Commons Sitting of 31 January 1990

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

  LONDON REGIONAL TRANSPORT (PENALTY FARES) BILL
  Order for Second Reading read.
  Mr. Andrew F. Bennett: Object.
  To be read a Second time tomorrow.
  Mr. Speaker: Does the hon. Member for Denton and Reddish (Mr. Bennett) intend to object to all the private Bills?
  Mr. Andrew F. Bennett: I do.

  SOUTH YORKSHIRE LIGHT RAIL TRANSIT (NO. 2) BILL
  Orders for Second Reading read.
  To be read a Second time tomorrow.

  BRITISH RAILWAYS BILL (By Order)
  Order for consideration, as amended, read.
  To be considered tomorrow.

  KING'S CROSS RAILWAYS BILL
  Motion made,
  That, notwithstanding the provisions of Standing Order 121 (Quorum of committee on opposed bill), leave be given for the Committee on the King's Cross Railways Bill to proceed with a quorum of two.—[The Chairman of Ways and Means.]
  Hon. Members: Object.
  To be considered on Thursday 8 February at Seven o'clock.

  BRITISH RAILWAYS ORDER CONFIRMATION BILL (By Order)
  Order for consideration read.
  To be considered tomorrow.

Oral Answers to Questions
  SCOTLAND

    National Health Service
    Mr. Cran: To ask the Secretary of State for Scotland how much was spent per head of the population in Scotland on Health Service care in 1989; and what was the figure for 1979.
    The Secretary of State for Scotland (Mr. Malcolm Rifkind): In 1979 Health Service expenditure in Scotland was £205 per person. In 1989 it was £552 per person. That is a rise of 34 per cent. in real spending power.
    Mr. Cran: Does my right hon. and learned Friend agree that by any objective examination of the facts, the Scottish Health Service is unquestionably second to none? That is illustrated by the fact that my father is receiving quite outstanding care at the Royal Infirmary in Aberdeen and the service at that hospital is open to anyone in that area. It is also shown in the quite astonishing building programme that has occurred since 1979 under this Government during which time there have been 54 major hospital building programmes with another 32 in train. If that is not enough, there has been a 32 per cent, increase in qualified nursing staff to look after the additional patients which the expansion has occasioned. Does not my right hon. and learned Friend agree—[Interruption.]
    Mr. Speaker: Order. That question is far too long.
    Mr. Rifkind: While the National Health Service continues to have certain difficulties, it is right to draw attention to what has been achieved over the years. In Scotland, the number of in-patients has increased by more than 20 per cent, over the past 10 years while the number of out-patients has increased by 12 per cent, and the number of day cases treated by hospitals has increased by no less than 119 per cent. It is right that that side of the story should be emphasised.
    Mr. Ernie Ross: Has the Secretary of State had time to study the press release issued by his junior Minister, the Under-Secretary of State for Scotland, about the ambulance dispute yesterday in which the Under-secretary claimed that lives are put at risk? Given the amount of money that the Government are trying to claim that they have spent, exactly whose lives are put at risk? What is the Secretary of State doing about that?
    Mr. Rifkind: The concern to which the Under-Secretary of State for Scotland, my hon. Friend the Member for Stirling (Mr. Forsyth) drew attention was that if there is not a proper response to 999 calls, and if ambulance officers do not accept the advice of their own unions in dealing with emergency cases, sadly there can be a risk to human life. I am sure that the hon. Member for Dundee, West (Mr. Ross) would join me in urging ambulance workers to respond to emergency calls in a proper and responsible fashion.
    Mr. Sillars: Is not the pertinent measure the expenditure in relation to need at the present time? If that is the case and if the Secretary of State is so brilliant, why has the Greater Glasgow health board suffered a £12

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    million cut in its budget this year and faces a £16 million cut in its budget next year? Again if the Secretary of State is so brilliant, why have we managed to have a Health Service in which there are demoralised nurses, doctors, ambulance men and ancillary workers and a public who do not believe that the Health Service is any safer in the hands of the lady in Downing street than in the hands of the devil himself?
    Mr. Rifkind: I do not accept for a moment the figures that the hon. Gentleman has been gratuitously introducing into the House. However, he may like to reflect on the fact that in his constituency, the health board in the city of Glasgow is, and continues to be, the best funded health board in the United Kingdom. Had the hon. Gentleman wanted to be fair, he might have prefaced his remarks by at least recognising and welcoming that point.
    Sir Hector Monro: Does my right hon. and learned Friend agree that we cannot really judge patient care in terms of statistics? It must be true that we have far more doctors, nurses and specialist care in Scotland than were available in 1979. Does he agree that the Health Service is safe in our hands and will be developed effectively in years to come?
    Mr. Rifkind: I do not question for a moment that there are still many things that the Health Service in Scotland would like to do but is unable to do even with the levels of funding that it has achieved. That goes without saying. The Health Service has continually been improving ever since it began in 1947. It is unfair that those who quite understandably call for even more improvements do not recognise the dramatic improvements that have taken place over the past 40 years or, indeed, over the past 10 years. Any fair debate on this subject should recognise that, as well as call for further improvements in the Health Service.
    Mr. Wilson: How many scarce resources belonging to the National Health Service in Scotland have now been used up in trying to defeat the ambulance men and women and in forcing them to give up their rightful claims by starving them into submission? Would the Secretary of State care to contemplate the newspaper headline that I am showing him as an acceptable face of the ambulance dispute? No matter how the soldiers and police try to perform the duties that have been thrust upon them, they are simply not able to do so because they lack the necessary equipment and training. Will the Secretary of State confirm that twice as much money has been spent on trying to defeat the ambulance men in Scotland, and elsewhere in the United Kingdom as would be required to settle their pay claim in full and give them the just settlement that every humane man, woman and child in Scotland wishes them to obtain?
    Mr. Rifkind: No one questions for a moment that the police cannot provide the same quality of service as the ambulance officers. If that is a matter of concern to the hon. Gentleman, I hope that he will join me in calling on ambulance officers to return to normal work. The hon. Gentleman knows perfectly well that there are recognised negotiating structures. He knows also that the offer that has been made to ambulance officers is compatible with what the vast majority of other people who work in the National Health Service have already accepted. Therefore, he must appreciate that we must be fair to the National
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    Health Service as a whole. To give to ambulance workers, whose income has increased substantially over the past few
    years—
    Mr. Wilson: Rubbish.
    Mr. Rifkind: The hon. Gentleman says, "Rubbish." He should remember that an ambulance officer's income in 1979 was less than £3,000. If ambulance workers accept the offer that has been made, the figure will be more than £11,000. Even taking inflation into account, that is a major increase.
    By all means let these matters continue to be discussed and negotiated, but if the hon. Gentleman has patients' interests at heart, as I am sure that he has, he should urge ambulance workers to return to normal work so that the public should not suffer because ambulance workers have a pay disagreement with their employers.

    Competitive Tendering
    Mr. Norman Hogg: To ask the Secretary of State for Scotland what representations he has had regarding competitive tendering in the National Health Service in Scotland.
    The Parliamentary Under-Secretary of State for Scotland (Mr. Michael Forsyth): Health boards have reported savings of £66 million, which have been used to recruit additional medical staff and improve facilities for the young, the elderly, the disabled and the mentally handicapped.
    Mr. Hogg: The Minister's answer is consistent with previous answers. Is he aware that, of the contracts that have been awarded in the Greater Glasgow health board area, three companies—Initial Health Services, Mediguard and Hospital Hygiene Services—figure very strongly? Is the Minister further aware that those companies have a dubious record and have either withdrawn from or been sacked in Bradford, West Leeds, Northampton, Merton and Sutton, North Warwickshire, Norwich, Nottingham, Pontefract, South Tees, York, East Birmingham, Manchester, Bromley, Canterbury, Gateshead and Oxfordshire? Why must we put up with the same in the Greater Glasgow health board? How much money must be spent on redundancy payments for real Health Service staff who have lost their jobs because of those private companies?
    Mr. Forsyth: In March last year, the saving available to improve patient care for the Health Service in Scotland as a result of competitive tendering was £5·5 million. The figure today is £66 million. The hon. Gentleman asked about redundancy payments. To date these amount to £5·2 million, compared with £66 million. Substantial additional resources are available for patient care.
    The hon. Gentleman complains about particular companies. Three quarters of both the contracts and the savings have been obtained, not by private contractors, but the in-house work force carrying out the same task in a different way. He also complained about the quality of services. I am sure that he will have seen the parliamentary answer that I gave the other day. An independent survey of standards of provision where private contractors have been brought in showed that the standards were at least as good as, if not better than, those achieved by the in-house work force.
    Mr. Allan Stewart: Does my hon. Friend agree that if Opposition Members were successful in campaigning against competitive tendering they would deprive patients of substantial additional resources for patient care? Will he confirm that every health board in Scotland has made savings and that in Greater Glasgow many extra staff have been made available? For example, is he aware that 74 extra staff for mental illness and handicap have been employed as a direct result of those savings?
    Mr. Forsyth: My hon. Friend is absolutely right. Incidentally, I congratulate him on sporting the blue rose of Eastwood. He is right to draw attention to the substantial improvements in staffing and facilities in Greater Glasgow as a result of the competitive tendering programme. The public are entitled to ask why Opposition Members do everything possible to frustrate the Greater Glasgow health board in pursuing a policy that produces real, tangible and substantial benefits for patients, particularly those with mental handicap or illness.
    Mr. Dewar: Is it not sad that staff of the health boards who have spent years in the service of the NHS have to give up hard-earned terms and conditions in order to save their jobs? Does the hon. Gentleman accept that the imposition of competitive tendering in areas that touch the core of the Health Service—such as diagnostic services, laboratories and radiography—is damaging? Does not the Minister realise that there is no public support for policies that threaten to turn those services into opportunities for private profit? In view of the contrived changes in the rules on VAT and redundancy, is he satisfied that competition has not been rigged?
    Mr. Forsyth: The hon. Gentleman makes several points. His first was about people giving up hard-earned terms and conditions. For contracts that have been won in-house—that is the majority; three quarters—the terms and conditions remain the same. They are Whitley terms and conditions. However, restrictive practices and the business of paying double time when it is not necessary have ended. That is how savings have been made. If the hon. Gentleman wishes to complain about the way in which savings have been made, he should address his remarks to the trade union officials who co-operated in the process in the interests of the Health Service and of obtaining the best deal for the patients.
    The hon. Gentleman wrote about rigging to my right hon. and learned Friend the Secretary of State, who answered his question fully. I am surprised that he has raised the matter again. VAT is payable only where the cost of the outside contractor, inclusive of VAT, is less than the cost of the in-house service.
    Mr. Speaker: We are making slow progress this afternoon. Briefer supplementary questions may receive briefer answers.

    Public Expenditure
    Sir Nicholas Fairbairn: To ask the Secretary of State for Scotland what is the level of public expenditure per head in Scotland of programmes for which he is responsible.
    Mr. Rifkind: Scottish Office expenditure for the current year will be £1,771 for every man, woman and child. This will rise to £2,047 in 1992.
    Sir Nicholas Fairbairn: Will my right hon. and learned Friend lose no opportunity to remind the people who live in Scotland, of whatever race, that they benefit to a greater extent than anyone else in the United Kingdom in all programmes of expenditure and that if they were to consider anything as foolish as a Socialist Government, a convention, an assembly or independence, they would be deprived of the level of living that we uniquely enjoy in western Europe.
    Mr. Rifkind: I very much agree with the sentiments behind my hon. and learned Friend's question. However, he is not entirely correct, because the level of expenditure in Northern Ireland is higher than that in Scotland. My hon. and learned Friend is certainly correct that public expenditure in Scotland is considerably higher per capita than that in England and Wales, which is a benefit which Scotland derives from the present constitutional arrangements.
    Mr. Robert Hughes: Does the Secretary of State recall that I wrote to him a couple of weeks ago to complain bitterly that while England and Wales has a substantial programme of cochlear implants, which are vital for deaf people, no announcement has been made in Scotland and we have no such programme of spending? When will the right hon. and learned Gentleman reply positively and make that money available to the health boards in Scotland so that deaf people in Scotland can benefit substantially?
    Mr. Rifkind: I am afraid that the hon. Gentleman has not scrutinised his newspapers carefully because we made a comparable announcement that similar provisions are to be introduced in Scotland and we are working on the details at present.
    Mr. Bill Walker: Does my right hon. and learned Friend agree that such expenditure programmes could not possibly be sustained in the event of any fraudulent proposals being brought forward for a Scottish Assembly in Edinburgh? Does he further agree that we could not enjoy the same number of Members of Parliament and that we certainly could not expect English Members of Parliament to support such programmes?
    Mr. Rifkind: If a Scottish assembly were responsible for the matters that are currently the responsibility of the Scottish Office, and if it were required to raise funds for those matters from within Scotland, the present level of spending on education, health, housing and other measures could be maintained only by a dramatic increase in income tax which the people of Scotland, alone in the United Kingdom, would be required to pay.
    Mr. John D. Taylor: Can the Secretary of State say whether a system of devolution in Scotland is likely to bring about increased public expenditure per capita?
    Mr. Rifkind: It would depend on the spending policies of such a Scottish assembly as might be created. The point that I have just been making is that even if a Scottish assembly did not wish to increase expenditure, but simply to maintain the present level of expenditure from the taxes raised in Scotland, it would have to level additional income tax that would not be paid by people elsewhere in Britain. That is why such proposals would be very much against the interests of the Scottish economy, employment in Scotland and the general welfare of the people of Scotland.
    Mr. Thurnham: Will my right hon. and learned Friend bear in mind the need to involve the private sector as much as possible in public expenditure programmes? Scottish civil engineers have a high reputation abroad, but need to have experience at home if they are to make the most of the worldwide opportunities.
    Mr. Rifkind: That is the case, and that is why I am delighted that the recent surveys by the Fraser of Allander Institute and the Confederation of British Industry in Scotland have suggested that the Scottish economy will do even better than that of the rest of the United Kingdom over the next few years. They pointed particularly to manufacturing industry and exports. It is encouraging that only yesterday a prediction of increased exports from Scotland was made by Scotland's business men. I am sure that the whole House will be delighted to welcome that.

    Councillors (Allowances)
    Mr. Menzies Campbell: To ask the Secretary of State for Scotland what representations he has received about the Government's plans to change the system of allowances for councillors in Scotland.
    The Parliamentary Under-Secretary of State for Scotland (Lord James Douglas-Hamilton): A number of representations have been received. The Government have agreed to defer the introduction of the new scheme for up to three months to allow the Convention of Scottish Local Authorities time to produce specific alternative proposals.
    Mr. Campbell: Is the Minister aware that the Government's initial proposals have united councillors of all parties, and of none, in Scotland in opposition? Does he accept that no one becomes a councillor in Scotland because he or she wants to profit from the attendance allowance? Is he aware that the sum of £10, which was fixed in 1974, should be not less than £40 at today's prices? In the settlement that the Government will eventually reach, will he undertake to ensure that proper account is taken of the commitment and responsibilities of councillors throughout the length and breath of Scotland?
    Lord James Douglas-Hamilton: The answer to the hon. Gentleman's last point is yes, but I must stress that even under the consultative proposals that have been put forward, the sums available to councillors in Scotland would have been at least 80 per cent, more than those for councillors south of the border and up to 125 per cent, more for district councillors. Strong representations were made about distribution and we have recognised that some authorities have a much larger workload and larger electorates than others. We were conscious of those facts and responded to COSLA's recommendations to defer those matters. We look to COSLA to come back to us with what we hope will be a much fairer and more consistent approach. I should stress that the sums available to councillors next year will be no less than those available this year—the sum for Britain as a whole being increased from £37 million to £42 million.
    Mr. Michael J. Martin: Will the Minister bear in mind that the vast majority of councillors do the job voluntarily? Often their home is inundated with people with serious problems and the family cannot enjoy a decent meal at night because of the phone calls that have to be attended
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    to immediately. This being the case, should not there be decent compensation for councillors who do a hard-working job?
    Lord James Douglas-Hamilton: I stress that I have been a councillor, so I am acutely conscious of the point that the hon. Gentleman has made. Council membership is based on the principle of voluntary public service and is not regarded as a salaried appointment. However, it is in the public interest that councillors should not suffer financial loss because of the public service that they perform.
    Mr. John Marshall: Does my hon. Friend accept that many people believe that local government, in Scotland and elsewhere, was better when councillors such as myself were unpaid volunteers, rather than, as under the present system, some at least being semi-salaried?
    Lord James Douglas-Hamilton: I am aware of the activities of my hon. Friend, but I stress that chairmen and convenors sometimes have to give almost full-time service and the special responsibility allowance is appropriate in their cases, and will be forthcoming.

    Employment Training
    Mr. Wallace: To ask the Secretary of State for Scotland what representations he has received regarding the performance of the employment training scheme in Scotland.
    The Minister of State, Scottish Office (Mr. Ian Lang): Since September 1988 when employment training first started in Scotland, my right hon. and learned Friend has received 190 representations about the operation of employment training in Scotland, and 66 were parliamentary questions.
    Mr. Wallace: The Minister will be aware that, under the employment training regulations, it is possible to give to single parents an allowance for child care while they are in training. How does he explain the selective approach to my constituents who are the wives of fishermen and who, when their husbands are at sea, are to all intents and purposes single-parent mothers and who wish to undertake training? Will the new local enterprise companies that are to be set up in Scotland and will have a training remit have the flexibility to allow payment to be made to such wives?
    Mr. Lang: It is part of our purpose that local enterprise companies should have as much flexibility as possible in the development and administration of training schemes. That is one of the important reasons why we are setting them up. At the same time, the existing arrangements take account of problems in different parts of the country. The hon. Gentleman will know that in the administration of employment training in Orkney and Shetland, consideration is being given to awarding skill shortage status to that area, which will be of advantage to it.
    Mr. Worthington: Is the Minister aware of the report that has just been published by the Scottish Council for Voluntary Organisations showing what the consequences for community care were of the transition from the community programme to the disastrous employment training scheme? That report has shown that over £17 million has been lost to community care, and that 50 per cent. of the care for the elderly and 62 per cent. of the care

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    for the disabled have been lost. The voluntary organisations warned the Minister that this would happen, but he could not have cared less. Will he now show some regret for the distress caused by the withdrawal of these services?
    Mr. Lang: One of the reasons for the loss of places was the lack of co-operation—indeed, the positive hostility—of many authorities. The Scottish Council for Voluntary Organisations is heavily funded by the Government and it does a good job. However, it is important that it should realise that employment training is not another form of social care—which is already fully provided—but essentially an employment training scheme to help unemployed people into jobs. In that, it is doing much better than the community programme did, as it is now helping 59 per cent. of leavers into jobs or further training and education, compared with 42 per cent. on the community programme. We should encourage that trend.
    Mr. Lester: When my hon. Friend has the opportunity to make representations to the Chancellor of the Exchequer, will he draw his attention to the following anomaly? Under the employment training scheme we quite properly support single mothers by allowing them to claim the costs of child care, but when they are trained and seeking a job there is no provision for looking after their children—a heavy premium for anyone seeking employment. Might there be an opportunity in the next Budget to do something about that?
    Mr. Lang: I understand that there are certain advantages at salaries of up to £8,500 a year, but I shall pass on my hon. Friend's comments to my right hon. Friend the Chancellor. My hon. Friend would not expect me to comment on what might be in the Budget.

    Local Government Finance
    Sir David Steel: To ask the Secretary of State for Scotland if he will make a statement about the level of the poll tax for 1990–91.
    Mr. Rifkind: There is a wide variation in community charge levels. Some authorities have reduced the community charge, while others have made large increases.
    Sir David Steel: Do not the figures released yesterday show an average increase over Scotland of 9·1 per cent., with many authorities showing increases of more than 15 per cent? In the light of that, how will the Government maintain the fiction to pensioners, ambulance men and others that the rise in the cost of living is 6·5 per cent?
    Mr. Rifkind: I noticed that the right hon. Gentleman did not mention that the two district councils in his constituency have reduced the community charge, or that the regional council has had a zero increase—perhaps it should have reduced its charge, too, given the grantt that it received. The increases in the community charge were less than the local authorities were predicting, and would have been much less if Labour-controlled authorities had not substantially increased the community charge by going for higher spending. It has been significant that a number of Labour local authorities receiving large increases in grant have used the money to increase spending rather than to reduce the charge.
    Sir Nicholas Fairbairn: Leaving aside the concept of averages or of the middle ground which is so favoured by the right hon. Member for Tweeddale, Ettrick and Lauderdale (Sir D. Steel)—[Interruption.]
    Mr. Speaker: Order. We do not expect this at Scottish questions.
    Sir Nicholas Fairbairn: Leaving aside the average concept or the middle ground so favoured by the right hon. Gentleman, may I ask my right hon. and learned Friend to lose no occasion to remind the people of Scotland and the people of England that if they want to have the money that they earn spent by Socialist authorities, they should vote Socialist? If they do not want that, they should vote Conservative.
    Mr. Rifkind: There is no doubt that Labour authorities appear incapable of maintaining services without huge increases in local taxation, while non-Socialist authorities appear more able to maintain the same level of services by means of better management and better value for money. The public clearly and rightly take that factor into account.
    Mr. Canavan: How can the Secretary of State possibly justify the Tory Government imposing this crippling tax system on the people of Scotland? In some areas the full poll tax will be more than £400, and even on maximum rebate people who depend on social security benefits and students who possibly have no grant will be expected to find more than £100 for the poll tax. Is it any wonder that at least half a million people throughout Scotland are refusing to pay the tax, or that many will continue their resistance until the Government come to their senses and abolish this iniquitous tax?
    Mr. Rifkind: The hon. Gentleman's rather unimpressive sympathy for people on low incomes would be slightly more persuasive if he, with a substantial income, were prepared to pay the tax that Parliament expects his constituents to pay. With his large income, the hon. Gentleman does not set an example of a sense of social responsibility and he cannot expect the House to treat his views with other than contempt.
    Mr. Dick Douglas: On a point of order, Mr. Speaker. An hon. Member used the word "cheat". Is not that unparliamentary?
    Mr. Speaker: I did not hear it, nor did I hear what the hon. Member for Dunfermline, West (Mr. Douglas) was shouting a little earlier. We really ought to get on.

    Enterprise and New Towns (Scotland) Bill
    Mr. Andy Stewart: To ask the Secretary of State for Scotland what representations he has had from the business community in Scotland about the Enterprise and New Towns (Scotland) Bill.
    Mr. Lang: The business community in Scotland has warmly welcomed the Enterprise and New Towns (Scotland) Bill and is enthusiastically participating in the groups bidding to become local enterprise companies throughout Scotland.
    Mr. Andy Stewart: My hon. Friend's reply confirms the impression I got last weekend when I visited Scotland for a family wedding, which was most enjoyable, and I saw for

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    myself the economic success created by this Conservative Government. Does not my hon. Friend agree that Scottish Enterprise will build on this development?
    Mr. Lang: My hon. Friend is absolutely right. It is because of the success of the Scottish economy in recent years that we are able to contemplate Scottish Enterprise, and it is because of the needs of the years ahead that we are now bringing it forward, combining the training role of the Training Agency with the economic development role of the Scottish Development Agency, and devolving it to local companies around Scotland. The enthusiastic involvement of the business community—we have now received 22 bids from groups of business men seeking to form local consortia—is very encouraging for the future of the Scottish economy.
    Mrs. Fyfe: How is the Minister responding to the views expressed by employment training trainees who have experienced grossly inadequate and irrelevant training schemes and schemes in which they have been treated as cheap labour?
    Mr. Lang: We always investigate such complaints. The hon. Lady will know that we have investigated such allegations as have come to our notice. The vast majority of such allegations have turned out to be ill founded, but where any minor deficiencies are discovered they will be dealt with in the appropriate way.

    Scottish Development Agency
    Mr. Knox: To ask the Secretary of State for Scotland what has been the total expenditure by the Scottish Development Agency since May 1979.
    Mr. Lang: Since May 1979 the Scottish Development Agency has spent a total of £1,291 million.
    Mr. Knox: Can my hon. Friend say how much, on average, the agency has spent each year since the present Government came into office, and how that compares with the average amount spent under the previous Government each year?
    Mr. Lang: Perhaps I can best illustrate the figures by telling my hon. Friend that the budget for next year, at £180 million, is the largest that the agency has ever had—15 per cent. higher in real terms than in the last year of the last Labour Government.
    Mr. McKelvey: The Minister will be aware that precious little of that money ever went to Kilmarnock. For that matter, I should like to know how much went towards improving the environment. Will the Minister undertake, on his next journey up north, to put on his hiking boots and march from Tummel, through Loch Rannoch, by Lochaber? He can go along heather tracks with heaven in their wiles. Some of us might think that there was a braggart in his step amidst all that beauty. Will he stop and reconsider the fact that if he does not give local authorities enough money to neutralise the billions of tons of rubbish and poison being poured into our coastal waters, neither he nor any of us, will ever
    "smell the tangle o' the Isles"
    Mr. Lang: I know that this is the season of Burns—we have just had the Kilmarnock edition. The hon. Gentleman mentioned the importance of environmental renewal. He is absolutely right. This year the agency is
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    spending about £54 million on environmental renewal projects. A total of 2,500 land renewal projects have been carried out in the last decade.

    Inner Cities
    Mr. Wray: To ask the Secretary of State for Scotland if he will make a statement on his policies for tackling the poverty in inner cities.
    Mr. Rifkind: The Government have launched a major initiative to deal with deprivation in Scotland's peripheral housing schemes, working with local people, the private sector and other public bodies. Good progress is being made.
    Mr. Wray: When I look at the statistics and remember that the Office of Population Censuses and Surveys has not done a survey of child poverty since 1981, I fail to understand that reply. The present indicators, which are available on the data base of the statistical section of the Library, show that Glasgow has the highest average rate of poverty in the nation. I should like to know what the Minister, having frozen child benefit, imposed the poll tax and made cuts in other benefits, intends to do about it.
    Mr. Rifkind: No one doubts that for many years there have been serious problems of poverty in certain areas of Glasgow. The hon. Gentleman should acknowledge that the renaissance that Glasgow is widely recognised to have enjoyed over the last 10 years has been for the benefit of all the people of Glasgow, including the hon. Gentleman's constituents. He should pay tribute to that development.
    Sir Hector Monro: Does my right hon. and learned Friend accept that the urban aid programme has been a great success not only in the major and inner cities but in country towns such as Dumfries? Will he do all that he can to encourage urban aid, towards improving not only the quality of housing, but the quality of life in those areas?
    Mr. Rifkind: Yes. We have provided for a massive increase in the urban programme this year and for a further major increase next year. The programme is a successful way of reaching those pockets of poverty that still exist in many of our towns and communities. Therefore, it is right to concentrate through the urban programme the kind of support that can help to transform people's lives, their housing and employment opportunities, and the quality of life that they quite properly wish to enjoy.

    Local Government Finance
    Mr. Douglas: To ask the Secretary of State for Scotland if he will make a statement on the effect of changes in rebates for poll tax recently announced on the level of the poll tax in 1990–91.
    Lord James Douglas-Hamilton: Changes that have been made to the community charge, including the transitional relief scheme and the widening of the exemption for people who are severely mentally impaired, should have had virtually no effect on the community charge levels determined by local authorities for 1990–91.
    Mr. Douglas: No matter how much the Minister and the Government tinker with this charge—the poll tax—it represents an onerous and unfair burden on the poorer

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    sections of the population. Those of us who seek to stand by those people, by withholding our payments, represent a very respectable tradition in Scottish democracy. We are in the season of Burns and I should like to paraphrase the great man. I put to the Government: "They'd break our backs for Maggie's tax, Such a parcel of rogues in a nation." The Government's policy will destroy the Union because the people of Scotland will not accept this unfair, unjust and undemocratic tax for which they did not vote.
    Lord James Douglas-Hamilton: Robert Burns was an excise man and knew all about tax.
    Mr. Douglas rose—
    Mr. Speaker: Order. The hon. Gentleman must contain himself. [Interruption.] The Minister was quite in order in what he said.
    Lord James Douglas-Hamilton: The hon. Gentleman complains about the warrant sales system. I stress to the House that when the reform of the law—[Interruption.]
    Mr. Speaker: Order. The hon. Member for Dunfermline, West (Mr. Douglas) must not barrack the Minister.
    Mr. Douglas rose—
    Mr. SpeakerOrder. The hon. Gentleman must sit down.
    Lord James Douglas-Hamilton: When the law reforming warrant sales went through the House in the last Parliament, neither the hon. Member for Dunfermline, West (Mr. Douglas) nor any Opposition Member voted against that legislation which removed the most objectionable features of the system. The hon. Gentleman spoke about unfairness. It was monstrously unfair when only 40 per cent, paid rates and that system could not possibly endure. The hon. Gentleman overlooks the fact that well over 1 million people in Scotland are receiving rebates which are of great assistance to them. The reforms on transitional relief should in due course benefit up to 500,000 people.
    Mr. Gow: Is not the system of rebates for the community charge considerably more generous than the rebates for the old system of domestic rates?
    Hon. Members: No.
    Mr. Speaker: Order.
    Mr. Gow: Is my noble Friend aware that many of us would like him to answer questions more frequently than he does?
    Lord James Douglas-Hamilton: I can tell my hon. Friend that those on income support receive 80 per cent, rebate and that their income support has been increased to take account of the fact that they have to pay the other 20 per cent. There have been reforms, and when anomalies arise we shall take steps to make sure that they are ironed out and removed, as we have done with difficulties arising for people with Alzheimer's disease.
    Mr. Maxton: Will the Minister confirm that the transitional relief scheme that the Government introduced with great publicity last year will help only 10 per cent. of poll tax payers in Scotland and that the average rate per qualifier will be £25 a year or 50p a week? Was it not all
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    just one massive con trick designed to delude the people of Scotland into believing that the poll tax was fair? Does he appreciate that the only way in which he can help the poor in Scotland is to get rid of the iniquitous 20 per cent. minimum payment as the first step towards getting rid of this grossly unfair tax?
    Lord James Douglas-Hamilton: The fact that up to 500,000 people will benefit is not something to be sneered at in any respect. Labour Members should set an example by paying the community charge rather than saying that they will defy the law.

    National Health Service (Staff)
    Mr. Leigh: To ask the Secretary of State for Scotland how many doctors, dentists and nurses were employed by the National Health Service in Scotland in (a) 1979 and (b) currently.
    Mr. Michael Forsyth: There are at present 87,000 doctors, dentists and nurses in the National Health Service—9,000 more than when we took office in 1979.
    Mr. Leigh: Does the Minister agree that those figures show the success of the Conservatives in recruiting considerably more doctors, dentists and nurses due not least to the fact that we have increased nurses' pay by 43 per cent, over and above inflation and doctors' pay by 36 per cent, over and above inflation, compared with a cut of 21 per cent, in real terms under the last Labour Government? Does he further agree that that shows that we not only have the will to improve the NHS but that, unlike Labour Members, we provide the ways and means to ensure that it is improved?
    Mr. Forsyth: I agree, and my hon. Friend is right to point out that there are more nurses and doctors in the Health Service. He is also right to point out that not only have we recruited more nurses and doctors and increased their pay over and above inflation, but we have reduced the working week for nurses and introduced a system of grading that ensures that nurses are able to pursue their careers while maintaining contact with the patient. That is a record of which to be proud and one which the Labour party cannot hold a candle to.
    Mr. Bill Walker: On a point of order, Mr. Speaker. You will have noticed that following the altercation that we had some moments ago, the hon. Member for Dunfermline, West (Mr. Douglas) has now left the Chamber, having made use of the television cameras—[Interruption.] Is that not an abuse of the rules of the House—
    Mr. Speaker: Order. I thought that the whole House had agreed that we should proceed without any thought being given to the television cameras.
    Mr. Watson: Now that the Minister has answered the shamefully planted question from the hon. Member for Gainsborough and Horncastle (Mr. Leigh)—who has never seen the inside of a Scottish hospital in his life and is never likely to—may I ask the Minister to deal with the current issue? Will he comment on the fact that there is now no dietician at Gartnavel hospital in Glasgow to deal with diabetic patients as a result of the cuts that have been made in the NHS in Scotland? Will he address that problem, which is a day-to-day issue that my constituents are bringing to me?
    Mr. Forsyth: If the hon. Gentleman is concerned about the position in a particular post, he should take that up with the general manager of the Greater Glasgow health board, who I am sure will be able to offer an explanation. I do not know whether the hon. Gentleman was here when my hon. Friend the Member for Eastwood (Mr. Stewart) pointed out that as a result of the programme of competitive tendering, which the hon. Gentleman opposed, Greater Glasgow health board is recruiting additional staff in precisely the areas concerned. The hon. Gentleman has received a copy of the report showing that that has been a success. There are more staff in the NHS as a result of the investment that we have made. From time to time there will be vacancies, but there are far more resources available than there ever were in the past.

    Health Boards (Expenditure)
    Mr. Darling: To ask the Secretary of State for Scotland what estimate he has made of the number of health boards where annual expenditure is likely to exceed their budgeted expenditure in 1989–90.
    Mr. Rifkind: One health board has indicated that its actual expenditure could exceed budgeted expenditure in 1989–90.
    Mr. Darling: The Secretary of State will be aware that Lothian health board is one of the best funded in the country, yet its members—hand-picked by him, mainly because of their loyalty to the Conservative party—have said that they cannot make ends meet because they are so underfunded. Does not that show to the Secretary of State the dire straits that the Lothian health board and health boards generally are in? What does he intend to do about that? Does he further accept that the inquiry that he announced, being carried out by Mr. Cruickshank, is being viewed with some scepticism and that it would be better to have an independent inquiry to look at the health board funding rather than to have a public brawl between officials?
    Mr. Rifkind: I am delighted that the hon. Gentleman has confirmed that Lothian health board is one of the best funded in the country. Other boards that are less generously funded have maintained their expenditure within their budgets, so it is not unreasonable also to expect that of the Lothian health board.
    There has been an independent inquiry by an independent firm of accountants, which today reported to the chief executive. The report suggests that there have been serious failings in the board's management and reporting systems. We shall be discussing those matters with the board to ensure that the necessary steps are taken to rectify those problems. However, we must do so in a way that does not damage the interests of patients in Lothian, which I believe to be paramount.
    Mr. Bill Walker: Does my right hon. and learned Friend agree that any service, such as the National Health Service, that is demand led must be managed efficiently, effectively and properly and devolved at local level—that is, regional health board level? If that does not happen, it will not be surprising if it runs into difficulties, because that is what happens in a demand led service.
    Mr. Rifkind: I have nothing but praise for the work of the health boards, including the Lothian health board. I
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    am sure that we are all concerned that, during the current year, certain problems appear to have led to the board's being unable to contain its expenditure within its budget. The priority must be to ensure that that failing does not lead to any damage to the interests of the patients. That will be the priority of the chief executive of the NHS in his discussions with members of the board and its staff.
    Mr. Eadie: Is the Secretary of State saying that the Lothian health board is guilty of financial mismanagement? Are not its members mainly his appointees? Is he aware that, despite what we have heard today about the great increase in nursing staff, I have received a letter from a constituent who works in the Princess Margaret Rose hospital claiming that nurses are worried that they may be made redundant soon because of closures within the hospital? Will nurses in the NHS in Lothian be made compulsorily redundant?
    Mr. Rifkind: I am happy to reassure the hon. Gentleman on that matter. As I said last week, there is no question of hospitals being closed or of other crisis measures being taken because it has become apparent that there has been overspending within the Lothian health board area. We wish to discuss with the board, in a considered, sensible and sensitive way, how it can bring its expenditure under control. I have already given the assurance that no hospital, including the Princess Margaret Rose, is in danger of being shut because of the problems that have arisen.

    National Health Service (Staff)
    Mr. Hind: To ask the Secretary of State for Scotland how many doctors, dentists and nurses are employed in the National Health Service in Scotland; and by how much their pay has increased since 1979.
    Mr. Michael Forsyth: There are about 87,000 doctors, dentists and nurses in the Health Service in Scotland. That represents an increase of about 11 per cent. on the position in 1979. Nurses' pay has increased by 43 per cent. over and above inflation, and doctors and dentists' pay has increased by about one third.
    Mr. Hind: Is my hon. Friend aware that 23 per cent. more is spent on health care for each Scottish voter than for each English voter? Does he agree that the efficiencies that he has introduced and the Government's prudent management of the Health Service in Scotland—especially through the introduction of competitive tendering—have enabled 11 Scottish health boards to increase the number of doctors and nurses of all disciplines, including mental handicap and community nurses, thereby improving the standards of health care?
    Mr. Forsyth: We are endeavouring to improve the standard of health care in Scotland. There are a number of plans for new initiatives, some of which have been mentioned today, including cochlear ear implants, which were mentioned by the hon. Member for Aberdeen, North (Mr. Hughes). There is always a challenge in the NHS, and this Government have met that challenge. It would help us to meet the needs of patients if Opposition Members would accept the need for good efficiency measures in the Health Service, which are as much a part of patient care as is ensuring that there are the conditions and the resources required, which has been this Government's record.
    Mrs. Ray Michie: Can the Minister tell us how doctors and nurses will continue to be employed in Oban unless he can explain what has happened about the new hospital which was first promised in 1972 by a Conservative Secretary of State, and promised again in 1986 by the Minister's predecessor? Is he aware that the people of Oban are fed up with promises that are not kept and with threadbare assurances that planning is going ahead when the site for the hospital has not even been purchased? Will he give a start date and a completion date?
    Mr. Forsyth: The hon. Lady will be aware that I have given approval in principle to the establishment of a new hospital in her constituency in Oban. I should have thought that she would welcome that. If the hon. Lady is concerned about progress on the hospital, she is free to write to me or seek a meeting with me. In the period since the general election, when I have been health Minister, I do not recall her seeking a meeting to express concern on the matter. I assume that that is because she knows that in her constituency we have been prepared not only to invest in a new hospital in Oban but to make substantial investment in the facilities at Campbelltown, which is part of a major investment programme in the Health Service in Scotland as a whole.

