Hong Kong?
Mr. Hurd: I am grateful to my hon. Friend. On his first point, every right hon. and hon. Member must accept that we have a continuing responsibility to Hong Kong and to our own constituents. Indeed, many of our own constituents have or will have substantial interests in and connections with the continued success of Hong Kong, so I do not think that there is a contradiction when it comes to the point.
I entirely agree with the way in which my hon. Friend put his second point. Every time one goes to Hong Kong and looks at the geography, the food, the water, the history and the law there, one sees clearly that its future is connected with China. That means a dialogue, but it does not mean simply finding out what the Chinese want and then doing it. Until 1997, we and the Hong Kong Government have our own responsibilities, and we intend to discharge them.
Mr. Chris Mullin: Does the Foreign Secretary accept that in the long term—I do not pretend that it is a short-term solution—the only way to stop the flow of refugees from Vietnam is to end the trade, aid and credit embargo organised by the United States in which most countries, including Britain, participate to a greater or lesser extent? Has he noted the recommendation in the report by the right hon. Member for Aylesbury (Mr. Raison) and Lord Ennals that Britain should resume aid to Vietnam? No one would pretend that that alone would solve the problem. What steps will the Foreign Secretary take to persuade the United States to end its war against Vietnam?
Mr. Hurd: The hon. Gentleman makes a point which, as he said, figured in the report published yesterday by my right hon. Friend the Member for Aylesbury (Mr. Raison) and Lord Ennals. Vietnam may be opened up to aid. The process of voluntary return and of repatriation is already accompanied by some help to Vietnam, although on a small scale. That may continue and develop, but the hon. Gentleman knows the difficulties.
The hon. Gentleman is right in saying that it is not an immediate solution. The immediate solution lies in continuing voluntary returns, as the report said, and in making it clearer than it now is to people in Vietnam that to get on a bus or a boat to Hong Kong is not a road to resettlement in the West for those who are not refugees. The solution also lies in the international community accepting that repatriation of people who are not refugees is regrettable but necessary, that returns should be monitored, that monitoring should not be confined to those who return voluntarily and that it has implications for financial and reception arrangements in Vietnam.
Mr. Cranley Onslow: Will my right hon. Friend confirm that a high proportion of so-called boat people have made their way from north Vietnam to Hong Kong either through Chinese coastal waters or overland through China? Does not that call into question the competence and integrity of the Chinese Administration, which must be the key to the future of Hong Kong?
Mr. Hurd: My right hon. Friend is perfectly right. The numbers arriving in recent months have been low because of the season. Most of those arriving recently have come, at least in part, overland. Clearly a traffic is developing and money is being made from it. People do not enter Hong Kong by land because if they did so they would be sent back immediately as illegal Chinese immigrants. I saw that happening one afternoon in Hong Kong. They make the last part of the journey by boat.
My right hon. Friend is entirely right to draw attention to the responsibility of the Chinese Government, which we have impressed upon them continually. They have given assurances, and it is up to them to carry them out.
Mr. James Molyneaux: The right hon. Gentleman said that Parliament would be invited to give approval to the scheme. When will that be? Can he assure the House that any such legislation would be regarded as constitutional and, therefore, would be taken in its entirety on the Floor of the House?
Mr. Hurd: The right hon. Gentleman asks legitimate questions, but they are not for me. My right hon. and learned Friend the Lord President of the Council will have noted the right hon. Gentleman's two points.
Mr. Jim Lester: I welcome the fact that my right hon. Friend has visited the camps for Vietnamese boat people in Hong Kong. Does he now realise just how difficult the conditions are for those people and how unwilling they are, even in those conditions, to return to Vietnam? He also paid tribute, rightly, to my right hon. Friend the Member for Aylesbury (Mr. Raison) for his report calling for wider economic aid to Vietnam. Does he accept that it would be easier for many of us to accept the policy of compulsory repatriation if he took the imaginative step, perhaps in the first instance, of offering jointly to fund the non-governmental organisations which

299
already have programmes in the poverty-stricken areas of north Vietnam? Might that be one way of making compulsory repatriation more acceptable?
Mr. Hurd: As my hon. Friend knows, I am keen that the NGOs should help to monitor what happens to people who return to Vietnam. If they came forward with particular schemes along the lines that my hon. Friend describes, I should certainly consider them.
Mr. Peter Shore: When the Foreign Secretary referred to progress towards democracy, he spoke of a formula that would satisfy Hong Kong opinion and that would endure. It would be remarkable if both those criteria could be met. The heart of the matter, as I am sure the Foreign Secretary knows, is that a formula that will satisfy demands for democracy in Hong Kong is not likely to endure because it will not satisfy the Chinese. When faced with that dilemma, how will the Foreign Secretary's mind move? Above all, we want to hear from him that he will give greater priority to satisfying the demands for democracy in Hong Kong than he will to appeasing the people in Peking.
Mr. Hurd: I am sorry that the right hon. Gentleman used the word "appeasing" in his analysis. We have no interest in appeasing the authorities in Peking as there is no particular Sino-British interest that is greater than, or outweighs, the future interests of Hong Kong. Hong Kong is the largest and heaviest component in our relations with China, and so it will stay.
We are simply concerned with what arrangements will start democracy in Hong Kong in a substantial way and which will endure. The right hon. Gentleman knows the history of this matter and he knows that democracy will start from a substantial point. The right hon. Gentleman knows that 10 directly elected seats in the Legislative Council were proposed in the joint declaration and that 10 were embodied as the starting point in last year's White Paper. I believe that everybody—I stress everybody—accepts that now the starting point will be substantially higher than that. That much has been achieved, and the right hon. Gentleman is one of those who helped to persuade us to achieve it. That much is under our belt, and it represents a big success.
I hope that we can go further and that we can reconcile the two considerations that the right hon. Gentleman mentioned. I do not know whether that will be possible, but, when we know, we will tell the House.
Mr. Michael Jopling: Is my right hon. Friend aware that a most welcome part of his statement was the fact that a large number of people in Hong Kong reluctantly accept that it is not realistic to offer a right of abode in this country to all those people who hold British dependent territory passports? Does he agree with the estimate given by the Select Committee on Foreign Affairs that those passport holders could amount to 5·25 million people by 1997? Is not this in stark contrast with what appears to be the official policy of the Opposition—certainly it is the policy of the leader of the Liberal party—that all those people should be given a right of abode here? That means that about 8,000 people with a right of abode would be imposed on every constituency.
Mr. Hurd: As I understand it, that is certainly the view of the leader of the SLD and, although I believe it to be a foolish policy, he has maintained it openly. Whenever anyone suggests what is the policy of the Labour party, the right hon. Member for Manchester, Gorton (Mr. Kaufman) bounces up and down and denies it. We have no idea about the policy of the Labour party; sometimes the right hon. Gentleman gives one impression, sometimes another. As the discussion continues, perhaps he will be able to come off the fence.
Dr. David Owen: An enduring future for Hong Kong depends upon agreement with China and with the Peking Government. All experience shows that that requires infinite patience, great determination and a readiness to continue to push a point long after most people would have thought that it had sunk home. In view of that, will the Foreign Secretary continue to argue that holding key workers in Hong Kong until the date of transfer offers the real prospect that they will continue to remain under the Chinese Government? Similarly, will the Foreign Secretary resist the blandishments to go further than the first tranche of democratisation in 1991, on which it looks as though there is a good chance of an agreement with China? Will he wait and hope for further agreement with China on an increased element on democratisation in the second tranche?
Mr. Hurd: We have discussed the nationality package with the Chinese Government for the reasons the right hon. Gentleman has given. They have made public their concern about the package, but we have begun to persuade them that, if they want, as the joint declaration sets out, a stable and prosperous Hong Kong in 1997, a package on those lines is essential.
On the second point, I note the advice which the right hon. Gentleman gives. We shall return to this matter as soon as the possibilities for the best way forward to democracy become clearer.
Mr. George Walden: Is my right hon. Friend aware that the undertaking given by the Opposition to repeal any legislation allowing 50,000 families the right of abode in this country would precipitate a major crisis in Hong Kong if ever the Labour party came to power? Does not that show that the policy statement of the Labour party spokesmen on this matter is the most cynical, demagogic and opportunistic that we have ever heard from the Opposition—and that is saying something?
Mr. Hurd: Ninety per cent. of Labour party policy is obscure and the remainder is irresponsible.
Mr. Tony Banks: Will the Foreign Secretary end the uncertainty by making a statement about the fate of the 670 tonnes of elephant ivory currently held in Hong Kong? I understand that the Foreign Office has taken over responsibility from the Department of the Environment with regard to the possibility of entering reservations to the CITES agreement. Will he say whether that reservation will be entered by 18 January? I hope that the answer will be no, but, if it is yes, does the Foreign Secretary realise that he will be condemning to death many more hundreds of elephants?
Mr. Hurd: The hon. Gentleman's last observation was nonsense because Hong Kong has already banned imports of ivory. The answer to the hon. Gentleman's other, reasonable question is yes. The Government, on behalf of Hong Kong, have today entered a six-month reservation to the CITES agreement which provides for listing African elephants in appendix 1 of the convention. The reservation will apply only to Hong Kong and will allow Hong Kong traders time to dispose of their legally acquired ivory in an orderly fashion and enable workers and carvers to find alternative employment. After that, Hong Kong will be part of the agreed system. I am sure that the hon. Gentleman will agree that that will be a considerable advance.
Mr. Ivan Lawrence: Will my right hon. Friend make it clear to the people of Hong Kong and the Government of the People's Republic of China that they could have given no greater total commitment to the future of Hong Kong—economic, political and free—than that they were prepared to court electoral unpopularity by undertaking to let into this country as many people as they have?
Mr. Hurd: I have done so and it is clearly understood in Hong Kong. The people there follow our proceedings and discussions with great interest and—when they hear remarks which show a total lack of realism at what is happening there—anxiety.
Last summer, three major matters were pressed on my right hon. and learned Friend the Lord President when he was in Hong Kong: first, nationality; secondly, repatriation of the boat people; and, thirdly, the movement to democracy. We have taken the first crucial and difficult decisions on the first two issues. I have answered questions about the third, a decision on which will come pretty soon.
Mr. Bernie Grant: I find the Foreign Secretary's statement totally inadequate. After hearing about his expensive and well-publicised visit, I expected a bit more. Was he or his governor—who recently visited the Chinese Government—able to extract a guarantee from the Chinese Government about the security of the British citizens in Hong Kong after 1997? I say that particularly in view of statements from the Chinese Government about the peaceful demonstrations in Hong Kong which have occurred. I should like to know precisely what the Foreign Secretary's position is on that issue. Is it not a fact that the British Government are totally bankrupt of ideas on the Hong Kong issue and are merely following behind the coat tails of the Chinese Government?
Mr. Hurd: The Chinese Government are certainly concerned about some expressions of free opinion in Hong Kong. The Government and the governor of Hong Kong have made it clear to the Chinese Government in many ways that an important aspect of Hong Kong is precisely that there is free expression there. If the Chinese intend after 1997 to incorporate into China a lively, vigorous and developing Hong Kong, they must accept that there will be freedom of expression and clear and rapid movement towards democracy. These are conditions of the prize; they are set out clearly in the joint declaration.
Dame Jill Knight: Can my right hon. Friend give the House any information about representations that the Government may have made to
302
Commonwealth countries in which there is space and opportunity to prevail upon them to offer passports to Hong Kong residents who may wish to leave after 1997?
Mr. Hurd: Yes, indeed. Since my statement on 20 December we have made representations to Commonwealth Governments and to many other friendly Governments encouraging them to follow our lead and introduce schemes of the kind that we propose, which are designed to keep key personnel in Hong Kong—for example, people working for companies belonging to these countries. The French already have such a limited scheme, as does New Zealand in one respect, and we are doing what we can to persuade other countries which could introduce such schemes to do so. My hon. Friend may have seen that Congressman Solarz has proposed such a scheme in the United States Congress.
Several Hon. Members rose—
Mr. Speaker: Order. I have to have regard to the subsequent business. The House knows that there is an important debate and a 10-minute Bill, and that the debate must end at 7 pm before we go on to private business. I shall call three more speakers from each side and then I am afraid we must move on.
Mr. Jim Sillars: The Secretary of State said that the fear engendered by the events of 4 June has lifted somewhat in Hong Kong, but will he confirm that there remains among its population an underlying fear and apprehension of the Peking regime, which is unrepentant about the events on 4 June, and confirm that they have cause for that fear?
Recently the head of the supreme court in China stated as a matter of policy that the Communist party is above the law. Given that background to the fear and apprehension, how does the right hon. Gentleman think the House should reply to questions such as I heard in Hong Kong? I was asked how it is that in my part of western Europe tears of joy are shed at people in eastern Europe escaping from Communist tyranny, and the people of eastern Europe are invited to join the European Community, which would give them the automatic right of abode in any part of the community, including the United Kingdom, yet we are prepared to consign Hong Kong to the Peking regime with inadequate protection in terms of a democratic structure.
Mr. Hurd: It is true that there continues to be an underlying anxiety. It has lifted a little because contacts have resumed in various ways. At lunch yesterday, I sat next to a young business man who had just returned from Peking, where he had been well received by the Prime Minister.
This underlying anxiety does not lead any of the Hong Kong Chinese to whom I spoke to question the fact that the joint declaration and the system being erected under it is the only realistic way forward for Hong Kong. Hong Kong wants us to make sense of the concept of two systems in one country, and the observations that the hon. Gentleman quoted will not apply in the special administrative region of Hong Kong.
Mr. Nicholas Budgen: Does my right hon. Friend concede that, if nearly 250,000 people come here from Hong Kong with the right of abode, that will permanently and irreversibly change the

303
nature of the British people? If this step is to be taken and my right hon. Friend's Bill receives a Second Reading, does he agree that the measure should be considered by a Committee of the whole House?
Mr. Hurd: The first matter is one on which every right hon. and hon. Member must make his own judgment—first, as to the likelihood of it happening; secondly, as to the consequences for the country if it did happen, given the people involved, their backgrounds, professional experience and so on. That is not a matter on which I would seek to educate my hon. Friend.
My hon. Friend's second point is not a matter for me. It is the second time it has been made, and my right hon. and learned Friend the Leader of the House is present listening.
Mr. James Lamond: It is clear that nothing that the Foreign Secretary is free to do will reassure the people of Hong Kong who are terrified about what might happen to them in 1997. His belated concentration on extending democracy to the people of Hong Kong must be looked upon by realistic people in Hong Kong as some sort of attempt by the Government to slide out of their responsibilities and to say. "Now that you have some measure of democracy, our responsibility is a little less than it used to be." Is not that the realistic situation?
Mr. Hurd: No. That suspicion was not put to me, and I do not think that it is in anyone's mind.
Sir John Stokes: is my right hon. Friend aware that in this difficult situation, which I know something about having recently visited China and Hong Kong, he has a duty to the people of England as well as to the people of Hong Kong? Is he further aware that mass immigration has been continuing for a long time to many parts of this country, including my own area? His proposal is for further mass immigration. Will that be acceptable to the mass of our people, and is it right that the Government should allow it? Is not his prime duty to maintain the social cohesion of this ancient and small island?
Mr. Hurd: I entirely accept, to quote my hon. Friend, that we have a duty to the people of England as well as to the people of Hong Kong. Given my hon. Friend's background and knowledge of both sides of that equation, I should not have thought that he would find those interests in contradiction.
Mr. Ted Rowlands: Will the Foreign Secretary clarify a matter that was raised earlier? If public servants and people in public office accept citizenship before 1997, will the Basic Law deprive them of or debar them from public office after that time?
Mr. Hurd: Perhaps the hon. Gentleman would look at article 74 of the joint declaration, which covers that point.
Mr. James Couchman: My right hon. Friend said that all the people that he spoke to in Hong Kong about his package of 20 December were disappointed that the number of people to be allowed to come here was not greater. He will note that I have a motion on the Order Paper for debate on Friday. It completely supports the Government's proposed package but expresses a similar concern about the number. Has my right hon. Friend's package of 20 December had time to begin to restore confidence, or does he think that he may need to increase the number?
Mr. Hurd: I made it clear in Hong Kong that I did not see any possibility of increasing the number. Members of the business community, civil servants and many others who raised the matter with me on Monday would have liked the number to be greater, but they accepted that it was as much as we would be able to implement. They made clear that my proposal of 20 December would be of substantial value in keeping key people in Hong Kong.
Several Hon. Members rose——
Mr. Speaker: I am sorry that it has not been possible to call all the hon. Members who wished to participate. I shall carefully note the names of those hon. Members who have been rising and will give them some precedence when we debate this matter again.

Hong Kong
  BILL PRESENTED
    SECURITY INDUSTRY
    Sir John Wheeler, supported by Sir Marcus Fox, Sir Geoffrey Finsberg, Mr. Ivan Lawrence, Mr. Michael Shersby, Dame Janet Fookes, Mr. John Greenway, Sir Eldon Griffiths and Mr. Tony Worthington, presented a Bill to require the creation of an inspectorate to regulate the employment of uniformed guards and personnel in the security industries; and for purposes connected therewith: And the same was read the First time; and ordered to be read a Second time on Friday 26 January and to be printed. [Bill 55.]

Adoption (Amendment)
4.23 pm
Mr. David Amess: I beg to move,
That leave be given to bring in a Bill to make provision for a statutory code of practice for adoption agencies; to amend the Adoption Act 1976; and for connected purposes.
In seeking the leave of the House to amend the Adoption Act 1976, I recognise that I am in a privileged position. I am the father of three small children and in 10 weeks' time I shall be the father of a fourth. We are lucky to be able to have children more or less to order while many couples are desperate to have children of their own and are not so blessed.
Just before Christmas, I visited Basildon hospital to play the role of Father Christmas. I was taken to the special baby care unit and shown eight babies. One of them had been born at 24 weeks and I am delighted to tell the House that that baby is doing well. In another cot was a big bruiser of a baby weighing 9 lb 15 oz. He had no name on his identification tag. The nurse told me that he had been born only that day and that a couple had been found who would give him their love. That certainly put the Christmas festivities into context for me.
The latest figures for England and Wales show that in the past year 69,249 children were in care and 7,390 children were adopted. Behind those stark figures lies in every case an individual human being who perhaps experienced the loss of both parents or a broken home, or who is simply unwanted. We tend to hear about the sensational cases of children being taken into care or of couples seeking to adopt. Those cases grab the headlines and tend to concentrate one's mind. I am concerned about the vast majority of cases—those that may be described as the ordinary cases.
I am anxious that the present system should overlook no one. It is difficult for people with their own children to imagine the heartbreak that childless couples can experience during the adopton process. It can be a traumatic time for couples who have been trying to have their own baby for a number of years, and who are ruled out of consideration as adoptive parents because of their age.
Most organisations involved in adoptions agree that the greatest demand is for babies and that there are not enough babies for those who wish to adopt them. Although there are enough children to meet the demand for them, sadly they do not always meet the requirements of prospective adoptive parents.
One would have to be very hard not to be moved by the details in the files of children waiting to be adopted. The smiling photographs are usually accompanied by personal details, and the overall message is of asking a family to give their love. There must be room for improvement in a system in which a boy of eight has been moved 38 times; in which some children spend all their time in care and are never matched to prospective adoptive parents; and in which other children are simply overlooked.
The overriding consideration in approving adoptive parents is the extent to which the adoption agency is satisfied that the applicants have the capacity for love, understanding, patience and flexibility that are required to meet not only the universal needs of a growing child but the specific needs of the child in question. Such considerations can include a child's physical or mental
306
handicap, or degree of emotional disturbance, or behavioural disorders. A child may need assistance in understanding his or her origins in an unhappy or unsavoury relationship, and may also need help in learning about his or her racial or cultural origins—which may be very different from those of the adoptive parents.
Adoption agencies, rightly, wish to satisfy themselves as to the health, vigour, imagination and other capacities of the adoptive parents during the subject's childhood. But I much regret any discrimination on the ground of age, especially when it is directed at grandparents. I pay a warm tribute to the hon. Member for Ogmore (Mr. Powell), who has been active in representing the interests of grandparents. Age is certainly being used as an instrument of control by some adoption agencies. My parents may have been considered by some as relatively aged, but I do not believe that I suffered from it.
Adoption law is complicated. The Children Act 1975 was consolidated into the Adoption Act 1976. A requirement of the Adoption Agencies Regulations 1983, which came into force in 1984, was that an adoption panel be set up. The new structure comprised seven family placement panels, each serving two adjacent social service areas. The linking was based on geographical proximity and attempted to amalgamate areas with a high population of children in care with those with a smaller number.
The panels have several functions which include fulfilling the criteria laid down in the regulations regarding the adoption of children, approving or rejecting applications from all families and individuals offering permanent substitute family care, ensuring that the child's feelings and wishes are taken into consideration and that she or he is appropriately prepared for placement, and examining all short-term placements that are expected to exceed two months' duration.
The Bill will require adoption panels to produce regular reports to the adoption agency which will include a review of their policies, range and volume of work and, perhaps more importantly, will require that the children's cases are reviewed, ensuring that in future no child is overlooked. As the system operates now, there is no uniformity among adoption agencies. They should publish widely their policies and practices, and the range and volume of work that they have undertaken annually. Sadly, there are children, particularly in inner-city areas, who have no individual attached to their case. The code of practice that I suggest would require those with responsibility for such matters to report back regularly on progress in finding homes for the children; then appropriate action would be agreed.
The temptation for some individuals, remembering the graphic pictures of children in Romania, is to go abroad, bring the children into the country and then seek adoption orders. I am advised by adoption agencies that that practice is causing particular difficulties.
The specific purpose of the measure is to improve the efficiency of matching prospective adoptive parents to suitable children. As I believe that I am the last Member to have spent the night seeking the privilege of introducing a ten-minute Bill, I can think of no finer cause for legislation. I very much hope that the House will support the motion.
Question put and agreed to.
Bill ordered to be brought in by Mr. David Amess, Mr. Tony Banks, Mrs. Rosie Barnes, Mr. Harry Cohen, Sir

307
Geoffrey Finsberg, Mr. Roger Gale, Mr. Ken Hargreaves, Mr. David Hinchliffe, Mr. Simon Hughes, Sir Charles Irving, Mr. Ray Powell and Miss Ann Widdecombe.

Adoption (Amendment)
  ADOPTION (AMENDMENT)
  Mr. David Amess accordingly presented a Bill to make provision for a statutory code of practice for adoption agencies; to amend the Adoption Act 1976; and for connected purposes: And the same was read the First time; and ordered to be read a Second time on Friday 30 March and to be printed. [Bill 56.]

Parliamentary Pensions
[Relevant documents: The Review Body on Top Salaries' Report No. 26, Review of Aspects of the Parliamentary Pension Scheme and other Matters (Cm. 362), and the Report of the Government Actuary on the Valuation of the Parliamentary Contributory Pension Fund as at 1st April 1987 (HC 317, Session 1988–89).]
Motion made, and Question proposed, That this House do now adjourn.—[Mr. Dorrell.]
4.33 pm
The Lord President of the Council and Leader of the House of Commons (Sir Geoffrey Howe): As colleagues will know, I had hoped that it would be possible to hold this debate well before now. Indeed, on several occasions last year, we tried to arrange it, but other business meant that it had to be put back. I apologise for that. Now that we have a chance of considering these important issues, I look forward to hearing the views of hon. Members on both sides of the House.
As the House knows, parliamentary pensions are a matter of extreme technicality. I do not pretend to understand their more subtle aspects, so perhaps my speech will be longer than it should be. I apologise for that.
There are three distinct topics to consider. The first is the Top Salaries Review Body report on the parliamentary contributory pension scheme. The second is the TSRB recommendations on the pensions of certain office holders—the Prime Minister, you, Mr. Speaker, and the Lord Chancellor—and on ministerial severance pay. The third is the Government Actuary's report on the state of the parliamentary pension fund with its recommendation for a reduction in Exchequer contribution.
Before dealing with the recommendations in the TSRB report, I should like to put the matter in context by reminding the House that the parliamentary pension scheme is generally regarded, by United Kingdom standards, as a good scheme, providing a reasonably generous return for hon. Members. I do not claim that it is the best that could be found, but in most respects it is on the right side of the average. As the House is in the position to set its own terms—with a significant contribution from the taxpayer—that is the right position to adopt.
Mr. Barry Field: Will my right hon. and learned Friend give way?
Sir Geoffrey Howe: I hope that my hon. Friend will forgive me if I do not give way, but I need to make a coherent presentation and listen to colleagues thereafter.
Under our scheme, benefit accrues faster than under most other public and private schemes. It is right for us to consider the scheme from time to time, as we are doing today, and I attach considerable importance to hearing the views of hon. Members. In July 1987 my predecessor invited the TSRB to undertake a review of the parliamentary pension scheme, the pensions of certain office holders and ministerial severance pay.
The recommendations that resulted fell into two categories—first, those solely affecting the parliamentary scheme on which the trustees were consulted and which are capable of being implemented by secondary legislation; and, secondly, those relating to Ministers and office holders which we accepted in May 1988 but which require

309
primary legislation before they can come into effect. I shall also mention the consequences of the recent Government Actuary's valuation report.
When I do that I shall be honouring a commitment given in 1987 to the right hon. Member for Manchester, Wythenshawe (Mr. Morris) that all reports by the Government Actuary on the parliamentary pension scheme will be debated. The right hon. Gentleman is the chairman of the trustees of our pension scheme. We are all grateful for the work that he and the other trustees do on our behalf. In some respects, the recommendations of the Government Actuary take automatic effect under section 5 of the Parliamentary and other Pensions Act 1972.
In 1987, hon. Members from both sides of the House raised a number of points on the scheme, which were put specifically to the TSRB. They included early retirement arrangements, resettlement grants, service as an MEP and hon. Members' contributions. The TSRB largely restricted its review to those issues. In paragraph 56 of the report, it took the view that the parliamentary pension scheme was basically a good one. However, it recommended two important improvements intended to ensure that it continued to meet the special circumstances of parliamentary life and remain consistent with good practice elsewhere.
First, the report recommended that the death-in-service gratuity should be increased to two years' salary. After consulting the trustees, I am maintaining the proposal of my predecessor that that change should come into effect from 1 May 1988. That date ensures that all deaths during the present Parliament are covered. Although that issue was not originally put to the TSRB, its recommendation brings the scheme into line with practice elsewhere. It also offers practical help where it is most needed. I know that hon. Members from both sides of the House are concerned about the position of widows. I warmly commend that change.
The second change recommended by the TSRB concerns early retirement arrangements. As the House may know, at present a pension may be paid earlier than the age of 65—the normal retirement age—providing the retiring Member is at least 50 years old. The pension paid is less than the accrued pension payable from 65, to reflect the longer period over which it is expected to be paid. If a Member retires at a general election, subject to fulfilling certain conditions, those arrangements may be modified.
Concern has been expressed about what are felt to be anomalies in these arrangements. Differences of treatment can occur in the level of pension arising from small differences in age and length of service, and that is why we asked the TSRB to examine them. The TSRB recommended revised early retirement arrangements for those retiring at a dissolution under which a full accrued pension would be payable. When the pension is brought into payment before the Member reaches pensionable age, it will be subject to an abatement to be calculated on a broadly actuarial basis, and that achieves a desirable and fair tapering.
The TSRB also suggested that the House consider whether those arrangements should apply at times other than at a dissolution. My predecessor met the trustees last year and agreed that there should be a single set of arrangements for those retiring at a dissolution and at other times. I endorse that and believe that this rationalisation represents not just a simplification of but a useful improvement to the scheme.
310
The TSRB also considered whether service as an MEP should count towards the qualifying period for early retirement. The House may recall that several Members raised that issue during the passage of the 1984 Act. The TSRB noted that although periods of service as an MP and an MEP may be aggregated for the purpose of establishing entitlement to a pension, they may not be so counted for the purposes of the qualifying period for early retirement. It took the view that the essential purpose of the early retirement arrangements for MPs should be to assist those whose parliamentary career had been exclusively in this House, and it concluded that an extension of the arrangements would not be appropriate.
Several hon. Members have made representations to me arguing against the view of the TSRB and arguing that, as service as an MEP can be counted for all purposes except early retirement and that because the nature of the MEPs' and Members' pension schemes are so similar, the current arrangements are anomalous.
That point is reinforced in the minds of those who advance the argument by the fact that the European salaries and pension arrangements for MEPs from this country are consistently kept in line with those of Members of this House, rather than with those of other Members of the European Parliament.
I have gone into the matter in detail because I shall be interested to hear the views of the House on that issue before finally deciding whether, in this respect, to accept the TSRB's recommendation.
Mr. Roland Boyes: The essential point appears to be made on page 6 of the TSRB's report, where it says:
"It can be argued that the occupation of MP and MEP are so closely allied".
That seems to accept that the two jobs are closely allied—that MPs and MEPs are doing similar jobs, are taking similar risks and are working under similar conditions.
Perhaps the right hon. and learned Gentleman will also examine appendix G relating to resettlement grants for MPs. If an MP and an MEP spend 15 years in the parliamentary process and the MEP has spent five years in the European Parliament, he will receive only half the resettlement grant. It seems ludicrous that if two people came into politics in 1979, one should get twice as much as the other.
Sir Geoffrey Howe: That may be a valid point, but the hon. Gentleman's intervention and its detailed nature confirms my initial wisdom in deciding not to give way during my remarks. I did so on this occasion only because there appeared to be a natural break in the proceedings. The hon. Gentleman's point deserves consideration, but I wish to deal at this stage with the scheme itself.
A further point, not considered by the TSRB, is the problem of excess contributions. Some Members continue to make contributions even though they have bought the maximum number of years to which they are entitled and thus cannot benefit from their extra contributions. That arises from the 1984 Act, which provides for a limit on the annual amount of pension of two-thirds of final salary. That is the limit with which all non-statutory occupational pension schemes must comply to qualify for tax relief.
When my predecessor met the trustees in June last year, he promised to consider the matter. Several possible ways to alleviate the problem suggest themselves, although I hesitate to define, let alone explain, them. I have examined