    Scottish Economy
    Mr. Graham: To ask the Secretary of State for Scotland when he last met the Scottish Trades Union Congress to discuss the Scottish economy.
    Mr. Lang: My right hon. and learned Friend met the general council of the Scottish Trades Union Congress on 10 November 1989 when a number of matters affecting the Scottish economy were discussed.
    Mr. Graham: When will the Secretary of State stop squirming in Cabinet and fight for the steel industry of Scotland and for new investment? Will the Secretary of State assure the House and Scotland that he will fight for the jobs at Bishopton Royal Ordnance factory which the Government propose to move from Bishopton to another part of the country, involving the loss of 26 invaluable, highly skilled jobs in my constituency? The workers in that factory fought hard for their jobs and the Secretary of State should stand by them. If he is not prepared to fight for Scotland, I am.
    Mr. Lang: The hon. Gentleman will welcome the fact that as a result of the offer of Government assistance, some 500 jobs at the Royal Ordnance factory in his constituency were saved.
    Mr. Dewar: Will the Minister discuss with the STUC the report prepared for the European Commission by the university of Louvain, which looks specifically at Strathclyde, among other areas, and which condemns the Government's lack of preparation for 1992 and draws attention in particular to our inadequate technological base? Against that background what possible defence is there for the ruthless cutting of regional preferential assistance for industry in Scotland, which, under the
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    Government, has fallen in real terms from £350 million to £150 million, a damaging decline which yesterday's public expenditure White Paper confirmed will continue?
    Mr. Lang: As usual, the Labour party judges the success of a policy simply by how much taxpayers' money is thrown at it. The reality is that Scottish industry is preparing for the single European market. Our exports into Europe have been increasing substantially. West Germany has now overtaken the United States as our biggest export market. Over half of Scottish exports go to Europe, and Scottish manufacturing exports per head exceed those of the rest of the United Kingdom by 28 per cent.
    Mr. Allan Stewart: Will my hon. Friend tell the STUC when he next meets it that self-employment in Scotland has risen by 50 per cent. since 1981? Does not that figure give the lie to much of the nonsense that we hear from Opposition Members?
    Mr. Lang: My hon. Friend is right. That is a reflection of the increased confidence in the business community. Many more people are willing to set up in business for themselves.

    Local Government Finance
    Mr. Canavan: To ask the Secretary of State for Scotland what is his latest estimate of the number of people who are in arrears with their poll tax payments.
    Lord James Douglas-Hamilton: While no overall figure is yet available, it would appear that the proportion of people in arrears with their community charge payments is broadly the same as under the rating system last year.
    Mr. Canavan: In view of the Secretary of State's insulting personal remarks about me, is the Minister aware that the reason why many people such as myself, who can afford to pay the poll tax, choose not to do so is because we are standing shoulder to shoulder in solidarity with people who have no choice, because they cannot afford to pay it? As there are about 500,000 of us throughout Scotland and only 200 sheriff officers, how does the Minister intend to enforce the collection of the Tory poll tax? Would it not be simpler for the Government to abolish it completely—and to abolish warrant sales while they are at it?
    Lord James Douglas-Hamilton: As a Scottish Member of Parliament, the hon. Gentleman is very well able to pay the community charge from his own earnings. It is for the council concerned to decide on the most appropriate method of collection, whether it be by arrestment or any other legitimate method. I see no reason to reform the warrant sales law, particularly as, when it went through Parliament, neither the hon. Gentleman nor any other Labour Member was prepared to vote against it. The hon. Gentleman's action in refusing to pay the community charge is grossly irresponsible. If enough people followed his example, either services would suffer or there would be redundancies among the local council's work force.

Points of Order
3.30 pm
Dr. John Cunningham: On a point of order, Mr. Speaker. Will the Leader of the House clarify the Government's intentions with respect to the exchanges in the Chamber that followed the Division at 7 o'clock last night? On behalf of the Opposition, I and a number of my right hon. and hon. Friends pressed for an urgent oral statement, by the Secretary of State for Defence in the first instance, about the Colin Wallace scandal and the information released yesterday by the Minister of State for the Armed Forces that the House and right hon. and hon. Members had been misled both in parliamentary answers and in correspondence. No statement has been made today, and it is important that we know now from the Leader of the House what are the Government's intentions.
I make it clear to the Leader of the House that, although in the first place a statement from the Secretary of State for Defence may be appropriate, this sordid affair has wider implications than simply matters concerning the Ministry of Defence. Right hon. and hon. Members on both sides of the House are concerned about the integrity of the House and of hon. Members, and clearly we need an opportunity to debate also those much more serious and wider implications.
Several Hon. Members rose—
Mr. Speaker: Order. I think that I should call the Leader of the House first.
The Lord President of the Council and Leader of the House of Commons (Sir Geoffrey Howe): In the light of the exchanges that took place in the House last night, the matter has been further considered. As the hon. Member for Copeland (Dr. Cunningham) points out, the background extends over a long time. In the light of that consideration, I am able to tell the House that my right hon. Friend the Secretary of State for Defence will make a statement to the House tomorrow afternoon. I shall say nothing beyond that today.
Mr. Tony Marlow: On a point of order, Mr. Speaker.
Mr. David Winnick: On a point of order, Mr. Speaker.
Mr. Speaker: Order. It is not for hon. Members to question the Leader of the House by way of a point of order. I call Dr. Cunningham first.
Dr. Cunningham: The announcement made by the Leader of the House will be welcomed by all right hon. and hon. Members. I ask him to consider and to discuss through the usual channels how the House may proceed. I reiterate that, although in the first place we expected and welcome the decision that the Secretary of State for Defence should make a statement about the implications for his Department and its responsibilities in the matter, the House should have an opportunity to debate also the wider issues involved.
Sir Geoffrey Howe: I must make plain what I should have made plain before. My right hon. Friend the Secretary of State for Defence is currently in Washington,
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and he will be making his statement tomorrow at the first opportunity. I cannot indicate the scope of his statement, or how the points raised by the hon. Gentleman may be dealt with. The House must wait until my right hon. Friend's statement has been made.
Mr. Tam Dalyell: On a point of order, Mr. Speaker. As a former Law Officer, the deputy Prime Minister will certainly appreciate the role of the Law Officers. May I ask whether Mr. David Calcutt's inquiry will benefit from the services of outside lawyers, or whether it will be dependent on "internal" civil servants from the Ministry of Defence? Could he clarify—[Interruption.] Anyone who knows about the matter knows that—
Mr. Speaker: Order. We have all heard what the Leader of the House has said: a statement is to be made tomorrow. It is difficult for him to give definitive answers about such matters before he has heard the statement.
Mr. Edward Leigh: On a point of order, Mr. Speaker.
Mr. Speaker: Is it on this matter? Is it for me or for the Leader of the House?
Mr. Leigh: It is for you, Mr. Speaker.
Mr. Speaker: Very well.
Mr. Leigh: As you know, Mr. Speaker, today is an Opposition day and a number of hon. Members wish to speak in important debates. We have received the clearest possible assurance that a full statement will be made tomorrow, at the earliest opportunity. Can we now move on? Opposition Members are trying to extend the discussion on the wrong occasion.
Mr. Speaker: The hon. Gentleman only repeated what I have just said.
Mr. Stanley Orme: On a point of order, Mr. Speaker. I thank the Leader of the House for saying that the Secretary of State for Defence is to make a statement tomorrow, but I urge him to recognise that the issue is much wider than it appears. It affects Members of Parliament—including me, as it happens—and the parliamentary Labour party has expressed grave concern about the current developments. Can the Leader of the House say what procedure may be used to enable the matter to be more fully investigated in the House?
Sir Geoffrey Howe: I cannot anticipate all the questions that may or may not be put to my right hon. Friend or to others, and I certainly cannot at this stage answer questions such as that asked by the right hon. Member for Salford, East (Mr. Orme).
Several Hon. Members rose—
Mr. Speaker: Order. This is not a matter for points of order. It has not been raised with me; it was raised last night in the House, and the Leader of the House said then that he would tell the House today what he proposed to do. It is perfectly legitimate for hon. Members to seek further clarification, but let me repeat what was said by the hon. Member for Gainsborough and Horncastle (Mr. Leigh): until we have heard the definitive statement it would be extremely difficult, if not wrong, to ask the Leader of the House to give detailed replies.
Mr. Tony Benn: On a point of order, Mr. Speaker. Is the Leader of the House aware that the issue being put to him now does not concern the Ministry of Defence statement, which is an internal disciplinary matter between Mr. Wallace and his former Department? It is a constitutional question, which I touched on last night and about which I wrote to you, Mr. Speaker, and to the right hon. and learned Gentleman. For more than 20 years disinformation has been issuing from Government—
Mr. Roger King: On a point of order, Mr. Speaker.
Hon. Members: "Sit down."
Mr. Speaker: Order.
Mr. Benn: The Government have now admitted, for the first time ever, the existence of disinformation that has branded and blackened the reputations of the right hon. Members for Old Bexley and Sidcup (Mr. Heath), and for Plymouth, Devonport (Dr. Owen), two former Prime Ministers—Wilson and Callaghan—my right hon. Friends the Members for Salford, East (Mr. Orme), and for Leeds, East (Mr. Healey) and my right hon. Friend the Member for Morley and Leeds, South (Mr. Rees), the former Secretary of State for Northern Ireland. Colin Wallace should be brought before a Committee here, just as Colonel Oliver North was brought before Congress, to give evidence free from the threat of prosecution under the new official secrets legislation.
Sir Geoffrey Howe: For the avoidance of doubt, I responded to a point of order raised in the House last night, and returned to the House this afternoon to respond to a point of order raised by the hon. Member for Copeland (Dr. Cunningham). Because I had given no notice of a business statement, I intended to respond to remarks that I understood would be raised as a point of order, and I have intervened on a point of order to tell the House that which follows from the undertaking that I gave last night. There will be a statement tomorrow afternoon.
Several Hon. Members rose—
Mr. Speaker: Order. By no stretch of the imagination can a matter such as this be the subject of points of order; to me they are not matters for the Chair.
Mr. Tony Favell: On a point of order, Mr. Speaker.
Mr. Speaker: Is it a point of order for me?
Mr. Favell: Yes, Mr. Speaker. Many Conservative Members are fed up to the back teeth with the bogus points of order raised by the Opposition. My right hon. and learned Friend the Leader of the House has already said that there will be a statement tomorrow. That is the time to raise questions. In the meantime, is it not about time that you, Mr. Speaker, laid down the rules—[Interruption.]
Mr. Speaker: Order. May I say to the whole House that when the Leader of the House makes a statement which in effect announces a change of business hon. Members have a right to question him.
Mr. Merlyn Rees: Further to the business statement made by the—[Interruption.]
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You informed us that it was a business statement, Mr. Speaker. If it is not a business statement, I cannot ask my question.
Mr. Speaker: Order. I repeat that the Leader of the House has made a statement about a change of business tomorrow. As it is a matter of grave concern to both sides of the House, it is legitimate for right hon. and hon. Members to put questions to the Leader of the House about matters that he can answer, but not about the statement, which he does not know about.
Mr. Rees: When Ministers do not seem to understand what the Leader of the House has done, it is very difficult for us to act on it. I am glad that the Secretary of State for Defence is to make a statement on this important issue tomorrow and we look forward to it. However, it has implications for the Northern Ireland Office which do not seem to matter to some people. There are also implications for other Departments. When one aspect is dealt with tomorrow, other Secretaries of State should be present because there are other issues to be raised.
Several Hon. Members rose—
Mr. Speaker: Order. I have called those hon. Members who are directly concerned with the matter because they were involved. [Interruption.] Order. I think we should now move on.
Mr. Tony Marlow: On a totally different point of order, Mr. Speaker, of which I have given you prior notice. On 12 June last year the House agreed the Select Committee report on televising the proceedings of the House. By agreeing that, we agreed to a degree of flexibility, provided that any variations were consistent with the reasonable assumptions which were made at the time the experiment was authorised. At the end of the main text there is a summary of conclusions and resolutions. In essence, those resolutions are the licence for broadcasters and the Select Committee. There are 87 such recommendations and conclusions. No. 31 states:
"Panning shots along the Benches should not be used."'
You may have noticed in the news media today—
Mr. Speaker: Order. Question No. 214 on the Order Paper today in the name of the hon. Member for Hertfordshire, South-West (Mr. Page) is on this very matter. There is a Select Committee on the Televising of the House. If the hon. Gentleman has any complaints about the way in which the televising of the House is being operated, he should put them to the Select Committee. I cannot deal with them.
Mr. Marlow: You, Mr. Speaker, will have seen that we have had advance notice of the answer to that question. The advance notice says that the cameras shall be allowed to roam. If so, that is a degree of flexibility beyond the reasonable assumptions in the report, one of which states that panning shots should not be allowed.
Mr. Speaker: That is not a matter for me; it is strictly a matter for the Select Committee on the televising of our proceedings. The hon. Gentleman would get a better answer from that Committee than he could possibly have from me, because I have no responsibility for it.
Sir Geoffrey Howe: In response to the point of order raised by my hon. Friend the Member for Northampton, North (Mr. Marlow), may I say that the report of the

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Select Committee which was approved by the House last year emphasised the rules that were issued for guidance were
"for the start of the experiment. They might need to be modified in the light of experience during the course of the trial period."
It was made clear that it would
"fall to the Select Committee to adjudicate …over the interpretation of the guidelines and to consider any reasonable modification which may prove necessary during the course of the experiment."
As the House would wish, the Select Committee has had the matter under continuous review. On Monday it reached some conclusions about certain modifications which were the subject of an answer to a written question on today's Order Paper.
I can assure my hon. Friend the Member for Northampton, North that the request for panning—one of the requests made by the forum—was not a request to which we acceded. If my hon. Friend studies the reply, he will discover the modifications that the Select Committee has approved and which I have reported to the House as soon as possible, consistent with the original report.
Mr. Marlow: Further to that point of order, Mr. Speaker.
Mr. Speaker: I do not see how it is possible to have a further point of order on that subject. The hon. Gentleman has been answered by the Leader of the House.
Mr. Stuart Randall: On a point of order, Mr. Speaker. I wish to bring to the attention of the House a very important matter relating to the proceedings in a Committee upstairs this morning with regard to the Official Secrets Act 1986 and the prescribing of certain organisations.
The Minister of State told me during the debate in Committee that the Comptroller and Auditor General, who as you know, Mr. Speaker, is an Officer of the House, would not have his status changed to that of a Crown servant. The importance of the point is that, if the Comptroller and Auditor General becomes a Crown servant under the order that was debated in Committee this morning, we would be hampering seriously the Public Accounts Committee. I know that that would be a matter of serious concern to hon. Members on both sides of the House. Therefore, I should like you, Mr. Speaker, to look into the status of the Comptroller and Auditor General in relation to the order this morning and the Official Secrets Act 1986.
Several Hon. Members rose—
Mr. Speaker: Order. Perhaps I can help hon. Members by saying that I will certainly look into the matter.
Mr. David Harris: Further to that point of order, Mr. Speaker. I was a member of the Standing Committee to which the hon. Member for Kingston upon Hill, West (Mr. Randall) referred. I am afraid to say that his account of the proceedings was not in accordance with what the Minister said. I am sure that that will be perfectly clear to you, Mr. Speaker, when you examine the matter.
Mr. George Foulkes: On a point of order arising from Scottish Question Time. During Scottish questions, which you may
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recall took place a short time ago, I, my hon. Friends, the Members for Glasgow, Shettleston (Mr. Marshall) and for Kirkcaldy (Dr. Moonie) and others tried to raise issues of vital concern to our constituents relating to questions that we tabled two weeks ago. I wanted to raise the matter of the Stranraer to Euston sleeper. I tried to raise the matter on suitable questions earlier, but I was not called, as is your right, Mr. Speaker, and we did not reach my question No. 21.
Scottish Question Time is my only opportunity to raise constituency matters on the Floor of the House. However, a large number of Conservative Members from south of the border with no constituency interests asked questions. I realise that this is a United Kingdom Parliament, but you have a responsibility to allow us an opportunity to ask constituency questions. I am not suggesting a language test, but I hope that you will bear this matter in mind when you call hon. Members during Scottish Question Time.
Mr. Speaker: I am aware of the desire in the House to make quicker progress at Question Time. However, that inevitably means fewer supplementaries and, so far as the Chair is concerned, this is constrained with the number of Front-Bench spokesmen. I do not criticise that, but I must bear it in mind in the interests of Back Benchers.
Several Hon. Members rose—
Mr. Speaker: I will take Mr. Winnick. I hope that it is not on the point that we have already dealt with.
Mr. David Winnick: On a point of order, Mr. Speaker. I should like your guidance. As you know, the Secretary of State for Defence is to make a statement tomorrow. Many hon. Members would like the opportunity at that time to deal with allegations that have been made about the way in which the Security Service had been and perhaps remains out of control. The Minister who will respond tomorrow is not the Prime Minister or the Home Secretary. Allegations and substantial smears have been made, and they must be answered. Will you ensure that we will be able to widen the issue of allegations about the Security Service? If not, the Home Secretary, or the Prime Minister, who is the head of the Security Service, should be on the Front Bench to answer questions.
Mr. Speaker: Perhaps I can give guidance to the whole House on this matter. Tomorrow there will be an opportunity not only to question the Prime Minister at Prime Minister's Question Time but to question the Leader of the House during business questions. Of course, there will then be the statement itself. There will also be Northern Ireland questions. There will be plenty of opportunities to deal with this matter.
Several Hon. Members rose—
Mr. Speaker: Order. I am not answering any further points of order on that issue.
Mr. D. N. Campbell-Savours: On a point of order, Mr. Speaker.
Mr. Speaker: Is it on another matter?
Mr. Campbell-Savours: Yes, Mr. Speaker. You will recall that, following the Christmas recess, I returned to the House and raised the matter of the commercial interests and directorships of Conservative Members of Parliament. Since that date, which is almost a month ago,

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I have sat through every Question Time and almost every statement in the Commons, and I have risen in my place on more than 300 occasions to be called on supplementary questions. It is being said in my constituency that it appears that the Speaker is carrying out sanctions against me by refusing to call me on supplementary questions—[Interruption.]
Mr. Speaker: Order. That is an unworthy charge to make against the Chair; the whole House will accept that. I do not think that, in general, the hon. Member is deprived in any way. He is regularly in the Chamber, and he has every opportunity to participate in our debates and at Question Time. He needs only to see his computer print-out, which I will gladly send him.
Several Hon. Members rose—
Mr. Speaker: I call Mr. Jonathan Aitken.
Mr. Campbell-Savours: My constituents want to know why I am not being called—[Interruption.]
Mr. Speaker: Order. I do not carry out sanctions against anyone.
Mr. Campbell-Savours: You have not told me yet, Mr. Speaker.
Mr. Speaker: I call Mr. Jonathan Aitken.
Mr. Jonathan Aitken: On a point of order, Mr. Speaker. Through you, I raise with the Leader of the House, the fundamental question whether the Secretary of State for Defence is the correct Minister to make the statement tomorrow. I draw to your attention the fact that a briefing that was given by the Prime Minister's press secretary to journalists today indicated that the Prime Minister herself might have been misled by previous statements made to her by civil servants as a result of which a parliamentary answer was given.
First, if that is correct, and if the security services are involved, as seems to be the general assumption, are you aware that in the Security Service Act 1989 there is no ministerial responsibility for the security services on the part of the Secretary of State for Defence? Therefore, why is the Secretary of State for Defence to make the statement? Secondly, if a wrong parliamentary answer was given by the Prime Minister herself, surely it is not necessarily within the ambit of the Ministry of Defence for the statement to be made. It seems to raise far wider constitutional questions. The Leader of the House should at least consider whether a different Minister should answer these questions tomorrow.
Mr. Speaker: That is not a matter for me. The whole House accepts that it is a serious matter which will need careful consideration. Let us leave it until tomorrow.
Several Hon. Members rose—
Mr. Speaker: Order. I am not taking any more points of order on that subject.
Mr. Max Madden: On a point of order, Mr. Speaker. I should like to raise a matter of which I have given you notice—the great anxiety about the future of Kashmir and the danger of civil war there. You will know better than most hon. Members that tens of thousands of British citizens are of Kashmiri origin and that thousands more have settled here and have lived here
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for many years. They are extremely anxious about the safety of their relatives and friends and are desperately worried about the future of Kashmir.
I should like your advice, Mr. Speaker, on how you can be given authority to write to the Speakers of the Indian and Pakistani Parliaments expressing the hope of British citizens of Kashmiri origin and your belief that every effort should be made to bring about a peaceful solution and to secure the future of Kashmir. How can the House give you authority to send such a message?
Mr. Speaker: The hon. Member knows that in such matters I am the servant of the House. It is not for me to initiate actions such as he suggests, although I share his anxiety.
Mr. Bob Cryer: On a point of order, Mr. Speaker. Can you confirm that it is your job as Speaker to examine breaches of privilege in the House and that they are no longer raised on the Floor of the House but are put in writing to you for a judgment on whether such a breach has occurred? There may be breaches of privilege in the statement tomorrow. I ask you to bear that in mind because, if there are, I and, I believe, several other hon. Members will write to you.
Mr. Speaker: The hon. Member knows that if a breach of privilege is alleged he should write to me. No doubt that will happen. Indeed, I have already received one letter on the matter.
Mr. Marlow: Further to the point of order raised by my right hon. and learned Friend the Leader of the House. He drew attention to paragraph 98 of the Select Committee report, which is part of the subsidiary text of the report. Within the report various items have been highlighted and transferred to the summary of conclusions and recommendations.
The Leader of the House spoke about the powers of the Select Committee, which are subject to the will of the House. The House agreed fundamentally with the summary of conclusions and recommendations, which takes precedence over paragraph 98. It says:
"Panning shots along the Benches should not be used."
On behalf of the House, will you look carefully at the report and the proposals of my right hon. and learned Friend and give the House your advice on the matter tomorrow? I submit that the Select Committee seeks to exceed its powers.
Mr. Speaker: I shall certainly look carefully at the report. We all have our views on the impact of television on our proceedings. The hon. Member heard the reply of the Leader of the House. He should take up the matter with the Select Committee or during business questions tomorrow..
Mr. Dennis Skinner: Further to that point of order, Mr. Speaker. I have listened carefully to what you said about the way in which the televising of the House is being changed. You have to keep an eye on it. You have had more than a little difficulty today. I think that there is a way out of it. You could kill two birds with one stone by allowing the cameras to zoom in close on the Prime Minister so that she can make a statement to clarify how she was misled in the Colin Wallace affair and we can ask her questions.
Mr. Speaker: Order. The hon. Member is ingenious, but that is not ingenious enough. We should move on because we have a heavy day before us.
Several Hon. Members rose—
Mr. Speaker: Order. To start our proceedings every day with—
Several Hon. Members rose—
Mr. Speaker: Order. I ask hon. Members to sit down.
Mr. Eric S. Heffer: On a point of order, Mr. Speaker.
Mr. Speaker: No.
Mr. Heffer: It is about—
Mr. Speaker: Order. I ask the hon. Member to sit down while I am on my feet.
Mr. Heffer rose—
Mr. Speaker: Will the hon. Gentleman please sit down? I am on my feet.
I must advise the House that it disfigures our proceedings to start every day with half an hour of points of order—[Interruption.] Order. These are not matters of order. They are matters of disagreement across the Chamber. They are not matters on which I can give any opinion.
Mr. Heffer: Yes, you can, Mr. Speaker.
Mr. Speaker: Order. I shall take only those matters that are my responsibility. I cannot take any others.
Mr. Heffer: My point is about the list, Mr. Speaker. You have a right in relation to that because you are the one person who can speak in our name. The hon. Member for Northampton, North (Mr. Marlow) talked about the "panning" of the House. As you know, Mr. Speaker, I was not in favour of any of it, but if we are to have the panning of the Floor of the House, we should not allow that panning to go only as far as the Gangway because, if that is the case, none of us below the Gangway will ever be seen.
Mr. Speaker: Order. I can give the hon. Gentleman some very good news. I now perforce watch television at breakfast time and frequently see the hon. Gentleman. I do not think that he need worry.
Mr. William Ross: May I seek your guidance, Mr. Speaker? Earlier this afternoon you told the House that it would be possible to have the Colin Wallace affair fully ventilated during the statement tomorrow. However, it is already clear from the exchanges in the House that not only the present Government but previous Governments over the past 20 years have been deceived and misled and that when they have come to the House to advise the House, they have misled the House.
How on earth can the House and the country believe that this whole affair can be fully ventilated by restricting our deliberations on it to a statement of one hour made by the Secretary of State for Defence, who is not completely responsible because the matter also concerns Northern Ireland? Surely we should have a full and detailed debate on this matter at the earliest opportunity, and it should be referred to a Select Committee of the House.
Mr. Speaker: I have no idea about how this will proceed tomorrow—[Interruption.] Well, until we hear the statement it is impossible to say what may happen in the future.
Mr. Ken Livingstone: I have received a letter from the Minister of State for the Armed Forces which tells me that the allegations that I raised in the House about the forging of CIA documents and about the use of Army officers to plant hoax bombs are now true. I understand that there is to be a statement tomorrow from the Secretary of State for Defence. That is not good enough. I raised this issue with the Prime Minister and I have received denials from the Prime Minister. I know from my own research that an entire dossier, listing every one of the allegations, was delivered to the Prime Minister on behalf of Colin Wallace in November 1984. The House will want to know why that—
Mr. Speaker: Order. It is quite likely that the House will want to know—and I shall probably want to know—but what is the point of order for me?
Mr. Livingstone: I am trying to ask, through you, Mr. Speaker, that we have the Prime Minister here to answer our questions because she is the main beneficiary of this treason and she has been the main architect of the cover-up.
Mr. Speaker: Order. The hon. Gentleman must not make allegations of that kind.
Mr. Livingstone: It is true.
Mr. Speaker: Order. I call Mr. Mullin.
Mr. Chris Mullin: It will be within your recollection, Mr. Speaker, that on 6 May 1987 the Prime Minister made a statement to the House in which she denied categorically every one of the allegations that have now been confirmed in yesterday's answer by the Minister of State for the Armed Forces. May I reinforce the points that have been made by the hon. Member for Thanet, South (Mr. Aitken) and by my hon. Friend the Member for Brent, East (Mr. Livingstone) to the effect that the Prime Minister should be the person at the Dispatch Box answering questions on this subject? Would it be in order for you, Mr. Speaker, to use your good offices in a way that I am sure you could to ensure that the Prime Minister is here to address us specifically on that subject?
Mr. Speaker: It is not a matter for me, but I am sure that what the hon. Gentleman has said has been heard.
Several Hon. Members rose—
Mr. Speaker: Let us move on.

Points of Order
  BILL PRESENTED
    HARBOURS, DOCKS AND PIERS CLAUSES ACT 1847 (AMENDMENT)
    Mr. Michael Shersby, supported by Mr. Barry Sheerman, Sir Bernard Braine, Sir John Wheeler, Mr. Steve Norris, Mr. Robert Maclennan, Mr. John Cartwright and Dr. John Blackburn, presented a Bill to repeal sections 79 and 80 of the Harbours, Docks and Piers Clauses Act 1847: And the same was read the First time; and ordered to be read a Second time upon Friday 2 March and to be printed. [Bill 65.]

  EUROPEAN COMMUNITY DOCUMENTS
  Ordered,
  That European Community Document No. 9934/89 relating to health rules for products of animal origin be referred to a Standing Committee on European Community Documents.—[Mr. Lightbown.]
  Mr. Michael Marshall: On a point of order, Mr. Speaker.
  Mr. Speaker: Is it about a completely different matter?
  Mr. Marshall: No, it is not, Mr. Speaker.
  Mr. Speaker: Well, then, I cannot hear it.
  Mr. Marshall: I believe that it would be helpful, Mr. Speaker.
  Mr. Speaker: Well, if it would be helpful—
  Mr. Marshall: I have listened to the exchanges this afternoon and wish to say simply that Mr. Colin Wallace is my constituent. It is essential that we have a statement from the Secretary of State for Defence tomorrow. I believe that that is a step that we need to consider before we look at other matters. I wish to put that on the record, having been involved for the past seven and a half years in making representations on behalf of my constituent.
  Mr. Speaker: I apologise to the hon. Gentleman. I did not realise that Colin Wallace was his constituent.

Newly Qualified Drivers
4.4 pm
Mr. Simon Burns: I beg to move,
That leave be given to bring in a Bill to impose restrictions, in respect of cars with engines of over 1000 cc, upon drivers for a period of 12 months after they have passed the test for the full driving licence; and for connected purposes.
In the past 20 years, there has been a revolution in motoring. Improved living standards have ensured that there is a far wider car ownership. Instead of one car per family being the norm, it is now more likely that two or even three cars are owned by one family. Furthermore, advances in technology, design and engine power ensure that cars are far more sophisticated and powerful than they were then. The driving test has failed to keep pace with the times. Noticeably there is no provision in the driving test for motorway driving. There is also no written examination, which many might consider to be beneficial and an improvement. There is also a belief that, as in certain European countries, a number of hours of driving should be completed before drivers are eligible to take the test.
In Great Britain, more than 28 million people have licences to drive motor cars. The figures for the latest available year, 1988, show that 1,039,000 people passed their driving test. Of those, 73 per cent, were aged between 17 and 25, 21 per cent, between 26 and 40, 5 per cent, between 41 and 60 and 0·3 per cent, over 60. In the same year, 184,000 motor car accidents involving personal injuries occurred. On top of those figures, one can add the 3,427 people who were killed in accidents involving lorries, motorcycles, and mobile and stationary objects.
To put the problem into perspective, overall, in 1988, 5,000 people were killed and more than 300,000 injured in road accidents of all types. In the under-25-year-old age group, there were almost 1,000 deaths and 60,000 injuries. If my mathematics are correct, in that single year nearly 500 of the constituents of every hon. Member were either killed or injured as a result of motor accidents.
The social cost of these horrific figures is in excess of £4 billion. I am reassured that the Department of Transport is extremely concerned about this and is constantly taking action to help to ensure that our roads are safer, with a plethora of positive initiatives and actions. However, my proposed Bill would add to the Department's initiatives and open thé debate on what more can be done.
Part of the problem emanates from the fact that inexperienced drivers are given, as soon as they have passed their driving test, the same privileges and rights as someone who has held a licence for over 20 years and gained experience through driving over the years. That is a mistake. In theory, a 17-year-old can, on his 17th birthday, pass his driving test, leave the test centre and drive away in a Porsche or a series 7 BMW. This is crazy, because it is obvious that such a time scale gives nobody the experience or understanding of driving a car with such a high performance. If such a youth got into difficulties, he would not be able to cope. The first purpose of my Bill is to restrict all newly qualified drivers to driving cars of only 1,000 cc for the first 12 months after passing a test so that they can build up the required confidence and experience when driving. Secondly, my Bill would seek to make all newly qualified drivers, up to 12 months after passing their tests, drive with plates marked R for restricted or N for

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novice—similar to plates used in Northern Ireland and elsewhere. Other drivers would then be aware of their relative inexperience.
I understand from press reports in the past few days that the Department of Transport is considering this proposal and introducing a P plate. I do not want to quibble with the Secretary of State for Transport about different letters of the alphabet. Any relevant letter should be used to attract the attention of other drivers.
Thirdly, there has been a serious problem of boy racers showing off on joy rides. They pile their cars full of passengers and race up and down the roads. That has led to far too many accidents involving death and personal injury. The third part of my Bill would go some way towards alleviating that problem by restricting the number of passengers whom they can take in their cars to two, of whom one must be a fully qualified driver in his own right.
Fourthly, my Bill would effect something that I know my hon. Friend the Minister for Roads and Traffic is considering as a matter of urgency—the banning of newly qualified drivers from sitting in cars with learner drivers, thereby allowing the learners to drive on the highway. They are not mature or experienced enough to take on such responsibilities.
The last two parts of my Bill include constructive ways of ending these tragedies and the activities of boy racers.
I do not pretend that my Bill will reach the statute book by the end of this Session, but I believe that, if it draws attention to the problems and raises the level of discussion so that people bring in new ideas to reduce the injuries and deaths on our roads and to produce an improvement on the past two decades, it will have been worth while. I commend it to the House.
Question put and agreed to.
Bill ordered to be brought in by Mr. Simon Burns, Mr. David Porter, Mr. David Evans, Mr. Anthony Coombs, Mr. Jerry Hayes, Mr. William Hague, Miss Ann Widdecombe, Mr. Bob Dunn and Mr. Douglas French.

Newly Qualified Drivers
  NEWLY QUALIFIED DRIVERS
  Mr. Simon Burns accordingly presented a Bill to impose restrictions, in respect of cars with engines of over 1000 cc, upon drivers for a period of 12 months after they have passed the test for the full driving licence; and for connected purposes: And the same was read the First time; and ordered to be read a Second time upon Friday 9 March and to be printed. [Bill 67.]
Orders of the Day
  OPPOSITION DAY
  [5TH ALLOTTED DAY]
  OPPOSITION DAY

    EC and Eastern Europe
    [Relevant documents: European Community Documents Nos. 9090/89 on aid to Poland and Hungary, 10788/89 on medium-term financial assistance for Hungary, 9716/89 on economic aid to Hungary and Poland, 8879/89 on Commission indemnities to the European Investment Bank against losses under loans to Hungary and Poland, 9127/89 and the un-numbered Explanatory Memorandum submitted by the Ministry of Agriculture, Fisheries and Food on 10th November 1989 on extension of the Generalised System of Preferences to Poland and Hungary and the un-numbered Explanatory Memorandum submitted by the Ministry of Agriculture, Fisheries and Food on 10th November 1989 on levy reliefs on certain agricultural products.]
    Mr. Speaker: We now come to the first of the Social and Liberal Democrat motions, that on the European Community and developments in eastern Europe. A considerable number of right hon. and hon. Members want to participate in this important debate, and I ask them all to keep their speeches brief in the interests of the whole House.
    Mr. Bob Cryer: On a point of order, Mr. Speaker. You will have noticed that a number of European Community documents are listed on the Order Paper. I understand that they have not been requested for this Opposition day, although they may well be convenient for it. I seek your assurance, Mr. Speaker—I hope that the Minister will respond to this point—that the Government are not attempting to use time allocated to the Opposition to put down what are essentially Government documents so that they can then say that they have been considered and there is no need to debate them in Government time. That would be an abuse of Opposition time.
    Mr. Speaker: I am sure that that will have been heard by the Minister.
    The Minister of State, Foreign and Commonwealth Office (Mr. Francis Maude): Further to that point of order, Mr. Speaker. As I understand it, it was not at the initiative of the Government that the documents were added to the motion for debate.
    Mr. Speaker: I remind the House that we should restrict our debate to the motion on the Order Paper.
    4.14 pm
    Mr. Paddy Ashdown: I am grateful to the hon. Member for Bradford, South (Mr. Cryer) for raising that important issue. It would indeed amount to contempt of this House, or at least contempt of the procedures of the House, if this debate were to be used for a discussion of European Community documents. I shall look into the question of who asked that these items be put on the Order Paper, but my understanding is that it certainly was not my party or, indeed, any of the other Opposition parties.
    I beg to move,

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    That this House welcomes recent progress towards liberal democracy in the countries of eastern and central Europe; endorses progress towards the political and economic integration of the European Community; and calls upon Her Majesty's Government urgently to recognise that this country's future depends on Britain playing a full and wholehearted role in the development of the new democratic Europe.
    I am bound, at the start, to say that I am somewhat surprised that the Government have not been able to find sufficient agreement—in the Conservative party, I presume—to put down an amendment to this motion, even though many parts of it are entirely contrary to what we understand to be Government policy. Indeed, I hear that there is a possibility that the Government will not even seek to vote against it—again, presumably on the grounds that they cannot find any agreement about their policy on these vital matters. I hope, in case the Government should argue that their policies are in accordance with the motion, to demonstrate that the facts speak entirely to the contrary.
    This motion is designed to encompass two factors. The first factor concerns the developments in eastern Europe; the second, and essential, factor is Britain's relationship to the new developments in western Europe—the movement towards closer economic, monetary, political and social integration. Hon. Members will not be fulfilling the terms of the motion—certainly not its terms—or its spirit if they merely use this debate as a chance to expatiate grand visions about eastern Europe. Those have to be set in a context, and that context is our approach to Europe itself.
    We on the Liberal Democrat Bench make no apologies for bringing to this, the oldest and, many believe, the most introverted of the democratic parliaments of Europe the issue of the new democratic Europe that is now emerging before our very eyes. Naturally, people will be concerned to discuss their view and their vision of Europe, but I want at the outset to establish that this is a matter of the deepest practical importance to every citizen of this country. It is not just a matter for visions; it is a matter of practical politics.
    On the environmental front, we know only too well that the European dimension is what has forced this Government to face up to the problems that now confront us as a part of Europe and, on the question of emission controls, has led the way in creating a cleaner atmosphere, often actually obstructed by this Government. On North sea pollution, it is the same story.
    The Berlaymont in Brussels has exposed this Government's failure—in the case of water, for instance—to take the necessary action to create a cleaner environment. We know also that it is through concerted European action that we shall begin to tackle the huge environmental problems with which Europe as a whole will be confronted as a result of the moves in eastern Europe and the extraordinary levels of pollution that have to be coped with there.
    We know too that, when it comes to the liberties of the individual, time and again it is the European Court that has had to be resorted to to defend the rights of British citizens, for whose protection our courts were too feeble, and for whom the lack of a Bill of Rights has meant an inadequate framewpork to secure civil liberties.
    When it come to business, we know that small businesses and enterprises are, day by day, paying the price of high interest rates, because this Government have failed to address the advantages to Britain that would accrue
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    from joining the European exchange rate mechanism of the EMS. We know that it is Brussels, and will increasingly be Brussels, that will tackle the issue of creating a free market—tackling monopolies and, indeed, exposing Government subsidies. Finally, we know that—crucially, in relation to 1992—it will be this country's ability to sink or swim in the open markets of Europe that will determine whether our nation and its industry and its economic base prosper or decline in the years to come.
    We believe that Britain must join in the march towards European unity, towards closer economic, social and political integration, because that is the only way to ensure the long-term future of Britain's best interests. The failure of the Tory party and the Labour party to come to terms with the new Europe that is now emerging marks them both as parties of the past rather than parties of the future. The attitude of both parties is marked by confusion and division because they are equally uncertain about how to address the new moves in western Europe and how those will relate to the new moves in eastern Europe. They are equally split on that crucial issue.
    This weekend, in what I can only describe as a masterpiece of euphemism, the Foreign Secretary tried to describe the split in the Conservative party as
    "honest and friendly disagreements about details of our policy."
    Was it "honest and friendly disagreement" about details of policy that caused the Chancellor of the Exchequer to resign on the issue of the exchange rate mechanism and the European monetary system? Was it "honest and friendly disagreement" that caused the former Foreign Secretary to be sacked because his views were dangerously pro-European and ran counter to the Prime Minister's personal antipathy towards all things European—or, as she would see it, all things foreign? Is it "honest and friendly disagreement" that has now led to a state of almost open war between the Prime Minister and Conservative Members of the European Parliament?
    If that split in the Conservative party were confined to the nasty element—one might even say the Chingford element—of the Conservative party, I might be able to understand the Foreign Secretary's complacency in this matter. Of course, that is not the case, because the split runs right into the heart of the Conservative party, right into the Cabinet. We saw that clearly in the most eloquent and powerful resignation speech by the former Chancellor of the Exchequer.
    Of course, Members on the Opposition Front Bench are no different. The difference between the hon. and learned Member for Monklands, East (Mr. Smith), who speaks on Treasury matters for the Labour party in Europe, and the hon. Member for Dagenham (Mr. Gould) is as wide as the differences between Nos. 10 and 11 Downing street in the era when the Prime Minister was going through so much difficulty with the previous Chancellor of the Exchequer. The splits in both the Labour and Conservative parties have robbed Britain of a coherent policy on Europe. They are robbing this country of an influence on the development of European events and will rob it of the opportunities to benefit from the tremendous chances that are now opening up in Europe.
    Mr. Austin Mitchell: It is easy to be consistent if one is totally naive, and easy for a party to be united in total naivety. Given an institution that has inflicted so much damage on the real economy of this

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    country, there is bound to be division in major parties about whether to go further and faster or whether to hold back. That is realism.
    Mr. Ashdown: The hon. Gentleman is a member of the Labour party, and therefore knows the real meaning of splits and naivety because they seem to have been almost a characteristic of his party over the past five or six years. The hon. Gentleman says that I am being naive and that what I am saying has nothing to do with real politics. We hear, do we not, that there are three reasons why the Conservative party and the Labour party regard it as important that Britain should stay in a minority of one out of 12 in Europe? First, there is the question of sovereignty. They are attached to an old-fashioned idea of the unitary sovereignty of the nation state. Neither of them realises the essential importance in the age in which we are moving of the concept of pooled sovereignty.
    At least we are told that sovereignty is the reason. When one looks deeper, one wonders how on earth those parties can hold that position. In defence—nothing can be more crucial in terms of sovereignty—we have become quite accustomed over the past 40 years to the concepts of pooled sovereignty. We have also become accustomed to the idea that, by combining with other nations in NATO, Britain will have a better defence. We have become used to the idea that that is the very basis of the multilateralism that the Prime Minister consistently tells us is so important—not that that removes from her the capacity to be in a minority, even in NATO, on issues such as the modernisation of nuclear weapons.
    For some time we have had pooled decision-making in foreign affairs. Yet in no way does that stop the Prime Minister from being isolated from our European partners from time to time on questions such as the way in which we should deal with South Africa.
    The heart of the case advanced by the Labour and Tory parties seems to be that the single issue of economic sovereignty is the area where we may not in any way diminish the extraordinary sovereignty held by this nation and House over economic affairs. To what, then, would they wish us to return—to the sovereignty that the Labour party enjoyed in the 1970s when it had to go cap in hand to the IMF to bail it out, or the sovereignty that the Conservative party currently enjoys when it goes cap in hand daily to the speculators of the money markets to ensure that its economic policies can stand?
    Is that the kind of sovereignty about which they are talking? Or is it the economic sovereignty which, in the 1960s and 1970s, made us prey to every small tremor of decision by what were then known as the gnomes of Zurich? Or is it the kind of sovereignty that the British Government enjoyed last October when, instead of observing the gnomes of Zurich, we had to stand on the edge of our chairs to await the decision of the faceless men of the Bundesbank? What an extraordinary degree of economic sovereignty is that.
    Mr. Eric S. Heffer: I am fascinated by much of what the right hon. Gentleman says, but I wish to recall to him the history of his party. He must have read about the great conflict between Lloyd George and others.
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    Great divisions occurred in the Liberal party because of the reality of political power and the need to make decisions.
    Those who have had to make decisions know that decision making is not always a simple matter. One is faced with a series of choices. Sometimes one makes the right choice, sometimes the wrong one, but either way one must make a decision. The reality of power rests precisely on that point. Much as I agree with much of what the right hon. Gentleman says, it is about time that the Liberals lived in the real world instead of in some fantasy world.
    Mr. Ashdown: The hon. Gentleman makes his point with characteristic pungency. Four times in the last 40 years Britain has been invited to make a real choice on Europe, and three times, whether under Labour or Tory Governments, the wrong choice was made. This country has suffered greatly as a result of those wrong choices. The hon. Gentleman cannot argue that that is naivety, or that we were living in some stratospheric world in which those choices did not matter.
    Our failure to join Europe is one of the fundamental reasons for the underlying economic weakness of this nation. Heaven forbid—if the hon. Member for Walton is talking about real politics—that Britain should, for the fourth time, make the wrong choice and be left behind, because I do not believe that our economy, industry and society could tolerate another wrong choice on Europe.
    Mr. John Gorst: Does the right hon. Gentleman agree that in foreign affairs it is highly desirable that we in this country have a bipartisan approach? He rightly points out that there is a spectrum of opinion on both sides of the House, and no doubt he believes that his party sits fair and square in the middle of politics—or at least that claim might be made. Does he think that it would be preferable to bridge the gap between the parties rather than try to extend it even more? Will he in the rest of his speech be suggesting how we can have a bipartisan approach?
    Mr. Ashdown: The hon. Gentleman makes a good point about bipartisan approaches. I agree that they are to be commended, except when a bipartisan approach is, as in this case, wrong. The hon. Gentleman is also wrong to suggest that we are in the middle of the Conservative and Labour parties. We are not: we are out ahead of them, where we have been consistently for the last 40 years on Europe. What my party and its predecessors have said about Europe has become reality. We are talking of a political agenda which we currently occupy, but I predict that the Labour and Conservative parties will have to move to it in the coming year or two, or Britain will pay an ever higher price in the future.
    Mr. George Foulkes: I want to make it absolutely clear that the policy that the right hon. Gentleman is attempting to criticise in no way represents the reality of Labour party policy. As he speaks with the support of about 4 per cent, of the electorate, I wonder whether he can confirm that he also speaks with the support of the hon. Member for Rochdale (Sir C. Smith) who, on a number of previous occasions, has disagreed with the right hon. Gentleman.
    Mr. Ashdown: My hon. Friend the Member for Rochdale (Sir C. Smith) will make his own points. The hon. Member for Carrick, Cumnock and Doon Valley

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    (Mr. Foulkes) cannot even get many of his Back Benchers to go along with the Labour party's incredibly flimsy line on the exchange rate mechanism.
    Sir Cyril Smith: I have been sitting here, listening quietly and behaving myself, which I always do. Suddenly, I hear that I disagree with everything that my right hon. Friend the leader of my party has said, and that I have done so on numerous occasions.
    I challenge the hon. Member for Carrick, Cumnock and Doon Valley (Mr. Foulkes) to produce any statement or speech that I have ever made in which I have disagreed with my party's stance on Europe. I have disagreed with my party on many other matters, but that is not what the hon. Gentleman alleged. He said that I disagreed with my party's stance on Europe, European affairs and the European monetary system. That is not true. I agree with every word that my leader has said today.
    Mr. Ashdown: I am grateful to my hon. Friend for his clearly expressed support. If the hon. Member for Carrick, Cumnock and Doon Valley had the slightest drop of integrity, he would withdraw his accusation. However, no doubt I and the House will have to wait in vain for that.
    The second objection of the Labour and Conservative parties relates to the creation of a European super-state. I agree that that is a danger, but it is my view and that of every other member state that we must struggle towards a new political distribution of power. Part of that is the concept of pooled sovereignty in Europe, but the other and most essential part is the passing of power back to our communities, and the establishment of Parliaments in Wales and in Scotland is an essential part of that distribution of power. Of all the European nations, West Germany is the most devolved. It has no difficulties with the idea of pooling some of its sovereignty at European level. Why should we?
    The third objection of the two main parties is that they do not want to give power to the Eurocrats in Brussels. Again, if that were a reality rather than a myth, I would agree with it. I want the establishment of an accountable bureaucracy at the Berlaymont in Brussels. How do we do that? We do it not through the Council of Ministers, but through strengthening the powers of the European Parliament and making it accountable to our elected representatives in Europe. With extraordinary, breathtaking contradiction, both the Labour and Tory parties say that they are afraid of being part of the European Eurocracy and opposed to increasing the powers of the European Parliament.
    It was with a lifting heart that I read in paragraph 10 of the Socialist manifesto the wonderful words, with which I could not disagree:
    "The more important the Community becomes, the stronger the European Parliament will be. The continuation of Europe must not be left in the hands of the bureaucrats and Ministers alone: it must be a people's Europe."
    Amen to that. However, there is a footnote: '
    "The British Labour Party disagrees and does not accept paragraph 10."
    I hope that, when the spokesman for the Labour party in due course catches your eye, Mr. Deputy Speaker, he will be good enough to explain to the House why the Labour party wants to keep power in the secret Council of Ministers, with the bureaucrats in Brussels, and not hand it out to the citizens of Europe as a whole.
    The importance of addressing the question now being put on economic and monetary union and the Delors
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    committee report is vital. Therefore, when I went to Brussels last week I was alarmed at the derision in which everyone in Brussels holds the extraordinary Treasury plan to accomplish economic and monetary union by a process of 10 competing currencies. As we move to the intergovernmental conference in December, it is clear to most of us who observe the scene that, if by that stage Britain has not joined the European exchange rate mechanism, or at least stated a date on which it intends to join, we may wave goodbye to any influence by the Government in the work of the IGC over the next year.
    The irony is that the Treasury scheme, the spatchcock arrangement of 10 competing currencies, is no more than an extension of the exchange rate mechanism that the Government have so far refused to join. The double irony is that that system, rather than the economic and monetary union proposed by Delors, would lead to the very domination of the deutschmark which the Government say they are most afraid of.
    My party does not believe every word of the Delors report. We take the position that there is a need for monetary union in Europe but agree along with every other nation except Britain, and most of the private views expressed in the Commission as well, that there is no case for the economic straitjacket which the Delors report proposes. But that is a matter of argument about the detail, not the principle. At all events, we shall be left behind in the discussion. There can be no question about the fact that we accept the need for monetary union.
    Central to that issue is the question of a central bank. Again, neither I nor my party has any difficulty in accepting the concept of a central bank in Europe, constructed along approximately the same lines as the Bundesbank. The United Kingdom is isolated on that issue too: we know that both the Tory and the Labour parties are opposed to the idea of a central bank. Why? Because they will do anything to maintain in their own hands the power to fiddle the economy before an election so as to win votes. It was the Prime Minister's capacity to debauch the British economy before the last election which has been the fundamental cause of many of our economic problems today.
    In making that statement about the importance of a central bank, I am not alone, because it was the view expressed in the House by the last Chancellor of the Exchequer. He believes, as I do, that we have nothing to fear from the concept of a central bank and a good deal to gain if it gets politicians' sticky hands off the capacity to distort the economy just before an election to win votes, leaving the country to pay the price later.
    Another former Minister, a former Secretary of State for Trade and Industry, Sir Leon Brittan, said in a speech in Reading on 19 January that he believed that European monetary union and the central bank, which is at the heart of that proposal, provide
    "a rock of low inflation and sound money at the heart of Europe."
    When it comes to the choice between low inflation and sound money that the Prime Minister is always telling us about, we note that, if there is any possibility of her power being taken away, that power must come first and the proper management of inflation and the creation of a sound economy come second.
    The truth is that this spurious concept of economic sovereignty is at best specious and anachronistic, and only

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    a crude front for the Government to express their anti-European ideas and for the Labour party to express its equally isolated and out-of-date policy.
    Labour is now telling us that it is in favour of the exchange rate mechanism and wants to move towards it. Labour has done a good job of persuading the British people that it has a more positive attitude to Europe, but its conditions for joining the ERM vary only slightly from those of the Government. The Government argue that we cannot join the ERM until inflation is down to something like West Germany's level, while Labour argues that we must first ask West Germany to inflate its economy and risk its inflation increasing to our level. The truth of the matter is that there is no difference between the two—they are both clever and rather erudite ways of saying no.
    There is a severe danger that Britain will be left behind and isolated in the process of monetary union. There is a will among the 11 other nations of Europe—though whether it will endure for a whole year's intergovernmental conferences is another matter—to go ahead without Britain. The establishment of monetary union will raise the whole question of a democratic deficit, which my party is committed to tackling by increasing the established powers of the European Parliament.
    As to the social charter, it is interesting that Labour has now found something with which it is prepared to agree. I often think that Labour only decided that it was in favour of Europe when it realised that the Government were against it. Nevertheless, the Opposition now ascribe at least to this aspect of the European concept, perhaps in the hope that they will be able to get legislation through Brussels that they would never get through this House.
    I think that they have the wrong end of the stick, because the social charter, or plan for action, is based only on broad principles. I would like to see the social charter developed into a citizen's charter. Our nation would face considerable danger if we allowed the establishment in Europe to operate the kind of corporate statism that ran Britain in the 1960s and 1970s. It is a Government's job to ensure a quality of delivery to the citizen. The social charter should be about defining the citizens' basic entitlements under that system, not be concerned with handing down blueprints for every individual country to implement.
    We must not allow the social charter to lead us back to the bad old days of the corporate states. We should approach the task through a series of definitions, broad principles and entitlements, and leave national Governments with the flexibility to enact them.
    Mr. Robert N. Wareing: Many of my right hon. and hon. Friends agree with some of the right hon. Gentleman's propositions, such as those concerning the social charter and the exchange rate mechanism. There had been divisions in all the major political parties over the years over our involvement in Europe. However, the right hon. Gentleman's speech is otherwise disappointing. Huge changes are occurring on our continent that require a visionary approach for the future, not a look back to the past. The right hon. Gentleman's petty party politicking speech does him a disservice and gives no honour to this House, which
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    should look forward to the new Europe that is now being born—not argue and be divisive about the events of the past.
    Mr. Ashdown: The hon. Gentleman may recall that I began my speech by emphasising that one cannot approach the problems of eastern Europe unless one sets them in the context of developing integration in western Europe. The hon. Gentleman brings me to the related issues of eastern Europe. Incidentally, I hope that we shall soon start to call it central Europe.
    The extraordinary events of recent months, which unleashed the power of the free citizen and overturned even the most brutal tyrannies and dictatorships of eastern Europe, place upon western Europe a necessity to continue with its own integration. I shall tell the hon. Member for Liverpool, West Derby (Mr. Wareing) why that is so. People such as the Prime Minister, who argue that Britain should backtrack and undo the whole process of integration and convergence in western Europe, are unwise and propose a policy that is positively dangerous. No other voice in eastern or western Europe expresses the view that is taken by the Prime Minister—and, by implication, by Labour—that the right thing to do now is to halt the process of integration.
    Every other voice in the established capitals of western Europe and the new voices of eastern Europe believes that western Europe's growing integration is essential in tackling the problems ahead. The argument as to whether we should widen or deepen the European Community is nonsense. The two are not contradictory but complementary. It is only within the framework of a more closely integrated western Europe that we shall be able to overcome some of the problems unleashed in eastern Europe.
    Further, in the fact of the collapsing economies of the emerging democracies in central Europe and the rocketing inflation that they face, and in the light of the power vacuums being created as the eastern European empire recedes, it takes a mind extraordinarily ignorant of history and peculiarly steeped in the illusions of British power to propose a return to a variation of the competing nationalism that afflicted Europe in the 1930s.
    Central Europe is escaping from Socialism, but it is not aspiring to Conservatism. Certainly it is not aspiring to Thatcherism and to the new materialism that it breeds. I have not heard on the lips of a single person who has come through the Berlin Wall from East Germany the word "Conservative". The words I hear time and time again are "liberal" and "democracy". Those are the words on the lips of the people now seeking freedom, who want a system of politics that is built on human and political rights, the value of community, and a properly representative Government. As they call for those things, so will our nation have to answer a similar call. We must look to our own reforms to deliver the same.
    Mr. Alex Salmond: As I understand the Liberal Democrats' defence policy, if the right hon. Gentleman's party inherited Trident as a fait accompli, it would retain it to use in nuclear disarmament bargaining. If that is so, which of the central European cities would the Liberal Democrats target with Trident? Will they include President Haval's Prague or Warsaw—or Moscow, given that Boris Yeltsin achieved such a convincing majority in the recent elections there? The right

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    hon. Gentleman's views on Trident have undergone a process of development, but I think that they have developed in the wrong direction.
    Mr. Ashdown: I shall refer later to matters of security.
    How can we assist the process of reform? We must acknowledge that along with the huge opportunities it presents come immense dangers. It will require great imagination, a good deal of forward thinking, and enormous sensitivity to achieve stability out of profound change. It is important to acknowledge also that each of the emerging central European democracies is different, and that none of them can be treated the same.
    The model that we should look to is that of a western Europe deepening its unity—strengthening its integration—to create an increasingly powerful magnetic pull, drawing the emerging democracies of central Europe—each adopting its own pace and a path of its own choosing—to a destiny that brings them much closer to the European Community. Some will be part of the Community; some may stay separate from it for some time to come.
    This is a time for pragmatism. It is not a time for grand designs or for the handing down of blueprints, but a time at which we should use all the organisations available to us, and all the possible routes—trading agreements, articles of association and perhaps the establishment of a model such as that used by the European Free Trade Association—to bring about a closer relationship with the Community. Perhaps the European Council in Strasbourg put it best when it stated that the Community's job was to become
    "the cornerstone of a new European architecture, and in its will to openness a mooring for a future European equilibrium".
    We in western Europe face a tripartite task. The first part is the provision of short-term aid—and I am bound to say that both the Government and the EEC have acted with commendable urgency in responding to a pressing need. The second is the development of long-term assistance to increase the economic prosperity of the nations concerned: that will involve key elements such as lines of credit and managerial assistance, of which both the Government and the EEC seem well aware. The task is so great, and the sums involved so massive, that Governments should not be the sole providers; we must try to create a climate in which private industry will begin to invest.
    We shall need a broad framework in the West within which that can take place, along with democratic economic stability in the East. The third part of the task is to assist democratisation, which—at first sight, and a very short time after its initiation—seems to be developing effectively.
    I turn now to security matters. The peace of Europe in the past 40 years has been assured by two huge standing armies—armed to the nuclear teeth, eyeball to eyeball, on the brink of war and daring each other to flinch. All that appears to be over, thank God: we should now start to work with some urgency towards establishing a new means of securing the peace of what will be a Europe with a new shape.
    We must accept the likelihood that that new shape, when it finally emerges, may well not include the stationing of United States and Soviet troops on what is currently described as the territory of Europe east and west. The task before us is nothing less than the rebuilding of the
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    edifice of collective and common security in Europe, and the setting up of what may come to be known as a European regional security agreement.
    Let me emphasise that the process should not—must not—include the precipitate dismantling of either NATO or, in so far as we have any influence over events, the Warsaw pact. This is not a time for unilateral action, but a time for working in concert with our European partners. I believe that—at least during the transitional phase, which may last for some time—the structure of NATO and, in so far as it holds together, that of the Warsaw pact will be vital.
    First, they will form the medium through which we execute the agreements on multilateral disarmament that will be the precursors of the new shape of European security. Secondly, they will provide the one fixed point in an otherwise fast-moving world, from which we can develop economic and political integration with the nations of the East. Without that security backdrop, the process would be much more difficult.
    Thirdly, the two structures will provide an essential superstructure behind which we shall have to construct the new European security arrangements. As I have said, the precipitate dismantling of that superstructure would destabilise an already difficult and delicate process.
    Dr. David Owen: Is the right hon. Gentleman really suggesting that the Hungarians, who were invaded by Soviet troops in 1956, and, the Czechoslovakians, who were invaded by Soviet troops in 1968, are not right to ask for those troops to be withdrawn? Does it not constitute a natural expression of the public rejection of Communist ideology—particularly Soviet Communist ideology—for the symbols of that ideology to be withdrawn? In those circumstances, of course the Warsaw pact will change.
    Mr. Ashdown: I am certainly not saying that. As the right hon. Gentleman knows perfectly well, those two nations have asked the Warsaw pact troops to withdraw, and they are doing so. I did not say that they should stay. I said that the structure of NATO and—in so far as we could assist the position—that of the Warsaw pact would, in the interim, be best maintained rather than precipitately dismantled.
    Mr. Foulkes: Why?
    Mr. Ashdown: There are three reasons. First, they will provide the means and the mechanism for us to proceed with disarmament; secondly, they will assist as a security backdrop for the political and economic steps that must be taken; and, thirdly, they will provide the framework on which we can erect new structures.
    Mr. Wareing: Will the right hon. Gentleman give way?
    Mr. Ashdown: I hope that the hon. Gentleman will forgive me if I do not. I have been speaking for some time.
    I do not believe that the creation of the new security framework can be taken at as casual a pace as we might wish. Behind that process is the insistent imperative of German reunification. One of the tragedies of the current position is the fact that the European and German clocks are ticking at a different pace and at different times, a difficult situation to which we must, however, react.
    Mr. Gorbachev has told us—he said it again yesterday—that German reunification will arrive, and that there is

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    nothing that we can or should do to stop it. The Soviet Union clearly thinks that reunification is all right, provided that the new Germany is neutral. But a neutral Germany would destroy the cohesion of NATO. All that emphasises the urgency of the conference on security and co-operation in Europe, particularly basket 1. We shall need not only to progress on disarmament, but to begin to build the new European security structure. As a diplomat who was involved in the Helsinki CSCE process, let me make a plea for the voice of Europe to be co-ordinated and clear: it certainly was not on the last occasion.
    I have discussed a number of issues in my speech. I hope that today's debate will be wide enough to encompass both what Britain should do to establish its part in western Europe and how, through western Europe, it can play its part in developments in the East. The new democratic Europe that is now emerging, East and West, presents the key framework within which our nation must build its future.
    Europe provides the litmus test that will identify Britain's political parties as parties of the future or of the past. For Labour and for Tories Europe is the crucial fault line, for both parties are equally infected with notions of post-imperial nationalism; each is impaled on outdated ideas of sovereignty, and each is incapable of rising to the challenge of a new democratic Europe that is now altering the shape of world power before our very eyes.
    Liberal Democrats recognise that our future in Britain is inextricably bound up in the new democratic Europe. We perceive that this is an historic moment for all of us, and we are determined that Britain should be part of the tide that is now sweeping Europe, rather than being left behind in a stagnant backwater. We understand that Europe must be Britain's destiny: that is why I commend the motion to the House.
    4.59 pm
    The Minister of State, Foreign and Commonwealth Office (Mr. Francis Maude): Let me begin by dealing with the point of order raised by the hon. Member for Bradford, South (Mr. Cryer) about the European Community documents which were tagged to the motion for today's debate. I should make it clear that it was an initiative by the European Legislation Scrutiny Committee to which the Social and Liberal Democrats acquiesced and it in no way replaces the need for those documents to be properly debated in the fullness of time. It was not a Government initiative.
    The right hon. Member for Yeovil (Mr. Ashdown), whose speech occupied the past 45 minutes or so, expressed a little surprise that no amendment was put down by the Government or by the official Opposition. It should be no surprise that the Government have no quarrel with the motion and welcome the chance to debate it. It should be no surprise that we welcome recent progress towards liberal democracy in eastern and central Europe and that we endorse the progress towards integration of the European Community because we are deeply involved in shaping that progress. All our actions show that we recognise that our future depends on
    "playing a full and wholehearted role in the development of the new democratic Europe."
    The right hon. Gentleman seems to believe that with fiendish cunning he has devised a motion that will expose
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    all sorts of deep divisions in all sorts of parties. He could just as well have put down a motion saying that the House believes in motherhood and apple pie. The motion is about as challenging and probing as the "doughnut" with which he surrounded himself when he made his speech.
    It is rather disappointing that in debating what are really quite great matters the right hon. Gentleman spent so much of his speech seeking to exploit narrow partisan domestic political issues. Perhaps it is inevitable that when we speak of recent events in eastern Europe we all seek fresher and ever more vivid words. We all strive against the certainty that our rhetoric cannot reach the level of the events that we have watched. After all, we have witnessed the 1989 revolution which was as profound and decisive as those of 1789 and 1848. The revolution has been mostly peaceful but sometimes bloody, driven throughout by the courage and passion of millions of our fellow Europeans who were unbowed by decades of tyranny and whose spirit survived the slow poison of the unconfined power of the state. It is wholly proper that the House of Commons should honour those who have fought for the freedoms that for us are routine. After all, the House was established so that the state should submit itself to the same rule of law that governs our people.
    The epic phase of the revolution is probably now complete. It has been glorious and it has brought forth its heroes, but it was only the beginning. Democracy cannot be created overnight. We are only now beginning to accept the difficulties of running free elections when none have been held for decades; where democracy is only a folk memory—tenaciously held but not easily realised. No one believes that democracy will be entrenched as result of one free election. The world will be looking for the full recognition of human rights protected by the rule of law. The rule of law is also essential for economic freedom to develop precisely the market approach which each of those countries has espoused and there is so much to do. The work has been started but it cannot be completed quickly.
    What is needed in eastern Europe today is no less than the recreation of civil society. Marx predicted the withering away of the state, but Communism sought to achieve the exact opposite—the withering away of society and the total domination of the state. Now eastern Europe has rejected Communism and wants capitalist structures, and the economic success and prosperity of the West has been a beacon. However, a market economy goes hand in hand with genuine democracy. Every day eastern Europe tells us that we cannot have one without the other and that political reform needs to be sustained by real economic change.
    In the Soviet Union perestroika has demanded political change. Fundamental to that will be giving free rein to the laws of supply and demand so that prices are set not by bureaucrats but by customers paying for goods and services that can be supplied to them. Enabling that to happen in a modern market economy requires a sophisticated apparatus. A legal framework must give investors the confidence to invest. Businesses need to understand accounts and there must be real banks, operating on commercial, not political, criteria. It may not sound popular, but if they want the rule of law, they have to have lawyers. In East Germany there are only 600. Any western country of equivalent size would have well over 20 times as many.
    Of course, in the old East Germany there was no use for lawyers. The authoritarian state took the decisions, and no

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    lawyer could help the citizen. A whole new generation of skilled people will be needed as part of the essential infrastructure of a free society. But where western societies have professional people serving the citizens, the old tyrannies had the Stasi serving the state. They do not need the Stasi any longer. They need solicitors, accountants and engineers. They need bankers and entrepreneurs with skill and flair. Free societies need their Petticoat lane, as well as their Speakers' corner. But the only markets in eastern Europe so far have been black markets and the gulfs between East and West are huge.
    In West Germany, 7 per cent. of households have two telephones. In East Germany, only 7 per cent have a telephone at all, and those are party lines. To set out the size of the task is not to be depressing or to sound gloomy. The eastern European economies face an awesome task. But if their problems are to be solved, they must first be identified. By identifying the problems, we can judge how to respond.
    Of course it is right that the Community should help, and it has done. Yet all the help that we give, as individual countries and together in the Community, cannot replace the determination to reform from within, and the determination to make those reforms endure. It is no kindness to suggest that our help can be a substitute for the iron determination that those countries will need.
    There can be no reforms without pain, no learning without suffering, no progress without risk. We cannot do more than ease the pain, speed the learning process, hasten the progress and reduce the risk. We cannot do more but we can do that, and we are.
    My right hon. Friend the Prime Minister said when she visited Poland in November 1988 that we would not stand idly by if the Poles embarked on real political and economic reform. Well, they did that; and we have not been idle. The United Kingdom took the lead immediately in marshalling western support for Poland and subsequently for the other emerging democracies.
    First, our own response to the changes has been quick and generous. We were first to provide technical assistance. In June last year we announced the establishment of a know-how fund for Poland. It has now been increased to £50 million. It is designed to provide the skills needed by the Poles to establish new political and economic structures. Other countries have now set up similar funds, but we pioneered the formula.
    Mr. Paul Flynn: Did the Minister see the rather distressing television programme on Channel 4 showing the know-how process in action in which a member of the Conservative party was instructing some aspiring Members of Parliament from Budapest in how to write a manifesto? The lesson was on the lines of copying the Government's 1987 manifesto in which they promised to maintain child benefit and pay it as now. The Conservative party member explained that such a promise could mean anything at all.
    The know-how funds are certainly necessary, but I am rather alarmed at the suggestion that the best thing we can give newly-democratised countries is a plague of lawyers that would be as welcome as the biblical plague of boils. In arranging those know-how funds, should not we teach them the best of our democratic system rather than the sophisticated arts of cheating and lying?
    Mr. Maude: I am sorry that the hon. Gentleman feels that the best contribution he can make to the debate is of that quality.
    We are providing technical advice in banking, accountancy, commercial law and other essential areas. The Poles have sought our help in restructuring their aged industries. They have seen our success in breaking down state monopolies and creating competition through privatisation. While Opposition Members remain obstinately opposed, reformers in the East are embracing British Conservative ideas with enthusiasm and they recognise that that is an area in which we have terrific expertise from which they are keen to profit.
    All that is targeted and practical help with real benefits for the Polish people. Grand gestures alone shorten no queues. We are also training Polish managers, and colliery managers from Poland will be visiting the United Kingdom to study the techniques used by British Coal. We may be able to help in those areas, but we are especially well-placed to help in those areas that are the life-blood of a market-based economic system and we have already committed more than £2 million to those efforts.
    The Poles have also asked us for help in various non-economic areas. We are helping with local government reform, with the training of journalists and broadcasters and we are bringing members of the new generation of Polish politicians to this country for political seminars. I am grateful to those hon. Members who helped the organisers of those seminars to receive the first group of visitors last year. Thanks are due also to the BBC and to the British Council. Thanks to their skill we can help the Poles.
    We have also set up a £25 million know-how fund for Hungary and the first of that money will be spent in April. Last week we announced that the know-how effort will be extended to cover East Germany, Czechoslovakia, Bulgaria and Romania. We have shown the Community the way.
    At a very early stage in the progress, my right hon. Friend the Prime Minister urged the United States, Japan, West Germany, France and our other Community partners to respond equally quickly and generously to those east European countries that were firmly committed to reform. The Community responded magnificently and it has already provided aid, trade and lending assistance to Hungary and Poland and more is promised. We have played a major role in stimulating the many forms of unilateral help which Poland is now receiving.
    Mr. Wareing: It is highly commendable that our Government should provide assistance in eastern Europe. However, I believe that we are miles behind the West Germans with regard to aid and trade assistance. The Minister has referred to the aid that is being offered. Does that come from the existing Overseas Development Administration budget? Are resources being diverted from the Third world or, as should be the case, are we increasing the percentage that we spend on overseas aid, perhaps up to the level it was under the last Labour Government? Are new resources being found to assist the Poles, the Czechs, East Germans and the other peoples in eastern Europe?
    Mr. Maude: I can assure the hon. Gentleman that the money to which I have referred is extra money. It takes nothing from the existing aid budget. The hon. Gentleman referred to our efforts compared with efforts in other

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    countries. This country was very quick and imaginative to find ways to provide immediate practical help for the emerging democracies, and we will continue to do that. The right hon. Member for Yeovil has recognised that.
    Mr. Christopher Gill: Will my hon. Friend give way?
    Mr. Maude: No, I want to make progress if I may because we are already some way into the debate.
    At the Paris summit of the Group of Seven last July, my right hon. Friend the Prime Minister pushed very vigorously the proposal that the European Commission should co-ordinate western assistance to Hungary and Poland. From that grew the Group of 24, the OECD countries, through which a huge amount of assistance is now being provided. That led to a $1 billion Polish stabilisation fund which was crucial to the structural reform of the Polish economy. Ours was the first contribution to that fund and it permitted the fund to come on line when it was needed.
    We have urged that the G24 exercise should be extended so that the same co-ordinated western effort can support Bulgaria, Czechoslovakia, Romania and East Germany. We have looked ahead to how the Community should develop its relations with eastern Europe.
    My right hon. Friend the Secretary of State for Foreign and Commonwealth Affairs has suggested to his ministerial colleagues in the Community the criteria for such an enhanced relationship. First, support should be appropriate to the level of practical and economic reform being put in place in each of those countries.
    Secondly, political reform needs a political response and we should be ready for a full political dialogue with eastern Europe. Those countries should be encouraged to accede to the European convention on human rights. They should be welcomed as full members of the Council of Europe as soon as they qualify. They should develop links with national Parliaments and there could be a particular role for the European Parliament.
    Thirdly, we should be open to a future relationship which neither leads to nor excludes membership of the Community. The Community has taken up the challenge magnificently.
    Comparisons have been made with the Marshall plan. However, it is worth noting that the total aid so far pledged for each person in Poland and Hungary is already roughly that provided by the United States to western Europe under the Marshall plan. We will begin work on the new programme as soon as we practically can.
    That the European Community responded quickly and generously is a measure of its growth and maturity. That the United Kingdom led its response is a measure of our central influence within the Community. Some have said that reform in eastern Europe poses a dilemma for the Community. Should it deepen or broaden itself? We see no such dilemma. It must do both.
    There has already been integration apace. Quite properly, in December the Community set the completion of the single market as its top priority to make European union increasingly a reality for our people.
    Mr. Gorst: In addition to the three criteria which my hon. Friend has already spelt out, should not there be a fourth criterion to take account of the possibility of a
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    breakdown in any of those countries as a result of political or social unrest leading to riots or even civil war? Although no one wants that eventuality, it is not impossible. Will the aid which my hon. Friend has described continue to be pumped into those countries if there is a protracted civil war?
    Mr. Maude: My hon. Friend raises a possibility which we all earnestly pray will not occur. It is possible to envisage circumstances in which that might happen, and if that occurred the donor countries would have to consider their actions. However, we have made it clear that our aid depends on proper political and economic reforms. The aid is not unconditional and it is intended to entrench the reforms. The circumstances which my hon. Friend postulates would be inconsistent with those reforms continuing.
    I was referring to the priority which the Community set unanimously in December in which it subscribed to the completion of the single market. We have seen measures to reduce air fares, to free travel, to increase consumer choice and to reduce costs. Those measures are genuinely intended to create a citizens' Europe to which the right hon. Member for Yeovil referred.
    People increasingly see that our single market is being founded on the rejection of centralism, without bureaucracy or prescription. We are seeing a genuine people's Europe emerging, not a bureaucrat's or politician's Europe. We are seeing a single market which entrenches precisely those virtues of liberal markets that our neighbours in eastern Europe are seeking.
    We are seeing the growth of political co-operation in the Community with no loss of sovereignty, but on an agreement that the 12 nation states should act in unison to make their common voice more powerful than individual voices could ever be. We are seeing the growth of economic and monetary integration to reduce costs, to help business and to take forward the integration of Europe. In all those profoundly important areas, Britain has led and we are showing the way forward.
    I sometimes see headlines claiming, "Britain on the sidelines". However, they come only from people who do not know which way the Community is going. They come from people who do not know the touchline from the try line. If they were looking in the right direction, they would know that we are not on the sidelines—we are ahead and that is where we will stay.
    The single market is following the pattern set jointly by ourselves and by the European Commission. It is being driven forward by our joint determination. Political co-operation was our initiative and we have been determined to see it succeed. In economic and monetary union, no country is more advanced than ours. No country has implemented more of stage I of the Delors report than we have. We are the only country to have put forward our own proposals for further development. Integration is proceeding apace, within the treaty of Rome.
    The Single European Act provides great scope for further integration, involving no further transfer of sovereignty, and encroaching no further on this House's powers. Within our treaty as it stands, deepening of the Community there can be, and there should be. But there must be broadening, too. This is no time for introspection—no time to turn inward.
    Our neighbours and our allies clamour to draw closer to the Community. We must respond to that. There must