311
a number of them and none is without difficulty. Further consideration is necessary, and I propose to pursue the matter with the trustees in search of a satisfactory solution.
Apart from parliamentary pensions, the TSRB was invited to undertake a review of the pensions of certain office holders and of ministerial severance pay. The TSRB recommended the introduction of severance pay for Commons Ministers on broadly the same basis as that already provided for Ministers in the other place. That represents a simple recognition that an abrupt and significant financial adjustment may have to be made by an hon. Member on relinquishing ministerial office in whatever House and for whatever reason.
The TSRB's proposals would involve a single payment of a sum representing three months' net loss of parliamentary income on loss of office for whatever reason except death in service. In cash terms, that will be between £3,000 and about £7,000, depending on the rank of the Minister concerned. It is right to emphasise that that proposal was supported by both sides of the House when it was put to the TSRB as well as by the TSRB itself. As my predecessor made clear in May last year, the Government endorse these proposals.
Three senior office holders—the Prime Minister, Mr. Speaker and the Lord Chancellor—are not members of the parliamentary pension scheme. They have their own arrangements under the 1972 Act. For some time we have been aware that their arrangements contained anomalies. The TSRB has recommended that the pensions of all three of the great office holders should be fixed at half final salary, that the Prime Minister and Mr. Speaker should be able to participate in the parliamentary scheme and that restrictions on pension increases should be uncapped.
We have accepted that package of recommendations, which are not directly part of the parliamentary scheme. Their implementation, along with the proposals for severance pay for Commons Ministers, requires primary legislation, which we shall introduce in the near future.
The main issue in the Government Actuary's report is the recommendation that the Exchequer contribution should be reduced to 4·4 per cent. I shall try to assist the House by sketching out the background to that proposal, although I approach documents prepared by actuaries with considerable foreboding.
Under section 5 of the 1972 Act, every three years the Government Actuary must make a valuation of the assets of the parliamentary contributory pension fund specifically for the purpose of determining the residual Exchequer contribution. The current report, laid before the House on 27 April last, reports a significant improvement in the finances of the fund. On that basis, the Government Actuary has calculated that the notional standard contribution should be 20 per cent. of salary.
On that basis, the Exchequer contribution, after deducting the 9 per cent. of salary payable by Members, would be 11 per cent. That 9 per cent. plus 11 per cent. is not much different from the 22 per cent. recommended by the Government Actuary in his preceding report. It is the long-term total cost of the scheme to keep liabilities and assets in balance.
The Government Actuary is not required to make any recommendation about the level of Members' contributions. The increase to 9 per cent. in 1983 was made to take
312
account of the improved rate of accrual in the scheme and, as hon. Members on both sides will recall, the House approved a rate of 9 per cent. Collectively, we accepted that because we believed it to be a realistic level, given the estimated cost of the scheme after incorporation of the improvements suggested by the TSRB. That level of contribution was included in the 1984 Act and is generally in line with other fast accrual schemes in the public service.
The fund has now accumulated a significant surplus. There are two reasons for that: first, the performance of the fund's investments, for which the skill and care of the trustees and their agents are to be highly commended; and, secondly, the very high level of contributions made by the Exchequer in recent years, for reasons which I shall explain, to a total of 18 per cent.
In determining the Exchequer contribution required, the standard contribution of 20 per cent. can and should be adjusted to take account of the surplus. By long-standing convention—not just in this scheme but in the overwhelming majority of similar schemes—such a surplus is normally used to reduce the employer's contribution—[Interruption.] That is the position. In this case, that is the standard contribution payable by the Exchequer. The Government Actuary has recommended an Exchequer contribution for the year beginning April 1989 of 4·4 per cent. of salary, and has recommended that that rate should be maintained for the next eight years. As a result of the provisions of section 5 of the 1972 Act, the recommendation took effect automatically from that date.
There have been some misunderstandings on this question, and it may help if I explain the background more fully. Section 5 provides for the Exchequer's contribution to be calculated in accordance with the Government Actuary's evaluation. My study of the statute, about which I hesitate, confirms that. Under that section, the recalculation of the Exchequer's contribution takes effect when the Government Actuary's report is laid before the House. In the present case, the Government Actuary's report covered the three years from 1 April 1987, and recommended a lower contribution with effect from 1 April 1989.
As far as I am aware, in previous years there has been no suggestion that the recommendations of the Government Actuary should be altered or rejected. The 1972 Act does not provide for that possibility. However, I acknowledge that we have not previously been confronted with a surplus in the fund—certainly not on this scale—or with a recommendation that the Exchequer should reduce its contribution. With that in mind, my predecessor gave the commitment that the House would have an opportunity to debate the Government Actuary's report before any decisions were taken.
Mr. Joseph Ashton: Will the right hon. and learned Gentleman give way?
Sir Geoffrey Howe: May I just finish my point?
I regret that that may have misled the House into believing that the Government Actuary's recommendations would not take effect in the usual way. It appears that that is not the case and, although we are having a debate on the subject, the recommendations automatically took effect for the year starting April 1989.
Mr. Ashton: Will the Leader of the House give an estimate of how much the Exchequer will save over the next eight years by cutting its contribution?
Sir Geoffrey Howe: I would not like to give an estimate, but I think that I am right in saying that the surplus was £7·4 million. The reduced contribution is not designed to eliminate that, but to bring it back to a level that would sustain a contribution of 11 per cent. from 1989 onwards.
Mr. Ashton: Was it over £20 million?
Sir Geoffrey Howe: No. The total surplus to be reduced over the next eight years is £7·4 million, after which a normal contribution of 11 per cent. would be introduced. An Exchequer contribution of 18 per cent. for several years generated the balance, and has resulted in the recommendation that its contribution should be lower from now on.
Mr. Stanley Orme: Does the Leader of the House agree that the anomaly is that the Government Actuary can look only at the Exchequer contribution and not at Members' contributions? If the Actuary had been able to consider both contributions, he could have come up with a more sensible proposition.
Sir Geoffrey Howe: The right hon. Gentleman is right to say that the Actuary is permitted to look only at the Treasury contribution as a result of the provisions of the 1972 Act. However, I would not want him to conclude that a dramatic change would necessarily result from the scrutiny of both contributions. If the greater part of the surplus was accumulated because of the high contribution of 18 per cent. by the Exchequer, that would have to be reflected in any recommendations from the Actuary.
I readily acknowledge that we are in dangerous waters on this issue. Against the factual background, I shall offer hon. Members some insight into the considerations which I think were taken into account in the most recent redesign of the system. Whatever hon. Members may say now, under the 1972 Act the Exchequer contribution was clearly intended to be the residual. It is normal for valuation changes to reflect on the employer's contribution rate since that is normally regarded as the residual, rather than the employee contribution.
In our case, the employer is the Exchequer, and its contribution was designed by the legislation to be the variable and to take account of any changes in economic trends. The Exchequer contribution has been as high as 18 per cent.—13 per cent. plus a 5 per cent. deficiency payment—since the previous evaluation report. The proposed dip to 4·4 per cent. to keep the fund in balance can be seen—this is the argument behind the legislation—as a temporary compensating relief for the higher Exchequer contribution of earlier years. The contribution was assessed in 1984 with the same aim—to keep the fund in balance.
Mr. Frank Haynes: The Government contribution being reduced 11 per cent. to 4·4 per cent. was a twist.
Sir Geoffrey Howe: Unusually, I did not catch the hon. Gentleman's intervention, although I have no doubt that it was an intelligent one.
During contribution holidays—as they are described—the bulk of public and private schemes leave employee contributions unchanged, as it is generally agreed that fluctuations in the employee rate are undesirable because they give rise to uncertainty.
Sir Peter Hordern rose——
Sir Geoffrey Howe: Before I give way to my hon. Friend, I appreciate that the House may argue that the figure of 9 per cent., which was an advance on the originally recommended figure of 8 per cent., suggests that there may have been some over-enthusiasm of judgment on the part of the House.
Sir Peter Hordern: I accept what my right hon. and learned Friend says about the role of the Government Actuary, and about the 1972 Act. However, the Review Body on Top Salaries has a different attitude. In successive reports it has been suggested what the relationship between the Treasury contribution and the employee's contribution should be. It has recommended the level of Members' contributions, and that level has differed from time to time. Last year's TSRB report was unusual because it accepted 9 per cent. as though it had no power to recommend otherwise. If it had recommended, as I think it should, that Members' contributions should have been significantly lower, which would have been proper according to the Actuary, all would have been well. Perhaps we shall have the opportunity to debate that later.
Sir Geoffrey Howe: My hon. Friend draws attention to an issue that I have already foreshadowed. In justice to history and to the previous legislation, I should expand the underlying rationale.
Mr. Harry Ewing: Will the right hon. and learned Gentleman give way?
Sir Geoffrey Howe: If the hon. Member will forgive me, I should come to a conclusion.
In favourable economic circumstances, it is not unusual for the employer's rate to fall and to be lower than the employee's rate. That certainly happens in the private sector and the public sector. The question is whether the right balance has resulted from the original legislative provisions, and the impact of the Government Actuary's report and the TSRB recommendations.
I have given in full the arguments for following the Government Actuary's recommendations, as we have done in the past. I do not think that they are likely to be set aside, but my mind is not closed. I should be foolishly over-confident if I closed my mind on any aspect of this matter. If the House expresses a clear view or preference for any improvement in the scheme, including changes in the contributions structure, I and the Government accept that the TSRB should be invited to consider all such suggestions for improved benefits.
I emphasise that any consideration by the TSRB would have to include the central question of who is to pay and what is the fair basis for payments in the long term. I think the whole House would wish that.
I hope that the process of considering possible future recommendations in the light of today's debate will not stand in the way of implementing the outstanding recommendations of the TSRB's 26th report. I visualise, after this debate, the relatively early introduction of two pieces of legislation: first, regulations to implement the TSRB recommendations for all Members of Parliament, including the revised early retirement arrangements, the improved death-in-service grants, and any other recom?mendations that result from tonight's discussions—for example, revised arrangements for Members of the European Parliament; and secondly, a Bill to implement

315
the changes affecting the three most senior office holders and severance pay for Ministers and office holders, except for the Prime Minister and Mr. Speaker.
I wish to ensure that, after the passage of those two pieces of legislation, any further changes that might arise from the next round of TSRB considerations can themselves be implemented by secondary legislation to avoid the need for more than one Bill on the subject in the current Parliament. I am anxious that we should give ourselves the freedom to proceed through secondary legislation: it may already be in our power, but I am not confident enough to say so in terms.
We have a good scheme, and we should build on it as the TSRB report recommends. Many right hon. and hon. Members on both sides of the House clearly hold strong views on some aspects of the scheme, and—as I said at the outset—I look forward to listening to those views with
care and attention.
5 pm
Mr. Stanley Orme: I thank the Leader of the House for his introductory speech. I remind him and the House that we are discussing a House of Commons matter, not a party-political matter. The House has overturned recommendations and decisions made by past Governments, and hon. Members on both sides of the House have often had to make difficult decisions themselves. Public reaction is often ill-informed, and it is therefore important that we examine this matter in some detail.
I consider the TSRB report disappointing and negative. It does not take account of the problems faced by Members and the staff of the House, and by their dependants. Far from improving matters, the report—coupled with the Government Actuary's report—makes them worse. When I gave evidence to the TSRB, I presented what I considered to be relevant but modest proposals on behalf of hon. Members who are asking not for benefits in excess of those given to other sectors, but to be treated on an equal basis with both the private and public sectors. There is no need for me to apologise for such a request; compared with the salaries and pensions in other European and Commonwealth Parliaments, our proposals are extremely modest.
The Leader of the House said that we had improved our position, and so we have. It was only in 1964, however, that a pension scheme for Members of Parliament was initiated, and we all know of hon. Members on both sides of the House who left after that time and experienced considerable financial difficulty. Slowly, we built on the scheme, and I hope that we shall continue to do so.
Mr. Anthony Beaumont-Dark: Is not one of the most disappointing features of the report its failure to deal adequately with widows' pensions? Many hon. Members do not come to the House until they are in their 30s or 40s, but the widow of an hon. Member who was here for 15 years may be left, in her early 50s, expecting no more than £3,900. The figure should be doubled so that widows receive a realistic pension. That is what worries us most of all.
Mr. Orme: I agree, and other hon. Members will doubtless develop that point.
316
I hope that the Leader of the House will take note of the strong feelings of hon. Members on both sides of the House. Before I deal with the more contentious issues, let me say that the proposal to increase the death-in-service grant to two years' salary is a welcome improvement. I agree with the right hon. and learned Gentleman that it should be retrospective to the beginning of the Parliament.
I support the view of the House of Commons trustees that it is not necessary to have two schemes to deal with early retirement: that, in my view, would lead to confusion. A single scheme should apply, whether the retirement takes place during a Parliament or at its dissolution. Again, I feel that any scheme proposed by the TSRB should be retrospective to the beginning of the Parliament. Normally, the TSRB reports only once in each Parliament. In this instance representations were made very early in the Parliament, but only now—when, as the Leader of the House has acknowledged, we are nearly halfway through the Parliament—are we discussing the report.
The limited proposals regarding ex-Ministers, the Speaker and former Prime Ministers are indeed very limited, and should have been part of a package dealing with the central issue of Members' contributions and pensions. I shall say more about that later.
The hon. Member for Birmingham, Selly Oak (Mr. Beaumont-Dark) mentioned widows' pensions. Widows' and widowers' pensions are still extremely low—lower than the normal industrial level. I could quote cases of real hardship among hon. Members on both sides of the House, and in some instances that hardship is still being experienced. I believe that the pension should be increased from half the amount of the pension for which the former Member was eligible to a minimum of two thirds of that amount. If my right hon. Friend the Member for Manchester, Wythenshawe (Mr. Morris)—who is chairman of the trustees—catches your eye, Mr. Speaker, he will no doubt develop that subject further.
Mr. Richard Holt: The report talks of increasing death-in-service grants and widows' pensions from one to two years' salary but refers to payment of a Member's salary for one year "or" repayment of the contributions made. Does that mean that those who receive the repayment will not receive the increase, or that someone whose spouse receives a lump sum will lose the repaid contributions?
Mr. Orme: I am afraid I cannot answer that question, but it is important and will no doubt be examined. I also noticed that passage in the report.
Mr. Frank Haynes: We all realise that the pension scheme does not give widows a fair deal. If the Lord President had said at the Dispatch Box that the Government's contributions would not be reduced from 11 per cent. but that widows would be given a bit more, he might have been rather better off. Does my right hon. Friend agree, however, that the staff of the pensions department, Mr. Jim Dobson and Mr. Tony Lewis—whom I welcome back after his illness—are doing a first-class job on our behalf?
Mr. Orme: I agree, and no doubt when the Leader of the House reviews today's debate he will take into account the points made about widows and widowers.

317
Severance pay—or resettlement grant, as it is now known—is not affected by pension proposals, although it was discussed by the TSRB. It is funded directly from the Exchequer. Many hon. Members, however, have raised with me questions about both the amount paid to Members with a short period of service and the cut-off point at 65 years of age. Payment at present is equivalent to six months salary for those with less than 10 years' service, rising on a graduated scale to a full year's salary for those aged 55 and over with 15 years' service. The simplest and most socially just solution would be to assist those Members who have completed only a short period of service by making an upward adjustment and raising the cut-off point for all Members.
The modest suggestion that MEPs' pension rights should he treated differently from those of Members of Parliament is clearly unjust and wrong. There is a direct link between the pension contributions of MEPs and Members of Parliament, and the suggestion that they should be able to aggregate their pensions should be acceded to. I note the point about resettlement grants made earlier by my hon. Friend the Member for Houghton and Washington (Mr. Boyes).
Certain problems have caused great distress to the dependants and staff of a deceased Member. It is completely wrong that any payments due to staff should be linked to the estate of the deceased and that the staff are asked to leave the House on the day following a Member's death because no proper structure exists to deal with that eventuality.
When a well-known Conservative Member died fairly recently, his secretary did not receive her salary or her P45 from the executors of his estate until long after his death. She had to take out a bank loan to cover her necessary expenses pending settlement of her salary from the estate. I stress that no blame whatsoever is attached to the family of the deceased, but right hon. and hon. Members will agree that that is a ridiculous system which must be changed.
A number of hon. Members have rightly mentioned the salaries and working conditions of staff in the Palace of Westminster. Although that goes wider than the immediate issues raised by the TSRB, the House must not overlook those important matters.
On Members' pensions, the House will be aware, as the Leader of the House has made clear, that a decision to deduct 9 per cent. of salary was upheld by the review body. However, that brings no increased benefits except for minor adjustments as outlined in paragraph 40 of the TSRB report. Paragraph 32 of the Government Actuary's report makes the startling suggestion that the Treasury contribution be reduced to 4·5 per cent. That flies in the face of what is accepted in industry in the private and public sectors, where the employer normally pays two thirds and the employee pays one third.
The Government Actuary makes that proposal based on the Treasury contribution and the healthy state of the fund. The report of the Government Actuary is extremely one-sided because he is not empowered by legislation to comment on Members' contributions, only on the Treasury contribution. That proposal turns the basis of our pension scheme upside down.
The Exchequer contribution is based on a multiple of two with a 9 per cent. contribution from the Member. That means that the Treasury contribution should be 18 per cent. producing a total of 27 per cent. The Actuary
318
proposes reducing the Treasury contribution to 4·41 per cent. leaving the Member's contribution at 9 per cent., thereby reducing the total contribution to 13·41 per cent.—a dramatic reduction from 27 per cent.—all with effect from 1 April 1989.
To bring the scheme in to line with accepted practice, the Treasury contribution should be 18 per cent. making the total 27 per cent. Given the present state of the fund, nobody is suggesting that. Before the implementation of the Actuary's report, the Member will contribute 9 per cent. and the Treasury will contribute 13 per cent.—well below the usual factor of two.
If some readjustment is needed because of the high level of the fund, either the benefits should be improved or there should be a reduction of the Member's contribution as well as that of the Treasury. For instance, there could be a reduction of 2·5 per cent. in the Member's contribution, bringing it down to 6·5 per cent., and the Treasury contribution could remain at 13 per cent. Alternatively, the Member's contribution could remain at 9 per cent. and widows' and widowers' benefits should be improved accordingly.
The Leader of the House raised the matter of excess contributions. The position needs to be examined, because eventually many hon. Members will be making contributions when they can get no increased benefits because they will have reached the limit.
It is worth putting on record the fact that our salary is based on 89 per cent. of a senior principal grade. It is estimated that, when wage negotiations are taking place, civil servants' contributions are based on 6 per cent. Where is the "fair comparison"—the term used in such negotiations—for hon. Members?
A substantial increase in contribution, no increase in benefit and a dramatic reduction of the Treasury contribution, which in the short term, could have a detrimental effect on the fund cannot be right. Therefore, I hope that the debate will make the Lord President aware of the strong feelings in the House. We are asking only for natural justice which has not been obtained through the current TSRB report or by the Actuary's recommendation.
If necessary, some of the issues could and should be referred back to the TSRB. The House will certainly want to discuss the matter in more detail before any final decisions are reached.
5.17 pm
Sir William Clark: I have read the Government Actuary's reports for 1984 and for 1987. There seems to be some illogicality in our approach to Members' pensions. According to the 1984 report, the Member was paying 9 per cent. and the Exchequer was paying 18 per cent. The 1987 report suggested that the Member paid 9 per cent. and the Exchequer 4·4 per cent. In the meantime, the fund has grown from nearly £42 million to more than £84 million, so it has doubled in the past three years. The real bone of contention is what should be done with the surplus.
In a private occupational pension scheme, if the fund increases in value to more than 105 per cent.—that is a 5 per cent. increase—the scheme must get rid of that surplus. There are two ways in which that can be done. Either the employer can take it out of the pension fund or it can be used to provide a contributions holiday. If the employer

319
takes out that surplus, the company pays 40 per cent. tax—the rate is higher than corporation tax. That is Government fiscal policy which was imposed because, quite rightly, the Government thought it unfair that an employer could take money out of a pension fund—which belongs partly to the employee—without any penalty and do nothing for the employee. Consequently, companies refrain from taking any surplus out of occupational pension schemes because of the 40 per cent. immediate tax liability, which has nothing to do with the company's profits, is payable irrespective of losses and is entirely different from corporation tax.
If that is the logic of the Government—and I am sure that they have not changed their logic—in our pension fund, which in many ways is analogous to a private pension fund, why does the employer or the Exchequer effectively take the lot without any penalty? In many cases, when there is a surplus in the private sector after revaluation, the contribution holiday is invariably shared between the employer and employees. Alternatively, the pension benefits are improved. I agree with the right hon. Member for Salford, East (Mr. Orme) that, irrespective of the Top Salaries Review Body, it would be a good idea for hon. Members to consider increasing widows' benefits. In addition, something should be done to help our ex-colleagues who are suffering hardship.
Figures up to last year show that Members contributed 9 per cent. and the Exchequer contributed 18 per cent. I cannot understand the logic of the Government's argument, because, in those circumstances, one third of the surplus belongs to hon. Members and two thirds belongs to the Exchequer.
I welcome the Leader of the House saying that he will discuss with the trustees the possibility of their contribution continuing after a Member has achieved full entitlement. I remind my right hon. and learned Friend that, under the state pension, if an employee continues working after 65 the employer continues to pay his contribution, but the employee ceases to pay his national insurance contribution. That could be the yardstick for hon. Members who have paid their contributions and reached full entitlement. The Government should follow the same system as the state retirement scheme, whereby, when an employee reaches full entitlement, he makes no contribution but the Exchequer continues to pay.
I pay tribute to the trustees of the pension fund and their advisers for achieving the excellent result of doubling the size of the fund over the past three years. I am sure that all hon. Members agree that they have done an excellent job.
There is an anomaly in how we deal with the fund's surplus. It is funny that, if there is a deficit, one tries to brush it under the carpet, but when there is a surplus, arguments ensue. I am delighted that my right hon. and learned Friend said that his mind is not closed to the possibility of bringing the system more in line with the logic of private pension schemes.
Sir Geoffrey Howe: I am listening carefully to what my hon. Friend is saying, but he may be under a misapprehension about the scale of the surplus above actuarial liabilities—I am not challenging the legitimacy of
320
his argument—which was £7·4 million. The fund is much larger than that, but I should not like there to be any misunderstanding about the scale of the surplus.
Sir William Clark: I agree that the surplus is immaterial. I am asking why we do not follow the example of private occupational pension schemes. What matters is not the amount of the surplus but the principle involved. If a private employer removes the surplus from a pension fund, he is heavily taxed above the rate of corporation tax. Consequently, his only alternative is a contribution holiday, during which the employers' contribution is not always reduced but is usually shared between him and his employees. I hope that my right hon. and learned Friend will consider that.
5.24 pm
Mr. Alfred Morris: I am most grateful to the Leader of the House for referring so kindly to my role and work and that of my fellow trustees on both sides of the House.
The House will expect me, as chairman of the managing trustees of the parliamentary contributory pension fund, to give their views on both the Top Salaries Review Body's proposals—some good, some less so—and the report from the Government Actuary on the valuation of the fund, in which he recommends a cut in the Treasury's contribution from 11 per cent. to only 4·4 per cent.
As trustees who are selected by the House to manage the fund, we try our best to improve its provisions in the interests both of Members, past and present, and their dependants. There have been many improvements over recent years in which the trustees have taken the leading role, including a faster accrual rate, the age-service conditions for early retirement at a general election and the provision for ill-health retirement pensions.
There is, however, a very strong and urgent case for further improvements which are now threatened, notably by the Government Actuary's recommendation that has cut the Treasury's contribution to only 4·4 per cent. I must therefore very strongly emphasise that it is ultimately for the House to decide, not the Actuary or the TSRB, if and when further improvements should be made. The scheme is a statutory one and Members have it within their power to improve its provisions.
The staging of this debate on a motion for the Adjournment does not permit of any amendment by which the House can make decisions today on the TSRB's proposals or the Government Actuary's recommendation. The House may think that this is curiously contrary to the spirit of an undertaking given on behalf of the Government by the right hon. Member for the City of London and Westminster, South (Mr. Brooke), who was then Minister of State, Treasury, during the passage of the Parliamentary and Other Pensions Act 1987:
"time will be made available for a debate on an amendable motion before any regulations amending the scheme are made under clause 2."—[Official Report, 13 May 1987; Vol. 116, c. 371.]
This debate may not be strictly covered by the letter of that undertaking, but I know that its spirit encouraged many right hon. and hon. Members on both sides of the House to hope that today's debate would take place on an amendable motion, preferably with an all-party amendment tabled by the managing trustees.
That has not been allowed to happen and I shall therefore set out the views of the trustees and also give the