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    be an enhanced relationship with the countries of the European Free Trade Association. We want closer links, and faster. We have led the way. The Community must make agreements with each country in eastern Europe, to suit each case, and to reflect the different and changing needs of each.
    On the "Europe beyond the Atlantic" to which the Prime Minister referred in her speech at Bruges, we should go forward with the proposals for the new transatlantic partnership that my right hon. Friend the Foreign Secretary set out last week.
    There are those who urge that the Community should enlarge. That will not happen in the near future, nor does it need to. But, having seen an end to one division of Europe, the Community should not create another.
    I do not think that the Community can insist for ever that Europe will be divided between its present 12 members and the others. If others wish to join and can meet the Community's demanding standards, we should not prevent them.
    As I said at the start of the debate, it is significant that amendments have been tabled neither by Her Majesty's Government nor by Her Majesty's Opposition.
    Mr. Ashdown: The Minister has not yet outlined the Government's policy on monetary union as proposed by the other 11 members. Will he spend a moment on that topic before concluding his speech?
    Mr. Maude: The right hon. Gentleman was not present in November, when we had a full-day debate on economic and monetary union. Had he bothered to turn up and listened to the views of the House of Commons on this matter, he would have realised that, as is so often the case, he and his party are the only ones in step—everyone else in the House of Commons is out of step with him.
    I will tell the right hon. Gentleman precisely our views. We can make huge progress towards economic and monetary union without changing the treaty and without the need for an intergovernmental conference by implementing stage I of the Delors report, on which we are moving forward faster than any other country in Europe. We have precisely set out our proposals for moving beyond that in the Treasury paper. I assume that the right hon. Gentleman has seen it and has understood it, although that is by no means certain. He will have seen that we have set out how progress can be made, not more slowly but more quickly than under the Delors report, and with no further encroachment on the powers of the House, towards which the right hon. Gentleman takes a remarkably cavalier view.
    If I criticise the motion, it is only that it urges the Government to do what they are already doing and have been doing for some time. I believe that the present success of the European Community owes a great deal to our leadership, to our determination to secure proper reforms, and to our readiness to look out as well as in.
    We have helped to fashion a Community that has been a beacon to eastern Europe. We are now leading its response to the changes that have swept through eastern Europe. The Europe that we aim at is a Europe of nation, without nationalism—a Europe of diversity without division. We shall achieve it.
    5.23 pm
    Mr. George Foulkes: The Labour party greatly welcomes the opportunity for the House of debate the European Community and eastern Europe. Apparently, it is the one subject on which the hon. Member for Rochdale (Sir C. Smith) and his leader agree. I must apologise to the hon. Member for Rochdale if I have missed that uniqueness.
    Although the House discussed an almost identical topic just over a month ago, events in eastern Europe have moved and are moving so rapidly that much of what was said then has already been overtaken by those events.
    I shall deal briefly with only two principal matters. As the Minister rightly said—for once I can agree with him—the membership of the exchange rate mechanism, the powers of the European Parliament, economic and monetary union, the social charter and many of the matters that were raised by the right hon. Member for Yeovil (Mr. Ashdown) have been discussed many times. The Government and the Opposition have clearly outlined their policies, but, unfortunately, the right hon. Member for Yeovil was not able to grace the House with his presence.
    I shall deal with the three interrelated matters of the transition from Communism to democracy—the deepening and widening of the European Community, and German unity—and then I shall say a few words about defence implications.
    Opposition Members unreservedly welcome the end of Communism, and the overthrow of tyrannies in eastern Europe, and the courage of people who have stood up against tyranny—particularly young people, students, intellectuals and others. Therefore, it is a travesty for some mischievous Conservative Members to try to equate Communism with democratic Socialism. Socialism and liberty are inseparable. It is an insult to democratic Socialists the world over who have fought and died for freedom and democracy to imply otherwise.
    Mr. Ray Whitney: Will the hon. Gentleman define Socialism as he understands it, and explain where Socialism and liberty have survived jointly?
    Mr. Foulkes: I said that I would be brief. It would lake much longer to do what the hon. Gentleman asks. However, I will see him afterwards—he and I are good friends—and I shall go through the examples.
    The people of eastern Europe are certainly rejecting Communism, but, as the right hon. Member for Yeovil said—rightly, on this occasion—they are equally certainly not opting for Thatcherism. They are not opting for an unrestrained market. Instead, they are opting for a mixed economy, as J. K. Galbraith said in an excellent address at my old university at Edinburgh only last week. This spring we will see a welcome procession of democratic elections from March until June as democracy blossoms in eastern Europe. Opposition Members unreservedly welcome that.
    However, the transformation from Communism to democracy is not easy. Elections cannot be delayed for too long, because instability during the hiatus between the end of Communism and the elections could become uncontrollable. Equally, we accept that time is needed for new parties to be formed and to organise. There is a dilemma facing people in each country in eastern Europe.
    Mr. David Winnick: Does my hon. Friend agree that there is no need for Labour Members to be on the defensive? We fought against Stalinist tyrannies. For example, last year we went to the East German and Czech embassies, protesting at arrest and detention. From the very beginning of the Labour party, we have been opposed to every form of dictatorship or totalitarian rule. Is it not the case that Tory Members have often defended dictatorships—for example, Hitler and Mussolini before the war and the Greek colonels since, not to mention what is happening in South Africa? It is they who should be on the defensive when it comes to democracy, certainly not ourselves.
    Mr. Foulkes: My hon. Friend is correct. We are also continuing to oppose tyranny in China, where it appears to be business as usual for Conservative Members. However, Opposition Members still recall the young student who stood up against the tank and fought for democracy. We do not erase that picture from our minds too quickly. I am not apologising in any way.
    As the transition from Communism to democracy takes place, eastern European countries will need our help. Opposition Members welcome the know-how funds, and we are playing our part in them. The Secretary of State recently announced their development and expansion to other countries. However, the pace of events in eastern Europe is overtaking the capacity of the know-how funds to offer help. We urge the Government to move their efforts up several gears and several levels.
    Mr. Maude: I remind the hon. Gentleman of what I said. We have just extended our know-how effort to embrace all the countries of eastern Europe without a limit on funds.
    Mr. Foulkes: I said that we recognise the extension of the funds. I shall come to that in a moment and give some explanations.
    My right hon. Friend the Member for Manchester, Gorton (Mr. Kaufman) has called for a new Marshall plan for eastern Europe. Such an initiative was endorsed by professor Susan Strange in two recent articles in the International Herald Tribune. She said that it should involve a central fund for credit, trade assistance and other help of that nature. Major economic assistance from Britain and other western European countries should be co-ordinated. Such assistance should be determined largely by the newly elected Governments in eastern Europe. I hope that, in his reply, the Minister will tell us that he is prepared to move beyond the important technical assistance of the know-how funds to much wider, broader and fundamental assistance.
    The new Governments in eastern Europe should be allowed to develop their own democratic, economic and social systems and to protect and develop their countries' cultural identities. It is vital to avoid new forms of dependency, such as we have seen, develop regrettably in the Third world. As my hon. Friend the Member for Liverpool, West Derby (Mr. Wareing) rightly said, it is vital that our help to eastern Europe should not be at the expense of our assistance to the Third world. That assistance will be even more important with the development of the economies of eastern Europe. Because I have known the Government over the past 10 years, I fear that, despite their assurances that new money will be made available, the planned increases in assistance to
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    poorer countries may be forgone and assistance to other areas may be squeezed. I urge the Minister to assure us that that will not be the case. I warn him that we shall watch it carefully.
    Britain has much to offer eastern Europe because of our experience of pluralist democracy, free access to the media, autonomous trade unions and a plethora of independent non-governmental bodies which are all still relatively vigorous in spite of—in some cases, because of—the ravages of the past 10 years. The message from both Conservative and Opposition Members should be that we are eager and willing to offer many types of assistance to the emerging democracies.
    We also support the initiatives of the European Community as an institution to assist eastern Europe. We have watched with interest moves towards closer political and economic links between east and west European countries. East Germany is a special case, and I shall refer to it later, but elsewhere in eastern Europe democracy will need to be established and consolidated and economies developed and stabilised before integration into the Community can be contemplated. Clearly, other forms of association are both possible and desirable.
    In Germany, the events of the past few weeks have been the most dramatic of all. Parties and unions in both East and West Germany are already joining in all-German federations. Some 3,000 workers who live in east Berlin have taken part-time jobs in the West. They earn more than they would by working full time at home. Last Saturday, at an amazing event, the great West German, indeed the world Socialist leader, Willy Brandt, addressed a tumultuous throng of 100,000 East Germans. It has become clear that the boundary between East and West Germany no longer exists. German unity is inevitable and we must work with that inevitability. Britain can take a lead in responding positively to that.
    As a democratic Socialist, I welcome the leading role that the SPD is playing in establishing a new Germany. It is important that the leadership of Germany show its acceptance of the 1937 borders with Poland and the Soviet Union in order to reassure the leaders and the peoples of those two countries.
    Mr. Ian Taylor: The hon. Gentleman endorses the policies of the SPD. Will he comment on some of the implications of the victory of Oskar Lafontaine in the Saarland at the weekend? He appeared to win through an opportunist attempt to stir up feeling against East Germans coming into the country.
    Mr. Foulkes: I endorse the SPD initiative and the new moves towards East Germany. I refer specifically to Willy Brandt and I make no apology for doing so.
    I wish to move on rapidly to the defence implications of events in eastern Europe. I fear that the Government's response to developments in the Soviet Union and eastern Europe is both misguided and misjudged. The Soviet Union has already announced in 1988 that it will reduce its army by 500,000 troops. A similar number in Warsaw pact countries have an uncertain future. The conventional forces in Europe treaty will eliminate two thirds of Warsaw pact tanks and thousands of aircraft.
    We all know that the Soviet Union is preoccupied with internal divisions and urgently needs resources to be transferred from expenditure on arms to boost its economy. Increasingly, the Soviet Union is becoming a

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    most unlikely aggressor. Yet the unbelievable response of the British Government, announced in the expenditure review yesterday, is to add £1 billion to our defence expenditure next year, with real increases in spending over the next three years. The British Government are increasing arms expenditure, unlike Belgium, the Netherlands and even the United States of America.
    The Labour party believes that there is an urgent need for a wide-ranging defence review to cut expenditure and take account of the greatly diminished threat. Perhaps the Minister could confirm the report in The Times today that the Prime Minister is to head a Cabinet meeting to look into new defence strategy. If that is the case, we welcome it in principle but we have some doubts about the attitude of the person who will head the committee.
    The right hon. Member for Yeovil spoke about continuing the existing pacts. Beyond that, the Labour party believes that the new architecture of Europe will need an entirely new system of security. We welcome the initiatives of Mr. Gorbachev and Mr. Mitterrand to consider a pan-European security system involving all 35 countries in a new Helsinki process. Although we welcome the Foreign Secretary's rhetoric about turning tanks into tractors, we cannot see evidence of it in Government expenditure plans or the Prime Minister's statements.
    We urge the Government to go even further than the Foreign Secretary's rhetoric and turn missiles into machines. It is grotesque and unacceptable while revolutions are taking place throughout Europe for the Prime Minister to press ahead with modernising short-range nuclear weapons. At whom are they targeted—Vaclav Havel, Lech Walesa? Perhaps if the hon. Member for Davyhulme (Mr. Churchill) catches your eye, Mr. Speaker, he will tell us. He is one of the remaining cold warriors in Europe.
    The Prime Minister buries her head in the sand. That not only wastes resources and maintains tension but delays the forward planning necessary in the arms industry to diversify in order to protect and maintain employment in more socially useful production.
    Finally, unless our present Government stop trying to make petty party political capital out of the monumental events in eastern Europe, broaden their vision and end the suspicion that isolates them as Europe's sole remaining cold warrior, Britain will have failed to play the positive part in these monumental developments in Europe which our background and history should determine that we play.
    5.39 pm
    Mr. John Biffen: The right hon. Member for Yeovil (Mr. Ashdown) is to be congratulated on tabling the motion, topical as it is in relation to the momentous events that are now revealing themselves throughout Europe. I suppose that he is to be admired for doing so with arguments which, although not entirely acceptable to me, have the deferential support of his hon. Friend the Member for Rochdale (Sir C. Smith), because for any Liberal leader to secure that characteristic deserves memory. The right hon. Gentleman said that he thought that it was time for taking a view and a vision of Europe.
    I apologise for the fact that I shall not follow some of the more detailed argument of the hon. Member for Carrick, Cumnock and Doon Valley (Mr. Foulkes). Instead, I shall put to the House one or two general
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    propositions that are properly the property of Back-Bench contributions to the debate, liberated as we are from the more cautious considerations of the Foreign Office or its shadows.
    I should like to reflect on the visionary comments of a generation ago, when the present European Community was being established, when it was much in the mind of Jean Monnet some time after the war, before the Messina treaty and the Rome arrangements were undertaken. He said:
    "In my view Western Europe is a vacuum, on either side of which are two great dynamic forces of Communism and American Capitalism."
    From that analysis a whole concept has developed of a continental state that comprises western Europe with a high degree of economic and political integration to match the existing defence arrangements that had been essayed in the North Atlantic Treaty Organisation. I do not make this comment in any sense of hostility, but whatever the virtue and validity of that analysis at the time of its making, it reveals nothing of the Europe that we now see. It reveals nothing of the Europe that preoccupies this debate and the debate outside the House and nothing of the kind of institutions that are more appropriate for what is now emerging.
    Therefore, I should like to share with the House my own observations of the two great characteristics that I think will cast their shadow—or their inspiration—over European debates in the immediate years ahead.
    Mr. Robert Maclennan: Does the right hon. Gentleman agree that the fact that the Europe of today bears no resemblance to that described by Monnet is very much due to the implementation of Monnet's vision of the structures of Europe that should take the place of that vacuum?
    Mr. Biffen: I am not trying to be clever, but the answer is yes and no. I have a qualified agreement with the Monnet analysis and a qualified acceptance of the present characteristics of western Europe as derived from the treaty of Rome and the changes that it secured. However, that is only a partial answer. So many other factors have operated outside Europe that have had inevitable hammer-blow consequences on the way in which we have developed that any answer given to that question must be much more than a mere couple of sentences, as the hon. Gentleman must know.
    I now turn to the two characteristics that I think will cast a shadow. The first is the reunification of Germany. Most hon. Members will accept that that reunification has been impending. There may have been arguments about the timing and about the modalities, but most hon. Members are past believing that two distinctive Germanys, operating to different economic, social and political judgments, are in prospect for the next decade. If we accept that German reunification is to be a reality of the new Europe, I hope that we shall do so with a full heart and not grudgingly.
    In my judgment, the behaviour of the German Federal Republic since the second war has been wholly exemplary. The fact that it has not sought to exercise a political authority in any sense commensurate with its economic clout, but has preferred to operate in partnership with France, should not deny us the belief that German politics operates with great maturity. They need no patronising comments from people in this country or elsewhere.

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    I have not been a particular Germanophile. My right hon. Friend the Member for Castle Point (Sir B. Braine), who was in his place a moment ago, has a great record of association with German parliamentarians, so I am happy to place on record the fact that I am making these comments in his spiritual presence.
    One can always try to unravel history to the advantage of one country or another, but I believe that the decision after the first war in the Versailles treaty provision 231 to identify German guilt for the first war is exactly the kind of insensitivity that haunts those who come after the authors of such attitudes.
    I observe a new, dynamic and cohesive force—cohesive in its own internal disciplines—now existing in central Europe, with new opportunities to direct its energies. "Drang nach Osten" is a phrase that will come back to us as we see German economic penetration to the East, German aid to the East and the recreation of traditional German ambitions towards the East.
    As I make my second observation in the presence of the hon. Member for Foyle (Mr. Hume), I confess that I had already formed my argument before reading Conor Cruise O'Brien's article in The Times. I make that point in self-defence. Although German reunification may be generally accepted, there are still great areas of dubiety, and I entertain great pessimism for the future of Mr. Gorbachev and the Soviet Union as currently constructed. I believe that the nationalism that has been released in the Warsaw pact countries will return to be effective in Estonia, Latvia, Lithuania, Moldavia, the Transcaucasian territories and possibly in the Ukraine. It is a formidable list, but there is plenty of circumstantial evidence for believing that those pressures are now at work in the Soviet Union.
    When one reflects that 18 per cent. of the Soviet population is Islamic and that 40 per cent. of the current Soviet conscript draft comes from the Islamic republics, one realises the lack of internal cohesion in the Soviet Union today. One possible reaction is that Russian nationalism will arise in response to the Soviet Union's losses in the minority, in the Islamic and in the non-Russian republics. Some evidence of the nationalist movement Pamyat can already be observed. I do not want to comment on that because I can do so only tentatively, but we would be extremely foolish to suppose that the Soviet Union, as currently constructed, can enjoy an element of stability in the new Europe. We have not seen the end of that story and no one can be quite sure where it will conclude.
    That takes me to the business of how the European Community and its institutions can adapt to meet that challenge. If I can plagiarise Jean Monnet, we need structures that can contain both a reunified Germany and possibly a humiliated, nationalistic Russia, which would be a potential danger on the eastern approaches. Therefore, in trying to secure the widest possible political co-operation, we should look at the institutions that we have today. My hon. Friend the Minister mentioned the Council of Europe and that is a start, but that wider political co-operation has to derive from the Council of Ministers and from the European Community.
    The right hon. Member for Yeovil and the hon. Member for Carrick, Cumnock and Doon Valley spoke of
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    defence. At this stage, not much can be said that is constructive, but I have an instinct that the influence of the United States will gradually diminish in the military councils of NATO. Therefore, we have to think in terms of European collective security, covering the European members of NATO and the Warsaw pact. That challenge will require the most delicate essay in statesmanship. The future of Europe will be more related to collective security and the ability to live to the old political structures—I know not whether before 1914 or 1939—than to maximising economic growth. That is the language of yesterday's Europe, not the challenge of tomorrow's.
    Trade is still the third cornerstone factor in the new Europe. As this debate has been initiated by the SLD, I shall quote the old Liberal adage that if trade cannot cross frontiers, armies will. That is adage enough to secure the efforts of the House to ensure the maximum trade operating throughout Europe, from the Atlantic to the Urals. However, let us be clear about one thing. That is not just the simple trade of the treaty of Rome. We are taking within our ambit countries whose economies are substantially different from those operating within the countries of the existing Community.
    Let me give the House just one example. Both in this country and in western Europe we are increasingly laying major environmental charges upon our industry and commerce. A Bill on that matter is passing through Parliament this very Session. There is no such comparable environmental care in eastern Europe. Much of the industry there operates under the most reprehensible environmental standards. Despite that, we shall expect our industry and commerce to compete where there is no even playing ground. We have to find some way to increase and improve trade across the wider Europe that is now emerging.
    There are no blueprints for these changes. There is no immediate revised treaty of Rome. It will be much more subtle and difficult. Those of my hon. Friends who have been to eastern Europe recently say that the countries of the Warsaw pact in the north are quite different from those in the south. Our whole mentality on east Europe and west Europe had better be replaced by one on north Europe and south Europe when we try to devise ways to cope with these changes. One modest, often neglected, mechanism that can reconcile such varying economies is flexibility in exchange rates. That is why what often seems to be the settled argument of last month or last year comes back to haunt us with new challenges and opportunities. At least the House is privileged to live in a time of challenge and opportunity.
    5.53 pm
    Dr. David Owen: There is little doubt that historians will compare 1989 with 1848, and that it will be seen as the springtime of nations. We are seeing the revival of nationhood, and there is nothing wrong with that. I agree with the right hon. Member for Shropshire, North (Mr. Biffen) that we must welcome the unification of Germany and not be grudging about that. We are seeing the flourishing of nations. How we handle the emergence of a unified Germany is the most significant issue. How we handle it over the next few weeks and months will be particularly crucial. I have no doubt that this will change the nature of Europe.

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    I believe that a united Germany will be a member of the European Community. After all, since 1956 the protocol annexed to the treaty of Rome has made it clear that the DDR and the FRG were, for all trading purposes, to be seen as one nation. I believe that unification will take place far faster than any of us had imagined. It is right that that should happen, because that commitment to nationhood, and the wealth in the Federal Republic, can bind the two into a unified country far quicker than the pace of any of the changes that will take place in Czechoslovakia, Hungary and Poland.
    It is in our interests that a market economy and a true democracy are established in one of the countries that were hitherto Soviet Communist satellites as quickly as possible. That can be done in three years, and unification will effectively take place this year, although the constitution requirements may follow later. If that can be done, it will make it easier for Czechoslovakia, Hungary and even Poland to come into the European Community within the decade.
    I do not know whether they will come into the Community. Much will depend on their determination to move to a market economy and the speed with which they can establish a real and genuine democracy. I agree with the Minister that democracy takes time to bed in. Such changes do not develop within a matter of months, and there are already worrying signs in Romania of the spectre of Fascism returning. We cannot be sure that any of these countries will find it easy to move—Poland, for example will find it hard to adjust to the market economy and will need all the help that it can get—but the fulcrum of these changes will be a unified Germany.
    That unified Germany will be a member of the European Community, but how it sees its defence relationships is still an open question. It needs to be made clear to Mr. Gorbachev that we will not accept any country dictating the pattern of defence alliances. That is a matter for self-determination by a unified Germany. I hope that a unified Germany will remain a member of NATO, but I note that Hans-Dietrich Genscher said the other day that he thought that it would be impossible for a unified Germany to be a member of NATO. If it is not, I hope that it will be a signatory to the Brussels treaty, a member of the Western European Union and committed under that treaty to come to the defence of any of its fellow signatories.
    I think that many Germans will be reluctant to give up the relationship with the United States that they know has been a central factor in their prosperity and security. We in NATO must look seriously at whether it is reasonable to ask a united Germany to have on its soil United States forces. After all, although we do not wish to have the Soviet Union dictating the pattern of German unification, and certainly not imposing neutrality, we have to take account of Soviet concerns.
    If, as I believe, Soviet troops are withdrawn quickly from Czechoslovakia and Hungary, it is certainly in our interests that they come out of eastern Germany. It would be foolish to have a unified Germany with Soviet troops in the old part of east Germany and United States troops in the old part of west Germany.
    It is open to argument whether it is right to provoke the Soviet Union by even trying to have United States troops in a unified Germany. Would it not be better for NATO, of its own volition—not as a result of an agreement with the Soviet Union or involving the Warsaw pact—to say
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    that a unified Germany would not have US forces stationed on its soil, and thereby no nuclear forces either from the United States?
    This does not mean, however, that the United States would pull out of a defence commitment to Europe. It is essential that we bridge the Atlantic. It is strongly in the interests of European development that the United States link its forces into Europe. American aircraft could still be deployed in the United Kingdom and in Italy. United States ships and submarines would still come into European ports and exercise in the western Atlantic and the Mediterranean. With smaller forces, Canada should also remain.
    NATO will stay; the only question is whether Germany will be a member of it. I think and hope that it will be. But we must not offer the provocation of keeping US forces on the soil of a united Germany, given that the Soviet Union is withdrawing from all the satellite nations. A unified Germany without United States troops can still have the troops of Holland, Belgium and the United Kingdom stationed on its soil—[HON. MEMBERS: "Why?"] That might be prudent, because it would allow the German army to be smaller.
    One aspect that worries people about a unified Germany is the idea of its having a large force. Were the forces of East and West Germany to link, a massive army would be formed. Many Germans would prefer a more modest army, relying, through the WEU, on links with other countries such as Belgium, Holland and Britain. That makes sense, and it would link a unified Germany to the deterrent strategy of the WEU, which is nuclear as well as conventional. That would mean that the United Kingdom and France would retain their nuclear weapons and be able to exercise their nuclear-carrying aircraft at the invitation of Germany, should they wish to do so They could even station them permanently in Germany, but there would be no United States forces.
    I hope that Germany will choose membership of NATO as well as of the European Community, although I would settle for membership of the WEU. I would be extremely concerned if a united Germany chose to be neutral. How we handle that question in the coming weeks and months is of fundamental importance. We must not be grudging in our political acceptance of the fact that a unified Germany will exercise its power responsibly. We must not be jealous of its economic strength, which will be needed in East Germany and which will be generously applied to other countries.
    The European Community and the Government have already demonstrated a great deal of imagination and foresight in the way in which they have tried to deepen the commitment to a market economy and to pluralist democracy in the countries of eastern Europe, but much more will have to be done.
    It is time we told Mr. Gorbachev that a European common home is alive and well and living in the European Community. If we want to build on the common home, we should enlarge the Community—of that there is no doubt—but the pace of enlargement remains open to question. We enlarged the Community from nine to 12 countries with political factors very much in mind. The economic development of Spain, Portugal and Greece had not progressed as far as we should have liked, but because we wanted to buttress the new democracies of those countries,

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    which were emerging from Fascism, we took a political risk and enlarged the Community more quickly than we might otherwise have done.
    We may find towards the end of the 1990s that the economies of Hungary, Czechoslovakia and Poland have not made quite as rapid progress as we should like, but we shall want to buttress their democracies by accepting them into the Community. There is no doubt that, if Austria wants to join after 1992, it will; likewise Norway.
    None of us quite knows what is happening inside the USSR. I am afraid that I share the pessimism of the right hon. Member for Shropshire, North. The great danger in this country, in the media and elsewhere has been that of giving Gorbachev rave reviews even though he is in serious trouble in his own country. Gorbachev has not delivered the market economy—he has come nowhere near doing so. I am somewhat pessimistic about anyone's capacity to turn the Russian economy into a market economy. Nor has Gorbachev moved in any significant way towards democracy; but the nationhood of which I spoke earlier is certainly flowering in the USSR—the Union of Soviet Socialist Republics, a phrase which Leszek Kolakowsky said contained a lie in every word. The Soviet Union has always contained nations forced into it and resenting that fact.
    What shall we do about Latvia, Estonia and Lithuania? It will be very hard for any Soviet leader to allow those countries to become independent—two months ago, I should have said that they would never be allowed independence. Now, I am beginning to wonder. The Russian empire is in such serious decline that it arguably may not be able to hold republics such as Moldavia, Georgia and Armenia. They may all seek independence. We may be witnessing not just the decline of the Soviet empire but the dismemberment of the USSR.
    What does this mean for the enlargement of the European Community? Instead of a Community of 24 or more nations, a wiser grouping might be a Community of about 16 nations, including Austria, Czechoslovakia, Hungary, Poland and East Germany—because of unification. There might also be a Baltic community, comprising Estonia, Latvia, Lithuania, Finland, Sweden and possibly Norway. That grouping might maintain a close relationship with the European Community. A Black sea community might also develop, comprising Romania, Moldavia, Bulgaria, Turkey, and Armenia.
    I have never believed that Turkey is a European country. I know that associate membership of the EC is meant to carry with it a commitment to full membership, but we should not see Turkey as an early candidate for enlarging the Community. If we outline how we see the enlargement of the European Community, we can lay claim to its being the European common home. We can have trading and economic relations with the Soviet Union, which might join us in the Council of Europe, a good forum in which to come together. However, the pace of development should be set by the democratic nations—by us.
    I urge the House not to get into the habit of thinking that these decisions should be taken in the framework of the conference on security and co-operation in Europe; or to believe that we have a vested interest in retaining the Warsaw pact, which is loathed by countries such as
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    Hungary, Poland and Czechoslovakia. When they have attained their freedom, who are we to tell them to keep that organisation?
    We must be self-confident enough not to be exclusive, but to open out our democracy all the time to a wider Europe. We must do so of our own volition and strength. There will be greater integration, but the European Community will respect nationhood. I hope that the federalists will stop seeking the end of nationhood and cease their drive towards a Community that tries to stifle the most basic political factor in our democratic development—the sense of belonging to a nation.
    This is not the same as nationalism. Of course there are institutions in the EC that override nationhood: there is a pooling of sovereignty. We know how much we can poll at various times while retaining our nationhood. NATO had an integrated command structure, yet we retained our nationhood. We shall move towards greater European economic and monetary union. But we shall want to retain nationhood—and there is nothing wrong with that.
    I have been a committed supporter of the United Kingdom's membership of the European Community since the first public political speech I ever made—in 1962. I have never been a federalist, and I resent the mood in Britain that, somehow, if one is not a federalist, one is not a European. I have arguments and differences with the Government about some of their attitudes to the European Community, but I will not be told that I am a bad European because I believe that the United Kingdom can retain its identity within a European Community.
    Retaining identity will not result in a weaker Europe. We will not get a larger Europe by spurning nationhood, nor will we get a cohesive Europe if we hold on to the outdated views about national decision making. It will evolve. The evolution of the European Community is the most exciting thing that has happened. As it has been debated in this House, all of us have changed. I do not believe that 20 years ago the right hon. Member for Shropshire, North could have made the speech that he made today, and I doubt that 20 years ago I could have made the speech that I am making now. We have all adapted and changed.
    In the European Community, we are building a unique structure. Forcing it into a mould marked "United States" would be ludicrous. It is utterly ludicrous to believe that, somehow, the European Community states will be like California, Montana and Oregon. The European Community that we are developing is unique, basic—[AN HON. MEMBER: "Bogus."]— I hear someone say, "Bogus." I read in the New Statesman the other day an exact simile from Professor David Marquand, who likened the European Community development to California, Oregon and Montana. The fact of the matter is that the European Community that we are building will not be matched by any other institution in the world, because Europe has an identity of its own. It is the retention of that identity that will embrace central Europe, that will go wider than the Community of the 12. It is that which we should build—and build on the basis of a united Germany.
    6.12 pm
    Mr. Churchill: It is a pleasure to follow the right hon. Member for Plymouth, Devonport (Dr. Owen). I certainly join him in his call to the NATO Allies in Europe—including a united Germany when it comes

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    into being, which, like him, I suspect will be sooner rather than later—to retain the commitment to the concept of collective security. It was the absence of that commitment in the 1930s that led this continent directly towards disaster. Further, I join the right hon. Member in his support for the concept of the United Kingdom and the other nations of Europe retaining their national identity within the scope of the European Community.
    Everybody under the age of 50 has lived his entire life under the reality or the threat of world war. Suddenly the scene has been transformed out of all recognition. Without question, the changes that are taking place in the Soviet Union and the revolution that has taken place in eastern Europe in recent months are the most positive and encouraging developments of my lifetime. Never have the prospects for peace been brighter than they are today. For millions of our fellow Europeans a 50-year nightmare, at the hands of the Nazis and then of the Red Army and its police-state puppets is drawing to a close. For the first time, these betrayed and battered people have a prospect of securing control of their own destiny through the establishment of democratic governments and the withdrawal of the invader from their soil.
    In this regard, the leader of the Liberal Democrats, most astonishingly, made it clear that it is his belief—I am not sure that it is a belief shared by his colleagues—that the Soviet occupying forces and the tanks of the Red Army should remain in Hungary, Czechoslovakia and Poland. Since the day Gladstone gave the order for the bombardment of Alexandria, no more illiberal statement has been uttered by one who claims to be a liberal politician.
    Mr. Ashdown: I can only assume that the hon. Gentleman was not listening. This calumny was put forward also by the right hon. Member for Plymouth, Devonport, (Dr. Owen), and the hon. Gentleman knows that I quite specifically denied it. That is not my intention, nor were those my words. It is perfectly clear that those nations—Hungary, Czechoslovakia and others—who want the troops of the USSR to be removed should be able to require their removal. That is what should happen. What I said was that in the interim period, until we believe that new European security agreements which would accommodate, for instance, the matter of the reunification of Germany are possible, the two structures currently in existence—NATO and the Warsaw pact—would be best kept in place. That does not mean that there would be Warsaw pact troops in Hungary, any more than it means that the preservation of NATO—and the right hon. Member for Devonport said that it was not so—necessarily requires the retention of United States troops in Germany.
    Mr. Churchill: I am delighted to have the right hon. Gentleman's clarification on that point. I think that few hon. Members followed him in his suggestion that it was desirable that the Warsaw pact should be maintained. That is what he said.
    The implications of these developments are far-reaching for the future of NATO, which will have to rethink both its strategy and its deployment, and for the future of the two Germanys, where reunification is inevitable. I regard reunification as wholly desirable, provided—and it is an important proviso—that it is firmly based on democratic principles. Of course, the very
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    prospect of German reunification will send shivers down the spines of an older generation in this country and elsewhere. However, as my right hon. Friend the Member for Shropshire, North (Mr. Biffen) said in his excellent contribution, the fact is that West Germany—the Federal Republic—has proved its democratic credentials, and there is no doubt that it could steer a reunified Germany on to the path of democratic development.
    Of course, the implications of this revolution for the European Community are also profound. We must see that the horizons of Europe and of the Community are widened to include the nations of eastern and central Europe. We must welcome those nations—we do welcome them—with open arms as partners in the building of this free and democratic Europe, provided that it is their wish to join in that adventure. Those people, like Mr. Delors, who favour a European unity based on centralism will have to revise their views, as the people of eastern Europe are most unlikely to want to be involved in anything that smacks of central control from distant places. We must build a structure of European unity based on respect for the national sovereignty of member states as expressed through their national Parliaments. In that respect, I echo what the right hon. Member for Devonport said. That is the way forward in building a European Community from the Atlantic to the Urals.
    I should like to address the immediate needs of the peoples of eastern Europe, especially in three particulars that stand out. First, millions of our fellow Europeans are literally starving and in urgent need of food aid on a far larger scale than that so far undertaken by the European Community. Secondly, the economies of many east European states are on their beam ends. Even at sacrifice to ourselves, we must extend large scale practical assistance on a Community-wide basis. Free enterprise must play a leading part in the regeneration of industry and commerce in eastern Europe.
    Thirdly, Britain and the House have a special part to play in helping the nations of eastern Europe to build democratic institutions. Those nations are at a loss to know which way to turn in that respect, and if we fail to help them there is a real danger that anarchy or even Fascism will fill the void created by the failure and collapse of Marxist Socialism.
    The House should call upon the Government and the European Community to redouble the laudable efforts that are already being made, because a special responsibility falls on us as Europeans more than on anyone else in the world, including the people of the United States, to rebuild the shattered nations of Europe ,on democratic foundations and to welcome them as equal members within the European Community.
    Let us recognise that, while we are living in a time of unprecedented hope for the future, the two super-powers are going through a period of the most intense instability. That could easily make the world an even more dangerous place than it was during the period from which we have so recently emerged—the cold war. The hon. Member for Carrick, Cumnock and Doon Valley (Mr. Foulkes) would do well to recall that, in spite of the cuts in the Soviet defence budget to which he referred, the Soviet Union is today still spending as a proportion of its resources three times more on armaments and defence than the United Kingdom, and twice as much as the United States. It would be folly at this juncture for Britain and its NATO Allies to join in any mad rush to abandon our defences.
    6.22 pm
    Ms. Joyce Quin: I am grateful for this opportunity to participate in the debate because it raises issues that are important not just for us or for Europe, but for the world. Like all hon. Members, I wholeheartedly welcome the emergence of democracy throughout eastern Europe and I was astonished and exhilarated by the pace of change.
    In moving the motion, the right hon. Member for Yeovil (Mr. Ashdown) stressed liberal democracy and seemed to claim some special affinity between his party and the emerging democracies in eastern Europe. At the Conservative party conference the Prime Minister seemed to claim something similar, that the new freedom in eastern Europe had been inspired by events in Britain, as if somehow it was to be equated with bus deregulation.
    Many of the emerging movements in eastern Europe have strong links with the Democratic Socialist elements in western Europe and indeed have been linked to the Socialist International. There are many good relationships in that context and I hope that they will be built upon in future. Perhaps, however, it is presumptuous and misleading for any one of us to claim a monopoly of friends in eastern Europe. If democracy is to mean anything at all, it will mean a variety of political movements emerging and no one strand outdoing all the rest put together.
    The main thrust of my speech will be about the question of the new economic relationship between western and eastern Europe. Eastern Europe, if we include the USSR, has a population of 420 million. If that market becomes more open, and certainly, in the long term, if the people there are to become more prosperous as we all hope, the consequences for world trade will be far-reaching. What will be the prospects for British industry and the British economy in that new economic situation?
    I fully recognise the economic difficulties in the countries of eastern Europe. When I talk about opportunities for British industry, I well understand the difficulties of eastern European countries in finding cash for expensive imports. That is why opportunities for British industry should be grasped within the co-operative framework of aid and trade about which many hon. Members, I am glad to note, have spoken. A Marshall aid type operation has been referred to. I am aware of the PHARE programme launched by the group of 24 which will assist economic restructuring in Poland and Hungary. I am delighted to know that that programme is being extended to the other countries of eastern Europe.
    Quite rightly, one of the issues raised several times in the debate is the need for eastern Europe to receive help on the environment. I wish that the Minister had given us a few more details, but I am glad to know that co-operative action to try to repair environmental damage is one of the priorities that the group of 24 is addressing. The environment is certainly an important priority area.
    The Communist regimes that have governed eastern Europe have been among the last environment-friendly regimes that the world has ever seen. I am sure that we all read with great concern the accounts in the press about the huge extent of environment damage in eastern Europe. Apparently 12 million people in Poland live in what is referred to as ecological "emergency" areas. It is reported that in Czechoslovakia 70 per cent. of rivers are polluted by mining wastes, nitrates, liquid manure and oil and that
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    75 per cent. of toxic wastes in that country is dangerously stored. It is also reported that 50 per cent. of forests are dying or damaged.
    Recently I read an article in the press which referred to the black snows of Transylvania. A joke was that in one of the towns in the region a white car that entered at one end of the town emerged as a black car at the other. Horrific accounts such as these show the extent of the environmental problems facing eastern Europe. A massive effort is needed.
    Mr. David Alton: I am happy to endorse what the hon. Lady has said. Is she aware of Mr. Gorbachev's comments two weeks ago when he suggested the establishment of a green cross that could be used in parts of eastern Europe such as the Ukraine where 300 villages have been evacuated in three separate regions as a result of the continuing effects of Chernobyl? An international green cross could be established to pool common European resources so that we could fight some of the environmental disasters that are occurring.
    Ms. Quin: That is an interesting and important suggestion to which the countries of western Europe and the international community should give serious attention.
    A massive effort is needed to improve the environment in eastern Europe and that effort is certainly beyond the present financial capacity of the countries concerned. The West must help with environmentally friendly technology and equipment. I should like to see Britain in the forefront of that movement, but, despite the brave words of the Minister, we are a long way behind many other countries in that respect.
    When we look at the various joint ventures that have been agreed between western industry and industry in eastern Europe we see that the West Germans, the Scandinavians, the Americans and the Japanese are all very active. Recent accounts certainly bear that out. Our trade balance with eastern Europe is worrying. We are in deficit with the USSR, East Germany, Poland, Czechoslovakia and even Romania. There has been dramatic deterioration during the Government's term of office, but especially during the past five years.
    I read today that Tokyo was expanding its branch offices throughout eastern Europe, so we have to make up a considerable amount of mileage and the Government need to do a great deal more. That is not only my view; it was the view expressed a year ago in the excellent report of the Select Committee on Trade and Industry on trade between Britain and eastern Europe. We cannot afford to sit back, although we should adopt the aid and trade co-operative approach.
    I wish to quote from the Kreisky report, which was published last year and which referred to an economic programme for the whole of Europe. It stated:
    "Environmental protection will be as important in the next decade"—
    that is, this decade—
    "as national defence was in the previous decade …
    It also stated:
    "Environmental technologies will be more important than Star Wars technologies."
    Those are the challenges of the new Europe, and that is where Britain should be playing its full part.
    6.31 pm
    Sir Bernard Braine: I warmly endorse the speech of the hon. Member for Gateshead, East (Ms. Quin) and also other splendid speeches made during this short debate.
    This is an exciting time to be alive in Europe. It is full of hope and promise both for the nations of the West and for those of the East. It is also a time fraught with some danger. In 1986, in a book about Poland, I wrote:
    "If East and West are ever to enjoy a genuinely peaceful co-existence—which is what millions on both sides want—there will have to be an end to the nightmare of repression suffered by the once independent nations of Central and Eastern Europe. This may have to come step by step but come it must.
    The alternative to removing the present injustices and building bridges of understanding and co-operation between East and West is the certainty that our grandchildren will be living well into the 21st century in two vast armed camps bearing a crushing burden of arms which they can only hope and pray will never be used, a state not so much of peace as one of controlled hostility."
    When I wrote those words, I had no idea that change would come so quickly, as it has done during these past few months.
    It was marvellous to see the Berlin wall come tumbling down. It is astonishing that, at long last, the Hungarians and the Czechs are now negotiating peacefully for the withdrawal of the Soviet occupation forces that have been in their countries for the past 45 years. It was symbolic of the new mood in Europe that even the Communists in Hungary decided to remove the Soviet-style star from the arms of their country and to replace it with the Holy Crown of St. Stephen. It was not at all surprising when a Member of the European Parliament representing a Bavarian constituency, who happened to bear the name Hapsburg and who speaks fluent Hungarian, was warmly welcomed on the streets of Budapest recently.
    Poland led the way with the first free elections last June, the first defeat ever of a ruling Communist party and the emergence of the first non-Communist Prime Minister since the second world war. Hon. Members will know how, with other hon. Members from all parties, I have long campaigned for Polish freedom, holding that Britain above all owed a special debt of honour to Poland, for which we went to war in 1939 and which, whatever the reasons, we abandoned at the end of the struggle.
    What has happened in Poland, since the end of Jaruszelski's dictatorship, has given us great joy. I wish to pay tribute to the Government for their ready and practical help for the Polish economy, which is struggling to modernise itself. I single out the know-how fund, which is the sort of developmental help that I would recommend elsewhere in the new circumstances of eastern Europe. Last year the Government authorised the sending of food, and declared a readiness to give additional aid once Poland had agreed an economic reform programme with the International Monetary Fund.
    However, as the Financial Times said on 28 December, it is still doubtful whether the flow of international aid to Poland—and, we must assume, to the other eastern European countries—will be sufficient. The Poles understand what is required. Prime Minister Mazowiecki made it very plain in his speech on 11 December on Polish independence day—the first time, incidentally, that it had been celebrated since the war. He said:
    "Let us at last take this fate into our own hands and we shall make Poland a normal country, a prosperous country, a
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    country in which there will be a great deal of satisfaction and joy stemming from the fact that Poland really is our joint possession."
    Their proud assertion underlines the remarkable speech of the right hon. Member for Plymouth, Devonport (Dr. Owen). We are seeing the emergence of a Europe of nations, proud of their heritage and proud of the contribution they can make, if they are allowed, to the common good.
    I heartily endorse what was said by my right hon. Friend the Member for Shropshire, North (Mr. Biffen) and the right hon. Member for Devonport about the inevitability of German reunification. I do not think that there is anything in that to worry us. It will take place within a democratic framework at a pace dictated by the Germans themselves, and I venture to suggest that it will come sooner rather than later. It is to be welcomed, and it should not frighten any of us if it is accompanied by the statesmanship and vision of which today's Germans are fully capable.
    For example, there is a need to reassure the Poles that there will be no clamour to alter Poland's western boundaries, which were settled in 1945. Poland has suffered enough at the hands of the Germans, as well as at the hands of the Soviet Union. The Helsinki accord must remain sacrosanct. There can be no boundary changes in the new Europe, save by the consent of the parties concerned. I do not doubt that German statesmanship will rise to the occasion.
    Elsewhere in central and eastern Europe the signs are also generally promising. Czechoslovakia has a new, inspiring head of state in Vaclav Havel. In 1983 I had something to do with helping to get him out of prison. That brave man could have purchased his freedom with the greatest of ease. He was then in prison for asserting that his country had dishonoured its signature on the Helsinki accord. If he had apologised to President Husak, he would have been released. He chose to remain in prison. It was only after ridicule from some of us in the West, aided by the BBC central European service, that finally the Czechs gave up and let him out. I salute the man: he is a great artist and a great human being. He symbolises the true spirit of Czechoslovakia, and we all wish him well.
    In Hungary, considerable progress is being made towards modernising and improving the economy. The Government are encouraging private enterprise and examining ways of securing closer economic co-operation with the European Community.
    Only in Romania is there doubt and fear. Here there is real cause for anxiety, as the hon. Member for Newport, West (Mr. Flynn) and I discovered only last week. The Communist party there is entrenching itself in power. Only in Romania, of the eastern European countries mentioned in this debate, are the emerging democratic parties being harried by thugs brought in by the so-called Government from the provinces to terrorise their opponents. Hon. Members should consider the shameful events that took place only a few days ago just after the hon. Gentleman and I left Bucharest. There was shameful harrying of Cornelius Copuso, president of the National Peasant party, who had spent 17 years in Communist prisons. His party headquarters was ransacked.
    The hon. Member for Newport, West and I made some modest speeches. We were greatly moved by our experience. I have never before in all my travels or political life witnessed what I saw in Bucharest. I saw a crowd of

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    about 300, many of them young, kneeling in the snow and the slush, holding candles in silent vigil, before one of the three improvised monuments to the dead in a place where large numbers of people had been mown down by the tanks of the Ceausescu regime. They were described later by the Government as hooligans. The Romanian people deserve much better than they have got. Indeed, they may need another revolution before they are truly free. I mention that because it is difficult to see how it is possible to help Romania, yet help it must be given.
    Mr. Alton rose—
    Sir Bernard Braine: I would rather not give way, because I think that the hon. and learned Member for Fife, North-East (Mr. Campbell) is ready to reply on behalf of his party.
    This has been one of the most interesting and stimulating debates that I have ever attended. This is the House of Commons speaking as one in favour of giving maximum aid, help and encouragement to the nations of eastern and central Europe struggling to be free. I look forward with confidence to our developing relationship with countries coming back into our common European home.
    6.43 pm
    Mr. Menzies Campbell: In the middle of October, in the course of a debate on the defence estimates, the Secretary of State for Defence told a somewhat surprised House that Mr. Honecker had resigned, and had been replaced by Mr. Krenz. There was among those who heard that news a sense of anticipation, but I think it is fair to say that none of us had any appreciation of the consequences. Indeed, had any of us attempted to predict what has happened since, we would have been received with nothing other than scepticism by those who were present on that occasion.
    Truly, the changes in eastern Europe have been staggering beyond comprehension. Of course, they have not all gone smoothly. The euphoria of taking down walls is soon replaced by the harsh reality of political decisions, sometimes made by those who have had little experience in recent time of making decisions, and sometimes made by those who are unsophisticated and unused to the responsibility which has inevitably been thrust upon them.
    The circumstances in eastern Europe, which are by no means common in each of the countries in which change has taken place, may yet get worse before they get better in our terms. One cannot ignore the emergence to a certain extent of nationalism. Any student of the history of the 19th century will recall that nationalism was a very bloody force in the politics of Europe at that time. Indeed, it had a carry-over into the current century. It is sometimes forgotten that the first world war was precipitated by the assassination of Archduke Franz Ferdinand in Sarajevo, something which in 1990 one would regard as highly unlikely to provoke the kind of conflagration that it did then.
    Later, nationalism was to some extent subjugated or subdued by Fascism, and then by the spurious internationalism and totalitarianism of Communism. I accept, as the right hon. Member for Plymouth, Devonport (Dr. Owen) said, that there is nothing wrong
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    with nationhood; indeed, there is a considerable amount to be said for it. But I believe that in these burgeoning democracies in eastern Europe we must take account of the risk of an emergence of nationalism which would be detrimental to the view of Europe which so many hon. Members have expressed in the debate.
    I believe that our task is to ensure that parliamentary democracy is enshrined, entrenched even, in these countries and that they have at an early stage inculcated into them a sense of international interdependence. We will do that best by giving them such economic assistance as we can, but perhaps more significantly by giving them political encouragement, and by being receptive, welcoming and, I suppose to some extent, tolerant of their efforts to replace totalitarian regimes with regimes which accord with our view of parliamentary democracy.
    As the debate progressed, there was little doubt that in the minds of most hon. Members the single most significant question is the unification of Germany. I think most now accept that there will be unification. It could hardly be otherwise. All the political parties in Federal Germany have as part of their constitutions the aim and objective of unification, and the constitution of Federal Germany makes special provision for citizens of what we call East Germany to become citizens of the Federal Republic.
    If we did not recognise it, the reality would soon overtake us, because the people of East Germany would simply vote with their feet, having voted with their bulldozers and their hands in the period around Christmas. I do not believe that we should be apprehensive about the prospect of a unified Germany. The democratic traditions which were put in place in Federal Germany after the war may not be particularly long-lived, but they are well entrenched. One is legitimately entitled to say that in that time the people of Federal Germany have behaved in all respects as if they accept, recognise and hold dear those democratic principles.
    One must also remember that, unlike the 1930s, what is happening in East Germany is not the setting up of a dictatorship but pulling one down. It would be most curious if the people of East Germany, having got rid of one form of totalitarian government, were enthused to embrace another. Federal Germany is already the most dominant economic power in Europe. That is recognised by the United States of America in the special relationship which President Bush clearly feels with Chancellor. Kohl.
    I believe that the circumstances which now present themselves with regard to the unification of Germany should be seen as an opportunity rather than an obstacle. We want to channel the new political assertiveness which is undoubtedly in Federal Germany into the European Economic Community, but we also want, and are entitled to ask, Federal Germany and those responsible for East Germany to make it clear that they have no territorial ambitions beyond the existing boundaries of the two countries.
    The existence within a stronger Community of a unified Germany can only be to its advantage. I hope, like the right hon. Member for Devonport, that such a Germany will remain in NATO. However, between now and the time when that important decision is taken, we shall have to acknowledge that political circumstances have changed so much that, for example, the deployment of a successor to the Lance missile in the Federal Republic of Germany is not politically unacceptable. The notion that such a

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    weapon might be stationed in that country with a view to firing it at targets in Poland, Hungary or East Germany is totally inappropriate to the new political order.
    There has been discussion as to whether or not NATO and the Warsaw pact should remain in existence. We have some influence over NATO, but not over the Warsaw pact organisation, so if it decides to disband there is nothing we can do. However, if we are to move towards a new order of security in Europe as a whole, that may be achieved more easily if negotiations can be conducted between two existing structures. That does not detract from the right of the people of Hungary or of Czechoslovakia to request that Soviet troops be removed from their country—and let us hope that such a request would be acceded to.
    The eastern bloc countries—as we have known them—will all develop at a different rate. Their political sophistication and economic development will all advance at different speeds. I do not believe that it will be necessary for the Community to have a European equivalent of the Lomé convention, but it should be flexible enough to offer each of those countries—as they develop to the stage at which the rule of law and parliamentary democracy is accepted—an association with the EEC both for the economic advantage that will bring, and, more significantly, the political stability that it will undoubtedly create.
    Mention was made in the debate of the kind of Europe that people want to see. The word "federal" has been cast about, but I sometimes think that all such labels should be rejected, although they may give comfort to constitutional lawyers. The most amusing part of the debate was the notion that there are not yet sufficient lawyers in eastern Europe. Perhaps that might be our first export. I can think of a few candidates, both north and south of the border, excluding myself, who are capable of bringing a suitable range of skills and attributes to bear on the lapsing totalitarianism and bureaucracy of eastern Europe.
    However, it is not necessary for the satisfaction of constitutional lawyers to describe one's attitude to Europe in terms that lawyers regard as important when explaining matters to their students. The pace of development within the Community will undoubtedly be different at different times, and it will depend on the collective will of all its members—not just the United Kingdom. There will be times when the Community will want to move more quickly because that is the collective will.
    The circumstances that we have debated, particularly as they affect the EC, ought to create in us a sense of anticipation and a feeling that here is a moment of great opportunity—perhaps several moments. The Minister gave an account of the Government's contribution, and although the letter of what he said may have been recognised by our partners in Europe, I wonder whether they recognised the spirit of his remarks.
    I and other right hon. and hon. Members feel strongly that Britain, as one of the Twelve, is often dragged into a collective decision. Instead of arguing for a collective decision and trying to improve it, too often we are seen as being dragged unenthusiastically into agreeing to a compromise. While it is right that differences over important matters should be permitted and perhaps even encouraged, and although the pace of movement will always be subject to the keen attitude that people take towards important issues such as the sovereignty of this House, it is undoubtedly the case that too often we are seen as grudging participants in the European process.
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    If that impression is allowed to persist in the new circumstances of eastern Europe, it will serve not only the EEC but the interests of this country very badly. We have the greatest influence when we are seen to be enthusiasts for the European process. If this debate has done nothing else, it has brought home to many people, both inside the House and outside it, that a remarkable opportunity is available to us—and I hope that the House will collectively decide this evening to grasp it.
    6.55 pm
    Mr. Maude: With the leave of the House, Mr. Speaker, may I say that one of the greatest of the privileges that I have enjoyed during my short tenure in my present post—six months that have seen a revolution across Europe— has been the opportunity to participate in several debates concerning matters that go much beyond the frontiers of the 12 existing members of the European Community. As my right hon. Friend the Member for Castle Point (Sir B. Braine) said, they have shown this House at its best—able to look for the most part beyond narrow partisan politics and to devote its collective and considerable expertise and wisdom to examining the uncertainties that have unfolded before us, and to prospect the future, to see how events may change.
    Today's debate has been very much one such debate. I regard myself as greatly privileged to have heard the contributions made—especially those of my right hon. Friends the Members for Castle Point and for Shropshire, North (Mr. Biffen), my hon. Friend the Member for Davyhulme (Mr. Churchill), and the right hon. Member for Plymouth, Devonport (Dr. Owen). They all brought to the debate their formidable experience, wisdom, clarity and insight, which has better informed all those among us who must examine how our country can help decisively to shape the future.
    My right hon. Friend the Member for Shropshire, North referred with a glancing blow to the caution that necessarily attends those of us who are, however temporarily, at the Foreign and Commonwealth Office. He was right to refer to that caution, but it is right also that we should exercise it, particularly at a time when Europe faces of necessity a period of instability. That instability exists for the very best of reasons, because for the past 40 years eastern Europe has paid a terrible price for its enforced stability. It is inevitable that we should deal with the new situation cautiously, sometimes looking carefully—perhaps excessively carefully—before we tread. I make no apology for that.
    It is inevitable that we should treat with caution also the unification of Germany, to which almost every speaker has referred. That is not to diminish in any way our commitment to that unification, based on self-determination. However, I re-emphasise the unanimous decision of the 12 European Heads of Government at the Strasbourg Council, that when unification takes place, it must have regard both to the interests of those directly affected by it and the treaties and agreements that it will affect. As I have said, that does not diminish the commitment of all 12 member states to Germany's reunification, should it emerge from the process of democratic self-determination.
    Inevitably, much of the debate has focused on the European Community and the way in which it should develop. I sensed a fairly widespread view that we should

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    not proceed helter-skelter into further institutional changes. I agreed profoundly with the right hon. Member for Devonport when he said that it was not necessary to be a federalist to be a good European; no one needs to believe that rapid further changes should be made to the treaty of Rome to be entirely committed to the European Community and to making it a success.
    The Government are committed to making the Community a success, and we have contributed centrally to its present position. That is why I found it hard to recognise the reality in the speech of the hon. and learned Member for Fife, North-East (Mr. Campbell), who said that we did not seem to be taking part in the discussions. The single market—the single factor that has made the most difference to the success of the Community—is fashioned after the pattern that we have described.
    Mr. Ashdown: Go to Brussels.
    Mr. Maude: It may have escaped the right hon. Gentleman's attention that I do occasionally go to Brussels. I take part in the discussions, and I can tell the right hon. Gentleman without immodesty that our influence on their outcome is profound. The fact that he does not understand that is a simple demonstration of how far removed he is, and will remain, from the reality of the discussions.
    Perhaps we have looked into the past more than we should have, but we have also looked ahead. That is proper at a time when we should not let our caution diminish the joy and pleasure that my right hon. Friend the Member for Castle Point described in his profoundly moving speech. At a time of necessary and inevitable instability, now that the tyrannies have gone we should be readier to build than to dismantle; but this time we should build to last.
    Question put:—
    The House divided: Ayes 215, Noes 9.

    Division No. 59]

    [7.02 pm

    AYES

    Aitken, Jonathan

    Browne, John (Winchester)

    Alexander, Richard

    Bruce, Ian (Dorset South)

    Alton, David

    Bruce, Malcolm (Gordon)

    Amery, Rt Hon Julian

    Buck, Sir Antony

    Amess, David

    Budgen, Nicholas

    Amos, Alan

    Burns, Simon

    Arbuthnot, James

    Burl, Alistair

    Arnold, Jacques (Gravesham)

    Butcher, John

    Arnold, Tom (Hazel Grove)

    Butler, Chris

    Ashby, David

    Butterfill, John

    Ashdown, Rt Hon Paddy

    Campbell, Menzies (Fife NE)

    Baker, Rt Hon K. (Mole Valley)

    Campbell-Savours, D. N.

    Baker, Nicholas (Dorset N)

    Carlile, Alex (Mont'g)

    Batiste, Spencer

    Carlisle, Kenneth (Lincoln)

    Beaumont-Dark, Anthony

    Carrington, Matthew

    Beith, A. J.

    Carttiss, Michael

    Bellingham, Henry

    Chapman, Sydney

    Bennett, Nicholas (Pembroke)

    Churchill, Mr

    Benyon, W.

    Clark, Sir W. (Croydon S)

    Bevan, David Gilroy

    Clarke, Rt Hon K. (Rushcliffe)

    Blackburn, Dr John G.

    Colvin, Michael

    Boscawen, Hon Robert

    Coombs, Simon (Swindon)

    Boswell, Tim

    Couchman, James

    Bottomley, Mrs Virginia

    Cran, James

    Braine, Rt Hon Sir Bernard

    Currie, Mrs Edwina

    Brandon-Bravo, Martin

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

    Bright, Graham

    Davis, David (Boothferry)

    Brooke, Rt Hon Peter

    Day, Stephen

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

    Devlin, Tim

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    Dorrell, Stephen

    Maclennan, Robert

    Douglas-Hamilton, Lord James

    McLoughlin, Patrick

    Durant, Tony

    McNair-Wilson, Sir Michael

    Dykes, Hugh

    Mans, Keith

    Eggar, Tim

    Maples, John

    Emery, Sir Peter

    Marshall, John (Hendon S)

    Fairbairn, Sir Nicholas

    Martin, David (Portsmouth S)

    Fallon, Michael

    Mates, Michael

    Favell, Tony

    Maude, Hon Francis

    Fearn, Ronald

    Maxwell-Hyslop, Robin

    Fishburn, John Dudley

    Mayhew, Rt Hon Sir Patrick

    Flynn, Paul

    Meyer, Sir Anthony

    Fookes, Dame Janet

    Michie, Mrs Ray (Arg'l & Bute)

    Forman, Nigel

    Miller, Sir Hal

    Forsyth, Michael (Stirling)

    Mills, Iain

    Forth, Eric

    Mitchell, Andrew (Gedling)

    Fox, Sir Marcus

    Monro, Sir Hector

    Franks, Cecil

    Montgomery, Sir Fergus

    Freeman, Roger

    Morrison, Sir Charles

    Garel-Jones, Tristan

    Moss, Malcolm

    Gill, Christopher

    Neubert, Michael

    Glyn, Dr Sir Alan

    Newton, Rt Hon Tony

    Goodhart, Sir Philip

    Nicholls, Patrick

    Goodlad, Alastair

    Nicholson, David (Taunton)

    Gorst, John

    Norris, Steve

    Gow, Ian

    Onslow, Rt Hon Cranley

    Greenway, Harry (Ealing N)

    Oppenheim, Phillip

    Greenway, John (Ryedale)

    Owen, Rt Hon Dr David

    Gregory, Conal

    Page, Richard

    Griffiths, Peter (Portsmouth N)

    Paice, James

    Ground, Patrick

    Parkinson, Rt Hon Cecil

    Grylls, Michael

    Patnick, Irvine

    Gummer, Rt Hon John Selwyn

    Pattie, Rt Hon Sir Geoffrey

    Hague, William

    Peacock, Mrs Elizabeth

    Hamilton, Hon Archie (Epsom)

    Porter, Barry (Wirral S)

    Hampson, Dr Keith

    Porter, David (Waveney)

    Hanley, Jeremy

    Portillo, Michael

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

    Powell, William (Corby)

    Harris, David

    Price, Sir David

    Hayes, Jerry

    Raison, Rt Hon Timothy

    Hayhoe, Rt Hon Sir Barney

    Renton, Rt Hon Tim

    Hayward, Robert

    Riddick, Graham

    Hicks, Robert (Cornwall SE)

    Ridley, Rt Hon Nicholas

    Higgins, Rt Hon Terence L.

    Ridsdale, Sir Julian

    Hind, Kenneth

    Rifkind, Rt Hon Malcolm

    Hogg, Hon Douglas (Gr'th'm)

    Sackville, Hon Tom

    Hordern, Sir Peter

    Salmond, Alex

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

    Shaw, David (Dover)

    Howarth, G. (Cannock & B'wd)

    Shaw, Sir Giles (Pudsey)

    Howe, Rt Hon Sir Geoffrey

    Shaw, Sir Michael (Scarb')

    Howell, Rt Hon David (G'dford)

    Shepherd, Colin (Hereford)

    Howells, Geraint

    Shepherd, Richard (Aldridge)

    Hughes, Robert G. (Harrow W)

    Sims, Roger

    Hughes, Simon (Southwark)

    Skeet, Sir Trevor

    Hunter, Andrew

    Smith, Tim (Beaconsfield)

    Irvine, Michael

    Squire, Robin

    Irving, Sir Charles

    Stanbrook, Ivor

    Jack, Michael

    Steel, Rt Hon Sir David

    Janman, Tim

    Steen, Anthony

    Johnson Smith, Sir Geoffrey

    Stevens, Lewis

    Jones, Robert B (Herts W)

    Stewart, Andy (Sherwood)

    Jopling, Rt Hon Michael

    Stradling Thomas, Sir John

    Kennedy, Charles

    Summerson, Hugo

    Kilfedder, James

    Taylor, Ian (Esher)

    King, Roger (B'ham N'thfield)

    Taylor, John M (Solihull)

    Knapman, Roger

    Taylor, Matthew (Truro)

    Knight, Dame Jill (Edgbaston)

    Tebbit, Rt Hon Norman

    Knowles, Michael

    Thomas, Dr Dafydd Elis

    Lamont, Rt Hon Norman

    Thompson, Patrick (Norwich N)

    Lawrence, Ivan

    Thurnham, Peter

    Lee, John (Pendle)

    Trotter, Neville

    Lester, Jim (Broxtowe)

    Twinn, Dr Ian

    Lightbown, David

    Walker, Bill (T'side North)

    Lilley, Peter

    Walker, Rt Hon P. (W'cester)

    Lloyd, Peter (Fareham)

    Waller, Gary

    MacKay, Andrew (E Berkshire)

    Wheeler, Sir John

    Maclean, David

    Wilshire, David

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    Winterton, Mrs Ann

    Tellers for the Ayes:

    Winterton, Nicholas

    Mr. James Wallace and

    Wood, Timothy

    Mr. Archy Kirkwood.

    NOES

    Beggs, Roy

    Smyth, Rev Martin (Belfast S)

    Cohen, Harry

    Walker, A. Cecil (Belfast N)

    Cryer, Bob

    Forsythe, Clifford (Antrim S)

    Tellers for the Noes:

    Meale, Alan

    Mr. John D. Taylor and

    Molyneaux, Rt Hon James

    Mr. William Ross.

    Skinner, Dennis

    Question accordingly agreed to.
    Resolved,
    That this House welcomes recent progress towards liberal democracy in the countries of eastern and central Europe; endorses progress towards the political and economic integration of the European Community; and calls upon Her Majesty's Government urgently to recognise that this country's future depends on Britain playing a full and wholehearted role in the development of the new democratic Europe.
    Mr. A. J. Keith: On a point of order, Mr. Deputy Speaker. I wonder whether the fact that no amendment to the motion had been tabled, and therefore the process of the vote was very short, caused some confusion among Labour Members. I was very surprised to go into the Division Lobby on a motion which invited the support of the whole House for democratisation in Europe, yet Labour Members were unable to bring themselves to vote for it. That is the new model Labour party.
    Mr. Deputy Speaker (Sir Paul Dean): The hon. Gentleman knows that that is not a point of order, but he has got his point on the record.

  Small Businesses and the Self-employed
  7.15 pm
  Mr. Matthew Taylor: I beg to move,
  That this House believes that the undermining effect of high interest rates combined with the impact of the Uniform Business Rate and revaluation in England and Wales, will have a catastrophic effect on small businesses and the self-employed; further believes that the effects of bureaucracy, employee poll tax defaulters and the late payment of debt will increase the number of bankruptcies within the small business sector throughout the counties and regions and nations of the United Kingdom; and urges Her Majesty's Government to take immediate steps to extend the relief associated with the introduction of the Uniform Business Rate, to take the opportunity of the Budget to improve the fiscal climate for small businesses and to enter the Exchange Rate Mechanism of the European Monetary System in order to improve the economic environment within which small businesses and the self-employed operate.
  Mr. Deputy Speaker (Sir Paul Dean): Mr. Speaker has selected the amendment in the name of the Prime Minister.
  Mr. Taylor: I welcome the opportunity afforded by the Liberal Democrats to debate the needs and difficulties of small businesses. Just before the debate the Minister told me privately that he also welcomed today's debate because we rarely have the opportunity to discuss these matters. The Liberal Democrats tabled the motion because we believe that there are important issues, developments and difficulties facing small businesses and we wanted to give the House the opportunity to debate them. I hope to suggest some practical measures to relieve the difficulties that small businesses are experiencing.
  The Government claim that a number of advances for businesses have taken place since they took office. We certainly acknowledge that there have been advances for monopolies and the privatisation of monopolies. There have also been some advances for other businesses—I would not wish to pretend otherwise—but recently the Government have created significant difficulties, particularly for small businesses. In election after election the Government described themselves as friends of small businesses, but business men and women tell me that the Government's present policies prove them to be anything but that. It would be interesting to see an opinion poll showing the reactions of small business men to the pressures of interest rates, business rate changes and new bureaucracy and red tape that are being imposed on them by the Government.
  The economic situation is worsening for businesses of all sizes, but small companies that are particularly vulnerable to those changes and are in a relatively weak position to negotiate with banks and to defend themselves against those changes suffer especially. After 10 years of Conservative government which were ushered in on the grounds that we had to tackle inflation and promote competition, we now have an inflation rate comparable to that which obtained at the end of the Lib-Lab Administration. For all that Ministers say, our competitiveness cannot be described as good either, for we have a record trade deficit—the only obvious accurate way of measuring whether our businesses can compete effectively with businesses abroad.
  The latest quarterly report from the Confederation of British Industry suggests that Britain is once more on the brink of a recession. We are smitten with high interest rates and high inflation. For all the Government's boasts about

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  new businesses, there was an increase in business failures in 1989 for the first time in five years. The latest CBI survey shows that business failures in 1989 rose to 18,000, which was a 10 per cent. increase over 1988. The CBI also states that we may see a substantial rise in bankruptcies, a further 1 per cent. rise in inflation and a £2 billion shortfall in investment, all due to the Government's policies. That is hardly a sign that Thatcherism has overcome the inherent weaknesses in the economy.
  From a Government to whom they once looked for support, small businesses now face the uniform business rate, revaluation, continued high interest rates, skill shortages, increased administrative burdens and an unsustainable exchange rate. The National Federation of Self Employed and Small Businesses states that high interest rates are proving a huge burden on small businesses. They create a climate of uncertainty and make it harder for those businesses to expand.
  The federation cites a number of examples of the way in which businesses have been hit. For example, a small manufacturing company with six employees in Berkshire is behind with orders. It cannot reinvest in new equipment and is having to turn down orders. A 20-year-old family business in Mid Glamorgan is prepared to state publicly that it is threatened with liquidation within two years if interest rates remain at the present level or are raised.
  I have spoken to business men in my constituency and I am aware of a dramatic change over the past few months in their attitude to the Government. Local businesses have called a meeting in my constituency on Saturday evening because they have been made desperate by the Government's policies. Those are the problems that small businesses face in this enterprise culture.
  Mr. Peter Thurnham: When the hon. Gentleman spoke to small business men in his constituency, did he find that they valued the fact that his party—under one name or another—helped to keep the Labour party in government for four years with all the great "benefits" that that Government gave to small businesses which were closing down then far quicker than they are now?
  Mr. Taylor: Small businesses look back on the influences that the Liberals were able to exert on that Labour Government. They are aware of the cuts in inflation that happened then. They are also aware of the fact that the Liberals managed to have a Minister responsible for small businesses appointed to the Cabinet. That Cabinet post has disappeared and the responsibility has been moved from the Department of Trade and Industry to the Department of Employment. Obviously the Government do not consider small businesses to be a vital part of our industrial base or its power house. They regard them simply as a vehicle for employment legislation.
  Mr. Roger Knapman: Since the Liberal party was the power house at the time, will the hon. Gentleman explain why currently there is an increase of 1,200 new small businesses every week, while under the Lib-Lab pact there was a decrease of 100 businesses a week?
  Mr. Taylor: One of the peculiarities of the Government's boasts about the growth in businesses is
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  that they ignore the fact that the businesses that are created are often tax shelters and not real businesses. Other people trying to create real new enterprises, for example, through the enterprise allowance scheme, find it increasingly difficult to do so. People trying to maintain their self-employed status are also having difficulties.
  Mr. Alex Carlile: Does my hon. Friend agree that the only fair way to judge the statistics about small businesses is to look at all the figures, including the number of liquidations? Does he agree that bankruptcies and liquidations among small businesses are running at record levels and that that is a direct consequence of the Government's economic policies that are crippling the small business man's cash flow?
  Mr. Taylor: Many people have told me that they are threatened with bankruptcy and liquidation—[Interruption.] Small business men will not respect Conservative Members if they laugh as I describe their problems. Small business men will also not be amused by the Government's shilly-shallying and ducking of the measures that could reduce inflation and interest rates.
  The Government must seriously consider the need to join the exchange rate mechanism of the European monetary system. That policy option is staring the Government in the face. Whenever a Minister leaves the Cabinet, it seems it is only a matter of days before he announces publicly that we should have joined the ERM of the EMS, although the Minister was not allowed to say that while he was in the Cabinet. That stubbornness is illogical and it is not supported by the serious economists and business groups. It is also patently damaging to the prospects for British business in Europe and to our ability to play a full part in developments in Europe.
  The Liberal Democrats have consistently favoured membership of the ERM. The Conservative party has said consistently that it favours membership one day, but it sets blocking conditions, and every time the Cabinet meets we know that membership will not be on the agenda. Unfortunately, the Labour party's position is no better as it ducks and blocks the issue. We hear fine words, but no real intention to act on them.
  The most important step that we can take to help businesses in this country at the moment is to reduce interest rates. We can do precisely that by joining the ERM.
  Mr. Jeremy Hanley: The hon. Gentleman will recall the White Paper which the Government published five or six years ago entitled "Lifting the Burden". It listed certain burdens on small businesses. The hon. Gentleman will be aware that the vast majority of those burdens have now been lifted as a result of Government legislation. However, one burden—statutory audit for small companies—has not been lifted. What is the policy of the hon. Gentleman's party on that?
  Mr. A. J. Beith: I wonder what the Government's policy on it is.
  Mr. Taylor: Perhaps the Minister can tell us later what the Government's policy is. I intend later to outline a number of measures that I would like to introduce to cut the red tape and bureaucracy which currently face businesses.
  The problems of interest rates have been debated endlessly in the House. Therefore, I want now to turn to

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  considering the blow falling on many businesses, especially in the south and south-west, caused by the introduction of the uniform business rate and revaluation.
  For all Ministers' claims, the UBR will have devastating consequences for small businesses. Indeed, the largest part of my mail bag comprises letters about the UBR. In introducing the UBR, the Government have moved the initiative away from small businesses back to the Inland Revenue. The changes cut the links with local councils and they remove the right of local businesses to appeal after six months, and that latter change is inexplicable because only the Inland Revenue will benefit.
  A good example of the problems caused by the UBR and the revaluation can be found in a family hardware business in the heart of Truro. In my constituency, the UBR has meant an increase of nearly 10 per cent. over the old rating system. That extra money, which is being levied from our local businesses, is to pay not for extra local services, which perhaps those businesses could accept, but for cuts in rate levels in other parts of the country where service levels will continue to be protected. Taking money from one of the poorest parts of the country to fund areas with high levels of services is regarded by people in my area as quite unacceptable and inexcusable.
  Mr. David Nicholson: What would the hon. Gentleman say to small businesses in my constituency? They are facing difficulties, not from the UBR which, on present rateable values, would be lower than the present rates in Somerset, but from the revaluation. Would his party abolish them or postpone the revaluations still further?
  Mr. Taylor: If the hon. Gentleman gives me a moment, I shall answer his question.
  The proposed transitional relief scheme goes some way to helping small businesses. It was precisely because I foresaw the massive difficulties when I served on the Committees that considered the Local Government Finance Bill and the Local Government and Housing Bill that I have consistently pressed for transitional relief measures, and we have only gradually seen the Government start to introduce them. Today we have outlined a series of measures further to help businesses facing massive revaluation problems. First, we strongly believe that transitional relief should be applied to all businesses that exist in April 1990, regardless of whether they subsequently move their premises. There are several important reasons for doing that.
  It will cause great difficulties for businesses that need to move, for whatever reason, to be outside the relief scheme as soon as they leave their current premises. That serves as a hindrance to business expansion and it will cause difficulties for businesses seeking to sell premises as buyers will be few and far between if relief will not apply to them. It will also hit businesses that are trying to trade down as a result of the increase in their rate bills. By moving to smaller premises, they may still end up paying the same or greater rates than they pay in their existing premises because they will not get transitional relief. Also, the people from whom they are renting premises will be put in a strong bargaining position.
  Any decreases in rents that might otherwise have arisen from the changes will not take place because people involved in leasing premises and rent negotiations will know that if a business moves they will lose transitional
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  protection. Most ironic of all is the fact that, although the Government have not extended transitional protection to them, a business moving to an office where it will gain from the changes will still get gains phased in over a period. It is a no-win situation. Every which way they go, it seems that they will have to pay more than they paid before. They cannot escape that. I wonder whether Ministers intended that or whether they understand the impact that it will have on small businesses.
  Secondly, I call on the Treasury to contribute funds to ease the implementation process. I should like it to undertake a series of measures to help to ease burdens on companies that are being hit most by the revaluation process. I do not believe that there is any logic in doing that unless the Treasury is prepared to take on at least a part of the burden, otherwise other companies that may deserve to benefit from the changes will see their benefit put off even further into the future. It is an obvious moment for the Treasury to make a contribution to earning the money that it will claim from businesses at a later date. [HON. MEMBERS: "The taxpayer, the taxpayer."]
  Mr. Simon Hughes: My hon. Friend is being interrupted by Conservative Members saying, "The taxpayer, the taxpayer," from a sedentary position. Would they like honestly to answer the question raised by the hon. Members for Richmond and Barnes (Mr. Hanley), for Beaconsfield (Mr. Smith) and so on? Would they prefer the taxpayer to assist the transitional arrangements, or would their constituencies, with an increase of more than 140 per cent. because of revaluation, prefer that there is no taxpayer assistance and that businesses should bear the whole burden? Unless they can answer that question, they should support my hon Friend and our proposals.
  Mr. Taylor: That is precisely the point that I have been making. My hon. Friend is quite right.
  Mrs. Edwina Currie rose—
  Mr. Taylor: I think that an eager volunteer wishes to respond.
  Mrs. Currie: If the hon. Gentleman has heard me speak on this subject before, he will know that my local business people face substantial reductions in the business rate. We are very grateful. It means that at last we can see the regeneration of our area. As for the point that the hon. Member for Southwark and Bermondsey (Mr. Hughes) invited the hon. Gentleman to make on his behalf, putting 2 billion quid back into the economy all in one go in the way that was suggested would be inflationary.
  Mr. Taylor: I have mentioned several non-inflationary actions that we can take. It is inflationary for the Government to pay off their debts because they dare not spend the money that they are currently attracting. That is a mistake, and they should not be engaged in it. Nothing is more important than building up and protecting our existing businesses. It is no good for the country to help at the margins of inflation if, in the process, the Government again bankrupt businesses that will provide the dynamo for solving current problems.
  Mr. Hanley rose—
  Mr. Gary Waller rose—
  Mr. Taylor: Conservative Members are seeking to intervene. I have given way a considerable number of times. I want to continue with my points on how we will tackle revaluation.
  Thirdly, the relief scheme should be extended to cover more premises by adjusting the size of businesses for which transitional relief is available. Small business organisations have been pressing Ministers for that, and some have pressed for large increases, and possibly a doubling of the size of the premises involved. Although I would not necessarily argue for going the whole hog on that matter, we need increases. I suspect that all hon. Members are aware of businesses that have been hit and have been outside the small business category but yet, in every other sense, should surely be eligible for help.
  Mr. Waller: Will the hon. Gentleman give way?
  Mr. Taylor: I have already said that I wish to finish the points that I want to make on this subject.
  Fourthly, relief should be increased. The limits on increases on rates—15 per cent. plus inflation for small businesses—should be further reduced to 10 per cent. Bearing inflation in mind, we are still talking about a crippling series of increases over a long period. Although some businesses can quite easily cope with such increases, others, mainly smaller local businesses with only one premises in town centres, are finding it extremly hard to cope. Frankly, there is little prospect of increasing their turnover or profits at a rate that would allow them to pay.
  Fifthly, the transitional relief scheme should be extended to allow small businesses the necessary time to adjust. The present system covers most businesses. I applaud the Government for giving them some time to adjust. However, it does not allow for many businesses with large increases in their rates bills, which, even at the end of the period of transitional relief, will still find that they are faced with a large lump sum increase. During Prime Minister's Question Time last week, the Prime Minister said that the Government would look at that matter and might be amenable to extending the specified period. I hope that the Minister of State, Department of Employment will be able to elaborate on her comments and confirm that the Government will ensure that that is the case. That would provide a large measure of security to businesses that have been hardest hit by the changes.
  Those proposals are positive measures to help businesses through the painful process of the introduction of the UBR and revaluation. However, they can only mitigate the effects of the UBR and revaluation. No amount of improvements can make ideal a system that was ill-conceived in the first place, though I put those suggestions before the House in the hope that Ministers will take some of them on board to provide a measure of relief.
  We need, however, to review the system on which business rating is based. We should consider a system of land value taxation. That would broaden the base of the rating system and tackle some of the advantages that developers and speculators gain from the present system. As well as broadening the tax base, it would contribute to many other desirable improvements, such as the regeneration of our inner cities by removing the incentive for business men to hold on to inner city sites and not to
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  develop them. It would also remove the fear that improving land and property would increase the rates burden and encourage improvement of buildings.
  Administration would be easier because the system would not require intrusive checking on what improvements have been made. Crucially, the system would be run by local authorities. That would preserve an essential link between businesses and the community and ensure democratic local accountability. The uniform business rate destroys that principle and centralises power.
  There should be an investigation into a rolling programme of revaluation to avoid lump sum changes and politically motivated delays which ultimately make the position worse. That is precisely what happens now. If we can overcome such delays through a rolling programme of revaluation, businesses will benefit.
  Our proposals for the transitional relief scheme would bring great advantages to small businesses. Our preferred system of land value taxation, combined with full membership of the European monetary system, would create a programme for change that would give small businesses the backing that they deserve.
  I said earlier that I wished to cover administration. I call on the Government to do three things. First, they should explain why, reportedly, Ministers will not support the Bill to be introduced by the hon. Member for Hampshire, East (Mr. Mates) on Friday to give companies a legal right to interest on unpaid bills. The phenomenal sums owed to businesses by major concerns and Government Departments are a disgrace. The Bill would provide a measure of relief from that.
  Mr. Michael Mates: I am grateful to the hon. Gentleman for mentioning my Bill. I thought that it was a relatively modest measure which would cause no trouble across the party divide and would be of help to small business men. Unfortunately, it is now clear that the Government are not in favour of it. I suppose that the cynic in me will say that it is because I propose to apply the measure to the Government so that they pay their bills on time. I understand the Treasury's reluctance to accede to the Bill. I hope that both Conservative and Opposition Members will be here on Friday to show the massive support of small business men throughout the country for my measure, which is designed purely and simply to help them in these difficult times.
  Mr. Taylor: I hope that many of the hon. Gentleman's colleagues will be present on Friday. After all, they are the largest group in the House. If his Bill is not passed, we shall ensure that it is in our programme for the next election. I hope that he can convince his party that it should be in its programme for the next election.
  I have probably spoken for longer than I should have. I cannot cover all the points that I had hoped to cover, but I believe that the Minister will find that I and my hon. Friends have outlined a programme to help small businesses through their present difficulties, which have been caused by the Government. It would bring a degree of cheer to businesses around the country if the Minister would say that he was prepared to accept it.
  7.44 pm
  The Minister of State, Department of Employment (Mr. Tim Eggar): I beg to move, to leave out from "House" to the end of the Question and to add instead thereof:

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  "congratulates the Government on creating an environment in which enterprise and small businesses are flourishing, and urges the Government to continue pursuing the policies which have led to a record increase in the numbers of self-employed and new business formations, as confirmed by the increase in registrations for value-added tax.".
  I begin by congratulating the right hon. Member for Yeovil (Mr. Ashdown) and his hon. Friends on choosing this subject for debate. It is useful from time to time to have a discussion on small businesses and the self-employed. However, I regret the extraordinary wording of the motion. It completely ignores the tremendous success of the small firms sector over the past 10 years. That success shows in the business climate established by the Government's policies, which favours enterprise and rewards risk taking and initiative. The current climate is in dramatic contrast to that created by the previous Labour Government, supported, of course, by their Liberal allies. The climate of the late 1970s was one in which small businesses were held back by punitive taxation, record levels of inflation and excessive union power.
  We took up the challenge to reinvigorate the economy by stimulating enterprise and encouraging innovation when we came to power in 1979. Over the past 10 years small firms have been, and will remain, a top priority for this Government. We have ensured that small businesses have been left free to get on with their role of creating wealth and jobs. The resurgence of small business in this country is described in the Employment Department's recent publication "Small Firms in Britain".
  These are some of the facts. Self-employment has risen by more than 60 per cent. over the past 10 years to stand at over 3 million. The early signs are that VAT registrations in 1989 show a net increase of 80,000, an average net gain of over 1,500 businesses a week—nearly 25 per cent. higher than in 1988.
  Mr. Alex Carlile: The Minister said that self-employment had increased. Of course, that is welcome. Does he agree that the strict rules imposed by the Inland Revenue on people who wish to be self-employed are restrictive and discourage self-employment? Many people work for one employer at a given time but would like to work for many others. The strict interpretation of the tax rules excludes them from doing that. I have written to Ministers about that on several occasions with no positive reply.
  Mr. Eggar: I understand the hon. Gentleman's point. With respect, it does not detract from the considerable increase in self-employment. A 60 per cent. increase over the past 10 years is a major achievement. I do not understand why the motion does not give recognition to the Government for their achievement in creating small businesses and increasing the number of self-employed.
  I said that indications showed a net increase in the number of businesses of over 1,500 a week over the past year. To set that in context, we estimate that there were 80,000 new VAT registrations last year alone. Between 1974 and 1979—the period of the last Labour Government—the net increase in VAT registrations over the whole five-year period was just 85,000. Last year alone there were almost as many new registrations as during the whole period during which the Labour Government were in power. During that time the hon. and learned Gentleman and his hon. Friends claimed to influence the Labour party for the better.
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  The "Small Firms in Britain" booklet showed that, of the estimated 2·5 million businesses in Great Britain, 96 per cent. are small firms employing fewer than 20 people. These now account for 36 per cent. of non-Government employment compared to only 27 per cent. in 1979, and make an enormous contribution to the economy. In addition, nearly half a million unemployed people have also been helped to set up their own business through my Department's enterprise allowance scheme.
  We have achieved those remarkable figures by reducing taxation, scrapping unnecessary controls and cutting red tape. We have left business men free to make their own decisions and to take the rewards with the very minimum of Government interference.
  Mr. James Wallace: I do not in any way dispute the figures that the Minister has just given to show the increase in self-employment during the past 10 years, but does he accept that at a time of increasing unemployment—it has almost trebled since the time of the Lib-Lab pact—a large pool of people have been necessarily forced into self-employment because they have been forced out of employment?
  Mr. Alex Carlile: That is the context.
  Mr. Eggar: The hon. and learned Gentleman is wrong again—[Interruption.] Well, we have created nearly 3 million new jobs in this country since 1983. We now have over 1 million people more in employment or in self-employment than in 1979. The facts do not coincide in any way with the assertions made by the hon. Member for Orkney and Shetland (Mr. Wallace). I realise that he is short of research assistants, but he should learn the basic statistics. The response to our policies for small businesses and the creation of employment has been tremendous.
  The achievement of the small firms sector is the achievement of these thousands—and now millions—of people who have made the conscious decision to branch out on their own during the past 10 years. They have made their own assessment that the conditions were favourable and have identified the needs of the market and of their customers. Hundreds of thousands of individuals have taken the opportunity to put their ideas into action.
  Mr. John Lee: Would my hon. Friend care to comment on the fact that in this important debate on this important sector of the economy the Labour party has in the Chamber only its official spokesman, a Whip and one Back-Bench Member who himself is probably nearer a large than a small business?
  Mr. Eggar: The vacant Opposition Benches obviously speak for themselves. While I was giving those figures for the net increase in business VAT registrations. I was indeed looking at the hon. Member for Great Grimsby (Mr. Mitchell) because he probably would have registered for VAT back in the early 1980s and so would not have featured in the net increase last year. The hon. Gentleman may wish to comment on that point when he seeks to address the House later.
  As I have said, the Government have worked steadily to reduce the disincentives to business initiative that we inherited from the last Labour Government. Taxation has been reduced and simplified. Every Budget since 1979 has seen reductions in taxation of one form or another.
  The reduction and removal of unnecessary and restrictive controls has been extended to other areas.

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  Controls on prices, dividends and foreign exchange—so beloved of the Liberals—have all been abolished, and many other areas of legislation have been simplified. Since 1979 more than 2,000 Government forms have been abolished and Government statistical inquiries have been reduced by over 1 million. Every new proposal for regulation, originating in either Whitehall or in Brussels, is now carefully scrutinised for its likely impact on business costs.
  New opportunities have been created for small business in the contracting out of central and local government services and in the liberalisation of areas such as bus services and telecommunications. This has enabled large numbers of new and expanding small businesses in these areas, and in others, to give better service and to create new wealth and new jobs.
  Our policies for small business have not only set up the right economic framework within which small businesses can succeed; they have also created an enterprise culture and stimulated a marked change in attitudes towards small businesses over the past few years. Not only are there many more small businesses, but they are being set up by entrepreneurs from increasingly different and diverse backgrounds. The number of women who are self-employed has more than doubled over the past 10 years. Indeed, the number of women taking advantage of the enterprise allowance scheme has increased from just 11 per cent. of all participants in 1983 to over 34 per cent. now.
  Furthermore, attitudes among young people towards business has changed to the extent that a recent MORI survey showed that 40 per cent. of young people were interested in running their own business and over a quarter—over 25 per cent.—fully expected to do so.
  Mr. Matthew Taylor: Before the Minister moves on from the subject of women going into business, does he accept that, while large businesses can provide work place nurseries, that is not the case for small businesses? Does he agree that it would be appropriate to help women who want to go into business or who want to work by providing child care vouchers so that they can contribute towards the cost of looking after their children and so that we can make the position more equal between smaller businesses and larger businesses in terms of their ability to help people in that way?
  Mr. Eggar: One option that is available to businesses of any size is to issue child care vouchers. Indeed, increasingly featuring in the enterprise allowance scheme are people who wish to start a business in helping and looking after children. I am sure that many more women will want to take part in creating businesses that set up creches. A number of options are therefore available to women, and businesses can take advantage of the scheme to which the hon. Gentleman has referred.
  Mr. Taylor: The Minister has misunderstood me. I was suggesting that the Government should provide child care vouchers, not that that should fall on businesses because small businesses cannot become involved in the same way as large businesses. If the Minister is not prepared to accept that, does he at least accept that it cannot be right for such provisions to be taxed as they are at present?
  Mr. Eggar: As the hon. Gentleman knows, tax matters are the responsibility of my right hon. Friend the Chancellor. The hon. Gentleman's speech and his intervention have shown what is, I suppose, an expected lack of any understanding of government. He has put forward all sorts of ideas, but has totally failed to show how they will be paid for. It is not possible simply to provide Government with bits of paper without somehow funding the ideas on them. It is all very well for the hon. Gentleman liberally and democratically to hand out the goodies—but if he were to produce the research to support them, perhaps he would have a little more credibility.
  Mr. James Paice: Will my hon. Friend give way?
  Mr. Eggar: I would rather not, but I will.
  Mr. Paice: Well, in that case I am even more grateful to my hon. Friend. While he was commenting on the various points raised by the hon. Member for Truro (Mr. Taylor), did he pick up the slightly throwaway line about the introduction of a land value tax? Will my hon. Friend discuss the devastating effect that that would have on many businesses including agriculture—[HON. MEMBERS: "No."]—and farming— [Laughter.] Well, perhaps that answers the point if the Social and Liberal Democratic party has not thought the issue through. Every time a tax has been placed on land, such as the development land tax, it has caused inflation in the value of land.
  Mr. Eggar: I am sure that my hon. Friend will wish to have fun exploring this point later in the debate, if he is lucky enough to catch your eye, Mr. Deputy Speaker. However, my hon. Friend the Under-Secretary has pleaded with me not to comment on that aspect of the speech made by the hon. Member for Truro, because he is looking forward to dealing with it himself. I hope my hon. Friend will forgive me if I do not go down that avenue.
  The Government's success in fostering the remarkable increase in business formation cannot be disputed. Our policy now is to build on this success and focus attention on the many businesses that were started up in the last decade and that are now facing the problems and opportunities of growth. We are determined to encourage those businesses that have the potential and the desire to grow, without abandoning our commitment to business start-ups. We need to encourage small businesses to identify their needs and seek advice, and to encourage individuals who already have the necessary expertise to provide it when small businesses ask for it.
  In addition, we have identified gaps in the market provision of services and in the advice available to small firms, and we have gone out of our way to fill those gaps. The loan guarantee scheme and the business expansion scheme are designed to meet the particular problems faced by small businesses when raising finance. The Training Agency offers a wide range of training for start-ups and growing businesses with a £50 million-plus commitment through business growth training. The small firms service and local enterprise agencies advise smaller businesses, while more specialised help is available through the DTI's enterprise initiative. Much of this help is delivered in partnership with the private sector.
  The critical new factor in this process will be the setting up of the locally based and employer-led training and enterprise councils. I am surprised that the hon. Member

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  for Truro, who has one of the first TECs in his region, did not comment on that or on the commitment by many leading business men in Devon and Cornwall to making a success of it. Perhaps he is not aware of what is going on.
  Mr. Matthew Taylor: The Minister is aware that I cut short my speech because of the shortness of the debate and my desire to let other hon. Members speak. There is a rather higher proportion of Social and Liberal Democrats here than of any other party. I would otherwise have dealt with TECs. Therefore, the Minister can now answer a couple of queries about them. First, would it not be possible to increase the role of small businesses in the TECs? Secondly, would it not be better to free them from the restraints of Government control? I have had feed-back from a number of people involved in TECs, and they feel that the TECs are far too directed centrally, and thus are unable to take as many of their own decisions as they would like.
  Mr. Eggar: I am not sure how well the hon. Gentleman understands the position in his TEC. I think that he is aware that the distinguished chairman of it is also the chairman of a smallish company and I would have thought that that is an obvious sign of the importance that we attach to the TECs being assisted by small businesses. As to the flexibility that the TECs need, this matter has been discussed—I have done so myself on at least two occasions—with the chairman of his local TEC. The hon. Gentleman will find, if he inquires, that a number of concerns expressed by the chairman about flexibility have been met satisfactorily. We have responded to the points towards which the hon. Gentleman was edging, and he may be a little out of date.
  The Government recognise that most small businesses face problems, either at key phases in their development or as a result of external factors. We recognise too that interest rates are causing problems to some small businesses, although it is important to remember that, at the same time, about half of all small businesses are in credit with the bank. Nobody wants high interest rates for a moment longer than is necessary. Hon. Members should be under no illusion that, in the longer term, a period of high inflation would do far more damage to the viability of small firms and their ability to plan than the level of interest rates.
  My hon. Friend the Member for Pendle (Mr. Lee) referred to the absence of Labour Members. I am not at all surprised by this. That the Labour party appointed the hon. Member for Bradford, South (Mr. Cryer) as the Minister responsible for small business is a sign of the importance that it attaches to that sector. The hon. Member for Berwick-upon-Tweed (Mr. Beith) said that the greatest achievement of the Liberal party was the sacking from that post of the hon. Member for Bradford, South. That is an interesting gain for the country, delivered through the Lib-Lab pact. If my memory serves me right, the hon. Member for Bradford, South gave other reasons for his departure from the Government, but I shall leave that dispute to him and the hon. Member for Berwick-upon-Tweed.
  Mr. Beith: The Minister is putting words into my mouth, albeit in a genial way. I did not claim that as our most significant achievement. We forced the Government to appoint as the Minister with responsibility for small
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  businesses somebody who understood what making a profit is about—the Right Hon. Harold Lever, and a very good job he did.
  Mr. Eggar: I congratulate the hon. Gentleman on that achievement. I suppose that one can put that in the positive side of the balance. I am rather more concerned about the tremendous damage done to the country during the period of the Lib-Lab pact. That is what really matters, as it had a dramatically adverse effect on small firms.
  Mr. Nicholas Winterton: My hon. Friend has spent two and a half minutes dealing with the hon. Member for Bradford, South but dealt with interest rates in less than 30 seconds. The problems facing businesses emanate primarily from high interest rates, and I hope that he will appreciate the great damage that these are doing to smaller businesses. I speak as someone who comes from a smaller business background, unlike half the lion. Members now present. High interest rates are crippling smaller businesses, adding to costs and making them less competitive against overseas manufacturers not only at home but in the export market.
  Mr. Eggar: My hon. Friend's knowledge of, and expertise in, all matters that come before the House is well known.
  Mr. Winterton: Too bloody sarcastic.
  Mr. Eggar: I apologise to my hon. Friend if he misunderstood what I was trying to say. I said that we recognise that for some companies, although not for all, interest rates are a problem.
  Mr. Winterton: Most of them.
  Mr. Eggar: It is generally recognised that about half of small businesses are borrowers from the bank and about half are in credit with the bank. Therefore, it is logical to say that, roughly speaking, half of small businesses are not adversely affected by high interest rates.
  Mr. Winterton: Try manufacturing.
  Mr. Eggar: I do not want to get into a disagreement with my hon. Friend because I recognise, as I have said, that some small businesses are affected by high interest rates. However, allowing inflation to get out of control would be far worse for small businesses—be they manufacturing businesses or other small businesses. I am sure that my hon. Friend will make his own speech in his own way, and I shall listen with considerable care to the points—
  Mr. Richard Shepherd: Will my hon. Friend give way?
  Mr. Eggar: If my hon. Friend insists.
  Mr. Shepherd: I understand why my hon. Friend may want to slide over high interest rates, but the intention behind them is to dampen demand. A reduction in demand affects all businesses, and that is one of the ways in which small businesses are squeezed. So to state that 50 per cent. of them are not in debt understates the position. Perhaps my hon. Friend has not given sufficient weight to that.
  Mr. Eggar: I know from conversations with my hon. Friend about his anxiety; he has particular expertise in the retail sector. Many small businesses in that sector are

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  affected by high interest rates, in terms of borrowing and of lesser demand. I accept my hon. Friends point, but I was not trying to skate over the problem. It is only right to put that problem in context and I hope that I did so in a balanced way.
  The Labour party's policy review shows that it is now even more hostile to small firms than ever before. Businesses would be required to pay a statutory national minimum wage—a recipe for destroying jobs and crippling fims as they are getting off the ground. All enterprises under the policy review, whatever their size, would have to contribute 0·5 per cent. of their pay rolls to a state training levy. Freedom to hire and manage staff would be effectively removed by a requirement to submit all personnel decisions to a joint union-employer body—
  Mr. Henry McLeish: Rubbish.
  Mr. Eggar: It is no good the hon. Gentleman laughing—that is what the policy review says.
  Labour's policy would smother small firms and stifle individual enterprise. To consult Labour about small firms would be as useful and effective as seeking King Herod's advice on child care.
  The Government will continue to encourage the small business sector. We shall continue to tackle the barriers to enterprise creation and to growth, whether they be in the form of attitudes to enterprise or of a lack of business knowledge and skills, or practical barriers in the form of red tape or restrictions on access to markets at home and in Europe. Conservatives do not only say that they are in favour of small businesses; we have proved by our actions and achievements that support for small businesses and enterprises is right at the centre of all our policies.
  8.14 pm
  Mr. Henry McLeish: We have heard a characteristically complacent speech by the Minister of State. It was interesting to see the little tiff about interest rates. The hon. Member for Macclesfield (Mr. Winterton) was right: the Government may want to take credit for blowing away lots of paperwork and Government inefficiencies, but the key problem facing small businesses is the crippling level of interest rates.
  How long does the Minister think this level of interest rates will continue; and does he seriously maintain that only a small number of firms are affected by it? The small business sector, along with the wider business community, is facing a bill of an extra £3 billion if the rise from 7·5 per cent. to 15 per cent. continues for a year.
  In view of jibes aimed at the Opposition today, I must point out that collective wisdom about small businesses has been invested this evening in my hon. Friends the Members for Great Grimsby (Mr. Mitchell) and for Jarrow (Mr. Dixon) and myself. I may add in passing that this is the first time I have been able to imagine someone leading a Conservative march in my constituency, and to look over his shoulder.
  The Opposition appreciate the contribution of the small business sector to growth and output and to employment. It was interesting that the Minister, who is usually courteous, would not allow me to intervene on a small
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  difference of opinion between him and the hon. and learned Member for Montgomery (Mr. Carlile) about the Government's claimed jobs miracle since 1983.
  I have a small challenge for the Minister and his able advisers. From the figures provided by the Department of Employment, particularly in the labour force survey, it is clear that, between June 1979 and June 1989, the net increase in employment in this country was 978,000; but 440,000 were double jobbers, and 470,000 were people on training schemes. By my calculation that leaves a net increase of 68,000 in 10 years. What does the Minister think of that calculation? Will he at last assure the House that these figures will be examined and that we shall hear no more nonsense about a jobs miracle made up of an odd collection of training places, part-time and poor quality jobs, double jobs and other dubious statistics related to self-employment.
  The small business sector employs about 6 million people, or one quarter of the work force. It is obviously a fairly powerful section of employment creation. The Government have argued, using labour force survey figures, that within this sector 3 million people are self-employed. Our research reveals that of the 1·2 million people who entered the self-employed sector between 1979 and 1989, to make up the total of 3 million, 900,000 pay no national insurance contributions. I challenge the Government to provide another set of statistics to verify that.
  Mr. Eggar: I shall be delighted to respond to the hon. Gentleman at length in due course. One of the reasons why his figures are wrong is that he used figures for the wrong year. It is some time since I looked at assertions that the hon. Gentleman published just before Christmas, but I think I am right in saying that he related figures applying to 1987–88 to 1989. I shall be delighted to set the hon. Gentleman right with the other reasons in due course.
  Mr. McLeish: I am delighted that the Minister acknowledges that our document, which was the focus of such merriment among Conservative Members the other day, has been read by his advisers. But he will not get off the hook by suggesting that extrapolating the figures for 1988 to 1989 makes up for the enormous difference between the Government's assertions about job creation and the true figures.
  I hope that the question of the self-employed and the doubts now surrounding the figures will be looked into. I am willing to accept that, as a result of the enterprise allowance scheme and other schemes, there are in self-employment a number of people who do not register in any of the Government's statistics and are only picked up from the labour force survey, on which figures the Government base their figure of 3 million.
  In the past, the small business sector has certainly been the focus of a political knockabout in this Chamber. There are certain reasons for that. When one takes into account the fact that one quarter of the work force are now engaged in small business development and that those people contribute about 20 per cent.—an enormous amount—to the gross domestic product, one realises that it is incumbent on all parties in this House not only to take very seriously the achievements in that sector but also to look at the potential there for further employment growth.
  Before looking at some of the concerns of the small business community at present, I want to refer to the hype

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  and rhetoric of the Minister of State. This is an area in which the Department of Employment too is becoming expert. It is intimidating to other hon. Members to have Ministers, in some respects, exploiting the small business community, using it to try to highlight what the deregulated market economy has produced.
  But the Government's argument about small businesses falls apart when hon. Members such as the hon. Member for Macclesfield intervene to raise the question of interest rates. The hon. Member for Truro (Mr. Taylor) also mentioned the uniform business rate. This is a saga of two halves. The Government have been shuffling papers for a decade. They have seen a rise in the number of self-employed people and an increase in the small business sector. But we must see a new relationship developing. This Government and any future Government must take the small business sector far more seriously than has been suggested by some of the comments that we have heard tonight. The new relationship between Government and the small business sector must revolve around the issues that actually matter.
  We have talked about crippling interest rates, but there are a number of other matters. It used to be the case that in any forum the Government could call upon the National Federation of Self Employed and Small Businesses to talk about issues and to reflect and support what the Government were attempting to do. In recent months, there has been a change in the attitude of those bodies. In my view, they now know that they were partly used by Lord Young during his sojourn in the corridors of power and by the Department of Employment, whose projection of what it is actually doing to improve the environment in which small businesses operate borders, at times, on the slightly dishonest.
  Speaking at a seminar on corporate finance in the City on 24 May 1989, the Chancellor of the Exchequer outlined clearly what businesses need. He said that businesses needed three things from Government—first, a consistent framework; secondly, minimal interference; and thirdly, limited practical help.
  Let us take the second issue first. Certainly we have now arrived at a situation of minimal interference, though I have to say that, when one speaks to people in small businesses about VAT and income tax, they put a different complexion on the situation. In March 1985, we had "Burdens on Business"; in July 1985, "Lifting the Burden"; in 1986, "Building Businesses—Not Barriers"; in 1987, "Encouraging Enterprise"; in 1988, "Releasing Enterprise"; and in 1989, "A New Tack on Red Tape". It is an annual event.
  Mr. Tim Smith: It needs to be.
  Mr. McLeish: The hon. Member says that it needs to be.
  In the early days of the development of the small business sector, there were real problems about the amount of red tape involved. What we now see is a ritualistic attempt to engage the small business sector, to create the impression that the problems that it faces are related to much of that, without actually addressing the crucial issues that have been raised in this House by hon. Members on both sides of the House.
  Clearly, the first of these issues is the question of interest rates. The irony of crippling interest rates is that they actually hit the companies that are growing fastest.
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  The Minister has made the point that the number of companies affected is small. In reality, however, the gearing ratio of a fast-growing small business is much more significant, and outgoings are much more significant.
  If such a business is asked by this Government to participate by paying its share of the £3 billion increase in debt, surely that will have an impact on the business's growth potential and its ability to introduce new technology and to create employment—clearly something that is valuable for all of us.
  But it is not only my opinion that high interest rates are hitting hard. I have here a press release from the National Federation of Self Employed and Small Businesses. Issued on 10 October, and headed "High Interest Rates Hitting Hard, Say Small Businesses", it says:
  "Mr. Bill Knox, Chairman of the National Federation of Self Employed, said 'Every percentage increase costs small firms £200 million. The real cost of money is at least 18 per cent. (15 per cent. plus 3 per cent. over base). This is how much businesses are having to pay to finance past expansion, to create new jobs, or even to survive. Small businesses are viewing the future with real concern.'"
  Does the Minister view the future with the concern that the National Federation of Self Employed and Small Businesses seems to have? I will give the Minister an opportunity to talk about interest rates, to answer the question that was posed by the hon. Member for Macclesfield: how long will small businesses have to endure this crippling burden? Is no hon. Member on the Government side willing to intervene and give me, with my limited knowledge, a lecture about when interest rates will come down? [Interruption.] I have given hon. Members opposite a chance to intervene, but all that I have heard is murmurs, and all that I see is grim faces.
  Mrs. Currie: Is the hon. Gentleman suggesting that we should return to the situation that prevailed not so long ago, under a Labour Government, in which the rate of inflation was regularly over 20 per cent? One has only to look at the results. Far more firms were going out of business entirely than were coming into existence. These days, despite all the problems and the pressures that the hon. Gentleman has described, far more businesses are being created week by week.
  Mr. McLeish: It is amazing that a party that has no future always wants to dwell on the past.
  My concern—[Interruption.] Let me explain the point that has been made by other hon. Members about inflation rates. In no country of the developed world—and certainly not among our European competitors—would the Finance Minister, the equivalent of the Chancellor, use one heavy blunt instrument to attack financial and trading difficulties. That is the crucial test for this Government.
  There is another measure. Despite what Ministers have said, the number of receiverships jumped by over 40 per cent. last year as the squeeze hit. As a postscript to that, let me quote from an article in The Times of 12 January:
  "The survey also shows that three accountancy firms established a clear lead over all others in the receiving and managing sector. Cork Gully, the specialist division of Coopers and Lybrand, was appointed to 150 firms, Grant Thornton to 110, and Peat Marwick to 107"—
  another set of statistics that the Government should be duly proud off.
  The uniform business rate has been mentioned. I think that the hon. Member for Truro gave it sufficient airing and that therefore I need not to into great detail. While, in a very simplistic sense, the north will benefit signficantly

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  and the south will have an extra burden imposed on it, it is quite clear, again from the National Federation of Self Employed and Small Businesses, that the impact of the transitional payments will disappear. Their phasing in is an illusion in terms of the impact that they will ultimately have on small businesses.
  I again ask whether the Government are truly the friends of the small business community. The business rate will start in April and it appears that people in small businesses will have to go to the local authority to determine the current position about rateable value. Discussions should be taking place with the small business community. Day in and day out, the Government lecture us and say that they are the true friends of the small business and that any other party, Liberal or Labour, that speaks or even hints at an interest in the small business sector is frowned upon. Things are changing, and it is easy to see why.
  The Minister talked about training and technology. The key issues for the future of small businesses are not only output and employment growth but whether the nation and the Government can link together to ensure that product development and innovation and training can be properly applied. Many small businesses do not have the resources to carry out those important tasks.
  Training and enterprise councils were mentioned. The Government say that, as friends of the small business, they welcome small businesses to TECs. Why is it that the National Federation of Self Employed and Small Businesses put out a press release on 23 September which was headed:
  "Small firms to lose out in Government training plans"?
  The press release said:
  "'We are concerned with the direction of training in Britain. Norman Fowler states that Training and Enterprise Councils (TEC's) will be big business. Our fear is that they will be for big business only', says Lyn Hadfield, Chairman of the NFSE's Training and Education Committee. 'The composition of the boards of TECs could well lead to specialised training for large companies at the expense of smaller firms.'"
  It is interesting to note that the small business sector is lauded by the Government but never invited to the top table. It is crippled by interest rates and by the uniform business rate. It is supposed to be involved in training, but it will be excluded from virtually every TEC in England and Wales, and the situation is similar in Scotland.
  Mr. Wallace: The hon. Gentleman has said that small firms have never been consulted. Will he comment on the fact that, as the poll tax comes into operation in England and Wales, employers will have to be involved in attaching the wages of employees? That unhappy burden has been placed on small business by the Government without the small business sector being consulted.
  Mr. McLeish: The hon. Gentleman makes another valid point to add to our attack on the Government. The Government's attitude smacks of hypocrisy; we experienced a great deal of that in the Minister's characteristically complacent speech.
  The Public Accounts Committee's eighth report on assistance to small firms said that the Government have machinery to do much more about training in small businesses. The training for enterprise concept is interesting, but the Public Accounts Committee criticized
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  it because it was badly focused. There was no real idea of the return on the investment in terms of the impact that the scheme had on participants. If the Government value the contribution of small businesses, they should bring them into TECs and also discuss with them the extension of existing machinery in the Department of Employment to encourage small firms to expand their output and make a greater contribution not only to their employees, but to national welfare.
  The nation requires a great deal of consensus on how we move forward in industry and on employment and economic performance. The National Federation of Self Employed and Small Businesses expects the Government to put forward policies that will help the NFSE. The firm statement to the Government is that crippling interest rates must be lowered. If they are not, the number of firms going into receivership will increase. Small businesses provide 6 million jobs—a quarter of Britain's work force. It also contributes one quarter of our gross national product. If the Government believe in small businesses, they must show that they want them to become involved by adjusting the TEC provision and making sure that they are allowed to speak to Government.
  8.34 pm
  Mr. Michael Grylls: The hon. Member for Fife, Central (Mr. McLeish) and the hon. Member for Truro (Mr. Taylor), who has just left the Chamber—briefly, I am sure—were scraping the barrel when they tried to attack the Government's policy on small firms. Clearly that is their job, but I listened carefully to their speeches and I sensed that they were finding it somewhat difficult to mount the case that the Government have failed to encourage small firms and foster their interests. Any disinterested observer would see that mounting such a case is impossible.
  My hon. Friend the Minister was right to say that the climate has been totally transformed. Of course there are problems, and I shall come to them shortly. Entrepreneurs would not start businesses if they were not prepared to deal with problems. That is what sets such people apart from a corporate man or someone in the public sector who has a rather comfortable life. The entrepreneur recognises that life is tough and that he has to solve problems. I am sure that my hon. Friends will agree that the Minister mounted a most convincing case to show that the small firms sector has been transformed. The climate is totally different. There has been a great deal of deregulation, but there is still a long way to go. Much good has been done and the number of complications faced by small firms has been greatly reduced. That should encourage us to go further.
  Taxes have been changed. The hon. Member for Fife, Central made much of interest rates. I shall deal with that before my hon. Friend the Member for Macclesfield (Mr. Winterton) leaves the Chamber. I see that he has slipped back into his seat. I remind the hon. Member for Fife, Central that in 1979 the rate of corporation tax for small firms was 42 per cent. The hon. Gentleman may have forgotten that. It is now down to 25 per cent. and we have every expectation that it will come down again in succeeding Conservative Budgets.
  The rate of taxation for the sole trader, the self-employed person, went up to a maximum of 83 per cent. and it is now down to 40 per cent. Many capital taxes

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  have been reduced, and that is important from the point of view of leaving money in a business so that it can expand. This is a serious subject and perhaps it was a little irresponsible of the hon. Member for Fife, Central to have political fun at the expense of the Government on the subject of interest rates.
  There was a forest fire involving some of my hon. Friends a short time ago and my hon. Friend the Member for Macclesfield threw in a match to ensure that it was burning properly. However, he is quite right to say that interest rates are a problem for many small firms. My hon. Friend the Minister accepts that and does not need to speak for a quarter of an hour repeating that that is a problem for small firms. However, it is not a problem for all of them because we have to add to the equation the question of demand. Of course it is true that the high interest rates from which we are suffering will reduce demand. However, we must remember that we have had eight years of record growth and demand in the small firms sector. When that is coupled to the reductions in taxation and deregulation, it will be seen that it has contributed to a huge growth in the sector. We have run into the problem of inflation.
  My hon. Friend the Member for Derbyshire, South (Mrs. Currie) was right to say that inflation is the real killer. It is the worst of the two problems. I note that my hon. Friend the Member for Macclesfield is nodding. He is a wise man who nods only when he agrees. He was nodding when the Minister spoke about inflation. Had we allowed inflation to continue at 20 per cent. for five years, that would have removed all the capital from businesses. It is not a very difficult or complicated mathematical equation; even I can work it out. Inflation is the worst evil. It is worth dealing with it in the short term because it must not get a real grip on the economy. I doubt that anything divides my hon. Friend and I on that point.
  Mr. Nicholas Winterton: I believe high interest rates to be a major contributory factor to inflation. There should be a more selective weapon to deal with inflation than high interest rates, which kill the goose that lays the golden egg—which is manufacturing industry and industry in general.
  Mr. Grylls: That is my hon. Friend's view. In 1980 inflation was running at 20 per cent. If we had not tackled it, it would have been the worst conceivable evil. We dealt with it again when it rose by a small degree in 1985. It has risen again in 1989–90, and I believe that the Government's policies that succeeded in 1980 and 1985 will succeed now. Of course, it would be dishonest to pretend that that cannot be achieved without a great deal of pain.
  I want to contrast Britain with West Germany. During the past eight years Britain has had a higher rate of growth, but West Germany has had lower interest rates, especially now. It is a question of balance. Some aspects are better in West Germany but some are better in Britain. Like other hon. Members, I travel around the country and meet many small business men. They all say, "We must not have inflation because that will kill us."
  We shall have the Budget in a few weeks, and there is room for the Government to make further changes in taxation that will help the cash position of businesses. Although corporation tax for small firms has fallen from 42 per cent. to 25 per cent., for a new and growing business it still means that a quarter of its profit is lost in taxation.
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  That is too much. There should be a lower starting rate, at least for the newer businesses in their most fragile years—perhaps the first three years. Perhaps there should be a new rate band from nil to £25,000 or £30,000 of profit. That would give small companies the opportunity to move on to the next stage of development so that they could expand their premises and take on more employees.
  If too much is taken out of profit—and I believe that 25 per cent. is too much—how can a company grow? The only way that it can grow—and this comes back to interest rates—is to borrow, which in itself creates a problem. It would make much more sense if the Chancellor left more money in the businesses so that they could grow from their internal cash generation. I hope that that will happen.
  Another longer-term measure would be to cut even further the inheritance tax rates for businesses. If we sincerely believe, as we do, in the enterprise culture—in the encouragement of people to take risks and invest their money in firms—firms should be passed on from one generation to another. Most firms do not reach their optimum size in only one generation. Inheritance tax has been reduced to 20 per cent., which is better than it was—it was awful—but if a firm with an asset value of £1 million, which is not a great deal in current terms, is to be passed on to the next generation, some £200,000 in cash must be produced.
  I sometimes think that the Treasury believes that small firms have pots of cash in drawers just waiting to be handed over when the firm is passed on to the next generation. That does not happen. A well-run business uses its cash to develop and to advance. We must make the Treasury understand that. Some may say that firms can take all sorts of fancy measures, such as consulting accountants and lawyers, avoiding tax, transferring assets outside the seven-year rule and so on—but that is not the point. The one thing that most entrepreneurs cannot decide is when they will die. That is something that even the Treasury cannot get round. Of course, I am not referring to private money—that is a different argument—but businesses should be passed on without an inheritance tax liability.
  Another area in which the climate has been transformed is the provision of general finance, especially through venture capital, the highly successful loan guarantee scheme and the enterprise allowance scheme for very small new businesses. However, there is still a gap and we would be wise to consider the practice in West Germany, where small businesses have loans totalling the equivalent of £4·5 billion at interest rates below the going rate, which is very low anyway. West Germany has prudently looked after the Marshall plan money, which is still allowing small businesses to borrow at special rates of interest. Of course, we do not have Marshall plan money in Britain, but it is an aspect that should be considered.
  Multinational companies can borrow in the Euro dollar market at quite low rates, even with the high interest rates in Britain, but small firms have to pay the maximum rates. That is rather like telling young children to stand on their own feet, but when they grow up putting them in a nursery. We should consider ways to give growing businesses a leg up with special interest rates. We could also offer subsidies and so on, but they are complicated.
  In 1988 about £1·5 billion of venture capital was loaned to about 2,000 firms, so it has been a successful innovation. The hon. Member for Fife, Central was not in the House in 1979, but the venture capital market was almost

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  unknown. It is all new money. However, it has tended to go to firms with a high growth rate. Perhaps we should worry about the plodding firms such as the good, steady engineering companies that do not have a high growth rate and so are more difficult to finance.
  I am sure that the problem of high interest rates will be temporary, and I hope that most of our firms can cope with them. It is a problem of today, but it will not be the problem of 1991. I am not suggesting that we should pat ourselves on the back because there is always more to do. The small business sector suffered 40 years of neglect until 1979 which cannot be rectified in just 10 years. It needs another 10 years of Conservative government to improve the climate in the ways that my hon. Friend the Minister explained so convincingly in his speech. I hope that very shortly we shall be given the opportunity for that further 10 years.
  8.49 pm
  Mr. Geraint Howells: As a very small business man, Mr. Deputy Speaker, may I begin by declaring my interest, as usual, and thanking you for calling me in this important debate for the small business man. This country was built up by the vigour and enterprise of small businesses and the self-employed, but they are now being squeezed to death by the power of the big battalions and the lack of concern of the Government. My constituency has a higher percentage of self-employed than others. I am proud of their record. I know the problems at first hand, and I have become more and more concerned about the increase in pressure under which the self-employed work and live.
  I listened with interest to the Minister, whom I respect in many ways. He must take more heed of what his hon. Friends have said about high interest rates. I should not like him to be sacked for not looking after the interests of small business men, but he should have a word with the Prime Minister because I believe that the hon. Member for Macclesfield (Mr. Winterton) would do a good job as a Minister responsible for small businesses and farmers.
  Many hon. Members, like me, represent areas with a large number of self-employed. When I go back to my constituency in Cardiganshire and north Pembroke people never mention inflation, although it is a big problem. They always talk about high interest rates and their effect on farmers and small businesses. They may be wrong in thinking that high interest rates have more effect on their businesses than high inflation.
  I have been in the Chamber since 7 o'clock. I think that only six hon. Members who have been here since the beginning of the debate were Members of the House in 1978. Human nature never changes. We always like to laugh at young Members who are up and coming politically, but I am ashamed that some Conservative Members laughed when my hon. Friend the Member for Truro (Mr. Taylor) was trying to make a good case for the self-employed and for small businesses.
  Mrs. Currie: That is because he is an idiot.
  Mr. Howells: The hon. Lady did not help many small businesses when she was a Minister.
  I do not blame Conservative Members if they want to criticise the Lib-Lab pact. They may criticise the Liberals
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  as much as they like, but we are still here. May I remind them that our former leader, my right hon. Friend the Member for Tweeddale, Ettrick and Lauderdale (Sir D. Steel), did something for small businesses that other hon. Members did not achieve. During the first few days of the pact my former colleague, Richard Wainwright, who was then the hon. Member for Colne Valley, and I met the hon. Member for Bradford, South (Mr. Cryer), who was a Minister at the time. I shall not comment any more, but we were not pleased with the result of our meeting. On our return we had a word with our leader. In his wisdom he suggested that he and others should see Lord Callaghan, who was then Prime Minister, and press on him the need for a Cabinet Minister to look after the interests of the self-employed and small businesses. That was achieved.
  If Conservative Members disagree with what I have said, I can tell them about a letter that I have in my office from Lord Plumb, the leader of the Conservative party in Europe. He wrote to me at the end of 1978 to congratulate the Liberal party and Members of the Lib-Lab pact because the 1978 Budget had been the best one ever for farmers and small businesses. [Laughter.] There is no need for the hon. Member for Derbyshire, South (Mrs. Currie) to laugh. These are the facts of life.
  The hon. Member for Cambridgeshire, South-East (Mr. Paice), who has left the Chamber, said that the Liberal party was in favour of rating agricultural land. Other hon. Members have expressed the same view over the years. I advise the hon. Gentleman to have a chat with his hon. Friend the Member for Southend, East (Mr. Taylor) who decided a few years ago to introduce a ten-minute Bill on the rating of agricultural land. I opposed him. I am delighted that the majority of Conservative Members came into the Lobby with me and the Bill was defeated.
  Lest any other Members want to jump up to support the rating of agricultural land, may I tell them that I have a letter of apology from an ex-Minister of Agriculture because he and others had misled hon. Members about our policy. I hope that hon Members who have come to the House over the last 10 years will realise what we Liberals stand for. We will stand by our policies. Conservative Members should not laugh at what we have done over the years or at our achievements under the Lib-Lab pact, of which I am proud.
  I have been a farmer all my life, as well as a small business man. Yesterday the Minister of Agriculture, Fisheries and Food announced an extra payment of 75p for the hill livestock compensatory allowance for sheep. Perhaps hill farmers in Cardiganshire will make a collection for the Minister so that he can help the Government out. I think my constituents would be willing to do that.
  Investment in United Kingdom agriculture has fallen by 40 per cent. in the last five years. Full-time employment in the industry has also fallen dramatically, with the loss of some 60,000 jobs in five years. Right hon. and hon. Members speak often about the environment, but it is the farmers on the highlands and marginal lands of Britain who are really responsible for looking after it. It is a great shame that so many of them are leaving the land and the rural areas of Britain, never to return. They have been the guardians of the countryside for generations. It is a great pity that the Government are unable to help the people who have looked after the interests of us all for generations.