321
House our advice on the response that it should make to the two reports where they affect our remit. I stress the word "our" remit, as some of the TSRB's recommenda?tions go beyond the trustees' responsibilities: for example, those on severance pay for Ministers and resettlement grants for Members.
Soon after they were published, the right hon. and learned Gentleman's predecessor made it clear that he proposed to accept the TSRB's proposals, and to give them legislative effect. It has to be said that he could hardly have done anything else, given the very tightly drawn terms of reference that he had dictated to the TSRB. Nevertheless, the trustees were grateful that the death-in-service benefit was soon to be raised to the level prevailing in most public-sector schemes—two years' salary. This is an improvement which we have advocated for some time and I welcome the right hon. and learned Gentleman's decision to give it retrospective effect.
We also welcomed the proposed further improvements to the early retirement provisions. They will give many right hon. and hon. Members more flexibility over retirement and will mean that more of our colleagues between the ages of 60 and 65, who have fewer than 20 years' service, will no longer face the agonising decision of whether to take an actuarially reduced pension or to defer drawing their pension until they are 65. That is something for which the trustees, with others, have long campaigned. On a personal note, I should like here to pay tribute to the late Brynmor John, who took so informed and constructive an interest in the scheme, and whose loss to the House is still felt very deeply by all his parliamentary colleagues.
The trustees are much less happy about the recommendation that the Member's contribution should remain at 9 per cent. I should explain, for the benefit of those who were not Members at the time, that the figure of 9 per cent. was not the actuarially assessed cost of the revised pension package then agreed, but rather a device to deal with a revolt over parliamentary pay among the Government's Back Benchers in July 1983. In the view of many, the figure of 9 per cent. was not only incomprehensible but reprehensible.
The latest survey of occupational pension schemes, by the National Association of Pension Funds, shows that in 1988, across the board, employees contributed 4·4 per cent. to the cost of their pensions and employers 8·8 per cent.—precisely twice as much. On that basis, in our scheme, Members would pay 6⅔ per cent. and the Exchequer 13⅓ per cent. Yet we have been paying 9 per cent. since January 1987, and to eliminate the fund's surplus—which that needlessly high level of personal contribution has helped to create—the Exchequer's stake is now reduced to less than half of the Member's contribution. That is shabby.
Under the Parliamentary and Other Pensions Act 1972, the Government Actuary is required to determine the contribution from the Exchequer that is needed to balance the scheme's assets and liabilities. This means—and it is essential for it to be very clearly understood by the House as a whole—that the scheme cannot stay in surplus, no matter how well the investments perform.
The House needs to understand, too, a little of the history of the pension arrangements for Members, which were first introduced with effect from 16 October 1964. While contributions had to be made to the fund only from that date, pension accrued in respect of up to 10 years—
322
later increased to 15 years—of service prior to that date. The cost of that concession—and the Act was quite specific—was to be met by a deficiency contribution from the Exchequer, payable over 25 years. It is important to bear in mind that the 1965 Act provided for the review, and the variation up or down as necessary, of Members' contributions and/or of benefits. Under the 1972 Act, which restructured the pensions provisions, the accrued pension rights of Members then in service were improved, at a cost to be borne by the Exchequer.
In his first report, on 27 November 1973, under section 5 of the 1972 Act, the Government Actuary indicated that the deficiency contribution to fund pensions in respect of service prior to 1 April 1972 was to be payable over 25 years from 1 January 1972. It was assessed at 7·75 per cent. in that report, had fallen to 6 per cent. at the valuation as of 1 April 1984, and has now disappeared some eight years early.
When the pension accrual rate was increased under the 1984 Act, the Government promised Members the opportunity to purchase a limited number of added years at a special price—40 per cent. of the cost—which is why the facility became known as "subsidised added years". The balance of the cost—60 per cent.—was to be borne by the Exchequer. I have to report to the House that no such contribution has been made to be fund.
All this means that the current membership is meeting the balance of a deficiency contribution which was intended to be a charge on the Exchequer. It also means that the subsidised element of the added years facility, which the Government said would be borne by the Exchequer, is effectively being paid by the current membership, some of whom did not take advantage of the facility. Others were not even Members when it was on offer. How then, with justice, can the Leader of the House possibly refuse to accept a reapportionment of contribu?tions as between Members and the Exchequer?
The House will wish to note that improvements in the scheme are now effectively vetoed, since successful investment management merely results in a reduction in the Exchequer contribution. The more the trustees succeed, the more they benefit not members of the scheme but the Exchequer.
Mr. Ray Powell: I appreciate the trustees' work in the matter, but is it true that they could have predicted a surplus accruing over the three years of the review? Would it not have been in order for the trustees to recommend extra payment of pensions, widows' benefits and so on before the three years had elapsed, so that the £7·5 million surplus could have been spent before this Government review?
Mr. Morris: I am grateful to my hon. Friend. As the fund's performance improved, we made repeated representations in support of improvements. We gave evidence to the TSRB about a shopping list of improvements that we thought were necessary. I shall refer to some of them as I proceed. If I cannot give way again, it is because I want to conclude my speech as quickly as I can although I am, of course, giving the House what is in the nature of a report from the managing trustees.
I ask the House, in considering whether and when to use its own ultimate power to alter the scheme, also to take very careful note of the fact that our scheme compares

323
most unfavourably with others, in terms both of the proportion of its costs paid for by Members and of some of the benefits that it provides.
There are many precedents for sharing the benefits of the contributions holiday that the Treasury is now set to enjoy in relation to our scheme. For example, the Daily Express on 4 May last reported Reed International's proposal to distribute some of the excess funds in its pension scheme, which gave some employees a 90 per cent. rise in pensions.
More recently, it was reported by the Financial Times that, as a result of surpluses in British Rail's pension fund, employees were to pay only a 5 per cent. contribution. In addition, the report states:
"substantial improvements in benefits have been made, in respect of both lump sum payments and of benefits for past service".
The trustees of the parliamentary scheme are acutely aware of the insistence, on both sides of the House, that widows' pensions must be increased. This debate is an opportunity to make the Government aware of that insistence and to offer suggestions for giving it effect. For the trustees, I must point out that, with the present surplus and continuation of a 9 per cent. contribution, we could meet the request by my right hon. Friend the Member for Salford, East (Mr. Orme) to increase forthwith the maximum widow's pension from 50 per cent. to 66⅔ per cent.
Such an increase ought certainly to have the wholehearted support of the Chief Secretary to the Treasury who, in the debate on the Finance Bill on 12 July, said:
"The really unsatisfactory feature of pensions provision is the millions of ordinary scheme members who do not receive a pension anywhere near the maximum allowable under the tax rules".—[Official Report, 12 July 1989; Vol. 156, c. 1074.]
The widows of our former colleagues, many of whom live in straitened circumstances, can be added to those millions.
As of now, the maximum widow's pension that can be awarded is of the order of £8,000, but I must stress that very few, if any, widows of Members can expect anything like that sum. For anyone to do so, until relatively recently, her husband would have had to serve continuously in Parliament for 40 years. Given that the average parliamentary career is no more than 17 to 18 years, a widow's pension under our scheme will average no more than £3,000. At his death in 1984, the widow of a former colleague and very close friend of mine, with total service of over 20 years, was entitled to less than £50 a week. That, too, is shabby.
Referring to the pensions paid to Members' widows in a debate on 27 April 1987, Sir Anthony Kershaw, then a trustee of the fund and the Conservative Member for Stroud, said:
"It is an absolute disgrace that this should be tolerated and even to speak of it ought to give one a sense of shock.—[Official Report, 27 April 1987; Vol. 115, c. 104.]
That is but one compelling reason for resisting the reduction of the Exchequer contribution to less than half that paid by Members.
As the House knows only too well, Members do not enjoy security of tenure. The nature of the job in today's world is stressful and imposes a very heavy strain on family life. It is for these, among other reasons, that the
324
trustees want the TSRB now to be asked to look again at the basis for determining widows' pensions. The trustees are advised—and here I pay tribute to my fellow trustee, the hon. Member for Horsham (Sir P. Hordern), who has worked long and very painstakingly on comparisons with other schemes, and who I know, Mr. Deputy Speaker, hopes to catch your eye—that current best practice in private sector schemes is to provide a widow's pension of up to two thirds of the former employee's pension.
That is what we seek and we urge the House to support a two thirds pension for widows. But it will require a re-examination of the basis upon which our scheme is funded and administered. There is evidence, as I have shown, taking occupational schemes as a whole, that costs are borne in the proportion of 2:1 as between employers and employees. On that basis, even at 11 per cent. the Exchequer is already paying far too little. The TSRB has on three occasions recommended that Members' and Exchequer contributions should be fixed in the ratio of 3:5—and the trustees see no reason why that ratio, given in response to references made to the review body by successive Leaders of the House, should not be accepted.
We must ensure that, when the fund is in surplus, the Exchequer is not the sole beneficiary. It must surely be only fair that the membership of the fund ought to see some benefit, whether by way of higher benefits or reduced contributions. I am mindful also of the claims of existing pensioners.
In a further reference to the TSRB, the trustees want the review body to be asked to consider the following changes to the fund. First, contributions to the fund should in future be shared between Members and the Exchequer in the ratio 3:5.
Secondly, the Actuary's triennial report on the fund should in future recommend what the percentage rate of the Member's contributions should be for a further period of three years, on the assumption that benefits continue unchanged.
Thirdly, it should be for the House to decide, if the triennial report shows the fund to be in surplus or to have an emerging deficit, whether there should be a variation in the benefits provided, in the rate of the Member's contribution, or both.
Fourthly, if the House decides on a variation in the benefits provided, the Actuary should recommend what the percentage rate of Members' contributions should be for a further period of three years, having regard to that decision.
Fifthly, regulations to give effect to any decision of the House as to benefits, and to the appropriate recommenda?tion of the Actuary as to contributions, should be made under the Parliamentary and Other Pensions Act 1987.
Given these changes in the scheme, Members would be much better served and their dependants much better protected. At the same time, the trustees would no longer be placed in the position of seeing all their work to improve the scheme's assets result in a lower contribution from the Exchequer alone.
The TSRB might well also be asked to compare our scheme to other parliamentary schemes across the world. To give but one example, Australia has a parliamentary scheme which is infinitely better than ours.
I am glad to have been able to indicate both the current restraints on the trustees of our scheme and the way forward if we are to achieve the improvements we seek, not least for Members' dependants. I hope not only that my

325
proposals will be given due attention by both sides of the House, but that they will soon be translated into practice. The House has the power to make that happen.
To conclude, I must place on record, on behalf of the trustees and, indeed, all Members and their dependants, our appreciation of the quiet and painstaking, but unseen administrative work of Jim Dobson, Tony Lewis, Moreen McColl and all who work and have worked with them so unstintingly to help members of the scheme, past and present, and their dependants. The House as a whole owes them its gratitude.
Several Hon. Members rose——
Mr. Deputy Speaker (Mr. Harold Walker): The debate must conclude at 7 o'clock and as I understand that at least a dozen hon. Members will be seeking to catch my eye, I very much hope that we can have brief speeches.
5.45 pm
Sir Peter Hordern: I start by congratulating the right hon. Member for Manchester, Wythenshawe (Mr. Morris) on his work as chairman of the parliamentary trustees. We have met often and have thought carefully about the recommendations that we have made. We have met my right hon. and learned Friend the Leader of the House on a number of occasions and have made proposals to strengthen and improve the existing provisions of the fund.
I begin by saying something about the nature of our fund because outside this place it may be thought that we are concerned only with improving our own conditions at taxpayers' expense. It is important to recognise the distinction between a funded scheme and a pay-as-you-go scheme. The Civil Service has a pay-as-you-go scheme and the benefits are paid according to need. It is not a funded scheme; it does not come out of the investments that have resulted from contributions made by the employer and the employee. That is an important distinction, because we are not asking for more money from the taxpayer. We are talking about how best to reduce our demand on the taxpayer—whether that should be done by reduced contributions from hon. Members or by improving and increasing the benefits available to hon. Members and their dependants. As I have said, it is an important distinction.
I welcome very much what my right hon. and learned Friend the Leader of the House has said and his proposal to refer the debate to the TSRB. We should bear it in mind not only that the fund has done very well under the investment advisers and managers whom we are happy and fortunate to have, but that when it was last valued —the subject of the Government Actuary's report—it stood at about £87 million. However, the latest valuation is £104 million. It is a triennial valuation and as the last one was made in 1987, the next is due this year. We should ask the TSRB to look again at this whole business, because it is clear that the substantial surplus upon which the Government Actuary reported has been exceeded by recent movements in the value of the fund. That appears a good reason for an urgent review of the fund and of our benefits.
Our scheme is a funded one and hon. Members contribute 9 per cent. That is the highest rate of any funded scheme in the country. I may be wrong, but I have made extensive searches and I have not yet come across a funded
326
scheme in which the employees pay such a high contribution. I shall return to the comparisons later because some of those other provisions are more in line with what we should be doing.
It is important to view the 9 per cent. employees' contribution in relation to what the employer pays. I agree with what the right hon. Member for Wythenshawe said about how we reached the figure of 9 per cent. in the first place. It was a great mistake. It was done rather quickly, and probably rather late at night, without anyone fully realising the consequences.
Even though 9 per cent. was decided in a moment of aberration, it is curious that the TSRB did not consider the matter seriously in the context of the total contribution made. The TSRB's latest proposal was that the total contribution required was 20 per cent., not 22 per cent. On all previous occasions, the TSRB said that the relationship between the Government's contributions and Members' contributions should be three eighths—that is, three parts Members' contributions and five parts Government contributions. That was the case in 1976 and 1983.
Only on this latest occasion did the TSRB accept the 9 per cent. contribution from Members' as correct without considering its role. That is regrettable. The role of the TSRB was to decide what contributions were appropriate for employers and employees. I hope that when it considers the position again it will revert to its former responsibility for judging what contributions should be made by Members and the Treasury.
I agree with my right hon. and learned Friend the Leader of the House that in some respects our scheme is good. We have an accrual rate of fiftieths rather than sixtieths. That is right because in general new Members of Parliament join the House in their early 40s. Sometimes they join earlier, but that is the most common age. A large number of accruals need to be made in a comparatively short period. Our scheme is not like an ordinary company-funded scheme which members can expect to join at 20 and have a long period of service. As we mostly join at 40, it is right that we should have special consideration. Fiftieths are a proper proportion.
Regrettably, there is a great deal of difference in the experiences of hon. Members. Some of us have a long period in the House and others have a short time. The turnover is significant. I asked one head of an actuarial department of a large insurance company his opinion of our starting rate of 9 per cent. He said that he could not advise any new member of any scheme that he ran to accept such a large contribution. That is a fact worth knowing.
Our scheme should reflect the nature of its membership. On the whole, we enter it late and, for some at least, there is a rapid turnover. It is important to ensure that our scheme does not provide any advantages that are not available to others in the private sector. The difference is that we pay for our contributions and we have a separate fund to which we have contributed. It is in every way our fund. The benefits that we receive come from our contributions. That is not the case with civil servants who do not have a funded scheme. However, like us, they have guaranteed index-linking. That is another advantage of our scheme.
Civil servants have some prospect of promotion. We live in a curious place which can be described only as a beehive. One spends one's early years here as a drone. Then the queen bee picks one up and one becomes a

327
worker. Then, before one knows what is happening, one ceases to be a worker and becomes a drone again. What sort of basis is that on which to evolve a properly run pension scheme? It is difficult to keep up with the whole business. That would not be acceptable in the Civil Service. It would not be allowed for one moment. Nor would the prospect of total extinction by an ungrateful electorate be acceptable in the Civil Service.
We have real problems in adjusting the scheme to what is proper and fair. It is fair to compare our contribution rate with the high contributions paid by firemen and the police. As I said, ours are the highest contributions to any funded scheme that I can find. It is true that firemen and the police make a higher contribution.
Mr. Orme: They have early retirement.
Sir Peter Hordern: As the right hon. Gentleman says, the reason is that they have early retirement. For example, the police retire at the age of 50. If people retire early, they can look forward to another career but for hon. Members who retire at 60 or over, the market for employment is strictly limited. Their case is not the same.
Mr. Ashton: Some of us may not have the chance to speak tonight. The hon. Gentleman has not mentioned severance pay, about which he is an expert. What about the peculiar circumstances of a person aged 49 with 15 years' service who receives six months' severance pay and has to look for another job? That is ludicrous. Have the trustees considered that and decided to increase the severance pay?
Sir Peter Hordern: We have indeed considered that, and we have made recommendations. I have no doubt that we shall do so again.
I now come to the proposals that are appropriate to our scheme and those on offer in comparable public sector schemes. The police pay out sixtieths. After 20 years that is reduced to thirtieths. Policemen and women gain a particular advantage from staying in the police for over 20 years. They reach a smaller proportion than we do.
The previous proposals of the TSRB were that Members' contributions should be about 7·5 per cent. and Treasury contributions 12·5 per cent. That is the range that the TSRB normally considers. I hope that it will reconsider the matter and perhaps revert to that range. If not, we could consider what improvements could be made to the benefits and retain our 9 per cent. contribution. I believe that we should adopt that course. We would still make the highest contribution of any funded scheme.
The benefits paid under our scheme should be a model for other privately funded schemes. I shall refer to other more or less comparable schemes. British Airways has a scheme which, like ours, is fully index-linked. Members contribute 5·24 per cent. The employer pays 2·5 times as much. The retirement age is 60. The death-in-service benefit is three times the salary. We propose, as the House knows, a death-in-service benefit of twice the salary of the person who dies.
In the British Airways scheme, widows will receive two thirds of the full retirement pension of the member. In the British Gas scheme, the employee pays 6 per cent. and the employer pays 6 per cent. Again, it is index-linked and the death-in-service benefit is two years' salary. There are
328
good provisions for ill health in service, too. Widows receive only half the pension but there are early retirement provisions. The same is true of British Telecom. At British Coal, the contribution by members of the staff salary scheme is 6 per cent. At present the employers are having a five-year holiday, or it would be 12 years. The House will note that the Treasury is to have an eight-year rather than a five-year holiday. Mineworkers' contributions are 5·25 per cent. of salary, and the employers pay the same. At British Telecom, the employee pays 6 per cent. and the balance of the costs paid by the employer is between one and a half and two times the employee's contributions.
It is clear that our 9 per cent. contribution is high compared with all the other schemes. I suggest that the TSRB undertakes a serious comparison with other sectors which have fully funded schemes—for example, the local government service scheme where the contributions made by the employees are substantially lower than ours and where the benefits are significantly better.
It is important that our scheme demonstrates, in relation to our contributions, that we care to provide benefits, especially for those widows and widowers who come after us. Given the nature of our careers in this place, it is wrong for those who depend upon us to be subject to the whims of the electorate and other matters; nor is it right that they should be given such a low proportion of the final pension of a Member.
I am sure that hon. Members will suggest many other benefits that should be considered. In my opinion, the sooner the TSRB meets to consider the proposals and puts our scheme on a proper basis comparable with other public schemes, the better the House will be served.
6 pm
Mr. Alan Williams: I congratulate the hon. Member for Horsham (Sir P. Hordern) on his speech and, especially, on the research and background work he has done on our behalf. He presented his case in a reasoned manner. I hope to present a case that is as well authenticated as that presented by the hon. Gentleman, but it is a slightly more indelicate one. Frankly, hon. Members have already been taken for a ride and have been ripped off by the Treasury—hon. Members may have gathered that from the information that they have already received.
We should reject out of hand the suggestion that the Treasury contribution should be dropped to 4·4 per cent. To substantiate my claim of a rip-off, it is important to look at the background to the case, as my right hon. Friend the Member for Manchester, Wythenshawe (Mr. Morris) has done. The hon. Member for Horsham was involved in at least one meeting in the mid-1980s to which I want to refer when we were negotiating the previous arrangements. In my then role as deputy shadow Leader of the House, I attended with Lord Dormand a meeting to negotiate, as my right hon. Friend the Member for Salford, East (Mr. Orme) does today, on behalf of the parliamentary Labour party. It is important to remember what was suggested at the time of the previous settlement and negotiations.
The TSRB proposed a substantial pay increase for hon. Members and an increase in our pension contribution from 6 per cent. to 8 per cent. to bring our contribution into line with the notional contribution then being taken into account in Civil Service pay. That proposal did not

329
appeal to the Government and they rejected it—it was a political decision. They said that they were unwilling to go along with the proposed pay increase. Then the negotiations began. The Government were not only against the pay increase, but they wanted our pension contribution to be increased by 50 per cent. They wanted it to increase from 6 per cent. of salary not to 8 per cent., as recommended by the TSRB, but to 9 per cent. The outcome of those negotiations was a settlement on which we lost on both scores. I am sorry to say that the then chairman of the 1922 Committee, Mr. Edward du Cann, did not play a particularly beneficial role on behalf of hon. Members in those negotiations. I am afraid that he sold out hon. Members, as we lost on both scores.
In exchange for the pay increase that had been recommended for that year by the TSRB, we were told that we could have that increase over four years. For three of the four years, we lost the pay increase that we were due to have and, in the meantime, we also did not receive the further annual increments that one would have expected on the basis of that pay increase if it had been awarded at the threshold level. Therefore, on pay, we lost out twice. So that the Government should make us the great concession of paying our pay rise over four years, Edward du Cann felt that we should pacify the Government by giving them something in return—the 9 per cent. pension contribution.
Together with Lord Dormand I went to a meeting with the then Minister of State at the Treasury and the then Leader of the House—I believe that that was the meeting at which the hon. Member for Horsham was also present. I remember well my incredulity when I demonstrated, mathematically, that the extra percentage increase from 8 per cent. to 9 per cent. was unnecessary. The Treasury Minister, of all Ministers, said to me that he did not think that we should be discussing such matters on an actuarial basis. Of course he did not, because the figures were against him. I prophesied that, if we pursued that course, the pension fund would, inevitably, make a surplus. We are now discussing the very surplus that the Treasury said would not arise. I am not suggesting that that percentage increase was the sole cause of that surplus, but it had an important effect.
Now the Treasury has said—this is where the rip-off comes—that it should have full benefit of the surplus and that its contribution to the fund should be reduced from 11 per cent. to 4·4 per cent. You, Mr. Deputy Speaker, in common with the rest of us, have already been taken for a ride by the Treasury. We should ignore the 18 per cent. that the Leader of the House quoted, as there are all manner of elements in that figure that have nothing to do with our on-going pension scheme. One need only consider what the Government Actuary said in paragraph 28 of his 1987 report:
"The Exchequer contributions are much lower than those recommended in my 1984 valuation report."
In other words, we were made to pay more for our pensions than the TSRB had recommended while the Treasury is already paying lower contributions than the Government Actuary suggested. Although the pension fund surplus has nothing to do with the Treasury fulfilling its commitments, it wants the full benefit from it. In the wake of such richness, the poetic unpleasantness of the du Cann settlement becomes apparent.
In paragraph 28 of his report the Government Actuary states that one reason why we have a surplus in the pension fund is we did not have a pay rise and, because of that, our
330
envisaged pension rates were lower. Therefore, when assessing the future liabilities of the fund, the Actuary noted that the liabilities were lower than they otherwise would have been. Part of the fund's surplus arises from the fact that we gave up part of our pay rise and accepted an increase in our contributions to the pension fund.
The Government will shelter behind the fact that the Actuary has made a recommendation to them. My right hon. Friend the Member for Salford, East and other right hon. and hon. Friends have already pointed out that that recommendation provides no such shelter because the Actuary, by statute, is required to express the Treasury contribution as a balancing sum against the going rate of contributions from Members.
The Government Actuary has said that the Treasury should contribute 4·4 per cent. to the fund, but he has not said that that contribution is necessarily or morally the correct proportion. He is just doing what the statute requires. The Actuary has said that, for the fund to meet its future liabilities—as long as we presume that Members go on paying at 9 per cent.—the Treasury needs to pay a 4·4 per cent. contribution only. That recommendation is arithmetically correct, but it has nothing to do with a value judgment as to how that surplus should be distributed. The Government are trying to shelter behind that recommen?dation when presenting their case.
The surplus should be distributed among the Members; we should receive the benefit. The surplus is probably bigger than the Treasury has admitted. In paragraph 31 of his report, the Actuary says, in essence, that, because his valuations are not carried out in the way that they would be for normal private pension funds, our surplus is smaller than it would have been if he had valued it on a normal basis. Therefore, we have a surplus which the Treasury says is about £7·4 million. The Actuary agrees that it is, but says that it would be more if he applied the rules which apply to every other pension fund.
Therefore, we can afford to look seriously at some important changes which should be undertaken. First, we should look at the possibility of a lump sum on retirement, as applies under many pension schemes, instead of just a lump sum if a Member is unfortunate enough to lose his or her seat. We should consider the possibility of applying a one-fiftieth formula to serving Members in the pre-1983 period. At present, the one-fiftieth formula goes back only to 1983. Many of us have early payments which are evaluated on the one-sixtieth formula. We should look at the possibility of the accrual rate for those whose payments do not reach the ceiling by the time they are 65 continuing beyond their 65th birthday to the full statutory ceiling. That is not possible under the present system. I think, as do all hon. Members, that the 66 per cent. widows' benefit is long overdue.
I shall make one final, cynical point. The Leader of the House slipped in and glossed over an important procedural suggestion. He talked about it being for the convenience of hon. Members and the House to have just one Bill during the life of a Government, and then umbrella legislation—orders based on the Bill—for carrying out other changes during that Parliament's lifetime.
I urge hon. Members to bear in mind what my right hon. Friend the Member for Wythenshawe said. He said that we are the people with the power eventually to decide the scheme's shape. However, if we allow the Government to switch to using subsidiary legislation, we cannot amend

331
it. Therefore, the occasions on which we as Members have the opportunity to table amendments to what the Government might propose will be limited.
Sir Geoffrey Howe: I do not want there to be any misunderstanding about this. When I discharge my functions in such matters I regard myself pre-eminently as the Leader of the House rather than as a member of the Executive. As we exercise the responsibilities of the kind described by the right hon. Member for Manchester, Wythenshawe (Mr. Morris), we are exercising the powers of the House over taxpayers' resources and therefore it is important that we carry them out fairly and honourably.
When I made my suggestion I wanted not to deploy a covert objective of an ex-Treasury Minister, but to say that if we proceed expeditiously with the matters before us which have been largely agreed—almost all of which are capable of implementation by secondary legislation—we must be sure that we do not lose the opportunity to deal with further matters of that kind because they cannot be dealt with by secondary legislation.
I seek to ensure that we have the ability to do what the House wants us to do. I think that the existing primary legislation gives us that ability, but because of the curiosity the timing of the Government Actuary's report and its impact on what is happening, I made the suggestion. I did so not as a gamekeeper lurking in a Treasury role but as the Leader of the House.
Mr. Williams: I am grateful to the right hon. and learned Gentleman. I am sure that none of us would challenge what he has said. In view of his comments about protecting our interests, he probably will not press any further the proposal relating to a single Bill. While he quite rightly says that almost anything any of us wants could be achieved under secondary legislation, a Bill would mean that proposals for change could come from anywhere in the Chamber. However, only the Government can initiate secondary legislation and what they initiate cannot be amended. Therefore, it is vital not to allow this procedural change to slide through, because it will severely limit our ability as Back Benchers, of whatever party, to influence the shape of the future of our fund.
6.16 pm
Sir Peter Tapsell: I wish to propose two improvements to our pension scheme. First, I echo what every speaker from the Back Benches and the Opposition Front Bench has said: we clearly should have two-thirds widows' pensions. That is the standard form in all good, new commercial pension fund arrangements and it is long overdue for this House. I hope that the Leader of the House has noted the unanimity on this issue and that the Top Salary Review Body will bear this in mind when it considers the proposal.
Secondly, the scheme should be improved by the qualifying length of parliamentary service to enable a Member to receive a full pension being substantially reduced. As the right hon. Member for Manchester, Wythenshawe (Mr. Morris) said, at present Members have to serve in the House for between 33⅓ and 40 years, according to whether they were elected before or after July 1983, to qualify for the full pension.
332
As the hon. Gentleman also said, the average term of service in the House is about 17 years. As my hon. Friend the Member for Horsham (Sir P. Hordern) said, some hon. Members stay here for a much shorter time. My hon. Friend the Member for Horsham and I have been here almost since the Flood and, like our beloved leader, we hope to go on and on and on. But everyone cannot hope to do that, and it is unsatisfactory that such a large proportion of hon. Members can never hope to receive anything like the full pension.
The right hon. Member for Wythenshawe also said that many other Parliaments have much better schemes, in terms of a variety of benefits, than ours. He was absolutely right to mention Australia, but it is not only the Australian Parliament which has a better scheme. In Australia, a Member of Parliament qualifies for a full pension of three quarters of his final salary after 18 years of service.
When I was preparing for this debate I asked the Library to find out the qualifying periods in the two leading Commonwealth Parliaments and the two leading EEC Parliaments. It is interesting to make a comparison with those other Parliaments, bearing in mind the fact that our qualifying period is between 33⅓ and 40 years. Canadian Members of Parliament qualify for a full pension of three quarters of their average salary in the best six years, payable after 17 years service. French Members of Parliament receive the full pension after 22½ years service at a minimum age of 55. West German Members of Parliament can receive a full pension after 16 years of parliamentary service and at the age of 55.
Those figures for the two leading Commonwealth and EEC Parliaments present an extraordinary contrast with those for our own. I suggest that the qualifying length of parliamentary service to obtain a full pension on retirement here should be reduced to 20 years. Even then, because of the average length of service of 17 years, most Members will not be able to attain it.
In the past, various arguments have been advanced against the suggestion that our pensions are insufficient. One was that it is possible for Members who are not members of the Government to hold other paid occupations at the same time and thus obtain other pension rights. I have been able to do that, but only because I have been excluded from Government service. Other Members who are active and punctilious in their attendance at morning Committees find it extremely difficult to have other paid employment.
From reading the newspapers, one sometimes gets the impression that some of the outside jobs that my colleagues take on might have been better avoided. I do not believe that the argument that other paid employment is available stands up to examination.
It has also been argued that, after Members leave this House, they can find very good jobs. One reads of special cases of particularly famous Members who find highly remunerated posts after leaving the House, but that is extremely rare and is becoming rarer. Having discussed this with former Cabinet Ministers, I can say with some insight that even they are finding it very much more difficult to obtain employment, partly because there are far more ex-Cabinet Ministers about now.
It is argued by the Treasury—its favourite and understandable argument, known as the "open-door" argument—that my proposal would open the door to similar demands in the public service for pensions after much shorter periods of service, but that is not valid.