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  My hon. Friend the Member for Truro mentioned at the beginning of his excellent speech the Interest on Debts Bill that is to be introduced by the hon. Member for Hampshire, East (Mr. Mates). There is great merit in his proposals. Dr. Emyr Roberts, the National Farmers Union deputy director for Wales, states:
  "We very much welcome this Bill, which would help virtually all farm businesses. It would allow small and medium-size firms the statutory right to interest on overdue debts from central and local Government, nationalised industries and large firms. It would not affect small and medium-size businesses in their trading with each other, and a big company could not use it against a small firm."
  At a time of high interest rates, it is vital that small businesses such as farms are paid promptly, as they cannot withstand payment delays in the way that large firms can. The NFU will urge all Members of Parliament to support the Interest on Debts Bill. I hope that, Ministers also will support the hon. Member for Hampshire, East and his Bill, which will do a power of good to everyone in agriculture and in small businesses.
  High interest rates are crippling farmers, shopkeepers, bus operators, and everyone concerned with rural, urban and city life. I hope that, when he replies, the Minister will reassure all those affected by the Government policy of high interest rates that he personally will persuade his right hon. and hon. Friends in Government to lower interest rates this coming year. If he will, the people of this country will be delighted to hear that news. Let us hope that small businesses and small farmers, who have been the backbone of this country, and still are, will be helped sooner rather than later.
  9.1 pm
  Mr. Graham Bright: I welcome the fact that the topic for debate chosen by the Liberal Democrats is small businesses, because they have played a growing and more important role in the development of industry over the past 10 years. It is necessary not only to acknowledge that but to congratulate the Government on the work that they have done and to reflect on ways in which small businesses can be improved still further.
  Like the hon. Member for Ceredigion and Pembroke, North (Mr. Howells), I am a small business man. That statement usually brings a laugh in view of my stature. The hon. Gentleman and I are similar in that respect. I have been a small business man for a number of years.
  I was interested to hear about the Lib-Lab pact's one moment of glory, when it disposed of the small firms Minister. Mr. Harold Lever, without doubt, understood the problems of small businesses. The pity is that, while he was in office, and during the period of the Lib-Lab pact—and I am sorry to mention it again, because I know that it upsets Liberal Democrat Members—small businesses and business men still suffered increases in income tax, corporation tax, capital transfer tax and capital gains tax.
  At the same time, legislation was introduced such as the Employment Protection Act 1975, which was nothing more than a form of appeasement to the unions. However appropriate it may have been for large firms, it imposed crippling requirements on small businesses. When debating the problems of small businesses, we must not only think of interest rates, because those problems cover a much broader spectrum.
  It is surprising that the Liberal Democrats could not bring themselves to congratulate my right hon. and hon. Friends on the steady rise in the number of businesses that
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  have registered for value added tax since 1979. The Minister has already spelt out the enormous growth in self-employment, which has risen from 1·8 million to 3 million. We now have more than 2·5 million small businesses. It is partly because so many new businesses have been created in the past year—the weekly rate has increased from 500 to more than 1,500—that there have been more business failures.
  The hon. Member for Ceredigion and Pembroke, North talked about farming. I do not farm, but I am a business man who, like a farmer, sows seeds, in the form of investments. Business men, like farmers, do not always get it right, and some of the seeds fall by the wayside; but they till the ground and work hard to protect those that take root.
  Hon. Members cannot simply point to interest rates. Lack of management expertise, poor marketing skills and bad financial practice often cause companies to go out of business, and I pay tribute to the Government for their investment in the small firms service.
  Mr. Alex Carlile: The hon. Gentleman gives the impression that only incompetent managers "fall by the wayside" because of high interest rates. Does he not agree that many good, sound, careful, competent financial managers have seen their businesses collapse because of the crippling rise in interest rates?
  Mr. Bright: The hon. and learned Gentleman should have listened more carefully. I accepted that high interest rates caused problems, and I shall say more about that in a moment, but I also emphasised the fact that there are many other reasons for business failures. Failure in business is a horrible thing: we do not share with the Americans the culture that accepts that seeds must be sown if growth is to follow. It is easy for those who fail to blame interest rates without considering the facts.
  One of the reasons why I praise the Government's contribution to the small firms service is that thousands of people have gone into business for the first time. It is not easy to run a business. There is a considerable difference between having manufacturing or engineering skills, or a flair for art, pottery or tapestry weaving, and having the marketing expertise to sell the product. Business men must understand accounts and cash flow or the company is likely to get into trouble. The small firms service has recognised that they sometimes need their hands held, and is able to guide them through difficult times. It has enabled many companies that would have collapsed in the past to survive and succeed.
  Let me join in the spirit of the debate and make some constructive and positive suggestions. We still have a long way to go in assisting small firms, and I should like to see a change in administrative methods within Government. I have argued for a long time that the small firms division of the Department of Employment should be enlarged and should deal with the enterprise and deregulation unit, and that its operations should include the Development Commission and the Council for Small Industries in Rural Areas, which are now the responsibility of the Department of the Environment. I should like all the small business organisations to be brought together.
  The hon. Member for Fife, Central (Mr. McLeish) spoke about training. That is an important concern for small companies which are not attracting people with the right skills. Small businesses require people with multiple

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  skills because a small company cannot afford to employ, for example, a maintenance man, an electrician, a plumber and a carpenter; it has to employ someone who can do all those jobs. We should emulate the Japanese and the Germans and employ people skilled in multiple disciplines, particularly in maintenance. We should look at our education system, and encourage fifth-year pupils in secondary schools to take vocational courses for industry. We should recognise the needs of small businesses and not encourage people to seek work only in large companies. Some of the initiatives to bring education closer to industry, such as the city technology colleges, are extremely important.
  Two areas in which the Government have actively helped small businesses are the loan guarantee scheme and the enterprise allowance scheme. We should attach to any money handed out under those schemes the obligation that the people receiving the money should undergo some training to make sure that they are equipped to run a business. The enterprise allowance scheme brought many people into business for the first time and managed to keep them in business for a year, but when the allowance was taken away many businesses failed. Perhaps it would be a good idea to examine the training facilities available and make it obligatory that people understand the basic principles of running a business.
  I accept that we have done a great deal to help by doing away with form-filling and mountains of forms, but we should consider the number of inspectors and officials who call on small firms as they are the bane of small business men. There is a powerful case for a single statute modelled on the Rights of Entry (Gas and Electricity Boards) Act 1954, defining the rights of access for everyone to understand. Those who have rights of access should declare who they are, why they are there and what authority they have to visit the factory. I should like an enlarged factory inspectorate to deal with a whole range of issues rather than having so many people appear on site. There is often friction, and that is extremely confusing for small business men.
  The question of late payment has been mentioned, but the House will have ample opportunity to discuss that on Friday. In my view, by delaying payment large companies often weaken their suppliers, and that is not in their interests. However, I am sceptical about the introduction of legislation as it would not necessarily work in favour of small business men.
  We should do more to encourage local government to open up contracts for small businesses. There are still far too many bogus and dubious so-called health and safety grounds that stop small businesses getting involved in supplying local government. Small businesses should be taking over some of the printing and other local government services.
  I began by congratulating the Liberal Democrats on allowing us to discuss this subject. As soon as they saw the possibility of small business men crying with anguish about the interest rates, they tried to jump on the bandwagon. I have every confidence that interest rates will fall. However, like my hon. Friend the Member for Surrey, North-West (Mr. Grylls), I believe that we must consider the fact that large companies can borrow from abroad. Having talked to the banks, I can see no way in which that
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  can be extended to smaller companies. We must consider that point carefully to see whether some special borrowing powers can be applied to small businesses to allow them to have a lower rate. There is nothing sacred about that, because many large businesses enjoy that privilege already. We are not trying to buck the system; we are trying to make the playing field level once more for small businesses.
  I am confident that when people pass judgment on the Government the small business men will acclaim the past 10 years as being a period of enormous success for them, and the figures prove that.
  9.16 pm
  Mr. Austin Mitchell: If small businesses look to this debate for salvation or hope, they would be better employed going bankrupt. Only my hon. Friend the Member for Fife, Central (Mr. McLeish), in his excellent speech from the Opposition Front Bench, displayed any understanding of the issue. Only he grappled with the problems. For the Government, the Minister turned a condescending sneer into a system of economics and Conservative Back Benchers whistled into the wind in an attempt to keep up their spirits as their majorities decline. They seemed only to say that, bad as things are, they would be worse under Labour. People do not believe that.
  The Liberals have shown a unique skill in framing incomprehensible motions. Well, I call it a motion, but it is more of a skip into which they have shoved everything. Perhaps a skip is a bit big. It is more like a Tonka toy dumper truck into which they have placed all their quirks—interest rates, the uniform business rate, bureaucracy, debt and regular brushing of teeth. It is all there. The motion even includes several non-sequiturs, the most amazing of which is that they want the relief associated with the uniform business rate to be extended. So far as I understand it, that would mean the north subsidising the south. The Liberals appear to be claiming that the north should subsidise the south for some time.
  I am no friend of the uniform business rate. However, I very much doubt whether the main topic of conversation on the Borders, in Berwick or in Southport is, "Good grief, what an awful time Harrods will have when the uniform business rate comes in. We must keep up our subsidy." If that is the extent of the Liberal's thinking on the matter, it is pathetic.
  The other pathetic part of the ridiculous motion is that membership of the European monetary system is introduced as the Liberal's answer to everything. In the previous motion EMS was the answer to the situation in eastern Europe. They asked, "Are there problems in eastern Europe? Well, the EMS will solve them." The EMS is now the answer to the uniform business rate, to bureaucracy and to everything else. Why is the EMS not the answer to AIDS, the problems facing the National Health Service and vandalism?
  The Liberals' view of the EMS is similar to a view expressed by Lord Randolph Churchill when he described Gladstone. Before the Liberal party became green, Gladstone used to spend his time at Hawarden chopping down trees. The Liberal faithful were brought round the grounds to catch a sight of the great man and they were all presented with a chip from those trees which they went home clutching. Lord Randolph Churchill asked, "What is Gladstone's answer to the problems facing the world?

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  Chips. What is his answer to eastern Europe? Chips. What about the poor? Chips." His counterparts today, Gladstone's teenage heirs, offer businesses a pamphlet on the EMS as those businesses head towards the bankruptcy courts.
  The Liberals portray a pathetic understanding of the EMS. The exchange rate mechanism ties other currencies to the deutschmark and uses them to keep the deutschmark down. The central problem with trading in Europe is that the Germans are generating a huge surplus and that means that the deutschmark should rise if we are to trade fairly. However, currencies are used as guy-ropes to keep the deutschmark down. That is why the exchange rate mechanism has had such a deflationary effect on the economies of France and Italy, in particular, with unemployment at 2·6 million and 2·9 million respectively. There has been a depressing, deflating effect. They are forced to deflate to get down to West Germany's abnormally low rate of inflation. Full membership of the exchange rate mechanism would have exactly the same effect here. It would become an engine of deflation.
  The Liberals want to enter the EMS, whatever is the exchange rate. When the deutschmark was 2·80 to the pound, they said, "Join the EMS". When it was 3·20 they said, "Join the EMS." Now it is on its way down again, they still say, "Join the EMS." They are not bothered. Yet the real problem is the valuation at which we enter. If we enter at an unsustainable valuation, it will not keep interest rates down. We would be forced to throw every engine of the economy, particularly interest rates—it is the only one that the Government have—into maintaining an untenable exchange rate. That is exactly the effect. Interest rates would not go down; they would fluctuate more wildly in the ERM. That is why the Labour party has very wisely suggested four conditions for joining.
  A rate will be determined by competitors who have a vested interest in access to our market and who want us to be over-valued so that they can send us more of their manufactured goods, and cause our industry to suffer. That is exactly the effect of membership. Deflation would be the inevitable result. Deflation is the real enemy of small business.
  Mr. Eggar rose—
  Mr. Mitchell: I shall give way to another condescending sneer from the Minister.
  Mr. Eggar: Is the hon. Gentleman in favour of our joining the exchange rate mechanism?
  Mr. Mitchell: The Minister heard me say that the Labour party has suggested four conditions. Since I think that those four conditions are unattainable, that is my position.
  Deflation inhibits the growth and development of small businesses. The Government's only achievement has been to make big businesses small and small businesses bankrupt, and to turn the unemployed into small business men by making them self-employed. That is their policy for small businesses.
  The real problem for small businesses is that the economy is run not for the needs of business or for industry or manufacturing—not for making things—but for those who manipulate money. Big financial institutions are the main enemy of small businesses. Their attitude, not in advertisements but in reality, is to lend small business a
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  brolly when it is sunny, to snatch it back as soon as it rains, and then to charge it for taking it back again. They would much rather buy estate agencies and banks in America. go bankrupt with them, and lend money to South America than lend it to small business in this country. That is the record of our financial institutions. If an economy is run for financial institutions, as ours is, it institutionalises over-valuation, because financial institutions' interests are in buying foreign assets cheaper and putting more money overseas than they are investing in this country. That is their record, and that is the way in which they run the economy. That is the way in which the economy has been run under this Government—for a high exchange rate, for high interest rates, and for the interests of financial institutions, not making things, selling things and surviving in a tough world.
  We need an economy that is run for manufacturing, with a competitive exchange rate and cheap money, which allows business to invest, allows us to become competitive and allows us to export, which makes exports cheap and imports dear, and allows us to build national champions such as those that have been successful in competing economies, in particular those of West Germany and Japan—national champions to export. It is on the back of that that small business becomes prosperous and expands. It needs a healthy, competing manufacturing sector.
  With deflation, small business shrinks. The Government began with a disastrous rate of inflation that crucified small businesses for four years and caused many of them to go bankrupt. They have never allowed manufacturing to expand its base so that it can do its job of supporting a national economy, provide jobs, generate growth, provide a surplus of spending power and provide the high-skill, high-wage economy that generates demand for small business. That is what it is all about.
  The only way in which we shall have a successful small business sector is by having a successful economy. That is why there is such a high proportion of small businesses and why small businesses are so active in Germany and Japan. They have a successful manufacturing economy. That is what we have destroyed and undermined. Until we recreate that, it is no use the Government promising sops and diverting into side issues of more freedom, fewer inspectors—which was the suggestion from the hon. Member for Luton, South (Mr. Bright)—freeing business from controls and regulations and allowing them to fire staff, neglect training, and undermine the conditions in which staff work. Through all those side issues and the manipulation of emotive symbols the Government try to escape the fact that the economy is being run, not for industry, small business, survival, competitiveness and jobs, but for finance and deflation.
  Under "Blabynomics", with the obsession of the previous Chancellor of the Exchequer with following the deutschmark, we should have had even higher interest rates. That was one Major gain from the change of Chancellors. It is now Government policy to let the pound fall while pretending to keep it up. They walk backwards towards a devaluation market pretending that it is not happening. Yet they are keeping interest rates too high—much higher than our competitors, higher than industry and small business can bear and far higher than investment requires.
  With a trade deficit the size of ours, the pound must come down. Interest rates must come down, too, because we have to invest to survive. Unless we invest to rebuild

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  and expand our industrial base, we shall not survive; it is as simple as that. It is no good the Government whistling in the wind and distracting small businesses from reality by the lures that they introduce.
  This next year will be horrendous for small business. No one has denied that prospect tonight. The small business sector will be tortured by high interest rates. They will be prodded and their position will be made worse by the uniform business rate and higher charges for electricity, water and telephones to fatten up the privatised industries. Telephone charges are now far higher than those in most countries on the continent. Small busineses will be depressed by the decline in spending power as people grapple with inflation, as unemployment increases and as people fail to improve their wages. All that contributes to a general decline. One person's spending is another person's income: money circulates. The Government's policies are dedicated to deflating and squeezing the economy in a fashion which is reminiscent of the attitudes, jargon and lack of concern with which they went into the great deflation from 1979 to 1982 which was so ruinous to British industry and, particularly, for the small business sector.
  We are, in business as in society, one of another. We advance together or we do not advance at all. One does not advance the interests of small business by allowing it to triumph over its workers, dodge restrictions, fire people and avoid its commitments to safety and training. We advance together with a healthy, prosperous industry which produces the skills, incomes and wages for people to spend in the shops on the products of small business, to activate the suppliers and small business so that we all grow together. That is true of the economy and of society.
  That will not happen until we replace a Government who have been completely ignorant of the interests of business and industry and deferential to those of finance and money and those who manipulate money. We must replace them with a Government dedicated to the interests of jobs, expansion and growth and to working together for an expanding future in which we have a strong industrial base on which this country can survive, compete and hold its head high in the world. A Labour Government will rebuild the economic health and heart of Britain.
  9.29 pm
  Mr. Richard Shepherd: I am aerobicised after the activities of the hon. Member for Great Grimsby (Mr. Mitchell). The agility with which he leapt from one theme to another would have put Saul Samuelson at a disadvantage. Nevertheless, the hon. Gentleman tackled some important and great themes.
  I began as a very small business man after leaving university with a single shop in Earl's Court road. It has given me a modest prosperity and has enabled me to come here. As is said, "Those who can, do—and those who can't, teach.", so here I am prattling on about a subject that I have always been cautious about approaching.
  I have always observed that small business men are essentially independent. The nature of their independence and the character of their spirit is instinctively Conservative. They draw from two great traditions that have little to do with Socialism. Their spirit may derive from the dissenters, the Quakers, the independent religions
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  or from the great Conservative tradition. Most of the people with whom I have come into contact in my working life have been in small businesses and have been modest dissenters, who strike out on their own and build businesses. They are instinctively Conservative.
  Mr. Beith: The hon. Gentleman seems to be missing the point slightly. What I have found most common among small business men is that they hate being ordered around. What attracts them to different political parties and away from the Labour party is that they are mistrustful of the intervention of the state. They are far more anti-Socialism than they are aligned to any other political views.
  Mr. Shepherd: I accept that anti-Socialism is a strong theme among independent business men. Fear, experience and a whole variety of reasons such as the attitude, "I am independent and do not wish to be bossed around" lies behind their thinking. I accept that, but the natural home of most business men I have encountered during my working life has been the Conservative party.
  Mrs. Currie: Will my hon. Friend give way?
  Mr. Shepherd: Perhaps my hon. Friend will forgive me if I do not give way, but I want to speak only briefly.
  Mrs. Currie: Will my hon. Friend please talk about business women as well?
  Mr. Shepherd: I hear my hon. Friend and note what she has said.
  Instinctive Conservatism is important to many small business men who have therefore looked to the Conservative party for understanding. However, during the 20 years that I have been a business man, which includes the 10 years before I became a Member of the House, I have noted that the Government are not particularly mindful of little business men. They take them for granted. I have nowhere else to go—I am an instinctive Conservative. I know that, "Those who can't teach—and those who can, get on with it", and the Government have taken for granted the attention and attendance of many small business men.
  I shall say little on this subject because, like most of us, before being elected to the House I had never written a letter to a Member of Parliament and had never been associated with the National Federation of Self Employed and Small Businesses. I stood alone and the modest prosperity that I gained was by the efforts of those with whom I worked. Therefore, I am respectful towards that class of small business people.
  I shall not deal with the wider subjects that have been raised, although I am grateful to the Social and Liberal Democratic party for initiating the debate. I shall consider just one narrow tax that the Government have stumbled upon and which is mentioned in the motion. I refer to the uniform business rate. I cannot imagine a Government choosing a tax without knowing how it will fall or where it will hit and pushing it through the House on assumptions that were manifestly wrong. It was paraded by my right hon. Friends the Members for Mole Valley (Mr. Baker), now the party chairman, and for Bristol, West (Mr. Waldegrave), who is now at the Foreign Office. The document is called, "Paying for Local Government". When one reads through what was written in ignorance and then sees what has happened, one realises that the distress is profound.

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  I first realised what we are about when the "Paying for Local Government" Green Paper suggested that the west midlands would pay more under the new system and that central London would pay less. I am a Member of Parliament for the west midlands and have seen the 'flu that hit our industry during the late 1970s and the early 1980s. I have also seen the collapse in commercial property values in manufacturing industry and it seemed to me that a tax predicated on that basis would lead to a reduction in manufacturing industry's overall contribution to domestic rates. I realised, therefore, that the idea had to be wrong.
  I am a trader in London and have seen the march of commercial rents. The assumptions behind the Green Paper therefore caused me some confusion. The Government changed a locally based tax, predicated on the supply and demand of local shops to finance local communities, into a national tax and created a huge redistributive mechanism. That amounts to £1 billion in redistributed money, but they do not know where it is going and what effect it will have.
  The Government should remember that the Landlord and Tenant Act 1985 imposes two conditions on small business men. They already pay a premium to get their businesses. I have no covenant. I have no plc behind me. When I am bidding for shop premises, I am invariably the last person whom a landlord would have by preference. We have now converted our high streets into some of the dreariest in western Europe because all the shops are owned by plcs. Each high street is replicated and one can buy only from these plcs. This nation of shopkeepers, as Napoleon called us, is reduced to a nation of about five plcs. That undermines the vitality of small business men who fight for their markets. They hold on long after the managing director of a plc quits with his pay-off and retires.
  I am conscious of the bleak circumstances faced by small businesses. Furthermore, rent reviews are only upwards. Once a rent has got somewhere, the terms of the lease ensure that it never goes down, despite the fact that small business men have to pay extra just to get the lease and often have to offer personal guarantees.
  In these circumstances, the Government decided to set up an £8 billion tax, and that will affect our national economy. Let us see how it falls. The Government suggested that central London would be a beneficiary but, over and above what businesses there would have had to pay to local authorities under the previous arrangements, they will have to pay some £610 million, of which £190 million will have to come from shops and £230 million from offices. A £610 million tax is being imposed on central London—I am not talking about outer London—and that will have some consequences quite apart from rent and balance of trade consequences. How does the retailer or small business man, the accountant or solicitor in his little office, recoup his share of that £610 million that the Government, without knowing that they were raising it and without knowing where it would go, have imposed? He has to raise prices. Therefore, I am worried about the inflationary impact at the time of the worst inflation that we have known in the last part of this decade. The tax will incite inflation.
  Outer London—a smaller region, with a lesser base for rateable value—will pay an additional £30 million, which is not much, but £15 million for shops. The south-east—another Conservative heartland—will pay an additional £270 million, with £120 million from shops and £80 million
  396
  from offices. The area from which the hon. Member for Truro (Mr. Taylor) comes—the south-west—will have to find another £60 million to distribute, £20 million of which will come from shops. Some £30 million will be shipped out of East Anglia—the Government did not know that—of which £20 million will come from shops.
  Originally, I suggested that the Government go ahead with revaluation, because not many people dispute the need for that. However, I also suggested that they should not have redistribution until they had seen how the pattern fell and that they should be prudent. Instead, they embarked on this. As I have said, it will gee up inflation, but it will have other effects. The hon. Member for Great Grimsby (Mr. Mitchell) seemed to think that Britain was ruled from the City of London, but most small business men will recognise his general point that overall prosperity helps every business. A strong and successful City of London is undoubtedly important to whatever Government we have—whether Conservative, Labour or, should it ever happen, SLD.
  Furthermore, 1992 is coming and the Government have constructed the highest cost office operating area in the Community. The additional burdens on the City of London will make firms wonder why they should locate there. By this measure, with £900 million exported from poor regions—without knowing the consequences of it—the Government will affect inflation and that is the most damaging result. This £900 million has to be paid for somehow—usually by raising prices. That is just an observation on which hon. Members must make their own judgments.
  I do not know how the north of England will be affected, but I have tabled a question to the Department of the Environment asking how local authorities will lose or gain under the tax. The question relates to flows in and out of local authorities. There will be some surprised yelps from Conservative Members representing northern constituencies when they realise that their constituencies do not gain. I am talking about a destabilisation of the national economy which may have an influence on inflation.
  I have been cautious. I have asked the Government to look at the Landlord and Tenant Act, which ratchets up prices to the highest rent last paid, never reflecting downward drifts in rents. So the costs for retailers, accountants or small business men always stay at the highest possible level. I predict that many businesses in central London will collapse. I am sorry that the Government have rejected the case put by retirement salesmen. The capital of a small business is often in the business. When these men reach the age of 65, 70 or even more, all they have for their pensions lies in the disposal or sale of their businesses. By imposing an arbitrary date of 1 April the Government have reduced the value of these businesses.
  I have said that I was a small trader. I started a shop in Sloane street, renting it for £5,000 in 1973, with a 20-year lease and a five-yearly rent review. By 1983, the rent had risen to £15,000, and the latest rent request is for £100,000. Valuation under the Government's uniform business rate is £121,000, which entails the payment of £40,000.
  I am not retiring or selling the business, because my brother runs it now. The whole business is now valued at £310,000 under the UBR. We bought the business from a retirement sale. A business sold on that basis now would

  397
  have a greatly reduced value because from 1 April a tenant in gainful possession of the premises would pay £40,000 in rates, which would affect the rental value.
  All this will prevent and confuse redevelopment in certain areas. The Government must urgently consider improving the position of retirement sales, and I suggest that a review of the Landlord and Tenant Act would provide a stimulus for small businesses.
  I have tried to present my suggestions in a friendly way and in a condensed manner. The Government, in short, must be more mindful of those who are natural Conservatives.
  9.43 pm
  Mr. James Wallace: This has been a good and necessary debate and it has been clear that, but for my right hon. and hon. Friends, we should have had to wait a long time for it.
  Because of the twin problems of high interest rates and the introduction of the uniform business rate, about which the hon. Member for Aldridge-Brownhills (Mr. Shepherd) has just spoken so eloquently, the Government would have been reluctant to introduce a debate on this subject in their own time. Despite the valiant efforts of the hon. Members for Fife, Central (Mr. McLeish) and for Great Grimsby (Mr. Mitchell), there has been a singular lack of interest on the part of the Labour party, which suggests that we would have had to wait a long time for the Opposition to take the initiative, as well.
  This has been the first opportunity in this Session for our party to nominate the business for the day, and we have used it to debate this important subject. The hon. Member for Aldridge-Brownhills pointed out, based on his contact with people in the small business and self-employed sectors, that they tend to be people with independent minds. Those in my party have a great deal of sympathy with such people. Many Social and Liberal Democrat constituencies have high percentages of self-employed people.
  It is for that reason that we welcome the fact that there are more people in self-employment and in small businesses today than there were 10 years ago. Any development in that direction is to be welcomed. However, it is worth bearing in mind the fact that we still fall far short of the comparable figures in, for example, West Germany or the United States of America. So there is still some way to go.
  What we have heard tonight from the Government does not give us much confidence that we are taking the right strides in that direction. The Minister, many times over, gave us the statistics for the increase—the welcome increase, I say once again. What he said was all very defensive: it was all about what had happened over the last 10 years. There was not really anything about the problems facing small businesses today, and less still about the problems and opportunities of small businesses tomorrow.
  We heard too about the number of small businesses being registered, but we have to look beyond that. What happens after they have been registered? My hon. and learned Friend the Member for Montgomery (Mr. Carlile), in an intervention which was not answered properly by the Minister, pointed out, in respect of people
  398
  who want to be self-employed—North sea divers, journalists, free-lance photographers, actors—that the Government are trying to make them not self-employed, to move them from schedule D to schedule E. Surely, under tax law, there must be some means of ensuring that people who want to be self-employed have their wish respected. The Minister did not answer that point. Perhaps he did not appreciate it. It is a serious point, and I hope that he and his Treasury colleagues will reflect on it.
  One could also look at the barriers that the Department of Social Security puts in the way of those who wish to be self-employed. The hon. Member for Surrey, North-West Mr. Grylls) made a very valuable contribution. He referred to a number of areas in which the self-employed have problems—the increasing lack, these days, of venture capital being put into new small businesses; the need to look at the tax relief that might be applied to small family firms where profits are ploughed back.
  The hon. Gentleman talked in terms of £1 million in the context of a particular small business. Many of the self-employed people in my constituency do not know what £1 million is like. A self-employed person who came to my constituency surgery last Saturday wanted to claim family credit. I have dealt with the cases of several self-employed people who find it increasingly difficult to claim family credit.
  To his credit, the hon. Member for Fareham (Mr. Lloyd), when he was a junior Minister at the Department of Social Security, changed the rule that required audited accounts. Of course, that rule was nonsense in the context of self-employed people. One wonders who drafts these regulations. But now, even though accounts are allowed, and even though they have been properly prepared by accountants, they are very often sent back with umpteen questions.
  One question that came to my notice in a recent case concerned the fact that farm insurance was not being allowed as a business expense, despite the fact that the farm was being insured as a business. Clearly some people in the family credit branch of the Department of Social Security do not understand what small business is about. That is another area in which a barrier is put in the way of people who want to enjoy self-employment.
  The hon. Member for Aldridge-Brownhills expressed very well the fact that, for too long, the Government and Conservatives have taken small businesses and self-employed persons for granted. In an intervention, I referred to what is happening over the introduction of the poll tax. Employers whose employees do not, or cannot, pay the poll tax will be expected to attach their wages. That will undoubtedly put a further administrative burden on small employers. Indeed, they are allowed to charge the employee £1 for the service—for actually making a deduction from his wages. Who in the world thinks that that will make any contribution to good industrial relations in small companies?
  But there are so many other ways in which the small business man has to act as the Government's tax collector. In a recent article in the Financial Times, Professor Sandford says:
  "The biggest unfairness associated with tax compliance is the disproportionate burden it imposes on small companies. What might be called the regressiveness of tax compliance costs applies in its most extreme form to VAT … the lowest band of compulsorily registered traders … bore compliance

  399
  costs which averaged £7·80 for every £1,000 of goods sold; the corresponding figure for companies with a turnover of £10 million was 3p."
  That shows quite clearly the burden that has been placed on small businesses.
  Let us look at the Government policy of introducing student loans. What will be the reaction of the banks to a new graduate wanting to set up a business or become self-employed when that graduate already has a substantial loan hanging around his neck from his days at university? My hon. Friend the Member for Ceredigion and Pembroke, North (Mr. Howells), in his excellent speech, outlined the Government's policy on fishing and expecially on farming. Government policy in those areas is putting great pressure on the self-employed.
  As I have said, high interest rates and the uniform business rate place a great burden on the self-employed small business man. The hon. Member for Macclesfield (Mr. Winterton) put his finger on the problem when he said that, in a glib but competent speech, the Minister of State tried to slide over the problem of high interest rates in some 30 seconds. Time and again, people in small businesses speak about the pressure of high interest rates not only on their own indebtedness, but on the spending power of those seeking their services or wishing to buy from them.
  An economic outlook report yesterday from the Royal Bank of Scotland said that the difference between the present recession
  "and that experienced during the early 1980s is that this time the impact will be felt by the service industries".
  It is in the service industries that we have seen such growth in small business and the self-employed. The Minister did not address that problem. The hon. Member for Great Grimsby said that the stock answer of my party is entry to the exchange rate mechanism of the EMS. Perhaps we say that time and again because we genuinely believe that it is the answer. Interestingly enough, when freed from the constraints of collective responsibility, Conservative Members have also said that.
  If the Minister spoke for only 30 seconds about high interest rates, he said nothing at all in response to the point made by my hon. Friend the Member for Truro (Mr. Taylor) about the uniform business rate. That the House could have demanded more answers about that is shown by what the Prime Minister has said:
  "The present transition period is five years, but that is not an absolute figure and it could he extended if need be."— [Official Report, 23 January 1990; Vol. 165, c. 737.]
  The state of the small business sector needs to be fleshed out. What do the Government intend to do? Those of us north of the border well remember the problems experienced by the small business sector in Scotland after revaluation. For months, the Government said that they would do nothing and then had to rush legislation through in a week or a fortnight to bring much-needed relief. They subsequently paid the political price for not having acted earlier. Great pressure will build up on Government to respond.
  The hon. Member for Great Grimsby cannot say that this is purely a problem for the south. He represents a constituency in south Humberside and may not know that in north Humberside a hardware shop had rates in 1989–90 of £2,611.
  Mr. Austin Mitchell: I said that it was a daft tax.
  Mr. Wallace: Under the uniform business rate, that will increase to £3,740—an increase of 143 per cent.
  The hon. Gentleman says that it is a daft tax, but businesses in the north will not be entirely exempt. We are not trying to provide exemption for Harrods. If he understood the transitional scheme and had listened to the speech of my hon. Friend the Member for Truro, he would know that our efforts are directed towards helping the small business community.
  It is important to leave the Under-Secretary of State adequate time in which to reply to the debate. My party is committed to the interests of the small business. That was shown by my hon. Friend the Member for Ceredigion and Pembroke who said that when we had an opportunity to influence Government we brought about a profound change in the attitude of the Labour Government to the self-employed. In the local government areas where we have control we have helped small businesses. In Government we would carry through our promises and bring benefit to the self-employed and the small business sector.
  9.54 pm
  The Parliamentary Under-Secretary of State for Employment (Mr. Patrick Nicholls): The hon. Member for Orkney and Shetland (Mr. Wallace), who has just made an eloquent speech, flatters me if he thinks that I can do justice to the debate in the six minutes that remain. I say to him what my hon. Friend the Minister of State said when he opened the debate—that we welcome the fact that the hon. Gentleman and his colleagues decided to choose this subject for debate. Although the debate has been short, it has been useful.
  I shall deal first with the speech by the hon. Member for Fife, Central (Mr. McLeish) who had two limbs to his attack. One was what he described as the crippling rate of interest; and he also spoke about the effect of the uniform business rate.
  It would be interesting to consider the careers of the hon. Gentleman and me. We are both virtually the same age, we appear to share the same sort of interests and we are both Members of this House. However, at a time when I was running a small business, the hon. Gentleman was earning his living in a quite different way. The hon. Gentleman spoke about interest rates as though they were far more important than the rate of inflation. When I was setting up my small business in the late 1970s, I was worried not about interest rates but about the rate of inflation. I must reiterate that the Government do not enjoy the current interest rate policy. No Government could enjoy the effect that it has on business in the country. However, it is the proven way to prevent inflation from getting back into the system.
  I tried to run a business in the 1970s when inflation rates exceeded 20 per cent. at times. That was incomparably more important than the interest rate. The hon. Member for Truro (Mr. Taylor) said that people in his constituency were not talking to him about the rate of inflation. They would not be talking to him about that, because, even though it has peaked under this Government, it is still only at the low mark of the rates reached under the last Labour Government. The hon. Gentleman knows that I am well acquainted with his part of the world. I have a good memory, and I remember what people were talking about in parts of his constituency when the inflation rate was in

  401
  excess of 20 per cent. If anything wrecks small businesses, it is the rate of inflation. If there is one proven instrument to deal with that, it is interest rates. It is not a comfortable instrument, but it works.
  The hon. Member for Fife, Central spoke about the Labour party policy, but understandably he did not want to dwell on it overlong. Labour party policy is to support a property tax on business. I remind the hon. Gentleman what the hon. Member for Copeland (Dr. Cunningham) said:
  "we support the revaluation of business property because we are in favour of a property tax."—[Official Report, Standing Committee E, 3 March 1988; c. 1186.]
  The Labour party should not shed crocodile tears. The hon. Member for Fife, Central does his homework well—much better, I suspect, than some who have spoken tonight. He knows that the uniform business rate produced seemingly large increases in certain areas, not because of the concept of the tax itself, but because of a lack of revaluation since 1973.
  It is a matter of great personal grief to me that, in the three minutes remaining, I shall not have time systematically to take apart the spurious arguments of the hon. Member for Truro. I remind him that there has not been a revaluation since 1973. The first time that the revaluation was ducked was in 1978; the significance of that date is that it was the date of the Lib-Lab pact. Indeed, the Earl of Stockton once said that the Liberal party produced policies that were both interesting and original—the trouble was that none of the original policies was interesting and none of the interesting policies was original.
  The hon. Member for Truro took the same approach today. He said nothing about any Liberal alternative to the uniform business rate. He told us about a man who kept coming to see him to complain, but he did not say that he had told him what the UBR was all about. He did not tell him about the lack of revaluation, because his party was opposed to it. He did not tell him that, on average, factory rates would come down by 31 per cent. and warehouse rates by 20 per cent. Obviously there is no such thing as a popular charge. There never is, and there never will be. There is no such thing as a popular tax either, but at the end of the day the uniform business rate will be the fairest form of charge. Bearing in mind the fact that the hon. Gentleman's policy is committed to a land revaluation tax as well, it is a bit thick that he should have criticised us today.
  Question put, That the original words stand part of the Question:—
  The House divided: Ayes 13, Noes 164.