333
Parliamentary service is unique. I speak as one whose majority in my first constituency was 164—after three recounts—so I know that survival here depends not on how good a constituency Member one is but on the geographical area that a Member happens to represent and on the whims of the Boundary Commissioners, who may appear on the scene at any moment and take away 25,000 devoted constituents and replace them with 25,000 political opponents. These are terrors that civil servants do not have to face.
As my hon. Friend the Member for Horsham rightly said, most Members enter the House in their forties so it would be appropriate for them after 20 years to reach the full pension of two-thirds of their final year's salary.
Finally, I echo what has been said so well by many hon. Members about the actuarial position of the fund. The fund is in surplus, as we have heard and, as my hon. Friend the Member for Horsham explained clearly, it is funded, not pay-as-you-earn. As the right hon. Member for Wythenshawe pointed out, the usual practice is that the employer contributes twice as much as the employee. The new extraordinary proposal is that this should be reversed: we should continue to contribute at 9 per cent.—one of the highest contribution rates for employees in any funded pension fund—and the Treasury contribution should be reduced to 4·41 per cent. It has already notionally been reduced to that figure as of April 1989. So, far from the Treasury paying twice what we pay, we pay twice as much as our "employer", which is wholly unjustifiable.
It must also be borne in mind that, until recently, the Treasury contributed 18 per cent., so the suggestion of a 4·41 per cent. rate means that its contribution will drop to less than a quarter of what is has recently been.
I hope that the Leader of the House will sympathetic?ally consider these points and ask the Top Salaries Review Body to look at the suggestions of a two-thirds pension for widows and widowers and a 20-year qualifying period of service, and that my right hon. and learned Friend will ask the TSRB to treat these and our other recommendations with urgency so that its report can be submitted to the House in time for legislation this Session.
6.25 pm
Mr. James Lamond: I congratulate the Leader of the House on arranging this debate, belated and twice postponed though it is. I wonder whether the press, who are so anxious to suggest that Members of Parliament put their own benefits and salaries first, would care to consider that the top salaries review report that we are discussing dates from May 1988, while the more important Government Actuary report on the valuation of the pension fund was ordered to be printed on 1 April 1987. If we had waited another nine weeks the next report would have come out, with more up-to-date figures.
It has been amply demonstrated by hon. Members who have spoken that for the considerable contribution of 9 per cent., which takes some matching anywhere in the country, we do not get value for money. Now we find that in 1987, almost three years ago, the Actuary's valuation of the assets in our fund showed that it was £5·4 million in surplus. When suggesting a reduction in the Treasury's contribution, he extrapolated figures for 1989, by when he said that the fund would be £7·4 million in surplus—after,
334
by his own admission, having undervalued the assets. If the figure that the Actuary puts on the assets is correct, the true surplus three years ago was more than £13 million.
The considerable surplus must be distributed in one way or another—our contribution is certainly too high—and I strongly object to the Treasury taking the surplus for itself by reducing its contributions. There are several proposals about what could be done with that surplus.
Setting aside any improvement in our own conditions, what about hon. Members who retired or lost their seats early and whose pension is based on a salary which, it is now admitted, was very much less than it should have been? The pensions are tied to those lower salaries and some former hon. Members are drawing totally inadequate pensions. We should look at that. I know that it is difficult because there are all sorts of legalities and regulations in our pension fund, but after all it is our money. The 9 per cent. that we pay is clearly ours and any contribution from the Treasury could reasonably be considered as deferred wages. The report talks about the 6 per cent. in addition that the Treasury has paid. That was not paid to us and has nothing to do with us, but was paid because of the inadequacy or non-existence of a previous pension fund.
I shall be brief because other hon. Members want to speak. My hon. Friend the Member for Bassetlaw (Mr. Ashton) mentioned the resettlement allowance. I understand that that allowance is paid to hon. Members for any reason—voluntary retirement or perhaps the loss of a seat—up to the age of 64, provided that they retire at a general election. The timing of a general election is not a matter for Back-Benchers. The decision is made elsewhere. The position that I am outlining does not apply to me, but I know several hon. Members to whom it does apply. The timing of the general election could mean the difference between £26,701 and nothing, and one day could make that difference. The rule should be that the resettlement allowance will be paid to any hon. Member who retires or loses his seat, provided that he does so not later than the first general election after his 65th birthday. That would mean that every Member would have the opportunity to decide for himself whether to retire and receive the resettlement allowance.
Mr. Ashton: Does my hon. Friend agree that one problem is that the resettlement grant is paid out of the Consolidated Fund, not out of the pension fund, and that we have no say in it? Surely it would be better to pay that from the pension fund by using some of the surplus and to let the House decide? That would be much better.
Mr. Lamond: My hon. Friend is right. I was about to make that point. If we had it in our control we could use some of the surplus for the purpose that my hon. Friend mentioned.
The calculation of the resettlement allowance is complicated. It takes account of age and length of service and those matters can vary considerably. My hon. Friend the Member for Bassetlaw drew attention to the anomalies. The calculation should be much simpler. It should be one month's salary for every year of service in the House irrespective of age, perhaps with a minimum of three months' salary or some such set amount. That would make the calculation much simpler and fairer.

335
I want to see some fairness extended to people who were in this place before us and whose pensions are inadequate. I hope that the possibility of using the surplus, which is our money, will be considered.
6.34 pm
Mr. John Marshall: I declare an interest in paragraphs 30, 31 and 32 of the TSRB report. I shall be brief so that other Members who wish to take part in the debate will have a chance to do so.
It has been accepted for a long time that we should encourage cross-fertilisation between the European Parliament and national Parliaments. That is why Members of this House draw exactly the same salary as Members of the European Parliament and pay exactly the same contributions towards their pensions. We also draw exactly the same pension as Members of the European Parliament. However, there is one anomaly—it is referred to in paragraphs 30, 31 and 32—and there is no good reason for it. It should be a perfectly natural career pattern for Members of the European Parliament to seek election to this House and for Members here to seek election to the European Parliament. One hon. Member did that at the last European election but was unsuccesful. In Northern Ireland a former Member of the House took a European seat at that election.
Cross-fertilisation, with Members of this House standing for the European Parliament and vice versa, should be the norm. My right hon. and learned Friend the Leader of the House should look again at paragraph 32 because it is a complete anomaly as the salary, pension and contributions are all the same. My right hon. and learned Friend is a reasonable man, and I am sure that he will come to the conclusion that, not for the first time, the TSRB has erred.
6.36 pm
Mr. Harry Ewing: I shall begin by outlining how we have got into such a position over the pension fund. It is important to explain to those who listen to the debate and who read about it that we are talking about money paid from the salaries of hon. Members. The Government Actuary made an assessment of the liability of the fund for the three years from the date on which the assessment was made, and that assessment was based on certain factors.
If the Actuary recommends a reduction in the Treasury contribution, the 1972 legislation requires that recommen?dation to be acted upon without the need to come to the House. We should amend the 1972 Act so that, when the Actuary makes his recommendation about the Treasury contribution, it cannot be implemented until the House has given its approval. If we do not amend the 1972 Act, there is no doubt that Members in future Parliaments will find themselves in the position that we are in now.
To be fair to the Treasury and to the Leader of the House, I should say that they had no option but to implement the recommendation of the Actuary to reduce the Treasury contribution to 4·41 per cent. The decision is a fait accompli, and that is unsatisfactory. We are dealing with the question of what to do with the surplus. I share
336
the view of the hon. Member for Horsham (Sir P. Hordern) that we should not reduce Members' contributions.
The Leader of the House said that, when there is a surplus in a pension fund, it is normal practice for the holiday to be enjoyed only by the employer. I shall give two contrasting examples of recent weeks from the Post Office and British Telecom. The public sector Post Office has a surplus in its fund, and its employees had their contributions reduced from 6·7 per cent. to 6 per cent. The private sector British Telecom has a massive surplus in its fund, but the employee's contribution has not been reduced and the British Telecom board has decided to take a holiday in relation to its contributions. We can all give similar examples to justify our arguments.
What should be done with the surplus? I am not in favour of reducing the contribution from 9 per cent., high though that may be. I am prepared to make such a contribution from my salary, as I suspect are right hon. and hon. Members in all parts of the House, provided that one eventually enjoys the benefits that such a contribution should provide. At present, that is not so. As there is a surplus, how should it be distributed?
At present, the pensions of Members of Parliament are made up of two accrual rates—one of 60 per cent. up to 1983 and another of 50 per cent. from 1983 to date. The Leader of the House should examine the feasibility of converting the sixtieths into fiftieths, or, more radically—though it would fall into line with Civil Service pension arrangements—of converting the whole lot to fortieths. If the pension fund is so much in surplus, then conversion to fortieths, or at least to fiftieths, should be possible.
Much has been said about the need to re-examine widows' pensions. I am strongly in favour of that being done, but any increase should be linked with an improvement in the pensions of right hon. and hon. Members. All that is before the House now is a proposal to increase widows' pensions from 50 per cent. to 66·66 per cent., which is unacceptable. It would be far better to improve both pensions together.
An examination of the ages of right hon. and hon. Members of the present Parliament reveals that this is the youngest House of Commons in the history of this country's parliamentary democracy. One way of keeping Parliament young is to provide adequate pensions to ensure that, when right hon. and hon. Members feel that the time to retire is right, they can do so. I am not the judge of when any other hon. Member should retire, only of when I should do so. Nevertheless, when right hon. and hon. Members wish to retire, they should be able to do so, free in the knowledge that they will be financially supported by an adequate parliamentary pension.
The Leader of the House mentioned the TSRB's recommendation that Ministers leaving office should be paid the equivalent of three months' salary. He said that that measure had been agreed by both sides of the House. I have certain reservations about such an arrangement, which strikes me as an earnings-related benefit. This House abolished such benefits for outsiders, and if it reintroduces them only for Ministers of whatever party is in power—and I am not trying to get at the present Government, because such benefits would be passed on to a Labour Government in 18 months or two years—there would be a serious risk of bringing this House into

337
disrepute. I have not made up my mind on that aspect, and I shall want to consider the proposals that the Leader of the House is to bring before us.
Mr. Orme: I was asked specifically by Lord Plowden whether I would agree to that proposal, along with others affecting the Prime Minister and Mr. Speaker. As a good trade unionist, and in an attempt to negotiate across the board in the interests of all right hon. and hon. Members, I conceded such payments because I believed then that there would be a general improvement. Unfortunately, the TSRB proposed instead the arrangements that are now before the House. I make no apology for my earlier concession, which seemed to be in the best interests of all right hon. and hon. Members.
Mr. Ewing: I knew the position to be as my right hon. Friend has described it and that he feels somewhat let down by the TSRB. Deals and quid pro quos are arrived at in many different circles, and my right hon. Friend thought that he was making a concession in exchange for an additional benefit. As that has not proved to be the case, we want to re-examine the whole scheme.
I agree with my hon. Friend the Member for Oldham, Central and Royton (Mr. Lamond) that severance pay or the resettlement grant—call it what one may—should be dealt with tidily and cleanly. It would be simplest to accept the proposition of my hon. Friend the Member for Oldham, Central and Royton that one month's salary should be paid for each year of service, with a minimum of six months' salary. There is much to be said for the point made by my hon. Friend the Member for Bassetlaw (Mr. Ashton), that the financial responsibility for meeting resettlement payments should be transferred from the contingency reserve fund to the pension fund, which would help to absorb some of the surplus.
I am grateful to the Leader of the House for listening to my suggestions, and I look forward to seeing them manifest themselves in the various recommendations that will come before the House at a later date.
6.46 pm
Mr. Gwilym Jones: Much of the debate has inevitably centred on the Government Actuary's recommendation that the employer's contribution should be reduced to 4·4 per cent. I would normally go along with the comment in the report of the Top Salaries Review Body that it is not common to pass on a funding rate reduction to the employees, which is the usual arrangement where there is a balance in the relationship between the contributions made by the employer and the employee—which could be of the order of an employee contribution of one third and an employer contribution of two thirds. At worse, both sides might contribute one half each.
The Government Actuary's recommendation of a reduction to 4·4 per cent. in the employer's contribution deals with only one moment in time. The scheme's trustees should ascertain whether they have the power to commission an independent consultant actuary to examine the totality of contributions to the scheme in the long term and try to arrive at a proper balance.
I agree with much of what has been said about other improvements and about the present 9 per cent. contribution made by right hon. and hon. Members. I should very much like to see an improvement in the size of
338
widows' pensions, both pre-retirement and post-retirement. The current pension is only 50 per cent., but it is not uncommon for schemes covering comparable employees—if it is possible to find such a thing outside this House—to offer pre-retirement and post-retirement widows' pensions of as much as 66 per cent. Bearing in mind all that the job of a right hon. and hon. Member entails—with its unsociable hours, the schizophrenic existence that it imposes, and the uncertain future that it presents—we owe it to our dependants to ensure that the scheme incorporates decent widows' pensions.
There is a proposal to increase the value of the death benefit from one times salary to two times salary. I welcome my right hon. and learned Friend's proposal to backdate that improvement to cover former Members of Parliament who are no longer with us. Nevertheless, death benefit outside can be as large as four times salary. Less emphasis should be placed on its being a single lump sum payment, because after all the bills have been paid—perhaps including a mortgage commitment, albeit that it makes sense to arrange alternative protection in that respect—the lump sum should be viewed as additional income replacement, to provide adequate support for retired widows.
The TSRB report makes provision for early retirement. I welcome the spirit of the recommendations, but I am worried that the proposal might create fresh anomalies. Taking the calculations and abatements used in the report, I noticed that for two Members, both aged 60, leaving on a retirement basis, one with 20 years' service would receive a pension of 20 fiftieths or 40 per cent., while his colleague, leaving after only 15 years' service would receive 15 fiftieths or 30 per cent. There would be a further abatement based on years of service. Instead of receiving 30 per cent., the latter would receive only 20·7 per cent. I cannot see why such a difference between two Members of the same age is justified.
When the question was referred to the TSRB, I think that it was asked specifically whether an early retirement pension could he provided from age 55. On the same examples of Members with 20 and 15 years' service respectively, one would get a pension of 27·6 per cent. and the other would get only 15 per cent. That is caused by the perpetuation of a double penalty which is not justified. I hope that the Leader of the House will consider further the use of years of service as a double abatement.
That might also be the answer to the question raised about Members of the European Assembly who are Members of this House. I have great sympathy for the point that has been made about them. If every Member got an early retirement pension, determined solely by the exact early retirement, the years of service, whether in this place or in the European Assembly, could be dealt with fairly and properly.
There is great scope for further progress on the parliamentary pension scheme. Other options deserve consideration. I hope that those options will be laid before all Members by the trustees, perhaps informally, before we have a longer and deeper debate.
Mr. Ray Powell rose——
6.52 pm
Sir Geoffrey Howe: I apologise to the hon. Member for Ogmore (Mr. Powell) for intervening now, but there are only eight minutes left for a reply. I shall listen with interest to what the hon. Member may have to say to me privately afterwards.
I have listened closely to what has been said by colleagues during the debate. I will not make a debating reply, responding to each point as though they had to be knocked down like ninepins in the customary fashion. The hon. Member for Ashfield (Mr. Haynes) reproached me a little unjustly because I was not speaking in the capacity that he normally imputes to me. I appreciate very much the contributions from hon. Members on both sides.
I should also have expressed my appreciation for the work of Mr. Dobson, Mr. Lewis and Miss Moreen McColl, as well as the work of Treasury staff on these matters.
It was unfair of the right hon. Member for Swansea, West (Mr. Williams) to talk about a Treasury rip-off. To a large extent I think that a number of the things about which we are complaining were a result of a self-imposed big dipper. We agreed, rightly or wrongly, to the 9 per cent. contribution. The latest valuation by the Government Actuary, bringing it down to 4·4 per cent., is also an automatic consequence of legislation passed as long ago as 1972. Of course, it is in the power of the House to make the necessary changes. That is a power which we have to exercise responsibly.
I was struck by the way in which my hon. Friends the Members for Horsham (Sir P. Hordern) and East Lindsey (Sir P. Tapsell) referred to the extent to which we are also in the power of the electorate, whether we be drones, bees or intermittent occupants of each role. I was struck particularly by the insight of my hon. Friend the Member for East Lindsey into how swiftly we might be removed altogether from this place. I remember vividly coming back on polling day in 1987 from a Nato summit in Reykjavik; I arrived in time for the count in my constituency. I remember saying to the officials who travelled in the plane with me, "At least you know what you will be doing tomorrow afternoon." That shows the hazardous nature of our occupation.
We have a special responsibility. Although a large part of the money is contributed by hon. Members, a significant part is contributed by the taxpayer, and we have to consider it in that way.
There are special factors, as my hon. Friend the Member for Horsham pointed out. None of us was covered by a scheme before 1964. We have, as I think we should, a rapid accrual scheme. That is why the rate of employees' contribution is so high. We are not the same as the fireman or the policeman where the hazard of the employment allows for early retirement; in most cases, we do not retire early but we arrive late. Even antiques like my hon. Friend the Member for Horsham, who has just celebrated his silver jubilee, have been here for only 25 years.
How am I to handle the matter from now on? I hope, after further proper consultations, to implement as expeditiously as possible the matters that have been under consideration by the TSRB, such as resettlement, early retirement, death in service and matters relating to ministerial severance pay and office holders, and also excess contributions, if we can get the right answer.
340
I note the support expressed by the right hon. Member for Salford, East (Mr. Orme) in the case that I offered, which was supported also by my hon. Friend the Member for Hendon, South (Mr. Marshall), in relation to Members of the European Parliament. With respect to the insight of my hon. Friend the Member for Cardiff, North (Mr. Jones) from my native land, it is a Parliament and not an Assembly. As for the best way forward procedurally, I shall examine the suggestions made by the right hon. Member for Manchester, Wythenshawe (Mr. Morris). I cannot buy his procedural proposals on the nod.
I think the right hon. Member for Swansea, West misunderstood me when I talked about trying to get as much as we could into the secondary legislation framework. It is not because I want to avoid the possibility of amendment; I want to avoid being stuck unnecessarily, waiting for the much more difficult achievement of primary legislation, if we happen to need that to deal with some matters, such as the effect of the Government Actuary's report. There might be a blockage in getting another Bill because of the legislative programme.
After further consideration, I shall seek to identify the matters which should be considered by the TSRB. Not necessarily all the matters that have been raised are appropriate for consideration by the TSRB, as has been pointed out. I should like that consideration to be undertaken as quickly as possible, as my hon. Friends the Members for Horsham and for East Lindsey suggested.
If I am to identify the principal matters for such consideration, I think that the most important is that which has been described as the balance of the fund, or the right relationship between employer and employee. I am struck by the widespread support for the retention of the figure of 9 per cent. I see the right hon. Member for Salford, East shaking his head. I do not say that that figure was endorsed universally, but it was supported widely. It gives resources for the improvement of benefits. Of course, it need not be as high, but it should be a generous figure.
On a contributions holiday, raised by my hon. Friend the Member for Cardiff, North and by my hon. Friend and neighbour, the Member for Croydon, South (Sir W. Clark), it is right to point out that, although it can be dealt with either way, a document provided for the trustees, based on the National Association of Pension Funds' survey 1988, showed at that time that in three quarters of the cases the employee contributions were not altered but substantial reductions were made in the employers' contributions. That is not decisive. At any rate, balance is one question for consideration.
The second important matter, strongly supported on all sides of the House, is the benefit that should accrue to widows or widowers of hon. Members. I subscribe to everything that was said about the miserable existence that we impose upon our spouses, which justifies sympathetic consideration.
Thirdly, my hon. Friend the Member for East Lindsey also raised the rate of build-up of entitlement to full pension. While I mention these things, I am not prejudging them, but they are matters that have been widely supported.
Fourthly, the resettlement grant—however one describes it—again may or may not be a matter entirely for consideration by the TSRB.

341
As we handle the matter in that way, I shall try to keep the House, and certainly the trustees, informed about the progress of my consideration, so that we can deal with these matters as expeditiously as the House would wish.
I hope that I have made a reasonable response to the points raised today.
It being Seven o'clock the motion for the Adjournment of the House lapsed, pursuant to Order [12 January].

Isle of Wight Bill (By Order)
Lords amendents considered.
7 pm
Mr. Jim Sillars: On a point of order, Mr. Deputy Speaker, relating to the conduct of Government business and the business of the House. I hope that the Leader of the House will listen for a few seconds.
It may be unknown to most hon. Members that there has been a scandal surrounding the private life of a member of the Court of Session in Edinburgh, one of our most senior judges, which reflected upon his public persona to the point where he could not continue to sit on the judicial bench. That was followed by a resignation. I understand that today, senior figures in the legal and political establishment gave a briefing to newspaper editors of the Scottish press during which it emerged that allegations had been made about more than the individual who was required to resign on 1 January.
What is most worrying is that Scotland is rife with the rumour that tomorrow the Government will evade the issue by the device of a planted written question on the Order Paper to which the Secretary of State can reply without Scottish Members having the opportunity to debate the matter or to question the Secretary of State—who, in the absence of the Lord Advocate, is the responsible Minister in the House.
I should like you, Mr. Deputy Speaker, on our behalf, to seek an assurance from the Leader of the House that there will be no such device as a planted written question on the Order Paper tomorrow but that, instead, there will be an oral statement to the elected Members of Parliament from Scotland of the same character and frankness that apparently was the case at the briefing of national newspaper editors today. This is a matter that concerns the highest judicial body in Scotland, and it must be dealt with in this House tomorrow afternoon through a statement.
Mr. Deputy Speaker (Sir Paul Dean): I am sure that the hon. Gentleman will appreciate that I cannot deal with that matter during private business. However, the Leader of the House is on the Treasury Bench, and I am sure that he will have heard what the hon. Gentleman said.
Lords amendments Nos. 1 to 9 agreed to.

Isle of Wight Bill (By Order)

  HYTHE MARINA VILLAGE (SOUTHAMPTON) WAVESCREEN BILL (By Order)
  Lords amendments considered.
  Lords amendments Nos. 1 to 8 agreed to.

  HYTHE MARINA VILLAGE (SOUTHAMPTON) WAVESCREEN BILL (By Order)
    Clause 14

      FOR PROTECTION OF A.B. PORTS
      Lords amendment: No. 9, in page 5, line 5, at end insert—
      For the protection of A.B. Ports the following provisions shall, unless otherwise agreed in writing between the Company and A.B. Ports, apply and have effect:—
      (1) In this section—
      "construction" includes execution and plac?ing, extension, enlargement, alteration, replace?ment or relaying, and removal, and "constructed" shall be construed accordingly;
      "plans" includes description, drawings and specifications:
      (2)

      (a) Before commencing the construction of a tidal work the Company shall furnish to A.B.

      343
      Ports for its approval, which it shall not unreasonably withhold, plans of the work showing the general mode of construction and such work shall not be constructed otherwise than in accordance with such plans as may be approved by A.B. Ports or as may be determined by the Secretary of State as hereinafter provided and all such works shall be executed to the reasonable satisfaction of A.B. Ports:

      (b) When submitting plans to the Secretary of State pursuant to section 6 (Tidal works not to be executed without approval of Secretary of State) of this Act, the Company shall send a copy thereof to A.B. Ports and the Company shall, on receipt of approval of plans or of any conditions or restrictions imposed under that section, send a copy to A.B. Ports:

      (c) In the event of A.B. Ports failing to express its disapproval of any plans within 56 days after they shall have been delivered to A.B. Ports under this paragraph, A.B. Ports shall be deemed to have approved them:

      (d) If it appears to the Company that A.B. Ports has unreasonably withheld its approval to any plans under this paragraph, the Company may appeal to the Secretary of State whose decision shall be final:

      (e) The Company shall at all reasonable times afford to the duly authorised representative of A.B. Ports all reasonable facilities for inspecting any tidal work in the course of construction:

      (3) The Company shall give to A.B. Ports not less than 14 days' written notice of its intention to commence the construction of a tidal work and, not more than 14 days after completion of such construction, shall give to A.B. Ports written notice of such completion:
      (4) After the purpose of any temporary structure has been accomplished the Company shall with all reasonable dispatch, or after a reasonable period of notice in writing from A.B. Ports requiring them so to do, remove any such temporary structure or any materials relating thereto which may have been placed below the level of high water by or on behalf of the Company and, on its failing so to do within a reasonable period after receiving such notice, A.B. Ports may remove the same and charge the Company with the reasonable expense of so doing, which expense the Company shall repay to A.B. Ports:
      (5) The Company shall not exercise the powers conferred on it by section 5 (Dredging) of this Act except with the written consent of A.B. Ports (which it shall not unreasonably withhold) and in accordance with such conditions and restrictions as may be reasonably prescribed by A.B. Ports:
      (6) The provisions of section 8 (Abatement of works abandoned or decayed), section 9 (Survey of tidal works), and section 11 (Lights on tidal works during construction) of this Act shall extend for the protection of A.B. Ports and, for that purpose, shall have effect as if for any reference therein to the Secretary of State, there were substituted a reference to A.B. Ports:
      (7)

      (a) Without prejudice to the other provisions of this section, the Company shall be responsible for, and make good to A.B. Ports, all losses, costs, charges, damages and expenses how?ever caused (including a proper proportion of the overhead charges of A.B. Ports) which may reasonably be incurred by or occasioned to A.B. Ports—

      (i) arising from the perusal of plans and the inspection of any tidal work by A.B. Ports or its duly authorised representative;

      344

      (ii) by reason of the construction of any of the works or the exercise by the Company of the powers conferred on it by section 5 (Dredging) of this Act, the failure of any of the works or the undertaking by A.B. Ports of works or measures for the prevention of danger to navigation arising from such failure;

      (iii) by reason of any act or omission of the Company or its servants or agents whilst engaged in the construction of any of the works or the exercise of the powers conferred by the said section 5;

      and the Company shall indemnify A.B. Ports from and against all claims and demands arising out of, or in connection with, such construction, exercise, failure or act or omission as aforesaid;

      (b) A.B. Ports shall give to the Company notice of any claim or demand made against it which is a claim or demand for which the Company may be liable under this paragraph and no settlement or compromise of any such claim or demand shall be made without the consent in writing of the Company:

      (8) Nothing in this Act shall be construed as imposing upon A.B. Ports, either directly or indirectly, any form of duty or liability to which A.B. Ports would not otherwise be subject which is enforceable by proceedings before any Court:
      (9) Nothing in this Act shall affect prejudicially any statutory or other rights, powers or privileges vested in, or enjoyed by, A.B. Ports at the commencement of this Act or any title of A.B. Ports in, to or over any lands or foreshore held or acquired by it."
      Amendment proposed to the Lords amendment, in subsection (8), leave out "Nothing" and insert
      "With the exception of any duty owed by A.B. Ports to the Company expressly provided for in the foregoing provisions of this section, nothing"—[The Chairman of Ways and Means.]
      Question, That the amendment be made, put and agreed to.
      Lords amendment, as amended, agreed to.

  BUCKINGHAMSHIRE COUNTY COUNCIL BILL [Lords] (By Order)
  As amended, considered.
  Ordered,
  That Standing Order 205 (Notice of Third Reading) be suspended and that the Bill be now read the Third time.—[The Chairman of Ways and Means.]
  Bill accordingly read the Third time, and passed, with amendments.
  7.7 pm
  Mr. Andrew F. Bennett: On a point of order, Mr. Deputy Speaker. I hope that you will allow me to put on the record the fact that Opposition Members who want to reform the private business procedure have not delayed the House tonight by forcing a series of votes, which could have been of considerable number, on the amendments. It is a token of our good will. We hope that the private Bill procedure will be speedily reformed and there will not be any further necessity to delay private business.
  Mr. Deputy Speaker: I suspect that rarely does the Chair take a point of order that is so welcome. I am much obliged to the hon. Gentleman for his comments.

Orders of the Day
  Pensions (Miscellaneous Provisions) Bill
  Considered in Committee.
  Pensions (Miscellaneous Provisions) Bill
    Clause 1

      QUALIFYING CONDITIONS
      7.8 pm
      Mr. Paul Flynn: I beg to move amendment No. 1, in page 1, line 17, leave out from 'men)' to the end of line 18 and insert
      'the words "is a woman who" are hereby repealed.'.
      The First Deputy Chairman of Ways and Means (Sir Paul Dean): With this we shall discuss amendment No. 2, in page 1, line 28, leave out subsection (4).
      Mr. Flynn: The main reason for clause 1 is that the public service pension schemes presently discriminate between the sexes in a way that, from January 1993, will no longer be permissible under the European directive on equal treatment in occupational schemes. The discrimina?tion is found in a rule that provides for pension increases to women under 55 with dependent children. Men in the same position do not qualify for pension increases unless they have retired because of ill health or, having retired on other grounds, are disabled by physical or mental infirmity.
      The discrimination operates only up to the age of 55. A man whose pension starts before that age will not get increases, except on health grounds, unless he is 55. When he reaches that age, his pension is increased to the level that it would have reached if the discrimination did not exist. The loss of pension to a policeman who, for example, retires—as many do—in his 40s can be considerable. At the age of 54, he could be drawing a pension worth half or less its original value.
      On Second Reading, the Minister said that if the discrimination was removed, by bringing men up to the level of entitlement that women now enjoy, about 7,000 police pensions would have to be increased and that if analogous arrangements were made for the armed forces, another 50,000 would be affected. That would be expensive, but public service pensions are not public charity: they are paid for in exactly the same way as all other occupational pensions, either by direct contributions by employees and employers or by an adjustment of salary in the case of a non-contributory scheme, such as the Civil Service scheme. Neither the employers nor the Government have a moral right to make unilateral decisions of that sort without consulting the members of the scheme and discussing the alternatives and how any additional costs might be met. No such consultations appear to have taken place.
      The Minister argued that equalising in favour of men would mean increasing the pensions paid to those who retire at comparatively young ages and who can then enjoy second careers. That is an extremely worrying argument for those who are affected, such as the police, who have good historical reasons for retiring at an early age. If it is acceptable to pay a retired policemen a pension that falls
      346
      in value every year because he can make up for the loss by taking another job, the implication must be that he does not need the pension at all.
      How long will it be before the Government decide, in the interests of efficient targeting, that no public servant should receive a pension below the age of 55? That is the logical conclusion of the Government's decision to which clause 1 inexorably leads us. Our amendment would tackle the problem of discrimination from the other end—equalising in favour of men, rather than removing the rights enjoyed by a small number of women. The Opposition do not propose to divide the Committee at this stage, but we hope to hear a statement about the Government's views on the issue, since no such statement was forthcoming on Second Reading.
      The National Union of Teachers and the Assistant Masters and Mistresses Association—practically the only bodies that seem to be aware of the Bill—say that they oppose the Government's proposals. The NUT believes that there should be legislation with the opposite effect —that equality of provision should be achieved by levelling up rather than levelling down, as proposed.
      The Assistant Masters and Mistresses Association is opposed to the clause as drafted and regrets the removal of an entitlement to pensions increased to female pensioners under 55 with dependants. That organisation writes:
      "The removal of this benefit is wholly unnecessary as regards the Teachers' Superannuation Scheme as the scheme's fund is well able to bear the financial cost of treating men on equal terms."
      While comparisons can be made with the police—a profession from which traditionally people retire at an early age—few male teachers would be caught in the net. We are told that the cost to the teachers superannuation scheme would be small.
      It is worrying not to have heard a statement about the Government's thinking on the equalisation of pensions, especially as equalisation is just over the horizon, or will happen within a few years. Seven of our 12 EEC partners have already equalised their basic pensions, most of them at the age of 65, with France equalising at 60.
      Perhaps more significant is what has happened recently in occupational pension schemes in Britain. With a view to equalising pensions in that sector, many have taken action and, from May to August 1988 of those occupational funds that equalised their pensions between the sexes, only 21 per cent. had equalised at age 60, while 55 per cent., by far the majority, had equalised at 65.
      May we be told what plans the Government have? As I said, the amendment attempts to solve the problem of discrimination by ensuring that we level up rather than down. Although, as I said, we shall not divide the Committee on the issue, it is clear that much consultation with members of the schemes affected is necessary. We hope that that will take place.
      The Economic Secretary to the Treasury (Mr. Richard Ryder): I thank the Opposition, and in particular the hon. Member for Newport, West (Mr. Flynn), for enabling us to take the Committee stage on the Floor of the House.
      As the hon. Gentleman said, we discussed the important issue of levelling up and down on Second Reading, when he signposted the fact that he would be taking a further interest in the subject. He has deployed the same arguments at this stage, and the answer that I shall give the Committee is along the lines that I adduced on Second Reading.

      347
      Clause 1(2)(b) and subsection (4) provide for the phasing out of the payment of pensions increase paid to women below the age of 55 if they have dependent children, a point stressed by the hon. Member for Newport, West. The existing law—that is, section 3(2)(c) of the Pensions (Increase) Act 1971—discriminates against men and must be changed to comply with the United Kingdom's obligations under European Community equal treatment law, which is EC directive 86/3/78.
      7.15 pm
      As I explained on Second Reading, the existing provisions benefit very few women; to our knowledge, only eight women fall into this category. But extending it to men would be costly. Equal treatment can, therefore, be secured only by removing that provision. The clause does that by phasing out the provision in a way which fully protects the accrued rights of female scheme members and pensioners.
      Acceptance of the amendment would mean that pensions increase would be payable from 1 January 1993 on pensions paid to men below the age of 55, provided they had dependent children, even on the parts of those pensions earned by service before that date. That, as the hon. Member for Newport, West pointed out, would be very costly indeed, and retrospective improvement to the superannuation provisions would benefit almost exclusively the younger retired members of the police, fire service and armed forces schemes at an age at which many of them can and do enjoy second careers.
      I advise the Committee to reject the amendment because, as I said on Second Reading, the total cost of it would be substantial. It would be about £80 million a year at today's pension levels, rising to over £100 million a year at today's pension levels after about 20 years.
      Those who have retired on ill health grounds or who are physically or mentally disabled already receive pensions increase when below the age of 55, and when other pensioners in the schemes reach 55—that is, still five years younger than the normal retirement age for most public service schemes and 10 years below the state pension age—their pensions are increased and the increase built up since they retired is paid up to then.
      The Committee will agree that we could not give priority to targeting extra support on a group of public service pensioners who already enjoy some of the best pension provisions of any groups of public sector employees.
      The hon. Member for Newport, West raised the issue of the equalisation of pension ages. The Government recognise the arguments for equalisation of pension age, but a great many complex issues must be considered, including demographic factors and the long-term economic and financial implications of any change for individuals, employers and the state.
      The hon. Gentleman spoke of what was happening in Europe and was right to suggest that some European countries have a common pension age. The common pension age in Denmark is 67, and in Germany, Ireland, Luxembourg, the Netherlands and Spain it is 65. 1 do not imagine that women nearing pensionable age would be delighted were the British Government to raise the pension age to 65.
      348
      Five countries have different pension ages. They are Belgium, where men retire at 65 and women at 60; Greece, where men retire at 65 and women at 60; Italy, men at 60 and women at 55—the only country with a 55 pension age for women; Portugal, men at 65 and women at 62; and the United Kingdom, men at 65 and women at 60.
      I hope that, having heard my reasons why we cannot accept the amendment, plus the additional background information on the equalisation of pension ages, the hon. Member for Newport, West will feel able to withdraw the amendment.
      Mr. Archy Kirkwood: I support the thrust of the case that has already been made by the hon. Member for Newport, West (Mr. Flynn). However, I am puzzled by the size of the sum of money involved. I agree that if I was in the Minister's shoes I would not wish to spend £180 million in such a way, because there are other claims on the money that also come under the social security heading.
      If I understand the situation correctly, we are talking about extending pensions, after 1 January 1993, to men under 55 with dependants, and the amendment aims to give them a larger increase than that provided for in the Bill.
      Presumably we are talking about the cost over a period and not expenditure of £180 million in the year commencing 1 January 1993. Either there are more people within the category that would get the increase if the amendment were passed than I imagined, or the sums of money to be paid to them are larger than I imagined.
      What I am trying to say, in a cack-handed fashion, is that either the increases are large or a huge number of people will benefit from them.
      I know that this is a technical question and the Minister may not have the information immediately available to answer, but I think that the Committee would like to know why such substantial sums of money would be involved if the amendment were passed. Will a few men under the age of 55 get a substantial increase in the short term, or will thousands of new pensioners benefit from the amendment? That is an important question. Why do the Government estimate that the costs will be greater if this amendment is made?
      Mr. Ryder: I shall do my best to answer the understandable and legitimate question of the hon. Member for Roxburgh and Berwickshire (Mr. Kirkwood).
      I shall again paint some of the backcloth. As I said earlier, only eight women in the schemes for which data are available—the Civil Service, the National Health Service in Great Britain and teachers in England and Wales—currently benefit from the provisions. The cost of the pensions increase to be paid to them is approximately £3,000. Home Office estimates for the police scheme in England and Wales show that no more than 50 or 60 retired policewomen could benefit from the provision, and the actual number is thought to be somewhat less. There are no retired female firefighters or armed forces personnel who would benefit from the provision. Paying a pension increase to men under 55 with dependent children would be very costly, as some 7,000 retired policemen and firefighters would benefit—mainly policemen, as proportionately more firemen retire early on grounds of ill health and they already qualify for an increase on those grounds.

      349
      The annual cost of such a provision would be about £6 million in 1989 to 1990, at 1989 to 1990 pension levels, rising to £14 million, at 1989 to 1990 pension levels, after 25 years.
      The cost of a pensions increase for some male pensioners under 55 could be met by an additional contribution of approximately one half of 1 per cent. of the payroll. The costs of increases on pensions payments in the future, in respect of the past service of current and retired employees, could not be met in that way for the police scheme, which is the main scheme to be affected, because the costs would have a capital value of approximately £120 million at 1989 pension levels.
      When I first saw the figures, I was as surprised as the hon. Gentleman, but they have been worked on in detail by the Treasury and by other interested parties and, to the best of my knowledge, the figures are accurate.
      The amendment moved by the hon. Member for Newport, West (Mr. Flynn) does not propose to phase in the provisions. If it did, the cost in 1993 would be small.
      I hope that I have answered the hon. Member for Roxburgh and Berwickshire. If I have missed any technical matters, I shall try to answer them later.
      Armed forces personnel can draw a pension from the age of 38 and the police, I think, from the age of 48.
      Mr. Kirkwood: I am grateful to the hon. Gentleman—and I am not trouble-making, honestly. Perhaps it is because I am not a specialist in this subject, but I do not understand the £120 million capitalisation figure that the Minister mentioned. I think that it means that the Treasury, however indirectly, would have to put that sum into the schemes to meet the increments over a period of some years. If that is the case, I shall go away a relatively contented man. As a lay person, it seems to me that it is possible to phase in the cost of meeting the increase if males under 55 are to benefit from the scheme.
      I remain surprised that the scheme will cost so much money. Is the simple answer that £120 million will have to come out of the Treasury's pocket to be paid into pension funds? I am still somewhat puzzled about the cost of the scheme, bearing in mind the small number of people likely to benefit from it.
      Mr Ryder: As the hon. Gentleman has conceded, we are dealing with sizeable amounts of public money. Some of that money could be better spent by looking after people who are less fortunate than many of the people who subscribe to, or gain from, the schemes that we are debating.
      To elaborate on the hon. Gentleman's last point, the schemes are not funded. Therefore, we are talking about the amount that we would have to put in if the payment were applied to pensions derived from service before the change was made.
      Mr. Flynn: I share the unhappiness of the hon. Member for Roxburgh and Berwickshire (Mr. Kirkwood) with the Minister's replies.
      I should like to draw hon. Members' attention to the unusual nature of the work of the police and the armed services, and the fact that it is universally accepted that people in those services need to retire early.
      I mentioned the teachers. Two teachers' unions have said that they would be happy to see the costs provided for in the amendment funded out of their superannuation fund. They believe that the cost would be tiny, protozoan
      350
      or minute, and they would be prepared to pay that for the principle that is at stake. It is an important principle: equal treatment of the sexes represents a great international reform. We should compare that reform with others in the world. At the time of the emancipation of slaves, we did not create equality by making all working people slaves; we did not spread the misery. The Government, however, seem in this instance to wish to spread not the advantages enjoyed by either sex—sometimes men, sometimes women—but the disadvantages.
      7.30 pm
      On Second Reading, the Minister used the words "the ultimate cost". Ultimate" refers to a long period, and I share the cynicism that has been expressed about the arrival of the year in question. It is with some regret that we note the resistance from this regressive, backward-looking Government to the ideal being pushed by the far-sighted, progressive Europeans. Much of the contribu?tion involved should be a matter for negotiation, as the funds are provided not by a public charity but by working people, in the same way as with other occupational pensions. Surely this is a matter for those people to decide rather than a matter for Government edict.
      Mr. Ryder: May I repeat what I said in my opening remarks and on Second Reading? If we were to accept the amendment on the levelling-up or levelling-down principle, considerable public expenditure would be involved. Therefore, we cannot accept it.
      The hon. Gentleman alluded to the equalisation of pension ages. As I said in my earlier speech, equalisation of pensions in Europe is not always equalisation downwards. The majority of countries that apply such equalisations equalise up to the age of 65, while Denmark equalises up to 67. Such an arrangement in this country would make women less happy than they are with the present arrangements, which specify an age of 60.
      I am advised that one problem of the amendment is that, perversely—I am sure that this was not the intention—it could discriminate against women. The children involved must be dependent children and, other things being equal, male pensioners are more likely to be regarded as heads of household than female pensioners, especially if the husbands of the female pensioners are still working.
      Mr. Flynn: In these days of equality and the spread of "house husbands", I do not think that that would pose a serious danger. In view of what the Minister has said, however, I beg to ask leave to withdraw the amendment.
      Amendment, by leave withdrawn.
      Clause 1 ordered to stand part of the Bill.

    Clause 2

      PERIODS OF FURTHER SERVICE
      Question proposed, That the clause stand part of the Bill.
      Mr. Kirkwood: May I ask again a question that I asked on Second Reading about the legal propriety of legislation to amend Acts that have been repealed? As I said then, it strikes me as absurd in the extreme and, indeed, incompetent for clause 2(5) to be included in the Bill without some discussion and some explanation of why the Treasury solicitors consider it necessary to amend the

      351
      repealed Pensions (Increase) Act 1965. If it is competent to do so, I should like an explanation of why it is necessary. The Minister addressed the matter briefly on Second Reading and, as far as I can remember, said that he thought that it was necessary so that people could understand what was supposed to have been the position between 1965 and 1971. Following the coming into effect of the Pensions (Increase) Act 1971, the appropriate increases were implemented.
      If the Treasury solicitors are going to make the amendment of repealed Acts a habit in the future, we shall all be led a merry dance. I could suggest a number of candidates for amendment among repealed Acts, but I think that those outside the House will not understand, and will think that we have nothing better to do with our time. I was not satisfied with the explanation that I was given on Second Reading, and I should be obliged if the Minister would have another stab at it tonight.
      Mr. Ryder: I will have a shot at it.
      Clause 2 amends the law on two small, technical aspects of pensions increase to align it with the actual practice followed by public service schemes. There are two separate issues. First, subsections (1), (2), (3) and (5) amend the Pensions (Increase) Acts 1965 and 1971 to make the law relating to the increase of pensions of certain re-employed scheme members what it was always thought to have been. The Acts include provisions to ensure that re-employed scheme members—that is, those who have left, and rejoined with a break in service—do not have a lower pension because of the way in which the Acts would otherwise apply on their cases.
      However, special provision then had to be made for the teachers' schemes because of provisions in those schemes that allowed teachers to qualify for a pension in certain types of employment or other absence from teaching which did not count towards their eventual pension. The relevant words have always been interpreted by the Departments concerned in a particular way which they believed that the Acts prescribed. The clause validates that interpretation and the practice that those schemes have followed since 1965. I should emphasise that the practice of scheme managements will not be changed, and in that sense no pensioners will be affected. No doubt you, Sir Paul, followed those remarks with particular attention in view of your previous responsibility for pension matters some years ago.
      Clause 2(4) corrects an unintended anomaly in the application of the same provisions to the dependants of re-employed scheme members. As it is now worded, section 4(3) of the Pensions (Increase) Act 1971 would apply only to dependants' pensions calculated as a proportion of the scheme member's pension. It would not appply to a dependant's pension calculated directly by reference to the scheme member's salary and years of service. The practice of scheme managements has always been to apply section 4(3) where appropriate to dependants' pensions, however calculated.
      The 1965 Act was repealed by the 1971 Act, but without prejudice to the operation of the repealed provisions in respect of the period ending 31 August 1971. The aim of the clause is to ensure that the provision has the effect that it should have had since 1965.
      352
      The hon. Member for Roxburgh and Berwickshire (Mr. Kirkwood) asked why clause 2 was necessary. I think that I have explained the reason in general terms, but let me explain more specifically: if we left it out, there would be an obligation to trace all past pensioners, and to compensate any who had not benefited but should have. That would probably be impossible and certainly very costly. It would be unfair and possibly illegal not to do so.
      Question put and agreed to.
      Clause 2 ordered to stand part of the Bill.

    Clause 3

      No INCREASE FOR ADDITIONAL LUMP SUMS ARISING FROM RECALCULATION
      Question proposed, That the clause stand part of the Bill
      Mr. Flynn: Clause 3 removes the right to inflation proofing when a lump sum retirement benefit is reassessed to take account of a retrospective pay increase. That is a frequent occurrence in certain professions, particularly the teaching profession, as the normal retirement date is the end of August and not spread throughout the year as it is in other professions. I understand that each year about 16,000 applications for retirement are received to come into effect at the end of August. When that happens the lump sum payments are calculated before the annual pay settlement is concluded. In due course those pensioners receive an additional lump sum based on the increase in salary. That addition is increased, where appropriate, under the Pensions (Increase) Act. Under clause 3 that will no longer apply.
      There seems to be only one argument in favour of clause 3 and that is that interest is not paid on salary arrears resulting from a pay rise and therefore pensioners should not be treated more favourably than employees. That argument has a familiar ring because of our discussions on clause 1, under which women are to lose their entitlement to a pension increase because men do not have the same entitlement. In clause 3 pensioners are to lose entitlement to inflation proofing of arrears because employees do not have the same entitlement. In short, the Government are saying that equality is a many?splendoured thing. They have suddenly become fanatical about being egalitarian, but only when the results of equality achieve a saving in public funds. That is a questionable devotion to the principle of equality.
      Perhaps the Minister can tell us how many people would have received those increases in recent years and whether they would have been affected by clause 3. Perhaps he could give us some idea of what the average loss would have been and the total savings to be made. What consultations have taken place with the unions and other representatives of the members of the scheme? Again, clause 3 represents a small change, but a mean, penny-pinching and unnecessary one.
      Mr. Ryder: Clause 3 ends a provision that gives rise to extremely small one-off payments to pensioners but with a disproportionate administrative burden for the scheme managements concerned.
      The problem we seek to solve is this. The Pensions (Increase) Act protects the real value of preserved lump sums awarded to "early leavers" from public service

      353
      schemes. That is entirely appropriate, but, of course, it was never intended that the provisions should operate once the lump sum had been paid.
      Unfortunately, they apply to lump sums that are recalculated when a retrospective pay award is made. If a scheme member retires after a retrospective pay award comes into force but before that award has been announced, his final salary for pension purposes will be increased and his pension and lump sum recalculated. An additional amount of lump sum is paid, and the Pensions (Increase) Act also requires pensions increase to be paid on that additional lump sum. However, the amount of that increase cannot be calculated and paid until the next pensions increase order is made. So the scheme management may have to make no fewer than three payments of lump sum when a scheme member retires: on the date he retires; when a retrospective pay award is announced; and when the next pensions increase order come into force.
      The last payment will normally be very small, no more than a few pounds and perhaps even a few pence. Clause 3 relieves schemes of the requirement to make this third payment and of the associate administrative burden. I must stress that the entitlement under scheme rules to an additional lump sum and the recalculation of pension if a retrospective pay award is made is completely unaffected by the clause. The clause simplifies the administration of pensions increase at an insignificant cost to pensioners.
      7.45 pm
      It is important to establish clearly that the minor administrative simplification is made at a negligible or insignificant cost to some pensioners. It does not undermine the principle that all pension benefits are protected against inflation. Pensions increase legislation has always taken account of practical considerations and the need to avoid excessive administrative costs.
      The effect on pensioners is very small. In many cases, the amount is less than £1. A hypothetical calculation based on a civil servant retiring on a salary of £25,000 after a full 40-year career might have benefited from an award six months delayed of only £11·25, or 0.03 per cent. of the total lump sum involved.
      The hon. Member for Newport, West (Mr. Flynn) was right to ask one particular question. The salary arrears do not attract interest. Another anomaly is that if the scheme makes a mistake no pensions increase is paid on the extra lump sum. I hope that that goes some way towards answering the hon. Gentleman's points.
      Question put and agreed to.
      Clause 3 ordered to stand part of the Bill.

    Clause 4

      EMPLOYERS' CONTRIBUTIONS TOWARDS COST OF PENSIONS INCREASE FOR TEACHERS AND PERSONS ENGAGED IN THE HEALTH SERVICES ETC
      Mr. Flynn: I beg to move amendment No. 3 in page 4, line 1, leave out subsection (1)
      The amendment seeks to delete subsection (1) which gives powers to make regulations placing the cost of teachers' pension increases on their employers or
      "such other persons or classes of persons (apart from teachers) as the Secretary of State may consider appropriate".
      354
      Perhaps the Economic Secretary can explain who those other persons or classes of persons are.
      By pressing for the removal of subsection (1), the amendment does not imply that we approve of subsection (2) which applies similar powers to Health Service staff. We want to concentrate on subsection (1) for two reasons, although we have many misgivings about the Health Service. I understand that a couple of telephone calls to health authorities revealed a sublime ignorance about the existence of the Bill.
      We seek to remove subsection (1) because the teachers' unions are concerned that the Government are pre-empting the results of negotiations that have been taking place on the funding and other aspects of the teachers' superannuation scheme. Given the present state of local government finance, any threat to impose additional charges on local authorities must be a matter of deep concern. Firm assurances are needed that, if the powers are to be used, an appropriate transfer of resources will take place at the same time.
      The calculation of the teachers' superannuation fund is weird and wonderful. It works in rather a similar manner to the pools panel that used to meet when we had severe winters, when experts would get together and guess the results of football matches that had not been played. Apparently a committee of experts decides what investments which would have been made, but had not been made, by the teachers' superannuation fund would have yielded. Unfortunately, the possible investments that they consider are only Government funds. No occupational pension scheme would have a portfolio which consisted only of Government funds.
      There is much concern that for many years teachers' superannuation payments have been seriously understated, but I understand that the teachers' unions and the appropriate body are negotiating on that.
      Clause 4 has wider implications. The principle of inflation-proofing public service pensions may be threatened if it became a matter for negotiation between occupational groups and employers rather than a nationally recognised obligation. We debated that at length on Second Reading. Clause 4 could be the first stage in the dismantling of the Pensions (Increase) Act, of which the Prime Minister strongly disapproves.
      If such fundamental changes are to be made to the financing of public service pensions, it should not be done by an enabling provision such as clause 4, followed by regulations that cannot be amended. If and when the Government decide what they want to do, they should incorporate their detailed proposals in a Bill that can be properly debated and amended.
      The financial memorandum to the Bill says:
      "Regulations made under the amendments to the Superannuation Act 1972 made by this Bill may in future have some financial effect."
      What does that mean? The Minister may say that he cannot predict what will happen in the future, but the worry is the effect that the Bill is likely to have on health authorities and, in particular, local government. We are aware of the financial problems experienced by both those bodies, but it is a particular threat to local government, because the gearing effect of the poll tax means that for every extra penny of expense shouldered by local authorities they must charge many times as much to local poll tax payers. We should like the Minister at least to tell the House what would be the maximum increased burden