  Division No. 60]

  [10.00 pm

  AYES

  Alton, David

  Maclennan, Robert

  Ashdown, Rt Hon Paddy

  Michie, Mrs Ray (Arg'l & Bute)

  Beith, A. J.

  Steel, Rt Hon Sir David

  Campbell, Menzies (Fife NE)

  Taylor, Matthew (Truro)

  Carlile, Alex (Mont'g)

  Fearn, Ronald

  Tellers for the Ayes:

  Howells, Geraint

  Mr. James Wallace and

  Hughes, Simon (Southwark)

  Mr. Malcolm Bruce.

  Kirkwood, Archy

  NOES

  Alexander, Richard

  Amess, David

  Allason, Rupert

  Amos, Alan

  402

  Arbuthnot, James

  Jack, Michael

  Arnold, Jacques (Gravesham)

  Janman, Tim

  Arnold, Tom (Hazel Grove)

  Johnson Smith, Sir Geoffrey

  Ashby, David

  Jones, Robert B (Herts W)

  Atkins, Robert

  Jopling, Rt Hon Michael

  Baker, Rt Hon K. (Mole Valley)

  Kilfedder, James

  Baker, Nicholas (Dorset N)

  King, Roger (B'ham N'thfield)

  Batiste, Spencer

  Knapman, Roger

  Beggs, Roy

  Knight, Dame Jill (Edgbaston)

  Bellingham, Henry

  Knox, David

  Bennett, Nicholas (Pembroke)

  Lamont, Rt Hon Norman

  Benyon, W.

  Lawrence, Ivan

  Bevan, David Gilroy

  Lee, John (Pendle)

  Biffen, Rt Hon John

  Lightbown, David

  Blackburn, Dr John G.

  Lilley, Peter

  Boscawen, Hon Robert

  Macfarlane, Sir Neil

  Boswell, Tim

  MacKay, Andrew (E Berkshire)

  Bottomley, Peter

  Maclean, David

  Braine, Rt Hon Sir Bernard

  McLoughlin, Patrick

  Bright, Graham

  McNair-Wilson, Sir Michael

  Brooke, Rt Hon Peter

  Mans, Keith

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

  Marlow, Tony

  Buck, Sir Antony

  Martin, David (Portsmouth S)

  Budgen, Nicholas

  Maude, Hon Francis

  Burns, Simon

  Maxwell-Hyslop, Robin

  Burt, Alistair

  Meyer, Sir Anthony

  Carlisle, Kenneth (Lincoln)

  Miller, Sir Hal

  Carrington, Matthew

  Mills, Iain

  Carttiss, Michael

  Miscampbell, Norman

  Clark, Sir W. (Croydon S)

  Mitchell, Andrew (Gedling)

  Colvin, Michael

  Moate, Roger

  Coombs, Simon (Swindon)

  Molyneaux, Rt Hon James

  Cormack, Patrick

  Monro, Sir Hector

  Couchman, James

  Montgomery, Sir Fergus

  Cran, James

  Morrison, Sir Charles

  Currie, Mrs Edwina

  Moss, Malcolm

  Davis, David (Boothferry)

  Neubert, Michael

  Day, Stephen

  Nicholls, Patrick

  Devlin, Tim

  Nicholson, David (Taunton)

  Dorrell, Stephen

  Paice, James

  Douglas-Hamilton, Lord James

  Patnick, Irvine

  Dunn, Bob

  Peacock, Mrs Elizabeth

  Durant, Tony

  Porter, David (Waveney)

  Dykes, Hugh

  Raison, Rt Hon Timothy

  Eggar, Tim

  Renton, Rt Hon Tim

  Emery, Sir Peter

  Rhodes James, Robert

  Favell, Tony

  Riddick, Graham

  Fishburn, John Dudley

  Ridley, Rt Hon Nicholas

  Forman, Nigel

  Ridsdale, Sir Julian

  Forsyth, Michael (Stirling)

  Rifkind, Rt Hon Malcolm

  Forsythe, Clifford (Antrim S)

  Ross, William (Londonderry E)

  Forth, Eric

  Ryder, Richard

  Franks, Cecil

  Sackville, Hon Tom

  Freeman, Roger

  Shaw, David (Dover)

  Fry, Peter

  Shaw, Sir Giles (Pudsey)

  Garel-Jones, Tristan

  Shaw, Sir Michael (Scarb')

  Gill, Christopher

  Shepherd, Colin (Hereford)

  Glyn, Dr Sir Alan

  Skeet, Sir Trevor

  Goodlad, Alastair

  Smith, Tim (Beaconsfield)

  Greenway, Harry (Ealing N)

  Squire, Robin

  Greenway, John (Ryedale)

  Stanbrook, Ivor

  Gregory, Conal

  Steen, Anthony

  Griffiths, Peter (Portsmouth N)

  Stevens, Lewis

  Grylls, Michael

  Stewart, Andy (Sherwood)

  Hague, William

  Stradling Thomas, Sir John

  Hamilton, Hon Archie (Epsom)

  Summerson, Hugo

  Hampson, Dr Keith

  Taylor, Rt Hon J. D. (S'ford)

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

  Tebbit, Rt Hon Norman

  Harris, David

  Thompson, D. (Calder Valley)

  Hayes, Jerry

  Thompson, Patrick (Norwich N)

  Hayhoe, Rt Hon Sir Barney

  Thorne, Neil

  Hayward, Robert

  Thurnham, Peter

  Hind, Kenneth

  Twinn, Dr Ian

  Hordern, Sir Peter

  Walker, Bill (T'side North)

  Howarth, G. (Cannock & B'wd)

  Waller, Gary

  Howell, Rt Hon David (G'dford)

  Walters, Sir Dennis

  Hunter, Andrew

  Wheeler, Sir John

  Irvine, Michael

  Wiggin, Jerry

  403

  Winterton, Mrs Ann

  Tellers for the Noes:

  Winterton, Nicholas

  Mr. Sydney Chapman and

  Wood, Timothy

  Mr. John M. Taylor.

  Question accordingly negatived.
  Question, That the proposed words be there added, put forthwith pursuant to Standing Order No. 30 (Questions on amendments):—
  The House divided: Ayes 139, Noes 30.

  Division No. 61]

  [10.11 pm

  AYES

  Alexander, Richard

  Hicks, Robert (Cornwall SE)

  Allason, Rupert

  Hind, Kenneth

  Amess, David

  Howarth, G. (Cannock & B'wd)

  Amos, Alan

  Howell, Rt Hon David (G'dford)

  Arbuthnot, James

  Hunter, Andrew

  Arnold, Jacques (Gravesham)

  Irvine, Michael

  Arnold, Tom (Hazel Grove)

  Jack, Michael

  Ashby, David

  Janman, Tim

  Baker, Rt Hon K. (Mole Valley)

  Johnson Smith, Sir Geoffrey

  Baker, Nicholas (Dorset N)

  Jones, Robert B (Herts W)

  Batiste, Spencer

  Jopling, Rt Hon Michael

  Beggs, Roy

  Kilfedder, James

  Bennett, Nicholas (Pembroke)

  King, Roger (B'ham N'thfield)

  Bevan, David Gilroy

  Knight, Dame Jill (Edgbaston)

  Blackburn, Dr John G.

  Lamont, Rt Hon Norman

  Boscawen, Hon Robert

  Lawrence, Ivan

  Boswell, Tim

  Lee, John (Pendle)

  Braine, Rt Hon Sir Bernard

  Lightbown, David

  Bright, Graham

  Lilley, Peter

  Brooke, Rt Hon Peter

  Maclean, David

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

  McLoughlin, Patrick

  Buck, Sir Antony

  McNair-Wilson, Sir Michael

  Burns, Simon

  Mans, Keith

  Burt, Alistair

  Marlow, Tony

  Carlisle, Kenneth (Lincoln)

  Martin, David (Portsmouth S)

  Carrington, Matthew

  Maude, Hon Francis

  Chapman, Sydney

  Meyer, Sir Anthony

  Clark, Sir W. (Croydon S)

  Miller, Sir Hal

  Colvin, Michael

  Mills, Iain

  Coombs, Simon (Swindon)

  Mitchell, Andrew (Gedling)

  Cormack, Patrick

  Moate, Roger

  Couchman, James

  Molyneaux, Rt Hon James

  Cran, James

  Monro, Sir Hector

  Currie, Mrs Edwina

  Morrison, Sir Charles

  Davis, David (Boothferry)

  Moss, Malcolm

  Day, Stephen

  Neubert, Michael

  Devlin, Tim

  Nicholls, Patrick

  Dorrell, Stephen

  Nicholson, David (Taunton)

  Douglas-Hamilton, Lord James

  Paice, James

  Durant, Tony

  Porter, David (Waveney)

  Dykes, Hugh

  Raison, Rt Hon Timothy

  Eggar, Tim

  Renton, Rt Hon Tim

  Emery, Sir Peter

  Rhodes James, Robert

  Fallon, Michael

  Ridley, Rt Hon Nicholas

  Favell, Tony

  Rifkind, Rt Hon Malcolm

  Fishburn, John Dudley

  Ross, William (Londonderry E)

  Forman, Nigel

  Ryder, Richard

  Forsyth, Michael (Stirling)

  Sackville, Hon Tom

  Forsythe, Clifford (Antrim S)

  Shaw, David (Dover)

  Forth, Eric

  Shaw, Sir Giles (Pudsey)

  Franks, Cecil

  Shaw, Sir Michael (Scarb')

  Freeman, Roger

  Shepherd, Colin (Hereford)

  Garel-Jones, Tristan

  Skeet, Sir Trevor

  Gill, Christopher

  Smith, Tim (Beaconsfield)

  Glyn, Dr Sir Alan

  Squire, Robin

  Goodlad, Alastair

  Stanbrook, Ivor

  Greenway, Harry (Ealing N)

  Stevens, Lewis

  Greenway, John (Ryedale)

  Stewart, Andy (Sherwood)

  Gregory, Conal

  Stradling Thomas, Sir John

  Griffiths, Peter (Portsmouth N)

  Summerson, Hugo

  Hamilton, Hon Archie (Epsom)

  Taylor, Rt Hon J. D. (S'ford)

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

  Tebbit, Rt Hon Norman

  Harris, David

  Thompson, D. (Calder Valley)

  Hayes, Jerry

  Thompson, Patrick (Norwich N)

  Hayhoe, Rt Hon Sir Barney

  Thorne, Neil

  Hayward, Robert

  Twinn, Dr Ian

  404

  Walker, Bill (T'side North)

  Wood, Timothy

  Waller, Gary

  Wheeler, Sir John

  Tellers for the Ayes:

  Winterton, Mrs Ann

  Mr. John M. Taylor and

  Winterton, Nicholas

  Mr. Irvine Patrick.

  NOES

  Alton, David

  Kirkwood, Archy

  Ashdown, Rt Hon Paddy

  McAllion, John

  Barnes, Harry (Derbyshire NE)

  McKay, Allen (Barnsley west)

  Beith, A. J.

  Martlew, Eric

  Bradley, Keith

  Meale, Alan

  Bruce, Malcolm (Gordon)

  Michie, Mrs Ray (Arg'l & Bute)

  Buckley, George J.

  Nellist, Dave

  Campbell, Menzies (Fife NE)

  Patchett, Terry

  Clark, Dr David (S Shields)

  Pike, Peter L.

  Dixon, Don

  Steel, Rt Hon Sir David

  Dunnachie, Jimmy

  Taylor, Matthew (Truro)

  Fearn, Ronald

  Wallace, James

  Gordon, Mildred

  Wareing, Robert N.

  Home Robertson, John

  Hood, Jimmy

  Tellers for the Noes:

  Howells, Geraint

  Mr. Bob Cryer and

  Hughes, Simon (Southwark)

  Mr. Dennis Skinner.

  Question accordingly agreed to.
  MR. SPEAKER forthwith declared the main Question, as amended, to be agreed to
  Resolved,
  That this House congratulates the Government on creating an environment in which enterprise and small businesses are flourishing, and urges the Government to continue pursuing the policies which have led to a record increase in the numbers of self-employed and new business formations, as confirmed by the increase in registrations for value-added tax.

  PETITIONS

    Television Reception
    10.21 pm
    Ms. Mildred Gordon: I beg leave to present a petition, which I support, signed by 481 of my constituents in the London borough of Tower Hamlets. It is one of three petitions that have been sent to me by people who, having bought or rented television sets and having paid for a television licence, have found that increasing interference with reception has become so bad over the past few months that programmes are now unwatchable.
    My petitioners believe that that is due to the massive buildings being erected in Docklands, particularly at Canary Wharf.
    Wherefore your Petitioners pray that your honourable House will act to bring a swift remedy to this situation.
    To lie upon the Table.

  Dogs
  Mr. John McAllion: I wish to present a petition on behalf of my constituents, Mr. and Mrs. John Lynch, and of the citizens of Dundee.
  The petition reminds the House of the savage attack that took place last year during which Kellie, the daughter of Mr. and Mrs. Lynch, was killed by two Rottweiler dogs. The petition urges the House to support any amendments to the law which would require all dogs to be muzzled in public places and which would ban the private ownership of particularly powerful breeds of dogs such as Rottweilers.

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  Mr. and Mrs. Lynch have succeeded in gathering 15,000 signatures in support of the petition. They have shown tremendous determination, and out of this terrible incident perhaps some good will emerge at the end of the day. I urge the House to support the principles in the petition.
  To lie upon the Table.

  Points of Order
  10.23 Pm
  Mr. Bob Cryer: On a point of order, Mr. Speaker. As you know, like my hon. Friend the Member for Bolsover (Mr. Skinner) I am an assiduous attender in the Chamber. Today, when the Social and Liberal Democrats had the choice of subject for debate on this Supply day, I happened to be out of the Chamber for a short time while I was engaged in important constituency work. I understand that, without any notification, the Minister made an attack upon me.
  As you know, Mr. Speaker, when an attack is to be made on another hon. Member, it is usual to notify that hon. Member so that he may respond. The Minister attacked a very good record of work by the Minister with responsibility for small firms in the last Labour Government, who ensured growth and prosperity for small firms. It is deeply regrettable that the Minister should feel so insecure and incompetent that he chose to attack me behind my back. It is very much to be regretted.
  Mr. Dennis Skinner: Further to that point of order, Mr. Speaker. I agree with what my hon. Friend the
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  Member for Bradford, South (Mr. Cryer) said about his being an assiduous attender in the Chamber. He is. The only reason he was missing tonight was that there was no money resolution. If there had been, I think that he would have been on his feet now. The important issue is that he was attacked—
  Mr. Speaker: Order. Was the hon. Member present?
  Mr. Skinner: Yes. I was stood at the back.
  Mr. Speaker: Why did not the hon. Member raise the matter at the time? I was not in the Chair at the time. The hon. Members for Bradford, South (Mr. Cryer) and for Bolsover (Mr. Skinner) are assiduous attenders. It is a convention that, if hon. Members attack each other in the Chamber, they let the relevant hon. Member know. I cannot judge what happened in the debate to which the hon. Members have referred.
  Mr. Skinner: Let me finish this little story. My hon. Friend was attacked—
  Mr. Speaker: Order. It is not really story time.
  Mr. Skinner: It is a bedtime story. When the Minister was attacking my hon. Friend, another Tory Member—I think it was the hon. Member for Macclesfield (Mr. Winterton)—said, "Hey, just a minute. Never mind about attacking the hon. Member for Bradford, South. You should be getting interest rates down." There is a moral to the story. The Minister should not have attacked my hon. Friend; he should have been doing his job in respect of interest rates. My hon. Friend came out—
  Mr. Speaker: Order. That is a good bedtime story, but let us have the Adjournment debate.

  Standard Spending Assessment (Cumbria)
  Motion made, and Question proposed, That this House do now adjourn.—[Mr. Lightbown.]
  10.26 pm
  Mr. Eric Martlew: The Government's spending target for Cumbria is ridiculous; it reflects the classic north-south syndrome and indicates the inability of Whitehall to recognise the needs of Cumbria or of any other area outside the south-east.
  Those are not my words, but those of the leader of the Conservatives on Cumbria county council. An article in the Evening News and Star of 16 January states:
  "Tories attack Thatcher. County poll axed."
  It goes on to state that the group in Cumbria
  "would not seek to meet the Government's target which would mean cuts of up to £33 million."
  I wonder whether Mr. Gyngell and his colleagues on the county council now regret their enthusiasm for the introduction of the poll tax. They fought the 1989 election campaign on the basis of the poll tax. They said that it was a good thing. I wonder whether they are so sure now, when their electors must pay the price of the Government's policy.
  The standard spending assessment for the county fails to respect or reflect the costs of providing services, particularly education and fire services, in a large and sparsely populated county such as Cumbria. It underestimates the significance of the cost of road maintenance and winter maintenance and it inadequately funds what is called "other resources". It grossly overestimates potential interest receipts.
  I now refer to winter maintenance, to give hon. Members some idea of how the SSA was put together. Cumbria is the second largest county in England. It has within it the Lake district, with many of the highest passes in the country and very bad roads in winter. It was originally granted £90,000 for snow clearing, which is less than the London borough of Camden was granted. That gives some indication of the thought that went into the SSA. It was only through representations by Members of Parliament and a high-powered delegation from the county council that that figure was changed. It is still inadequate.
  Mr. Michael Jopling: The hon. Gentleman made a good deal of the remarks of Mr. Gyngell at the beginning of his speech. I should think him unfair if he did not add that, besides criticising the standard spending assessment for Cumbria, Mr. Gyngell criticised unnecessary overspending by the county council. As the hon. Gentleman knows, the council is dominated by the Labour party. Many people think that there are considerable opportunities for savings so that ratepayers of Cumbria do not have to pay as much over the SSA as may be the case.
  Mr. Martlew: I am sorry that the right hon. Gentleman did not tell the House which service he would like cut. People in his council—South Lakeland district council—will pay the highest poll tax in the area.
  Mr. Cecil Franks rose—
  Mr. Martlew: If the hon. Gentleman wished to speak on this subject, perhaps he should have sought an Adjournment debate. I am glad to see that I am keeping up the Conservative Members for Cumbria.
  Mr. Jopling: Will the hon. Gentleman give way?
  Mr. Martlew: I have given way once to the right hon. Gentleman. I have only a quarter of an hour at my disposal.
  It is deeply resented that Cumbria is being penalised to help the south-east. The Government came to the conclusion that they had to pay more to councils in the south-east. That was right and proper, but although it had to be funded the money did not have to come out of the pockets of people in the north of England.
  Mr. Keith Bradley: My hon. Friend makes an important point about the distribution between the south-east and the north-west. He spoke eloquently about rural areas, but urban areas are equally hit. The city of Manchester—
  Mr. Franks: A high overspender.
  Mr. Bradley: For a standstill budget, Manchester would require £449·8 million. The SSA for Manchester is £366·5 million, a shortfall of £83·3 million. On top of that, each poll tax payer in Manchester will have to pay £71 to fund the safety net, or, in other words, the Tory marginals in the north-west.
  Mr. Martlew: I agree with my hon. Friend. It was interesting that the hon. Member for Barrow and Furness (Mr. Franks) tried to make a sedentary intervention. He seems to talk in the House more about what happens in Manchester than about what happens in his own constituency.
  Mr. Franks: Will the hon. Gentleman give way?
  Mr. Martlew: I refuse to give way to the hon. Gentleman.
  Had Cumbria been in Wales our SSA would have been £280 million. We have £244 million because we are not a Welsh county council. Cumbria has many similarities with some of the north Wales councils. We have sparsely populated, large areas. I hope that the Minister will not come to the Dispatch Box and get away with the lame excuse that he has nothing to do with Wales and has no responsibility. My constituents want to know why they must subsidise areas in the south and why they are not supported to the same extent as the Welsh county councils.
  To go into the detailed estimates for the county, the Government say that Cumbria overspends on education to the tune of 11 per cent. They want the council to cut education by 11 per cent. That is nonsense. We do not spend enough on education in Cumbria. I plan to visit two schools in my constituency on Friday. No doubt, I shall be told that classes are large, that there are not enough teachers, that the buildings are shabby and that there are not enough books. That is a reflection of the amount of spending that is put into the county. The education system in Britain is a disgrace compared with the rest of western Europe. We should put more money into it, not take it out.
  The Government say that we should cut education expenditure by 11 per cent. If that happened, the small schools in the Tory rural areas would feel the effect. They are already feeling it under local management of schools.

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  We see pictures of Tory Members in the newspapers presenting petitions and complaining about the threat to rural schools. It is time that they started to do something about that instead of just picking up petitions.
  The Government say that we should cut social services spending by 7 per cent. The fact is that this week my county council has already decided to close six old folk's homes—not because they are empty, but because the county cannot afford to bring them up to standard. That is under the present assessment. What will we do if we have to cut the budget by 7 per cent.? Will we say to some old folks, "We have no place for you"? When children in this country are more at risk from sexual abuse than ever before, are we saying that we shall have to cut resources? That is what the Government are saying.
  I turn now to the police. Six months ago the Home Office told us that we would get extra police. I was one of those who lobbied for that and I welcomed the announcement. However, the SSA for Cumbria says that we have 4 per cent. too many police. Therefore, on the one hand the Home Office is recognising that we have a problem with crime—indeed, we have near record levels of crime in Cumbria—but, on the other hand, the Department of the Environment is saying that we have to sack the police that we have taken on.
  The funding of our fire service is also amazing. We have had a Home Office review and it is right that Cumbria overspends. We spend £500,000 more than the shire average. However, the Home Office review states that the high costs are not due to inefficiency or ineffectiveness. In fact, the main determination of fire costs is not population, but the nature of the fire risks to be covered. As the House knows, Cumbria has several areas of major fire risk in its boundaries. We have British Nuclear Fuels at Sellafield, the nuclear shipyard and the gas terminal at Barrow and a large ammunition depot near my constituency. They are all fire risks. The Home Office report states that there is a shortage of 16 firemen. Therefore, the force is below standard.
  However, the SSA for Cumbria on fire services says that we are overspending by 28 per cent. It implies that we should cut the service by 28 per cent. But if we do, we shall be failing to abide by the law because the Home Office has set down statutory guidelines saying that we should maintain a certain level of fire cover. If we cut the fire service budget by 28 per cent., we would have only two full-time fire stations in the county—one in Barrow and the other in Carlisle. The right hon. Member for Westmorland and Lonsdale (Mr. Jopling), and his hon. Friends the Members for Barrow and Furness and for Penrith and The Border (Mr. Maclean) would be most concerned about that.
  I have mentioned highways and the problem of winter maintenance. I concede that we received more than the £90,000, but only after a struggle with the Minister. While the Department of Transport says that we underspend on our roads by £1·5 million, the Government say that we are overspending and should cut our roads expenditure. If we did that, we would be cutting Cumbria's economic lifeline. It is a remote county and needs good roads. We do not have them now and we certainly will not have them if we make any cuts. When the Government announced that the poll tax for Carlisle would be £239, they were right.
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  However, they should have added that if we cut education expenditure by 11 per cent. and destroy our children's futures; if we cut social services expenditure by 7 per cent. and close old people's homes; if we cut 4 per cent. off the police budget and give the criminals a bonus; if we cut the highways budget by 19 per cent. and reduce our lifeline for economic viability; and if we cut the fire service budget by 28 per cent. and put lives at risk, then we could have a poll tax in Cumbria of £239. That is the truth. That is what would have to be done if we are to reach the SSA that the Government specify.
  In reality, the Cumbrian councils will not make those cuts. Indeed, the Tories on the county council have said that they will not make such cuts, and neither will the Tories on the district councils. In fact, the Lake district special planning board, over which we have no control and which has put precepts on us, will not make any cuts.
  Mr. Jopling: Will the hon. Gentleman give way?
  Mr. Martlew: I have already given way once to the right hon. Gentleman. If he wishes to make a speech on this subject, he should ask for his own Adjournment debate.
  A terrible burden has been placed on the people of my constituency. The poll tax in Carlisle, and probably in most of the south lakeland, will be between £300 and £400 rather than the £239 that the Government suggested.
  I have asked for this Adjournment debate for three reasons. First, I want the Minister to change his mind on the SSA for Cumbria. I am sure that that is why Conservative Members are here. Secondly, I wish to place on record the terrible way that the county has been treated not only by the Government but by Conservatives representing constituencies in it. On 18 January, we had a debate and then a vote on a measure that would have given Cumbria and other councils extra money. The right hon. Member for Westmorland and Lonsdale and the hon. Members for Barrow and Furness and for Penrith and The Border all voted against it. That is the day that they deserted the people of Cumbria. Thirdly, I want to lay down a marker for the Government and the Minister. They have done it once to Cumbria. If there is any justice, next year they will give us a fair deal with the SSA.
  10.41 pm
  The Parliamentary Under-Secretary of State for the Environment (Mr. David Heathcoat-Amory): My hon. Friend the Member for Southampton, Itchen (Mr. Chope) wanted to reply to the debate, but, as the hon. Member for Carlisle (Mr. Martlew) has been told, my hon. Friend was called away at short notice to Southampton. However, the reason is a happy one. His wife is expecting a baby, and it is arriving early, so it is right that he should be there.
  I congratulate the hon. Member for Carlisle on securing the debate and on the vigorous way in which he has put the case for a higher spending assessment for Cumbria. This is not the first time that there have been consultations and discussions between Ministers from my Department and representatives from the county council about the SSA. On 6 December last year, a cross-party delegation from Cumbria county council met my hon. Friend the Member for Itchen and put to him many of the points that the hon. Member has raised again tonight. The council put its case clearly and identified a number of aspects of the SSA where it did not do as well as it thought it should. The fact that Cumbria was able to identify so specifically where it

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  was not happy with the SSAs demonstrates that, at the very least, the new system is, as we had intended, much more understandable than the complex grant-related expenditure assessments that it replaces.
  Ministers in my Department have met many other delegations, from local authorities throughout the country, about local authority grant settlement for this year. We have also received many written representations. Nearly every authority from which we heard put forward reasons why it should be treated as a special case and why some element of the SSAs was not appropriate to its circumstances. My righ hon. Friend the Secretary of State for the Environment considered all these sometimes conflicting representations and laid before the House the distribution report which defines how SSAs are calculated. He said:
  "Excluding the parish councils, there are 426 local authorities in England, and the more deputations I have received concerning SSAs, the more I have realised that there are at least 424 special cases".—[Official Report, 18 January 1990; Vol. 165, c. 435.]
  Drawing up a means to distribute standard spending assessments between the 426 authorities is a difficult task. My right hon. Friend has reached a basis that is fair and strikes the right balance between the differing points of view put to him.
  The basis of the distribution is in no way arbitrary and does not seek to reward or penalise particular authorities. It is set out very clearly in the distribution report, approved by the House, which gives a formula for each of a number of service blocks. These formulae apply in exactly the same way to all authorities providing particular services. The information which feeds into the formula is derived from nationally available data sources, so that these data are provided on a consistent basis for all authorities.
  Mr. Martlew: Can the Minister explain what went wrong with the computer when it decided that Cumbria would receive £90,000 for winter maintenance but that Camden would get £125,000 for the same purpose?
  Mr. Heathcoat-Amory: I shall come to that in a minute. It was a useful element of the earlier consultations that such factors were spotted and dealt with. I am entirely satisfied that the settlement that finally emerged was fair and was on a consistent basis for all authorities.
  Mr. Franks: I thank my hon. Friend for giving way and thereby displaying far more courage than the hon. Member for Carlisle (Mr. Martlew), who saw fit to use up only 13 minutes of a 30-minute debate, yet chose not to let me intervene.
  Will my hon. Friend bear in mind two points? First, the hon. Member for Carlisle said that Conservative Members representing Cumbria had deserted the county. Six Members of Parliament represent Cumbria, three Conservative and three Labour. All three Conservatives are in the Chamber tonight to hear the debate; two of the three Labour Members are not.
  Secondly, I ask my hon. Friend to take into account the bloated bureaucracy of county hall. It is a shameful waste of expenditure. Should not the hon. Member for Carlisle direct his fire at his Labour colleagues on the county council instead of at the Government?
  Mr. Heathcoat-Amory: My hon. Friend makes a characteristically telling point. I too have noticed that the
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  hon. Member for Carlisle is the only Cumbria Labour Member to attend, whereas all three Conservative Members from the area are here. I refer to my right hon. Friend the Member for Westmorland and Lonsdale (Mr. Jopling), my hon. Friend the Member for Barrow and Furness (Mr. Franks) and my hon. Friend the Member for Penrith and The Border (Mr. Maclean), who has taken time out of his ministerial duties to attend this debate. All three of my right hon. and hon. Friends have consistently and vigorously promoted the interests of their constituencies and the county. That has been more productive than the mistaken allegations made by the hon. Member for Carlisle.
  If the Labour party ever makes progress in bringing forward alternative proposals for local government finance—we await them with interest—the hon. Member will still have to face up to the problem of how to distribute grant between local authorities. A balance must be struck between making the system reasonably simple and understandable—by limiting the number of criteria—and including ever more criteria to take account of every conceivable circumstance. The latter system would immediately become too complex and opaque—features of the system that we have replaced. It became too complex to be understandable even by those who work in local government.
  I shall return to the details of the SSAs for authorities in Cumbria, but first I must mention the overall provision in the settlement for 1990–91 for England as a whole. The plain fact is that the total standard spending for 1990–91—the amount that we consider it appropriate for local authorities to spend in total from revenue to provide services—is a full 11 per cent. higher, at £32·8 billion, than the equivalent for 1989–90.
  Perhaps I may now turn to Cumbria itself and put on record that for 1990–91 Cumbria county council told us that a budget of £278 million would, in its terms, be needed to maintain services. This represents a cash increase of more than 11·5 per cent. over its equivalent total expenditure for 1989–90, and seems to me to be rather more than should be needed simply to maintain services. It does not suggest that the council has made further efforts to find savings. My hon. Friend the Member for Barrow and Furness pointed out where it could start to look. I hope that, now that it knows its final standard spending assessment and the grant and business rates going to district councils in Cumbria, it will be able to look again and find further savings to benefit its charge payers. In broad terms, every £1 million by which Cumbria county council could reduce its budget could lead to a reduction in community charges in its area of almost £3 per charge payer. All savings that local authorities can make will now feed through, pound for pound, into reductions in the community charge.
  As I have already said, my hon. Friend listened very carefully to the points that Cumbria county council made when it came to see him. One of the points that most strongly concerned it was its assessment for highway maintenance—a point raised by the hon. Member for Carlisle also—and in particular for winter maintenance. Several other authorities with climate and geography similar to Cumbria's also told us that the winter maintenance SSAs seemed out of line with expenditure. As I have said, we looked again at this and realised that the formula we published in the consultation documents on 6 November did not adequately reflect my right hon.

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  Friend's desired treatment of winter maintenance. On 8 December last we wrote to all local authorities informing them of this.
  This has been of very considerable benefit to Cumbria county council—a point not made by the hon. Gentleman. Its SSA for highway maintenance in the final figures is £1·587 million higher than the figure published on 6 November. Taken with other changes—in particular, more up-to-date figures for credit approvals—Cumbria county council's SSA is now almost £2·5 million higher than the figures published in November.
  Mr. Martlew: The Minister does me a disservice. I indicated that the £90,000 that had originally been given by the Government was increased. But that was not because of anything done by the Minister or any of his minions; an all-party delegation of councillors from Cumbria had to come and tell the Minister that in the winter it is colder in Cumbria than in Camden, and that Cumbria has many more roads and a lot more housing. Otherwise we would have received £90,000.
  Mr. Heathcoat-Amory: Cumbria county council was not the only authority to raise that point with my hon. Friend and my right hon. Friend. It was as part of the wider consultation procedure that we took a further look at highway maintenance and, in particular, winter maintenance and came to the conclusion that an adjustment was necessary. I wish that the hon. Gentleman were rather less grudging in conceding that we moved very significantly to increase the subsequent SSA. All of this means that the SSA for Cumbria county council is now £246·476 million, which is an increase over its equivalent GRE in 1989–90 of 7·3 per cent. That figure is close to the current rate of RPI inflation, and well above our estimate of the GDP deflator, which is perhaps more relevant to local government spending. Not only does Cumbria have an increase of about the rate of inflation, but its SSA per adult is around the average for shire counties. Its SSA is £643 per adult and the average is £653. Some 19 out of 39 shire counties have lower SSAs per adult than Cumbria.
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  That cannot be construed as unfair treatment for Cumbria. The hon. Member for Carlisle stayed away from those figures.
  Mr. Jopling: Those figures are all very well, but my hon. Friend must understand that many people other than those in Cumbria are complaining. The way in which the SSAs have been worked out taxes the loyalty of many of the Minister's supporters. As the hon. Member for Carlisle (Mr. Martlew) said, how can one possibly justify an SSA which says that spending on the fire service must be cut when the Home Office says that spending should be increased?
  Mr. Heathcoat-Amory: I had hoped that in the closing minutes of the debate I could come to some of the specific points made. The review of SSAs for the fire service looked at many options. The approach that was finally adopted by my right hon. Friend the Secretary of State for the Environment has the support of my right hon. and learned Friend the Home Secretary, who is responsible for the fire services.
  Although the SSA for an authority is made up of a number of elements, we do not ask authorities to compare their expenditure with those elements service by service. It is the overall comparison between spending and SSA that is important. Local authorities retain discretion to set their overall level of spending and to decide how that should be distributed across the services that they should provide. Cumbria will see a 7·3 per cent. increase between its SSA for 1990–91 and its equivalent SSA for 1989–90 GRE.
  I welcome this chance to debate the matter in detail. I hope that I have covered all the points raised by the hon. Member for Carlisle, but I shall write to him on any that I have failed to cover. I am satisfied that the new system of SSAs is simpler and more understandable than the old system of GREs and that the result for Cumbria is fair. It is for Cumbria county council to examine its expenditure plans and to play its part in setting a reasonable community charge.
  Question put and agreed to.
  Adjourned accordingly at three minutes to Eleven o'clock.