      355
      on employers if the total cost of pension increases were placed on local authorities and local bodies, which clearly is what the Government have in mind.
      Labour Members recognise that there is merit in that proposal and that those sums should be paid by those bodies rather than by the Treasury, but the Minister must assure us that it will be fully and appropriately funded. Will he explain how employers will find the money to pay what will be required?
      The Department of Education and Science has sent a letter to the National Union of Teachers. Last year, the NUT held a meeting on the root-and-branch reform of the teachers superannuation fund. It intends to reconvene that meeting, but it fears that legislation may pre-empt negotiations. The reply from the Department states that the Bill will not pre-empt future negotiations. We should like the Minister to confirm that that is not the purpose of the Bill.
      Mr. Ryder: The hon. Member for Newport, West (Mr. Flynn) mentioned the pools panel. I must reveal that I have always wanted to sit on the pools panel on a Saturday morning when matches are snowed off and to deliberate over the fortunes of Newport County, Norwich City or Ipswich Town. Alas, the pools panel has had a pretty thin time over recent seasons. I hope for its own sake that it is not paid according to the number of times that it meets.
      I must reject amendment No. 3. The purpose of clause 4 is to allow the Secretaries of State responsible for the National Health Service and teachers' superannuation schemes in England, Wales and Scotland to make regulations, which would be subject to negative resolution, to permit the cost of pensions increase to be taken into account in determining employers' contributions to the schemes. At the moment, those costs are met by the Departments that administer the schemes, rather than by employing authorities.
      The teachers' and National Health Service schemes are unfunded. The Government Actuary advises the Secretaries of State on the appropriate levels of employers' contributions on the basis of quinquennial valuations of the schemes' assets and liabilities. For that purpose, he makes various actuarial assumptions and works on the basis that the schemes are funded.
      Union interests, particularly in teaching, have in the past argued strongly that some of the assumptions that the Government Actuary uses are unrealistic. They believe, for example, that different assumptions about investment returns would lead to a surplus on the notional funds, which might then permit lower contribution rates or improvements in benefits. I understand that employees' and employers' representatives in the teachers superannuation working party have just agreed on a report endorsing that. It will be impossible to take this further without clause 4.
      The Amendment No. 3 would restrict the change made in clause 4 to the National Health Service superannuation schemes and would deny a worthwhile opportunity to take similar powers for the teachers' schemes.
      Without wishing to anticipate unduly the outcome of discussions following the teachers superannuation working party report, the Government would feel able to agree to changes in such matters as the investment assumptions, which might be seen as giving greater realism in building
      356
      up the assets of the schemes, only if there were a corresponding realism in treating pensions increase as a liability of the schemes. I understand that employees' and employers' representatives in the teachers' superannuation working party recognise and accept that. Clause 4 provides the necessary power.
      I cannot say when regulations will be made under clause 4. There would need to be much careful consultation with all the interests concerned before a change could be made. Indeed, sections 9(5) and 10(4) of the Superannuation Act 1972 would require that, and the statutory instruments containing the regulations would be subject to negative resolution. The Government would also want to be sure, so far as possible, that the net effect of any changes was not likely to add unacceptably to the costs of employing authorities.
      I hope that the recognition that I have given to the need to contain the additional costs for employing authorities and the need for full consultation before any changes are made will allay any misgivings that Labour Members, or interests with which they have been in touch, may have had.
      The hon. Member for Newport, West asked whether the Government plan to compensate health and education authorities for the higher contributions that they will have to make to finance pension increase. They will not necessarily have to pay increased contributions; the clause confers a power on Ministers only to make at an appropriate time regulations under which employers' contributions can be set to cover the costs of pensions increase. The effect on health and education authorities' finances will be considered if the need arises.
      Mr. Flynn: The Minister trod on private grief when he mentioned Newport County and the pools panel. The only game that Newport County could win was when the pools panel sat, but tragically the football team no longer exists.
      We take little comfort from what the Minister said. I noticed how carefully he chose his words when talking about not adding unnecessarily to the costs of local authorities.
      In the past, Opposition Members have been cynical about Government legislation, and we remain a little apprehensive. I note the Minister's points. On that basis, I beg to ask leave to withdraw the amendment.
      Amendment, by leave, withdrawn.
      Clauses 4 to 14 ordered to stand part of the Bill.
      Bill reported, without amendment.
      Order for Third Reading read.
      8 pm
      Mr. Ryder:I beg to move, That the Bill be now read the Third time.
      I am grateful to hon. Members, particularly the hon. Members for Newport, West (Mr. Flynn) and for Roxburgh and Berwickshire (Mr. Kirkwood), for their prompt consideration of this modest, technical and useful Bill. Public service superannuation will never be the most exciting subject that hon. Members debate, but we owe an obligation to the electorate and to approximately 4 million members of public service pension schemes to give a fair hearing to Bills of this kind.
      I recognise the strength of feeling on the subject of levelling up against levelling down, which we debated in Committee. I assure the House that the Government looked carefully at the issues and the merits and demerits

      357
      of levelling up and levelling down before concluding that it was right to phase out a benefit which, in practice, has benefited and always will benefit a small number of women pensioners. We must do what is right for public service pensioners, what meets our European Community obligations and what is fair to the taxpayer. I am confident that the Bill strikes the proper balance.
      In Committee, hon. Members noted that other measures in the Bill made small and, again, technical changes to the existing law. Opportunities to legislate on public service superannuation will always be rare events, but I am pleased that we have been able to produce a Bill to secure equal treatment in pensions increase to make such changes. I commend the Bill to the House.
      8.2 pm
      Mr. Flynn: Opposition Members do not wish unnecessarily to delay legislation, but the Bill is proceeding at breakneck pace. It was introduced at an unusual time—a few days before the Christmas recess. The Second Reading debate was shortly before Christmas, and we are now concluding the remaining stages. Further submissions from representatives of many people affected by the Bill may be made when the Bill is in another place and when it returns to the House.
      A great pensions minefield is ahead for the Government. There are many qualms about the Bill, some of which have been expressed tonight, particularly the implications for the Health Service and local government, and for equality of the sexes legislation. There will be repercussions throughout other Government pensions legislation and policies.
      The fascinating history over the centuries of providing the elderly with comfort and security in retirement is continuing. It reached a high point of hope in the 1970s. The years since then have shown the growth of complexity of pension provision, without a growth in pension quality, and a certain guarantee of much future confusion. There is great indecision about the problem of equalising pension provision for men and women in the future. I am certainly not suggesting that pensions should be equalised down, but the implications are that the Government have little hope of equalising them other than by disadvantaging
      358
      women. We will also see a continued undermining of the precious 10-year-old principle that pensioners should share in the country's growing prosperity.
      The Bill is a product of yesterday's false, extinct ideas and, sadly, is not a product of the new hope for universal access to prosperous and fulfilling vintage years of retirement for everybody.
      8.5 pm
      Mr. Kirkwood: The Bill is a useful addition to the body of statute law governing pensions. I almost stand accused of being boring about the need——
      Mr. Terry Lewis: Not just on pensions.
      Mr. Kirkwood: That may be true, but it is for others to judge.
      I am concerned about the increasing complexity of the language used in pensions legislation. Earlier debates have suffered because of it, but the Minister coped commendably well. He should use his power to make the parliamentary draftsmen to do their best. I understand that it is a complex subject, but we are getting into the realms of the absurd in the language that is used in some statutes. That comment applies to this Bill in particular.
      The Government were right on whether to level up or level down. I give the Minister clear notice that the Government must take no precedent from their judgment on the Bill. If they bring forward sex equality measures or any other legislation, they must not use this Bill as a basis on which to level down future provision. The facts and circumstances of each case must be carefully considered. On balance, the Minister was right, but he must not assume that he will have such a easy ride in the future.
      Mr. Bob Cryer: Easy Ryder.
      Mr. Kirkwood: Yes.
      The Government must introduce legislation that takes advantage of the opportunity presented by legislation from Europe to level up social provision across the broad spectrum of social policy. He will be widely opposed if he seeks to use the Bill as a precedent for arguments in the future.
      Question put and agreed to.
      Bill read the Third time, and passed.

  Civil Aviation Authority (Borrowing Powers) Bill [Money]
  Queen's Recommendation having been signified—
  Motion made, and Question proposed,
  That, for the purposes of any Act resulting from the Civil Aviation (Borrowing Powers) Bill, it is expedient to authorise any increase in the sums payable out of or into the National Loans Fund or charged on and issued out of or payable into the Consolidated Fund under the Civil Aviation Act 1982 which is attributable to provisions of the new Act—

  (a) increasing the Authority's borowing limit to £500 million with power to make further increases up to £750 million by order;

  (b) enabling the Authority to borrow sums in units of account defined by reference to more than one currency.—[Mr. Chapman.]

  8.8 pm
  Mr. Bob Cryer: As hon. Members know, I like to exercise some scrutiny of money resolutions, and I am delighted that several hon. Members are intent to do the same. The Bill was dealt with by a Second Reading Committee which sat for just under an hour. No doubt the Minister will be pleased to confirm that the borrowing powers in the resolution are for only £500 million, which is a great deal of money, but that any further sums up to a total of £750 million will be subject to an affirmative order of the House—that is not a great safeguard, but it is something—and that, by virtue of this money resolution, we are not handing the Minister unfettered powers.
  The borrowing powers that are authorised by the money resolution are for money that is to be used for improving air traffic control capacity. On 20 December last year the Minister stated:
  "Perhaps I could give two examples of major projects in the investment programme, which hon. Members may find of particular interest. One project is the central control function; it has been called the tunnels in the sky concept. It involves a major restructuring of the airspace over south-east England and will increase capacity in the terminal manoeuvring area over the south-east by at least 30 per cent. when it is fully in place in 1995. The project will cost about £30 million."— [Official Report, Second Reading Committee, 20 December 1989, c. 3.]
  Perhaps the Minister will confirm that the borrowings for that project will not confine the benefits to the south-east and that regional airports, such as the Leeds-Bradford airport which is operated by the Leeds-Bradford airport committee, will obtain the benefits by virtue of the fact that the delays around Heathrow and Gatwick will, I hope, be curtailed.
  As the Government are currently considering the application to extend flying hours beyond 10 pm, perhaps the Minister will bear in mind the fact that the investment which is to be authorised by the money resolution might increase the existing capacity of aircraft to enter and leave air space. Therefore, the extended flying hours at Leeds-Bradford, for which some people are pressing—but not, I hasten to add, those people who live close to the flight paths—might not be necessary.
  If the money is to be used for such a project, there will be great advantages. However, there is then the question of the other priorities. As was made clear in the debate to which I have referred, there are several other more pressing priorities. I refer, for example, to Bradford and, although this is not the Minister's responsibility, I should like to place it on the record that it would be helpful if more
  360
  money could be allocated for the construction of permanent extensions to schools there, because several schools in my constituency need many millions of pounds spent on them.
  We are talking about borrowing powers. Air traffic is a growth area, and since the money that will be lent to the Civil Aviation Authority will be recouped in charges to the air traffic users, we must ask the Minister how long the borrowing period is and how soon the Government will recoup that money so that it is available for other priorities. I am not opposed to improvements in air traffic control and, of course, in safety standards. We all agree with the need and determination to maintain and improve our air safety standards. However, if the money is to be recouped, some of the other pressing priorities for expenditure can also be considered. I should like the Minister to comment on that.
  The Civil Aviation (Air Navigation Charges) Act 1989 allowed charges for landing to be made in European currency units. As a consequence, paragraph (b) of the money resolution refers to
  "enabling the Authority to borrow sums in units of account defined by reference to more than one currency."
  I take it that that wording has been chosen to embrace ecus, as they are known, which very few people on the face of our planet have ever seen or used.
  I served on the Second Reading Committee of the Civil Aviation (Air Navigation Charges) Act which, as I have said, allowed charges to be rendered in ecu. As the Minister explained in the Second Reading Committee, the extension of the use of other currencies is purely to embrace ecu. However, he could not satisfactorily explain at that stage why that would be of great advantage to the Civil Aviation Authority, except from the point of view of flexibility.
  As was pointed out to the Minister, the exchange rate in ecu, like that of any other currency, fluctuates and varies extensively. European currency units are no different. The significant difference is that the European currency unit is a medium by which the federalists inside the Common Market are devoting their attention to producing a standard European currency. The extension into ecu goes directly against the Prime Minister's vaunted wish to oppose federalism and instead merely to retain the European Economic Community as a trading organisation. Paragraph (b) of the money resolution is therefore a sign of the acceptance of and a step towards federalism, not against it.
  I hope that the Minister will be able to cite something more than "flexibility" to justify paragraph (b) because he did not provide an adequate explanation when the Bill was considered in Committee. As I have said, I hope that he can give an explanation about the money resolution because a large sum of money is involved. The total is £750 million. The borrowing limit seems to be being provided for a good and useful purpose, but the examples that the Minister gave in Committee totalled only £30 million. Perhaps he could give us a brief outline of what the other £720 million——
  The Minister for Aviation and Shipping (Mr. Patrick McLoughlin): I believe that in Committee I also gave the example of the en route centre, which will cost considerably more than £30 million. In fact, it will cost about £200 million. That £30 million covered just a few examples.
  Mr. Cryer: I am sure that the Minister would like to fill us in with some further details and to give us a sketch of the £750 million that is likely to be involved. In fact, the money resolution covers only £500 million because any increase in the borrowing limit above £500 million will be made by order. Presumably, therefore, that part of the borrowing requirement is not yet needed. Perhaps the Minister could tell us why there is a contingency figure of £250 million, because he will have to do that when he presents the order. I look forward with eager anticipation to the Minister's detailed response.
  8.16 pm
  Mr. Anthony Steen: Before commenting on the money resolution, Mr. Deputy Speaker, I should like to ask for clarification. As I understand it, the length of any speech made by any hon. Member is recorded. I am concerned to ensure that any speech that I make tonight will not lead to my being placed on a blacklist. When I asked Mr. Speaker a little earlier about my speeches, I learned that there were two stars against my name, which showed that I had spoken for 20 minutes or longer in the past. However, neither of those speeches was a Second Reading speech. Both were made on Report or at the request of my hon. Friends who had asked me to keep the business going. I want to make quite sure that, in future, I shall not be picked out and discriminated against because of my speech tonight. I should be most grateful, Mr. Deputy Speaker, if the Chair could give a ruling.
  Mr. Deputy Speaker (Sir Paul Dean): These matters are clouded in mystery. However, I can advise the hon. Gentleman and the whole House that in the interests of trying to get a fair balance among those whoe are called to speak in our debates, Mr. Speaker keeps a careful note of those hon. Members who speak, of the subject on which they speak and for how long they speak.
  Mr. Steen: As that may put a somewhat different complexion on the fact that this debate can last until 10.45 pm, I hope that the length of an hon. Member's speech will not be held against him or her. Because we now have two and a half hours before the next business needs to be called, I am deliberately making the statement that, if I choose to go on until 10.45 pm or thereabouts—although I have no plans to do so at the moment—I believe that, in view of the position in the House at the moment, no hon. Member, including myself, should be compromised for choosing to speak on a money resolution which is important but which may not be the most significant matter that has come before the House.
  I declare an interest at the outset. First, I have been involved with aviation for the best part of 20 years. Before I became a Member of the House, when I practised at the Bar, I was involved in aviation law, and I have been involved in the aviation industry ever since I have been a Member of the House. I deliberately declare that interest because it has been said from the Chair that constituency interests take precedence over consultancy interests. I and many other hon. Members have both constituency and consultancy interests.
  I have a constituency interest in Plymouth airport, which is surrounded by South Hams. I also have consultancy interests in Airlines of Great Britain, of which British Midland Airways is part, and British Island Airways. As I am interested in aviation I have worked, not
  362
  necessarily in a paid capacity, for several other airlines, such as Brymon Airways, which is my local airline, Britannia and other airlines.
  The House is becoming confused about interests. Simply because one is paid to do work connected with a particular interest, one should not be discouraged by one's colleagues or by organisations outside the House from speaking on the subject. It has been said that, if an hon. Member speaks on a subject as a paid consultant, the content of the speech is dismissed.
  Mr. Spencer Batiste: Does my hon. Friend agree that that criticism usually comes from those who would prefer to speak on most subjects from ignorance? Provided that my hon. Friend or any other hon. Member declares that interest, and its extent, the additional knowledge that arises from it is of the greatest importance to industry and to the House.
  Mr. Steen: I am grateful for my hon. Friend's timely intervention. As you know, Mr. Deputy Speaker, I was not called in a recent debate on airport security. I could have given the House inside knowledge from five airlines about the serious problems faced by the industry. As I was deprived of the opportunity to do so, the House was deprived of information direct from operators at Heathrow, Gatwick and Plymouth about the problems of airport security and safety. One reason for not calling me was that I had interests in the aviation industry. I should have thought—this is the point that my hon. Friend made—that because I had interests in aviation I could have been useful to the House and given it the benefit of my 10 years' experience in the industry.
  I declare my interests because I believe that they are good, not bad, points. My hon. Friends would prefer to hear from an hon. Member who knows about his subject rather than from one who does not. Many of my hon. Friends believe that, provided that the hon. Member gives good value for his consultancy interests, it adds another facet to debates in the House.
  Mr. Rupert Allason: There are two and a quarter hours to go.
  Mr. Steen: As my hon. Friend the Member for Torbay (Mr. Allason) says, I have two and a quarter hours to go. I assure the House that I do not propose to speak for that long. It is important to get on with the money resolutions.
  The money resolution will give the Civil Aviation Authority a sizeable sum of money. Probably few hon. Members can comprehend the enormous sum of £750 million. The sum of £500 million went through on the nod, but the extra £250 million will have to be brought back to the House for another debate. It is strange that, the more money that we ask the Government for, the fewer hon. Members attend the debate in the House. For smaller sums, the House is packed. The large sum of money may be going for the best possible purposes. I should like the Minister to comment on the regulation and control of that money, which will go to a public body. It would be most helpful to the House to know what control there will be on the £500 million that will be spent.
  Urban development corporations were debated in the House several times and vast sums of money were spent on them. Those sums went through on the nod. When the Labour party was in government between 1974 and 1979, we constantly passed vast sums of money for the

  363
  nationalised industries. Now that so many of them stand on their own feet in the private sector, there is less opportunity to pass vast sums to the public sector. I am afraid to say that the civil aviation authority is still one of those bodies.
  The House will be interested to know that 90 per cent. of the Civil Aviation Authority consists of an organisation known as the National Air Traffic Scheme. The NATS service is responsible for all that happens in our skies and 90 per cent. of the staff of the CAA are in NATS. Does the Minister believe that public money could be saved if the CAA were separated from the navigational arm, which forms the majority of it, and was either made into a public utility or privatised?
  NATS controls slots at airports. The service that it performs is marketable and could be privatised. Airlines could be charged for its services. Could some of the large sums to be voted for CAA borrowing be saved if NATS became a public utility or was privatised?
  In 1983, the Secretary of State for Trade and Industry referred the running of the CAA to the Monopolies and Mergers Commission and it conducted an inquiry. It is strange that, six years later, the Department of Trade and Industry has again referred the CAA to the MMC. Is that because the 1983 report was no good or are the Government running out of public bodies which the MMC can investigate? As we go through the cycle of privatisation, the CAA will probably be referred to the MMC every few months as the MMC runs out of public bodies to examine.
  We have a problem about the amount of money that is being asked for and about how NATS is run. If it were run in a slightly different way, it might not cost so much. I do not know whether my hon. Friends know that NATS is run by an air marshal for three years and by civilians for the next three years. It is rather like a biblical story, in which seven years are lean and the next seven years are fat. With NATS, the air marshal takes over the running of the air navigational system every three years and civilians do it every other three years. It is like rotation of crops. Is that the best way to run air traffic control? There is a constant change of seats. It is like musical chairs. After the third year, the air marshal has his chair removed and a civilian moves in. That does not lead to continuity and cannot be the most effective use of money.
  Conservative and Opposition Members would like more money, provided that it produces more slots in the air. Is the Minister aware that the antiquated system under which NATS is run means not only that more slots will not be produced, but that the amount of money spent will not necessarily result in better working practices?
  I wonder whether my hon. Friends are aware that at Heathrow every day at 3 o'clock the runways are changed, rather like the changing of the guard. That results in about a half-hour gap in operations as the CAA changes the runway pattern. No other airport halts all aircraft wanting to take off or land so as to change the runways, and Heathrow is one of the few airports that does not have a mixed-mode runway. Perhaps a few bob from the £500 million could be saved if Heathrow's runway configuration were not changed at the same time each day.
  Money could also be saved if NATS had better working practices. I know that the Minister will tell me that various
  364
  London boroughs asked for the runways to be changed round because of noise. That request was made many years ago, but since then planes have become much quieter. It should not necessarily be advantageous to spend money on an organisation that has antiquated practices.
  The money to be loaned to the CAA will not mean that it gets NATS off its back, nor will it give NATS the opportunity to make its operations lean and more efficient. That money will compound what is going on. I accept the good work that NATS does, but I fear that the money will consolidate outdated and ineffectual working practices. When the Minister replies I hope that he will consider whether money could be saved or better value for money given were my suggestions followed.
  We are all for safety and security and we all want facilities for more capacity in terminal areas. The only snag about the money to be given to the CAA for NATS is that it may produce many more slots in the air space, but the £500 million may only keep the planes in the sky. My hon. Friend the Member for Torbay (Mr. Allason), whose interest in travel is well known, will be pleased to know that. I am sure that he will share my concern, however, that although more planes will be flying around the air, it will not follow that more planes will be taking off or landing. The money will provide slots in the sky, but it will not provide more capacity in the terminal areas.
  Mr. Allason: Does my hon. Friend agree that the problem lies not with the number of slots in the sky, but with the experts who decide how many seats will be used in a plane? The problem is not the ever-growing number of people who use air travel, but the number and type of plane. A few years ago, the so-called experts advised that smaller aircraft should be used. Those aircraft have resulted in a greater number of air movements, but there has been no commensurate increase in the ability of those aircraft to carry more passengers. Exactly the same number of passengers are carried now as in the past.
  Mr. Steen: Although my hon. Friend's point does not truly relate to the borrowing powers that we are discussing, it would be discourteous if I did not respond to him briefly. The problem with the larger aircraft is that one presumes that all passengers want to travel to the same destination at precisely the same time.
  Mr. Julian Brazier: They cannot get off halfway.
  Mr. Steen: No, indeed.
  Nowadays, the travelling public want planes that will take them, on a regular basis, to smaller airfields nearer to their eventual destinations rather than larger and larger planes that go to one place. In the 1970s there was a growth in the demand for large planes, but that trend is reversing and smaller planes are being used, which has resulted in more air movements.
  More air movements do not present a problem. The trouble is that those planes must land and take off. Extra slots in the sky do not present a problem; the problem is providing adequate and sufficient controls at each airport to allow planes to take off or land. When my hon. Friend replies, I hope that he will say something about better working practices at airports such as Heathrow which will result in more movements.
  At the terminal 4 inquiry, the inspector said that the maximum number of movements that could be allowed

  365
  out of Heathrow was 275,000 a year. Hon. Members are probably unaware that there are now 340,000 movements in and out of Heathrow, discounting night movements. New technology has enabled more planes to land and take off and the provision of more slots in the sky. As a result of the money to be given to the CAA and of planes becoming quieter, does the Minister intend 400,000 air movements at Heathrow? Is it his intention to increase the number of slots out of Gatwick? Unless my hon. Friend makes a statement about how the money will be used, he will find that the British Airports Authority will resist growth at Heathrow and Gatwick and will favour moving planes to Stansted, in which it has invested £300 million.
  I hope that my hon. Friend's reply will be robust and I hope that he will tell the House that Heathrow's efficiency will not be reduced because of a conflict between the CAA which, through new technology, will be able to produce more slots and more take-offs and landings, and the BAA, which wants to switch traffic to Stansted. The House is entitled to know whether the CAA will use its enormous loan clout to redirect air traffic in the London area.
  Although the sky is the limit for investment in airlines, there is little point in making provision for more air space if sufficient money is not used to provide the necessary infrastructure to deal with arrivals and departures. I touched on that when I mentioned the mixed-mode runway.
  Although I could speak for a long time, it would not be right to do so, as I know that other hon. Members want to participate. We should remember, however, that airports such as Heathrow can be competitive only if there are sufficient slots in the air space and opportunities for true competition. The House should be concerned about the new competitive blocks that are emerging at Heathrow—British Airways, Sabena and KLM and Air France and Lufthansa. Between them they could take up 60 per cent. of the slots at Heathrow and allow virtually no room for competition.
  It is important for the Minister to ensure that the major airline blocks do not take all the additional slots to be made available as a result of the additional money for the CAA. Those slots must be used for the smaller independent airlines so that they can compete on all fours with the big battalions. I hope that the Minister will tell us the Government's policy on this—[Interruption.] I do not know why the hon. Member for Jarrow (Mr. Dixon) is getting so excited. I cannot believe that it is because of my speech.
  Mr. Don Dixon: I have never heard a money resolution being allowed to be debated as widely as this. The hon. Member for South Hams (Mr. Steen) has not once been brought to order or brought back to the resolution. If the Government's intention is to try to waste time tonight, we could have saved them the effort because we could have been voting from 7 o'clock on every amendment on the private Bill. We shall consider doing that the next time the Government wheel in Back-Bench Tories to waste time.
  Madam Deputy Speaker (Miss Betty Boothroyd): We are discussing a money resolution, which happens to be wide. The hon. Member for South Hams (Mr. Steen) obviously has expertise in the matter before us and it is therefore more important for him than for other hon. Members, to speak directly to the resolution.
  Mr. Steen: I am grateful to you, Madam Deputy Speaker, for the way in which you put that. I am also grateful to the hon. Member for Jarrow (Mr. Dixon) for explaining his discomfort. I do not wish to detain the House because I have made many points which have been well received by Conservative Members.
  I do not wish to abuse the good will of the House. I have mentioned the points about which I am concerned. We are talking about £500 million and I want to ensure that the money will not create just more space in the sky but with no room to land. I do not want the CAA to use the words "safety and security" to obtain millions of extra pounds.
  I hope that the Minister will be circumspect in ensuring that the money is put to the best possible use in line with Government policy. The Government's policy is to encourage competition. If the Civil Aviation Authority uses the money to provide more opportunities for competition, that will fulfil the Government's commitment. I hope that the Minister will be able to assure us tonight that the money will be used for the direct purpose of opening up the skies to real competition rather than giving the block cartels more opportunities, which in turn will prevent airlines from competing equally and which are against consumers' interests.
  8.42 pm
  Mr. Tam Dalyell: I wish to speak on a subject on which I have given notice to the Minister and on which I checked that I would be in order. I shall refer to the letters from Mr. Karel Van Miert to Mr. Roland Dumas—page 3 on the first letter on infrastructure facilities and page 7 of the second letter on the legal framework. I should like, I hope concisely, to raise one particular issue.
  During the Consolidated Fund debate which started at 5.52 am just before Christmas, I was fortunate enough to raise the general issue of rain forest trade in animals. The debate could have been referred to any one of 10 Government Departments because the subject straddles Whitehall Departments. During the debate I raised the matter of the International Air Transport Association and it is that on which I wish to concentrate tonight.
  I brought the debate recorded in Hansard, column 564 on 20 December, to the attention of the Department of Transport. My contribution should not be interpreted as any criticism of the Department because we are dealing with difficult matters which, to my knowledge, have not been solved by any country. Of the millions of pounds that we are discussing tonight, my plea is that more money should be given to guarantee facilities at our big airports, particularly Heathrow. That is relevant to the resolution.
  At 6 am on 20 December I said that I was
  "indebted to Tony Juniper and Christoph Imboden of the International Council for Bird Preservation, which is primarily concerned with the conservation of species."
  If my information seems to come from specialist sources, I think that the Minister would agree that there is widespread concern in this country about the conditions of the import of birds, fish, animals and reptiles.
  On 20 December I continued:
  "It is therefore of great concern that they have learnt that the number of birds dying in each consignment entering Britain continually averages between 13 and 20 per cent. In answer, I think that the Minister gave a figure of 13.7 per cent. The recent consignment of birds from Tanzania en route through Heathrow to Miami is a good example of the scale of the problem."

  367
  We are concerned not only with the importation but with the transit facilities which may be at the root of the problem. On 20 December, I said that one recent consignment
  "totalled over 8,700 birds, but over 1,200 individuals died. That is within the percentage loss that appears to be generally accepted by the authorities and importers not only in Britain but world-wide. In the United States, the figures for deaths range from 14 to 24 per cent."
  Current public feeling is considerable.
  "If it were dogs, cats or horses in trade, such figures would be totally unacceptable. Ministry of Agriculture, Fisheries and Food figures"—
  Madam Deputy Speaker: Order. As usual, the hon. Gentleman has been most courteous in giving notice to the Minister of the points which he wishes to raise. The money resolution concerns not IATA but the Civil Aviation Authority and it would be helpful to the Chair if the hon. Gentleman would show how the CAA makes the rules in this case, how they are used and how finance comes into it. I understand the point that the hon. Gentleman is trying to make, but it would be enormously helpful if he would speak more directly to the money resolution.
  Mr. Dalyell: I think that the Minister would agree that the Civil Aviation Authority has the closest relations with IATA. Is not the chairman of the Civil Aviation Authority, Christopher Tugendhat, a member of the IATA governing body—so there is the closest relationship between the two?
  I shall be concise. On 20 December I said:
  "While detailed figures are available on this trade in other countries, there are no comparable figures available in this country. For example, in the United States in 1985 over 18,000 grey parrots were imported and almost 2,700 died…
  Obviously a total ban on the trade in animals for commercial trade is ideal, but the present climate would never accept such a measure. However, limiting the trade to those individuals which are captive bred will certainly reduce the trade and the mortality figures. Interim measures which could be easily implemented include a stronger resolve by Governments to get to grips with this problem and to implement the CITES checklist scheme.
  The problem experienced by the International Air Transport Association is very important. It is vital that the dialogue between the CITES secretariat, through the standing committee, and the live animals board of the Intenational Air Transport Association, the Animal Air Transport Association and the International Office of Epizootics be continued; that applicants for export permits or re-export certificates should be notified that, as a condition of issuance, they are required to prepare and ship live specimens in accordance with IATA live animals regulations for the transport of live specimens by air and the CITES guidelines for transport of live specimens for marine or terrestrial shipments; that to assist enforcement officers, CITES export permits or re-export certificates should be accompanied by a crating checklist to be signed immediately prior to shipment by a person designated by a CITES management authority, the person so designated being familiar with the live animals regulations;"—[Official Report, 20 December 1989; Vol. 164, c. 564-65.]
  This will all cost money and require facilities. That is why I am particularly grateful that the Minister said that he would do his best to comment on this contribution.
  I admit that being a party to the convention and providing animal holding facilities can be extremely expensive. Facilities should be open to inspection, with the concurrence of the transport company—in this case the airlines—by CITES-designated enforcement personnel or
  368
  designated observers; and any documented information should be made available to the appropriate authorities and to the transport companies.
  This is a complex matter to which there is no easy answer; it requires money and an understanding that other countries are involved in the trade, and that it is no good exporting or re-exporting animals from this country and finding that a significant percentage of them die on the way to their final destination.
  One of the advantages of the Consolidated Fund debate is that one can quietly put a case to the House. That is what I should like to do on this, similar, occasion, in the expectation that the Department of Transport is doing its best and will tell us what it is doing about an appalling problem. It is, of course, true that humans are more important than animals, but the civilised world can do a great deal about the problem.
  8.52 pm
  Mr. Rupert Allason: I have the honour to have been selected to serve on the Standing Committee scrutinising this Bill and I am extremely worried about much of the way in which the money is to be spent.
  The key to the Bill and this resolution is the overcrowded skies of the south-east, a problem which has arisen time and again. Experts have been consistently wrong, and I should like to be reassured that the money will be spent in ways that will reduce the burden on air traffic controllers. As far as I can tell, that is not what will happen.
  Some of the money will be spent on buying a new green field site of about 30 acres in Fareham to move the air traffic centre from West Drayton. I cannot say that I am enthusiastic about that. I understand also that some of the extra borrowed money will go to a national radar network. Anyone who has studied the radar system—especially the defence system—of this country will know that it has been a shambles since the late 1940s. I hope that some of the money will be spent integrating the military and civil systems.
  Similarly, a great deal could be achieved by spending the money sensibly to remove the pressure on the south-east. When this issue reached crisis proportions last year, serious consideration was given to opening up two major international airports, not in the south-east but serving the major catchment area of the west midlands and the south-west.
  We have two huge airports that are hardly used. One is Greenham Common which was, but is no longer, a cruise missile site. It is conveniently close to the M4. Brize Norton is a major international airport used only by the military. No civilian personnel pass through it, but Customs and immigration officials are there. For my constituents in the south-west it would be extremely useful not to have to trek the whole way to the M25 and around it to Gatwick to make their connections. It would greatly help them if they could go up the M5, on to the M4 and pop into Brize Norton or Greenham Common, both of which are greatly underused. If these two sites were developed there would be no necessity to move from West Drayton and despoil a green field site in Fareham, and that is the core of my proposition.
  My hon. Friend the Member for South Hams (Mr. Steen) described the resolution as concentrating on safety and security; I cannot say that I share his view. Safety is

  369
  extremely important, but I understand from the Civil Aviation Authority that much of the money will be spent on training an additional number of air traffic controllers, which is to be welcomed if they are really needed. The irony is that study of the figures shows that the trainees are being streamlined—Civil Service jargon for saving money and reducing the time spent on training. The time from the moment someone is recruited to the time he is popped into the control centre will be 18 months. I am a little concerned about that and about the time that will be spent in on-site training in a control tower——
  Mr. Steen: I want to correct a misapprehension on the part of my hon. Friend. I said that the amount of money that could be spent on security or safety was limitless. Merely mentioning them necessitates an open cheque, so using any of the £500 million for security or safety does not necessarily mean that procedures would be any more secure or safe.
  Mr. Allason: My hon. Friend is absolutely correct as usual. His knowledge of the subject is considerable, and it is a great disappointment that he was not called in the debate on airport security. It is astonishing that the most modern airport in Europe, terminal 4 at Gatwick, is probably illegal, in the sense that it is the only airport with no segregation of incoming and outgoing passengers. That should be against the law; it is likely to be against European law in the not-too-distant future.
  This most modern of terminals was obviously built and designed by people who had never had to walk through an airport building. When the Queen went to open terminal 4 she was horrified by what she saw and remarked that she could not understand—
  Madam Deputy Speaker: Order. I am sure that the hon. Gentleman is aware that he should not bring in the monarch to assist debate.
  Mr. Allason: I beg your forgiveness, Madam Deputy Speaker, for my brief lapse. All I can say is that a personage who opened terminal 4 asked how her subjects would be able to push their trolleys from the point of luggage collection at the carousel to the railway station, a journey which would necessitate no fewer than four on-and-off loadings of the trolleys, because the geniuses who invented the little shuttle train that moves between the terminal buildings designed it not to be able to carry luggage carts.
  Mr. Batiste: That annoys many of the passengers who go through most of our larger airports.
  Madam Deputy Speaker: Order. We are departing from the resolution. Airport buildings are not necessarily the responsibility of the Civil Aviation Authority.
  Mr. Allason: While I agree that the railways inspector is directly responsible for banning the luggage carts on the Gatwick shuttle, the CAA has overall responsibility to police such matters. The CAA plans for expenditure clearly show that little is to be spent to improve security. It is curious that in Canada, the security and intelligence service spends the majority of its vetting time dealing with applicants and candidates from airports. Every airside member of staff has to be positively vetted in Canada. In this country the Security Service is regarded as far too secret to have to dirty its hands protecting the public.
  370
  I am not convinced that this increase in the borrowing powers of the CAA from £200 million to £500 million in ecu, dollars or pounds will be sensibly spent. I look forward to the Minister giving us a detailed analysis of exactly what will be spent, and I hope that he will assure us that the site in Fareham will not be a complete white elephant.
  9 pm
  The Minister for Aviation and Shipping (Mr. Patrick McLoughlin): The Bill is essentially simple, although the debate may have raised it above that level. It is an important measure to increase the borrowing limit of the CAA. It also makes clear the existing power of the CAA to borrow in foreign currencies and also to borrow in units of account such as ecu. I shall try to cover as many as possible of the points that were raised in debate. I hope that the hon. Member for Jarrow (Mr. Dixon) will accept that I shall try to cover concisely matters raised not only by my hon. Friends but by Opposition Members.
  I can tell the hon. Member for Bradford, South (Mr. Cryer) that any extension over the £500 million would require an affirmative order and would be subject to the possibility of another debate. The hon. Gentleman slightly confused me when he talked about the need for regional airports. I was not sure whether he meant that they ought to develop or whether he wanted to see some restriction on the opening hours at Leeds-Bradford airport.
  Mr. Cryer: I suggested that the Minister's explanation in Committee was an illustration of increasing air traffic capacity through investment of the money that would be subject to the money resolution. If that is the case, it would obviously increase the capacity of airports such as Leeds-Bradford which are not congested in the same way as Heathrow. That might lead to the conclusion that it would not be necessary to extend the opening hours at Leeds-Bradford airport, and that would satisfy many people who live under the flight path.
  Mr. McLoughlin: I follow the hon. Gentleman's argument. One of the great dilemmas when talking about the necessity to increase airport capacity is balancing environmental questions against the convenience of people in the Leeds-Bradford area travelling from their own airport and not having to travel long distances to other airports. The Government place great emphasis on the role of regional airports in serving their localities. It seems nonsense that people have to travel from Leeds, Bradford or Derbyshire to London to get the flight that they require. The Government would like to see regional airports take up as many opportunities as possible. There are many flourishing regional airports such as Birmingham, Manchester, East Midlands and to some extent Leeds-Bradford, which I have not yet visited but hope to visit in the near future.
  The hon. Member for Bradford, South asked why the CAA should be allowed to borrow in units of account such as ecu. The CAA already has power to borrow in foreign currencies with the approval of the Secretary of State. The legislation merely extends that power, including the consent provision. The Secretary of State and the Treasury have to be satisfied that each tranche is required. As units of account are not currencies in every sense of the word,

  371
  the Bill merely explains that the term "currency other than Sterling", in section 10 of the 1982 Act, includes units of account defined by reference to more than one currency.
  It is wise to allow the CAA to borrow in units of account, because charges collected from airlines by Eurocontrol for air navigation services provided by the CAA from 1 January this year will be paid to the CAA in European currency units and not United States dollars. That provision has been introduced to provide greater flexibility. The money is required for not only the £30 million tunnel in the sky concept that I mentioned earlier but the new en route system, to which my hon. Friend the Member for Torbay (Mr. Allason) referred, and to which I shall return.
  My hon. Friend the Member for South Hams (Mr. Steen), who has a great knowledge of aviation, made a number of serious points. I was sorry that he was unable to catch the eye of Mr. Speaker during our debates on the Aviation and Maritime Security Bill. On Monday he made an important point concerning slot allocations and the necessity—although this may go wider than the issue of the CAA's borrowing powers—to ensure that fair competition is allowed, the consumer has a right of choice, and smaller airlines are not stifled and put out of business.
  My hon. Friend asked about the possibility of splitting national air traffic control services. That interesting idea was also contained in a recommendation of the Select Committee on Transport, which we are currently considering. We shall respond in due course, and I trust that my hon. Friend will not expect me to comment further now.
  My hon. Friend asked also about a reference to the Monopolies and Mergers Commission. That is not the responsibility of my right hon. Friend the Secretary of State for Transport but for the Director-General of Fair Trading. Any public body must be open to detailed scrutiny of the kind that the Monopolies and Mergers Commission can undertake, and I hope that the CAA comes out of its investigation very well. However, I cannot comment on the likely outcome of the MMC's report.
  My hon. Friend gave me some of the answers to his own questions concerning mixed mode operations at Heathrow. That aspect is new to me, but it is also a question of getting the balance right between noise and maximising the capabilities of our airports, which is of fundamental importance.
  Mr. Steen: Objections to noise are too often made without being counteracted by the argument that there is virtually no unemployment in the vicinity of airports. The people who work at airports want to live near them, so complaints about noise are often a red herring.
  Mr. McLouglin: My hon. Friend is welcome to make that point, but it is not one which right hon. and hon. Members representing areas close to airports would promote. I have to take very seriously the views of local residents. I repeat that it is a matter of achieving a balance between providing the required service and the environmental impact in a particular area. That balance is not easy to achieve, but we must aim at striking it as often as we can.
  I thank the hon. Member for Linlithgow (Mr. Dalyell) for his usual courtesy in notifying my office that he would
  372
  be raising certain points. I understand that his remarks were in order because the CAA is responsible for safety matters. Most of the responsibility for regulating the carriage of livestock is primarily with Departments other than my own. Shortly before tonight's debate, the hon. Member informed me that his contribution to the Consolidated Fund Bill just before the Christmas Recess could have brought responses from 10 different Departments.
  Responsibility for livestock lies mainly with the Minister of Agriculture, Fisheries and Food and the Department of the Environment. For carriage by air, the air operators themselves have drawn up, through the International Air Transport Association, regulations with which all United Kingdom operators should comply. In licensing a United Kingdom operator wishing to carry cargo, including livestock, the Civil Aviation Authority will satisfy itself that an operator is competent to comply with the association's rules. The policing of such carriage lies principally with the Ministry of Agriculture, Fisheries and Food and with local authorities in which the point of entry or departure is located. However, the CAA flight operations inspectors also run checks on air operators to ensure that they comply with the association's regulations in the holding and transit of livestock.
  The hon. Gentleman drew attention to serious incidents. I assure him that I shall draw attention to the chairman of the CAA. If I can go further, I shall write to the hon. Gentleman later. Indeed, we gave him an undertaking when he managed to get in at the end of the debate on the Aviation and Maritime Security Bill.
  Mr. Dalyell: The Department of Transport can make sure that the checks are carried out systematically. The difficulty is that MAFF says that it is the responsibility of the Department of Transport. It is not as simple as buck-passing all the way round. The difficulty in the British system is that anything that straddles more than two Government Departments, let alone 10, becomes the responsibility of someone else if it is awkward. That is why I suggested in the Adjournment debate that there should be an overall committee representing all Departments to consider an issue that concerns a great many people who are horrified, particularly at the pictures of gross cruelty to animals and often gross and needless incompetence.
  Mr. McLoughlin: We have had a warning. If there is one thing for which the hon. Gentleman is known, it is his persistence. If the problem is not sorted out, we can expect to hear more from him on it. I undertake that we shall try to produce clear guidelines to cover some of the important points that the hon. Gentleman has made.
  My hon. Friend the Member for Torbay wondered whether the money was necessary. There is no doubt that some of the new equipment that the CAA needs is very expensive. We do not want to hold the CAA back. The argument is sometimes put that there has been under-investment. We want to make sure that adequate investment is available to the CAA. It is not a matter of trying to create more slots. Some would argue that Heathrow and Gatwick are almost at capacity. We are awaiting advice from the CAA on that. It should be published nearer the summer.
  The Bill is important and deserves the approval of the House; I hope that it will get that approval.
  Question put and agreed to.
  Resolved,
  That, for the purposes of any Act resulting from the Civil Aviation (Borrowing Powers) Bill, it is expedient to authorise any increase in the sums payable out of or into the National Loans Fund or charged on and issued out of or payable into the Consolidated Fund under the Civil Aviation Act 1982 which is attributable to provisions of the new Act—

  (a) increasing the Authority's borrowing limit to £500 million with power to make further increases up to £750 million by order;

  (b) enabling the Authority to borrow sums in units of account defined by reference to more than one currency.

  Civil Aviation Authority (Borrowing Powers) Bill [Money]
    EUROPEAN COMMUNITY DOCUMENTS
    Motion made, and Question put forthwith pursuant to Standing Order No. 102(5) (Standing Committees on European Community documents).
    EUROPEAN COMMUNITY DOCUMENTS

      AIR TRANSPORT
      That this House takes note of European Community Documents Nos. 8520/89 relating to the application of the competition rules to air transport, and 8521/89 relating to the development of civil aviation in the Community; and endorses the Government's objectives in the first case of improving procedural certainty in aviation operations, and in the second of providing the fullest degree of liberalisation within the Community subject to suitable safeguards against anti-competitive behaviour.—[Mr. John M. Taylor.]
      Question agreed to.

  Telephone Premium Services
  Motion made and Question proposed, That this House do now adjourn.—[Mr. John M. Taylor.]
  9.13 pm
  Mr. Terry Lewis: I did not think that I would be called, because of all the shenanigans on the Conservative side. However, I am on my feet and I am grateful for the opportunity to raise again the issue of telephone premium services. I fear that I am in danger of being politically typecast, so I shall have to be careful.
  Telephone premium services were introduced in January 1986. They caused immediate controversy. There were large bills and children were being corrupted. In one case, three young children in the London area were abducted through a liaison made with an older person who was keying in to the telephone services and having conversations with young people.
  Those embarrassing events led the industry to respond in what I regard to be a timid way. In August 1986, it created an organisation called the independent committee for the supervision of standards of telephone information services—ICSTIS. It was funded—and still is—by British Telecom, the main recipient of the profits from those services. Various trade organisations were set up and various codes of practice were published. Throughout 1986 and 1987, the embarrassing and controversial cases still appeared in the newspapers and on television. There was a great response, throughout the country to the interest that I took in the matter.
  The Director General of Oftel, whose remit from the House under the Telecommunications Act 1984 is to represent the consumer interest, was very much involved. I shall later discuss the various cases in greater detail.
  The Director General of Oftel, under considerable pressure and clearly within the remit given by the House, finally made a reference to the Monopolies and Mergers Commission in July 1988, and its report was published in January 1989. There then followed considerable consultations with interested parties, but the interests of the consumer and those who have fallen victim to the services during the preceding three and a half years were not sufficiently taken into account. I gave evidence to the Monopolies and Mergers Commission, had several meetings with the Director General of Oftel and had considerable correspondence, but not one of my recommendations was adopted. I do not take that as a personal insult.
  I am sure that the Minister will agree that all the matters that we discussed recently in a television debate were conceived by the industry. The cornerstone of the new licence amendment is a code of practice that will be supervised by the ICSTIS. It is a new code but, in effect, it is only the old code in a new wrapping. The first code has gone by the board. There have been three codes in three years and we are told that this one will solve all the problems. It seeks to provide monitoring of the multiline chatlines, when up to a dozen people engage in what is mostly banal conversation, but which can be dangerous. It envisages age control, where young people below a certain age will be barred from using the service. It also envisages compensation for high bills.
  I shall first deal with monitoring. In 1987 there was a chatline called Talk about, which was owned by British Telecom. It was taken out of service after a great deal of

  375
  controversy and after much heartache for many families. When the controversy was at its height, the Liverpool city council trading standards office made a fetish of monitoring—almost 24 hours a day.
  British Telecom was persuaded to carry out an almost one-to-one monitoring exercise. It is nonsense to suggest that monitoring can solve the problems about which I am speaking. I shall show how many people have become involved in monitoring. It will then become clear that it is nonsense to suggest that monitoring can solve the problem.
  It is suggested that age control will help. How in goodness can a telephone monitor judge that a girl is younger than 14, 15, 16 or 17? Publicans cannot do it. Sophisticated as some youngsters are, it will be virtually impossible to do it on the telephone. In other words, age control is another nonsense which has been dreamt up by the industry to protect its profits.
  The most ludicrous proposal is the so-called compensation scheme. That idea came from the industry when families were driven into debt with telephone bills of £4,000, £5,000 and a record £7,000 because youngsters had used the telephone without consent. If a compensation scheme could overcome that, I would be the first to say that it should be given a try.
  If a product or service, before being delivered into the market place, needs a compensation scheme to underpin it or to make it legitimate, the service or goods in question cannot be worth a candle. Again, the industry creating protection for itself dreamed that idea up and it was taken on board by the Director General of Oftel.
  The market about which I am speaking is so defective that it must be addressed not by the Director General of Oftel but by Parliament. It is defective to the extent that the market can survive only if people steal calls on the telephone at home or at their workplace.
  My next remarks will interest the Minister because I have with me a cutting from a newspaper which this morning said that a business in the Minister's constituency had been landed with a telephone bill for £19,000 because of an employee's obsession with chatlines.
  About two years ago I began to appreciate, as households were being driven into debt, how small businesses could find themselves faced with huge charges as young employees, ill-supervised—particularly where it was not possible for small firms to provide call-barring equipment—ran up huge telephone bills.
  I have done a great deal of research into the whole issue. I would not care to think how much it has cost me in telephone calls to funny and seedy chatlines in recent years. Indeed, economy has had to be introduced into my parliamentary office and we have had to do less telephoning.
  So concerned was I about the possible plight of small businesses that I wrote to about 600 chambers of commerce, one of which was in the Minister's constituency, where the company to which I referred has been saddled with a telephone bill for £19,000, a reasonable irony for tonight's debate.
  Why am I so bitterly opposed to telephone message services, and why have I put so much time into the
  376
  argument, and run the risk of being typecast? It is because of the experiences that I have outlined tonight, and the research that I have carried out.
  Multiline chatlines are one of the specific problems that I have come across. I know of a case where three children aged 13, 14 and 15, tried to commit suicide when huge bills of between £3,000 and £5,000 dropped on to the doormat. I know from correspondence from people throughout Britain that families are still struggling with the debts that have been run up in such a way.
  I anticipated the possibility of fraud, and I alerted the Director General of Oftel a long time ago to the fact that unscrupulous chatline companies, once they get a line from British Telecom, are divorced from scrutiny and supervision. I thought that people might be encouraged to break into other people's homes and businesses, use the chatline, leave the phone hanging there for hours on end, and the chatline proprietor would split the difference with the perpetrator of the crime.
  I am sad to say that that has happened on a number of occasions. Several cases are now going through the courts, and two court cases have been concluded in the past three weeks. We should not clutter up the courts with a new crime—telephone chatline stealing.
  The other game that I detest and find despicable is the so-called interactive game in which the caller can be kept on the line for a long time, sent from one part of the game to another. The games are designed to keep the caller on the line and the caller is usually not the person who has to pay the bill.
  Tape messages are another problem. One usually sees offensive adverts for them. Out of respect for you, Madam Deputy Speaker, and because it would probably be an affront to the House, I shall not read out the offensive adverts that appear in The Sport today—they need to be seen to be believed, they are so bad.
  The worst problem is with one-to-one calls—usually a girl talking to a man. One finds them in the poorest parts of city centres throughout Britain, but Manchester seems to be the capital. A young woman is employed to speak, typically to a male caller, at all hours of the day or night and the conversation has to be about sex.
  I have brought to the attention of the House on a number of occasions the different problems associated with such lines. They are corruptive of women and, in my view, there is a correlation between the institution of those lines during the past four years and the number of crimes that are perpetrated against women on the streets. Some people think that they are useful and they argue that they are a safety valve. They say that sexual inadequates use the lines to blow off steam and that they are no problem to anyone else.
  Interviews that I have conducted in my office with young women who have worked on chatlines suggest that the opposite is the case: those women feel corrupted and dirty, and a number have said that they felt like "verbal prostitutes". No doubt someone will now say, "They do not have to do it."
  The Parliamentary Under-Secretary of State for Industry and Consumer Affairs (Mr. Eric Forth): They do not have to do it
  Mr. Lewis: The Minister is not strapped economically; like most hon. Members, he is all right, thank you very much. Outside the House, however, are one-parent

  377
  families—women who work at night when the kids have been put to bed. There are people out there who have not a hope in hell of getting a reasonable job. People in economic difficulties will do many things to earn a crust; women have been known to walk the streets because they have been dragged into economic difficulties.
  I hope that the Minister will take that aspect rather more seriously. Women are being corrupted. Let me appeal to the Minister in his capacity as a family man who, I believe, has two daughters of his own, rather than as a desiccated Minister who is far above these matters.
  During the campaign led by newspapers and television producers, we have from time to time been able to infiltrate some of the one-to-one chatline companies with women journalists. On the most recent occasion, a woman who engaged in such work for two and a half days told me—10 days after the experience—that she felt damaged by it. She could not talk about it to anyone for a long time. She confirmed what others have told me many times when I have spoken to them in my office or in their own homes. What they have to listen to, and the memories that they go away with, have no place in a civilised society.
  As has been said before in the House, typically the man who telephones must hear a female voice, and while he is talking to that voice—often in a public phone box—he is usually masturbating. Such men describe how they are going to go away and abuse their own children, and even their domestic pets. All this stems from the legalisation and legitimisation of the involvement of a great British corporation—indeed, an international corporation—in improper activities. The House of Commons should do something about it, and it is the Government's responsibility to help us to do something.
  Where do I stand? If he is consistent, the Minister will probably say that I am denying people choice, but, on the contrary, I am arguing for choice. I am saying that the subscriber should be able to choose whether his or her telephone is used for these awful services. That would kill them stone dead overnight. Consumers, most of whom have a good deal of sense, do not want to spend their money on the tripe and garbage that we are discussing.
  I want the introduction of a contracting-in system. I want subscribers to be able to sign a piece of paper telling British Telecom, Mercury or Racal that they actually want their telephone receivers to bring them such services. That would solve the problem. There should be free itemised billing. The quarterly bill should include a list of the calls that have been made so that they can be challenged and so that any calls that have not been authorised by the subscriber are immediately apparent.
  There should be a total ban on the one-to-ones and the multilines, I have heard on the multilines drug dealing, racialist comments that made my hair stand on end, and young girls making liaisons with older men. Those services have no right to survive.
  There should also be a ban on the lurid advertisements. The advertisements in certain newspapers cause deep offence to many people and need to be cleaned up. A statutory body should be set up, independent of the industry, created by Parliament and funded by Government to supervise what remains of those services.
  I take some comfort from the fact that one or two unexpected allies have rallied to my cause. Not least is the chairman of British Telecom, Iain Vallance, who described the services as a blight on the industry. I hope that the Minister will take that on board. As the chairman of
  378
  British Telecom has said that it is a blight on the industry, we should jolly well do something to assist him in removing it.
  Another ally is the Director General of Oftel. I understand that many of the complaints that he has received since 8 December resulted in his staff replying in writing and sometimes by telephone. In at least two of those telephone calls, members of the public have been told to contact their Members of Parliament as there is a need for a change in the legislation.
  But that is where I came in. I said four years ago that there needs to be a change in the legislation. I have said it in the House, outside and in every television studio in the land. It is a simple matter to look at the problems that I have outlined and the case that I have proved and that other people have proved and change the legislation.
  I said earlier that it was imposible for ICSTIS as presently constituted to monitor the volume of calls. We are talking about millions of calls per year. The supervisory committee consists of the princely number of eight staff—one secretary and seven administrative workers. It does not envisage employing more people until the end of the year when they will increase to 10. What chance has such a minuscule organisation of policing the matters that I have been talking about tonight and for a considerable time?
  I hope that the Minister has changed his mind since 6 o'clock this evening and has been convinced that something needs to be done not by the industry or by the Director General of Oftel but by the House of Commons. I am supported in that by organisations such as the Conservative Family Concern organisation and many others. Many individual members of the Conservative party have written to me.
  Mr. Bob Cryer: Does my hon. Friend agree that the Government's policy of allowing the marketplace to dominate and providing only a weak and ineffective code of practice has been found to be completely ineffective? This evil traffic will be controlled only by legislation. The Minister should recognise that my hon. Friend has yet again brought to the fore one of the unacceptable faces of the enterprise culture.
  Mr. Lewis: I am convinced of that, and I am grateful to my hon. Friend for making that point.
  Over the past four years, I have been extremely careful to argue on moral and practical grounds that the case is unanswerable. Any reasonable person, whether it be a Minister or member of any political party, must see the wisdom of the argument that these services are a facet of the free market and that the problem should be strenuously tackled. Ministers must begin to tackle the problem. There is no chance of its going away, because there is no chance of the present controls working. The industry knows that they will not work, and the greedy people who benefit from these awful services, which are harming innocent people, will flourish as long as Ministers ignore the problems that I have highlighted. I hope to hear something more positive from the Minister.
  9.41 pm
  Sir Michael McNair-Wilson: I congratulate the hon. Member for Worsley (Mr. Lewis) on raising the subject of telephone message services.

  379
  I endorse everything that the hon. Gentleman said. He was right to warn the House about the danger of such services. I wonder why Oftel and the independent committee for the supervision of standards allow British Telecom to make telephone numbers available to companies that pour out sexually suggestive, if not sexually arousing, tapes which anyone of any age can telephone.
  As the hon. Member for Worsley said, advertisements for those services are not restricted to pornographic magazines but regularly appear in some Sunday and daily newspapers and, as a constituent of mine recently pointed out, even in that all-purpose publication Exchange and Mart. I have some of those advertisements here if the Minister would care to see them.
  The telephone advertisements always feature some form of sexual pursuit in their titles that appeal across the range of human desires. Some call themselves "teledates" and others call themselves "contact lines." An advertisement in the Exchange and Mart says:
  "Men 4 Men. Ring and listen to other gay men looking for someone special".
  The advertisement next to that says "Data-Mate." One can ring either for a woman or a man on "Gay Lines" or on a "Lesbian Line." In other words, they pander to the lowest of human desires.
  As I said, those advertisements in Exchange and Mart were brought to my attention by a constituent who had bought that magazine, as tens of thousands of people do, for advertisements for household goods, cars, motor bikes, houses and a range of the essentials of life. To his great surprise, he found page after page of those advertisements under the title "Adult interests."
  As a result of my constituent's letter, I wrote to Sir Bryan Carsberg, who is Director General of Oftel, asking why Oftel allowed such advertisements to appear. I should like to quote his reply:
  "I do not have any formal powers that would enable me to exercise direct control over these advertisements. However, when I first became aware of the general problems associated with this kind of service, I encouraged British Telecom to take steps to establish a system of voluntary regulations. As a result of that, British Telecom appointed an independent committee, chaired by Mr. Louis Blom-Cooper and chosen to be broadly representative of public opinion, to draw up a code of practice relating to these services. British Telecom made compliance with the code of practice a condition of its contracts and the committee considered complaints.
  The code deals with both the content of messages and advertising. Some services have already been suspended as a result of breaches of the code. However, the committee has not so far taken a strong line on advertising, preferring the view that this was primarily a matter for the Advertising Standards Authority.
  Some complaints about the advertisements for these services were considered by the Authority but it declined to criticise them. As a result of recent escalation of concern with recorded message services, the committee is now determined to take a stronger line and I believe that it sees advertising, as you do, as a significant part of the problem. It proposes to issue a revised and strengthened code later this month"—
  he wrote in March 1989—
  "and it expects this to provide a basis for action in relation to advertising.
  I think that the best way forward is to try to make the committee's procedures effective and I believe that there is a good chance these procedures will now work well."
  He then advised me to write to Mr. David Wiseman, the Secretary of ICSTIS, which is what I did. In his somewhat
  380
  anodyne reply, Mr. Wiseman enclosed two copies of ICSTIS leaflets. One is headed "Premium Rate Telephone Information and Entertainment Services", and states:
  "What is ICSTIS?
  The Independent Committee for the Supervision of Standards of Telephone Information Services…is an independent watchdog which supervises premium rate telephone information and entertainment services.
  Premium rate services cost more than an ordinary telephone call.
  Currently, calls cost 25p per minute cheap rate and 38p per minute at all other times of the day. Of course, these rates will be higher for calls made from telephone boxes, hotels, etc.
  These services provide both information and entertainment (such as weather forecasts, financial information, sports results, games, and stories) over the telephone. Most of these services consist of recorded messages provided by private companies called Service Providers, each of whom is responsible for the content of the message or service as well as any associated promotional material.
  The independent committee, ICSTIS, has produced a Code of Practice that sets the standards which the Service Providers must observe. If they break the Code, their service can be removed from the telephone network."
  From that leaflet and from Sir Bryan Carsberg's letter, one would have thought that, 10 months later, I would not be supporting the hon. Member for Worsley (Mr. Lewis), who has powerfully made out the case against these message services. He will probably agree that there has been no appreciable change and that, if anything, such services have proliferated.
  If one chooses to buy soft porn magazines one can see literally hundreds of these advertisements in a single column. That shows that these services are profitable both to the providers of the tapes and, sadly, to British Telecom. I must declare an interest, for I have a small shareholding in British Telecom. It gives me no pleasure to be a shareholder in a company that is making money out of such a grubby business.
  One must ask what can be done. Some advertisements at least trade on what can only be described as obscene titles, but, as is often the case with that sort of material, they end up as a rip-off in every sense. The actual message will probably be fairly innocuous and, I suspect, carefully produced to be just within whatever the lawyers who advise the companies believe allow them to claim that they are not obscene. If the titles are obscene, the companies will no doubt claim that the content of the tapes is not obscene. It must be on those grounds and on those alone—what other reason could there be?—that ICSTIS does not seem able to put into effect the code of practice, the details of which I have already given to the House.
  However, whether these "services" are rip-offs or not, and whether or not they are verbal prostitution—or, as I would prefer to put it, a verbal form of striptease—the fact is that they pander to the lowest tastes in human beings. They do nothing for the reputation of British Telecom and they make me wonder why neither Oftel nor ICSTIS has yet been able to produce the necessary procedures to prevent the trade from continuing.
  I recognise that when a company initially asks British Telecom for a telephone number with which to provide a service, British Telecom cannot know exactly what is involved. However, I no longer believe that British Telecom, Oftel or ICSTIS can have avoided noticing the advertisements that appear not only in pornographic magazines but, as both myself and the hon. Member for Worsley have already said, in daily and Sunday newspapers and in other publications as widely read as

  381
  Exchange and Mart. It is no good those organisations putting their heads in the sand and saying, "We had no idea that this was going on," because it is their telephone lines that are being used. They are profiting from the services. It is high time that they took their duties more responsibly.
  The advertisements and the services that they present to the public can do nothing for the reputation of British Telecom or persuade any of us that privatising British Telecom has enhanced the reputation of our national telephone service. By the same token, while the advertisements continue unabated, there must be a question mark over the effectiveness of Oftel and its Director General. Why has he not been given the formal powers, which in his letter to me he said that he did not have?
  Is my hon. Friend the Minister satisfied that we can continue without bringing forward such formal powers for the Director General and without asking ICSTIS to look again at its code of practice with a view, not to offering slaps on the wrist, but to giving the sort of teeth that will banish these advertisements from our daily and Sunday newspapers and from publications that lie about the house and can be seen by people of all ages and both sexes? That should not happen. I believe that we have it in our power to prevent it from happening.
  9.52 pm
  Mr. Nigel Griffiths: It is a sad sign of the times that we must have this debate, but it is also sad that we are seeing the true face of the Minister and his party, with a few honourable exceptions. There is no doubt in my mind that Alexander Graham Bell would turn in his grave at the knowledge that his wonderful invention was being used widely for such a perverted purpose. It is a sad sign of the times that so many people are using such services for misguided or perverted reasons, and it is also sad that once-responsible businesses are choosing to boost their profits by providing these revolting services.
  It is not that the services pander to healthy appetites—whatever that may mean—because today's newspapers carry a selection of advertisements from one company, Leeds Communications, which offers no fewer than 19 lines, including "Rubber Lust", "Wet 'n' Wild", "Ready and Willing", and "Out of Control". Another company encourages men to fantasise about girls at school with its "Gymslip" line. Another offers girl lovers.
  The Minister is well known for his support for private enterprise, but I should have thought that even he would draw the line at some of those advertisements. Apparently not. The Minister supports the independent committee for the supervision of standards of telephone information services, the regulatory body charged with vetting obscene calls on chatlines and associated premium rate lines. Each year, an estimated 45 million calls are made on sex lines. The watchdog body has one person permanently monitoring the lines with back-up from eight people who can be called in from other duties. Those were the figures that it gave to me today. There is one person to monitor every 5 million potentially obscene calls. If someone is caught making an obscene call, the penalty under section 43 of the Telecommunications Act 1984 is £400.
  The profits from porn lines are enormous. Over a dozen chat lines and phone line firms have revenues in excess of £1 million. The penalties are puny. Not one prosecution
  382
  has been brought against a company in four years. The chatline industry is laughing all the way to the bank. One paper today even flaunts that fact in an advert. It is called "Dial if you Dare". It dares people not only to take the risk of being caught, but to risk being prosecuted. Another advert calls its British Telecom number "Banned Lines".
  As my hon. Friend the Member for Worsley (Mr. Lewis) said, the effect on women can be devastating. Parents cannot stop their child or a young teenager from ringing the phone lines. Firms cannot stop unscrupulous or irresponsible people from running up massive bills.
  The hon. Member for Newbury (Sir M. McNair-Wilson) concluded by putting a list of questions to the Minister. I, too, have a list of questions. Why has it taken him four years to produce a code of conduct that will control sex lines? The third code is claimed to be effective, but we know that it will not be. Why does the Minister rule out legislation when the code of practice is patently ineffective? Why does he not provide tough laws to control chatlines when the watchdog body appears to be toothless? Why does he refuse even to meet the Director General of Oftel to discuss the need to protect the public?
  Why is the Minister taking no action to prevent British Telecom from giving detailed technical advice on how to set up filth lines? Why are the people who run chatlines not vetted to screen out the paedophiles and perverts? Is he satisfied that nine staff can monitor 45 million sex line calls? Does he believe that a £400 fine for chatline obscenities deters firms which make millions of pounds?
  British Telecom claims that sex lines are a blight on the industry. The advice of the Director General of Oftel to my constituents and others is to contact their Member of Parliament to lobby on this matter.
  The Minister must know that British Telecom will not tackle the problems. The business generates multi-million pound profits for it. The Minister has a choice. He can endorse market sleaze or accept the four-point plan proposed by my hon. Friend the Member for Worsley. It is time for the Minister to stand up and protect consumers throughout Britain from this obscenity.
  9.58 pm
  Miss Ann Widdecombe: I am grateful for this opportunity to contribute to the debate and I congratulate the hon. Member for Worsley (Mr. Lewis) on obtaining it. The interest which the subject arouses is amply demonstrated by the number of hon. Members present for this Adjournment debate.
  I am sorry that the hon. Member for Edinburgh, South (Mr. Griffiths) should have attempted to introduce party politics. It degraded what has been an entirely serious debate. If he wishes to conduct the debate on that level, however, I must say that I see little mileage in a party that opposed clause 28 of the Local Government Bill in 1988 and opposed the prevention of the promotion of perversion in schools lecturing us on morality. I would rather get back to the major substance of the debate.
  The hon. Member for Worsley said that chatlines were driving many people into debt, but they also drive people into crime. In my constituency, one young man has become so addicted to the obscene lines and the obscene services that he breaks into shops to use telephone points.
  It being Ten o'clock, the motion for the Adjournment of the House lapsed, without Question put.
  Motion made, and Question propose, That this House do now adjourn.—[Mr. Patnick.]
  Miss Widdecombe: I agree that the obscene services thus provided can be described as prostitution. The consequence must be that those who make profits from such services are living upon immoral earnings. I was under the impression that that was a crime. I would like the Home Office to be involved with this matter as well as the Parliamentary Under-Secretary of State for Industry and Consumer Affairs.
  I, too, welcome profits, but the profits that are made from the innocence and irresponsibility of children are immoral. It is totally unrealistic to expect a young person, particularly a child, to understand that a telephone is not a free instrument and to understand that calls cost a great deal of money, which mounts up. In every home, agitated parents say to teenagers in the normal course of events that they spend too much time on the telephone.
  In the abnormal course of events, of which we have heard tonight, problems often occur in families in economically straitened circumstances. In those cases, the mother of the family is often economically constrained to go out to work. She is not at home to exercise control over the use of the telephone and is unaware of what is going on. She is simply unable to exercise parental responsibility, and by the time she realises what has happened it is much too late. In my constituency, telephone bills of four figures have been reported fairly regularly, so much so that a local priest, the Rev. Tony Faulkner, has taken up this issue. He has tried to inject local responsibility into this matter so that parents are more aware of what is going on.
  I second what the hon. Member for Worsley said about the effect of such services on women. All of us who have received obscene calls and who have managed to put the telephone down in 10 seconds flat, still know that one can feel extremely shaken up after the event, no matter how tough or self-reliant one may be. Therefore, the effect on women can be extremely damaging.
  I appreciate that the Minister will say that it is up to women to decide whether they participate in such calls. That is not true of young girls who ring up such lines for a bit of a giggle and who suddenly realise exactly what is on offer. Obviously, there is also the danger of liaisons being formed and young girls being lured to meet men—there is evidence that that has happened.
  I am all for wholly responsible profit-making and initiative in the sort of chatlines that are produced. I see nothing to suggest that the problem is restricted to private enterprise. British Telecom was privatised fairly recently, but the lines that we are discussing have been going for some time.
  I am all for responsible commercial enterprise, but we are talking about completely irresponsible commercial enterprise. That enterprise represents immorality and prostitution and those behind it are living off immoral earnings. Even when no obscenity is involved, such enterprises live off the irresponsible exploitation of the young. A little bit of will would stop it. We have heard various suggestions as to how it could be stopped. The hon. Member for Worsley suggested the opting-out method whereby it could be indicated that certain telephone lines were not to be used for such services. We should tackle what will become a growing social evil. It
  384
  involves the worry of parents who cannot meet their bills, the steady corruption of children, the degradation of women and the promotion of an ugly face of private enterprise which I do not like any more than the hon. Member for Worsley does.
  10.4 pm
  Mr. John P. Smith: I shall not keep the House long, but I should like to join in the congratulations of hon. Members from both sides of the House to my hon. Friend the Member for Worsley (Mr. Lewis), not just for winning tonight's Adjournment debate and choosing such an admirable subject, but for the campaign that he has conducted for some time.
  I feel strongly about the subject, largely due to an experience I had which sums up some of the issues involved. I held a surgery just before Christmas and a mother came to see me who was quite upset and distraught. She had discovered that her son was addicted to the disgraceful and pornographic telephone lines provided by British Telecom. Sadly, she actually believed for some time that British Telecom had confused her account with somebody else's because she was receiving such astronomical bills. She thought that they had lined her into a local company. She discovered quite by accident, through the recording mechanism on the telephone, which records the previous number called, that her adolescent son was using these services.
  I said that I would take up the case. I was not then familiar with the work of my hon. Friend the Member for Worsley with British Telecom and Oftel. Quite frankly, I could not believe that we had no power, and the firms had no power, to do anything about this disgraceful and expanding practice.
  Sadly, I have to disagree with the hon. Member for Maidstone (Miss Widdecombe), although I accept that many of her colleagues have supported my hon. Friend's campaign and disagreed with their Front-Bench spokes-men on the matter. I am afraid that this is a party-political problem. The solution is simple and anybody with a modicum of common sense can see what it is: with just minor legislative changes we could prevent this disgraceful activity.
  I am obliged to ask why we are not taking such steps and why the Government are not taking action. It may be a lesson to some Conservative Members to know that it is because the Government have gone so far that they do not know where to draw the line and stop. They adopt such doctrinaire attitudes towards privatisation, free markets and enterprise that they cannot see the damage that is being done. That is why I shall listen with great interest to the Minister's response.
  10.8 pm
  The Parliamentary Under-Secretary of State for Industry and Consumer Affairs (Mr. Eric Forth): I congratulate the hon. Member for Worsley (Mr. Lewis) on having secured the debate and pay tribute to him for the dedication with which he has pursued the cause over a long period. That has been mentioned during the debate and I want to pay tribute to him for having pursued the matter with great sincerity and dedication. This Adjournment debate is an important occasion in the course of his pursuit. Although my hon. Friend the Member for Maidstone (Miss Widdecombe) referred to the amount of

  385
  support in the House this evening, it is worth recording that although there is an unusually large number of Members here for the Adjournment debate, it is not exactly an overwhelming presence.
  Many hon. Members have contributed to the debate—my hon. Friends the Members for Newbury (Sir M. McNair-Wilson), for Maidstone and for Pendle (Mr. Lee) and the hon. Members for Edinburgh, South (Mr. Griffiths) and for Bradford, South (Mr. Cryer). Also present are my hon. Friends the Members for Bolton, North-East (Mr. Thurnham) and for Norwich, North (Mr. Thompson) and the hon. Members for Clydesdale (Mr. Hood), for Vale of Glamorgan (Mr. Smith) and for Hemsworth (Mr. Buckley). My hon. Friend the Member for Elmet (Mr. Batiste) is also here. It is worth recording the names of the hon. Members who have taken the trouble to be here at this relatively late hour to participate in the debate.
  I am glad that I shall have a little longer than usual to reply to the many important points that have been made during the debate. I want to reply to them reasonably fully.
  First, I want to set in their proper context the difficulties to which all hon. Members have referred. Consumers generally, and particularly consumers of telephone services, benefit enormously from the widely available and openly accessible public telecommunications systems that are provided principally, but not exclusively, by British Telecom.
  The availability and accessibility of these systems are at the heart of any public system of telecommunications and these rights are recognised in the duties placed on the Secretary of State and on the Director General of Oftel by section 3 of the Telecommunications Act 1984
  "to secure that there are provided throughout the United Kingdom, save in so far as the provision thereof is impracticable or not reasonably practicable, such telecommunications services as satisfy all reasonable demands for them".
  It may be that the burden of this debate will revolve round the interpretation of the word "reasonable". That may be the word on which we agree to differ, but in any case this is the basis of the provision of telecommunications services, and these duties are reflected in the licences granted to British Telecom and other national network operators—Mercury Communications, Racal-Vodafone and Cellnet.
  However, just as consumers have a right to telephone services, so too do premium-rate service providers. If we qualify such a right we must be sure that we do not undermine that main objective or access to the system.
  I also stress that under the terms of the Telecommunications Act 1984 and the licences issued under it the regulation of premium-rate services is the responsibility—rightly—of the Director General of Oftel, Sir Bryan Carsberg, whom hon. Members have mentioned several times in the debate. I make it absolutely clear that Sir Bryan has my fullest support, and that of the Secretary of State, in his work. We believe that he discharges his duties with great responsibility.
  The hon. Member for Worsley knows that I am obliged—I take the obligation seriously—to maintain a close interest in the issues raised tonight and I shall ensure that Sir Bryan receives a report of our debate.
  It is worth recalling that the services to which the hon. Member for Worsley refers have a common feature, in that they are all charged at premium rate directly to the
  386
  subscriber's bill. My hon. Friend the Member for Newbury referred to that, but it is worth emphasising that these sorts of services fall into three categories: recorded message services on which the caller listens to a tape recording which could, for example, be a weather forecast or many other sorts of service; multiline or chatline services, which have caused some anxiety and on which the caller has the opportunity of talking to a group of between two and 11 other callers; and one-to-one services, those which perhaps cause the most concern, on which the caller has a conversation with an operator on a subject of his choice, or on one of the subjects in the advertisements to which hon. Members have referred.
  It is worth recalling briefly the history that has led to the present controls. In response to public concern—like that expressed by the hon. Member for Worsley—over many years about these premium-rate services and about their cost, advertising methods and contents, Sir Bryan decided that regulatory action was necessary. He first tried to persuade British Telecom to agree voluntarily to new measures that gave control over access to these services to the person paying the bill. When this failed, he referred the matter to the Monopolies and Mergers Commission. Its report was published last year.
  The MMC concluded that the services operate or may be expected to operate against the public interest. It specified the effects that were adverse to the public interest by saying:
  "Due to the ease of access to the services, and the terms of contract between BT and its customers, the customer has inadequate control over the types of service which can be accessed and over the costs or charges that may be incurred for use of the services, which significantly impairs the value and quality of the telephone service to the customer".
  The MMC advised that until the modernisation of the network provided technology to remedy the main adverse effects of these services, they could be remedied or prevented by licence amendments and the MMC specified licence amendments which it believed to be appropriate. The MMC also stated that it did
  "not believe that the adverse effects of chatline services are sufficient to justify the virtual cessation of the services".
  That is an important statement because the Monopolies and Mergers Commission is independent of Government, as is Oftel. That statement is the backdrop to what I am about to say. It is clear that the MMC did not share in any full sense the points made by the hon. Member for Worsley.
  Mr. Lewis: Does the Minister agree that following the taking of evidence by the MMC, worse cases of chatline girls and of chatline services such as those we have been discussing appeared in the media? Because of that, Sir Bryan Carsberg took a stronger line than he would otherwise have taken.
  Does the Minister further agree that the Director General of Oftel could make licence amendments without strict reference to the MMC recommendations? He may take them into account, but in the light of new evidence he could have acted differently, and I do not think that he has done so. As I said in my speech, one of the great difficulties is that the Director General of Oftel seems to have taken more account of the industry's views than he has taken of consumers' views.
  Mr. Forth: The hon. Gentleman is entitled to put that interpretation on Sir Bryan's conclusions, but I repeat—it is important to remember—that I and Sir Bryan have to

  387
  pay due regard to what the legislation specifies and what an independent body such as the MMC says. The Government also have to pay due regard to what Sir Bryan and Oftel say. That is the way that the thing works. I hope that the hon. Gentleman will agree that in many ways it is preferable for such matters to be dealt with by bodies that are independent of Government rather than to have a political overlay. I regard that as a virtue, not a shortcoming. In many other cases the hon. Gentleman might agree with me, and if he reflects on the matter I think that he will agree in this case, too.
  It is incorrect to suggest that to legislate in this matter would be relatively simple and straightforward. The hon. Gentleman has not faced the difficulties that Ministers have to face when legislating. First, there is the difficulty of getting a priority place in the legislative programme and secondly, there is the extent of commitment to legislative change. There are no wands to be waved in such matters even if the wish were there. I do not regard legislation as appropriate in this case and I shall explain why.
  Following the MMC report and having closed its own chatline service, British Telecom withdrew services from chatline operators. That decision is still the subject of legal action and I cannot comment further upon it.
  That brings me to the present measures. In the light of the MMC report and following the appropriate consultation, Sir Bryan has introduced new controls which give strong protection to the consumer by making amendments to the network operators' licences. They may now provide the facilities needed by premium chatline and one-to-one services only if the director general has approved a code of practice which regulates the provision of the services and, most important, sets up a fund to compensate customers with excessive bills arising from unauthorised access to the services.
  As recently as 7 December, Oftel approved two such codes of practice—one for multiline chatline services and another for one-to-one services. Both are administered by the independent committee for the supervision of standards of telephone information services. I stress the word "independent". I make it clear that a body that is chaired by as eminent an individual as Louis Blom-Cooper can hardly be regarded as in the pocket of either British Telecom or the service providers. I am sure that anyone who casts an eye over the committee's other members will be satisfied of their probity, integrity and independence. I resent the suggestion that they are in any way in the pocket of British Telecom or of the service providers. They are sturdily independent people of great reputation and probity. The House should know and understand that, and acknowledge it.
  Mr. Lewis: Public perception outside this House is as important as the Minister's regard for the members of the committee. I have no criticism of them as individuals, but the committee is funded by British Telecom and the other network providers, who appointed its members in the first place. That body includes an individual who is himself a chatline provider, albeit at the respectable end of the business. However, no consumer interest is represented on the committee. If it was broadly based and totally independent of the networkers, it would be more acceptable.
  388
  Nor is the committee wide-ranging in social or geographical terms. Its members all come from a narrow social background and work or live in London. There are other parts of this great country of ours than London.
  Mr. Forth: I do not dissent strongly from some of the hon. Gentleman's points, which will be considered when reviewing the future membership of the committee. However, given that its members include a consultant physician, a head teacher, and someone who calls himself a consumer policy adviser, I cannot accept the hon. Gentleman's main criticism. I do not want to get unnecessarily bogged down in the composition of the committee, and hope that I have said enough to convince the House that its members are highly qualified and independent.
  If an operator fails to comply with one of the codes of practice approved by Oftel, ICSTIS can make a recommendation to Oftel, which can in turn authorise British Telecom to disconnect the service. As right hon. and hon. Members must be aware, one such disconnection has already taken place and another service has been withdrawn voluntarily. Evidence of failure to comply with the codes can come either from monitoring of the services by ICSTIS or from a complaint. I hope that any right hon. or hon. Member who has grounds for complaint will use the machinery available under ICSTIS to initiate the complaints procedure.
  The codes of practice, copies of which have been in the Library for some time, provide strong consumer protection. They require service providers to contribute to a fund sufficient to compensate any subscribers who face large bills as a result of unauthorised access to their services. One of the terms of the compensation fund—claims to which will be considered by an adjudicator, Sir John Bailey—is that where the adjudicator is unable to identify any firm evidence to support either acceptance or rejection of a claim, the benefit of the doubt shall normally be given to the customer, which is an important protection.
  Mr. Jimmy Hood: The Minister said that he does not believe that new legislation is necessary. I am not a great believer in censorship, but a whole village in my constituency is served by a telephone exchange having the STD prefix 08993. I am having problems because people using digital telephones just have to add another "9" and my constituents find themselves being asked for cricket scores or weather forecasts, which is not too bad, but for other services such as "Kinky dreams", "Naughty nymphette", "Rubber bust", Waiting for it" and "Wet 'n' wild".
  My constituents are harassed by these calls. People have to be protected. I am talking about a rural area with a substantially elderly community. I am pressed by people who are getting obscene calls. We are the legislators and we must do something about it. That is where democracy is. We have to protect people from harassment and perversion. I hope that the Minister will explain clearly why he will not introduce legislation to save people from harassment.
  Mr. Forth: In the five minutes that are left I shall attempt to give a clear explanation. I hope that I shall be allowed to press on. I accept absolutely the validity of the hon. Gentleman's point. If he has not done so, I hope that

  389
  he will approach British Telecom to discuss the problem. If he has any difficulty about that, I hope that he will come to me.
  Mr. Hood: I have raised the point with British Telecom, and we had a heated exchange. British Telecom more or less said, "Sorry, it is not our problem. It would cost us too much to change STD numbers." I was more or less told to go forth and multiply.
  Mr. Forth: I hope that the heated exchanges will be limited to the House and will not spread to British Telecom, where they could be disastrous. I hope to answer the points that the hon. Gentleman has made.
  Under the terms of the code of practice, ICSTIS has the right to visit the premises of operators without notice, to require that reasonable information and co-operation be provided, including written records in the case of one-to-one services and tape recordings in the case of chatlines, which must be retained for a period of six months.
  Service providers are required to do everything practicable to prevent access to the services by those under 18 years of age. In saying that, I recognise the difficulties with that provision. Even now there is an argument about the sale of cigarettes to under-16s by tobacconists. There is a continuing argument about the sale of alcohol in pubs to under-18s. I emphasise the general point that the new provisions have been in place just over a month. We have not yet had time to see how effective the codes of practice, the compensation fund, and the other provisions that ICSTIS has in its power will be.
  I hope that all hon. Members and the public will take the fullest opportunity to use the mechanisms that are available to find out whether they are adequate to cover the requirements raised in the debate. I believe that they should be. Equally, I can see that they may not be. If so, we will have to consider the matter again. Oftel will, as will others. The reason why I resist further legislation is that I believe that the mechanisms that we have provided, which are much more flexible than anything provided under legislation, should be adequate. If they are not, it is to them that we should look.
  390
  I must hurry in the two minutes remaining to me to say a word about the content and advertising of the services—another matter raised in the debate. I understand the concern of hon. Members. I looked at some of the advertisements earlier this evening to check on their nature.
  The codes of practice incorporate the British code of advertising practice and the British code of sales promotion practice, as well as other provisions requiring disclosure of the cost of the services, and details of the service provider and restrictions on aiming the services at young people. ICSTIS has written to the National Press Association and the Association of Free Newspapers informing them of the existence of the new codes of practice.
  It has begun an investigation into the advertising and promotion of adult services, examining ways to improve the standards of advertising and restrict the placement of advertisements, particularly in publications readily accessible to children. The investigation will involve service providers, network operators, the Advertising Standards Authority and relevant newspaper publishers associations and European and international authorities. ICSTIS is also taking action to make the general public more aware of its role, to look into European experience with premium rate services and to see what more can he done.
  I ask hon. Members to give the measures that we have put in place the fullest opportunity to work and to use the complaints services and the existing mechanisms. We will reconsider the matter when they have had a chance to operate to see whether they have had the effect that I expect and hope they will. If not, I will expect Oftel and the MMC to return to the matter, and I shall do so as well. I hope that over the next few weeks and months we will see a dramatic change and the improvements that all hon. Members have urged upon us. I expect that to be the case, but we will watch the position closely.
  The motion having been made Ten o'clock and the debate having continued for half an hour, MADAM DEPUTY SPEAKER adjourned the House without Question put, pursuant to the Standing Order.
  Adjourned at half-past Ten o'clock.