Commons Sitting of 24 July 1990

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

  INCOME TAX
  The Vice-Chamberlain of the Household reported Her Majesty's Answer to the Addresses as follows:
  I have received your Addresses praying that the Double Taxation Relief (Taxes on Income) (Italy) Order 1990 and the Double Taxation Relief (Taxes on Income) (Netherlands) Order 1990 be made in the form of drafts laid before your House.
  I will comply with your request.

PRIVATE BUSINESS
  PENZANCE SOUTH PIER EXTENSION BILL

    BRITISH RAILWAYS BILL (By Order)
    Orders for consideration of Lords amendments read.
    To be considered tomorrow.
    LONDON DOCKLANDS RAILWAY BILL (By Order)
    Order for consideration, as amended, read.
    To be considered tomorrow.

    HEATHROW EXPRESS RAILWAY BILL [Lords]
    Motion made,
    That the Promoters of the Heathrow Express Railway Bill [Lords] shall have leave to suspend proceedings thereon in order to proceed with the Bill, if they think fit, in the next Session of Parliament, provided that the Agents for the Bill give notice to the Clerks in the Private Bill Office of their intention to suspend further proceedings not later than the day before the close of the present Session and that all Fees due on the Bill up to that date be paid;
    That if the Bill is brought from the Lords in the next Session, the Agents for the Bill shall deposit in the Private Bill Office a declaration signed by them stating that the Bill is the same, in every respect, as the Bill which was brought from the Lords in the present Session:
    That as soon as a certificate by one of the Clerks in the Private Bill Office, that such a declaration has been so deposited, has been laid upon the Table of the House, the Bill shall be deemed to have been read the first and shall be ordered to be read a second time.
    That the Petitions against the Bill presented in the present Session which stand referred to the Committee on the Bill shall stand referred to the Committee on the Bill in the next Session;
    That no Petitioners shall be heard before the Committee on the Bill, unless their Petition has been presented with the time limited within the present Session or deposited pursuant to paragraph (b) of Standing Order 126 relating to Private Business;
    That, in relation to the Bill, Standing Order 127 relating to Private Business shall have effect as if the words 'under Standing Order 126 (Reference to committee of petitions against Bill)' were omitted;
    That no further Fees shall be charged in respect of any proceedings on the Bill in respect of which Fees have already been incurred during the present Session;
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    That these Orders be Standing Orders of the House—[The Second Deputy Chairman of Ways and Means.]
    Hon. Members: Object.
    To be considered tomorrow.

    KILLINGHOLME GENERATING STATIONS (ANCILLARY POWERS) BILL [Lords]
    Motion made,
    That the Promoters of the Killingholme Generating Stations (Ancillary Powers) Bill [Lords] shall have leave to suspend proceedings thereon in order to proceed with the Bill, if they think fit, in the next Session of Parliament, provided that the Agents for the Bill give notice to the Clerks in the Private Bill Office of their intention to suspend further proceedings not later than the day before the close of the present Session and that all Fees due on the Bill up to that date be paid;
    That if the Bill is brought from the Lords in the next Session, the Agents for the Bill shall deposit in the Private Bill Office a declaration signed by them stating that the Bill is the same, in every respect, as the Bill which was brought from the Lords in the present Session;
    That as soon as a certificate by one of the Clerks in the Private Bill Office, that such a declaration has been so deposited, has been laid upon the Table of the House, the Bill shall be deemed to have been read the first and shall be ordered to be read a second time;
    That the Petitions against the Bill presented in the present Session which stand referred to the Committee on the Bill shall stand referred to the Committee on the Bill in the next Session;
    That no Petitioners shall be heard before the Committee on the Bill, unless their Petition has been presented within the time limited within the present Session or deposited pursuant to paragraph (b) of Standing Order 126 relating to Private Business;
    That, in relation to the Bill, Standing Order 127 relating to Private Business shall have effect as if the words 'under Standing Order 126 (Reference to committee of petitions against Bill)' were omitted;
    That no further Fees shall be charged in respect of any proceedings on the Bill in respect of which Fees have already been incurred during the present Session;
    That these Orders be Standing Orders of the House.—[The Second Deputy Chairman of Ways and Means.]
    Hon. Members: Object.
    To be considered tomorrow.

    KING'S CROSS RAILWAYS BILL
    Motion made,
    That the Promoters of the King's Cross Railways Bill shall have leave to suspend proceedings thereon in order to proceed with the Bill, if they think fit, in the next Session of Parliament, provided that the Agents for the Bill give notice to the Clerks in the Private Bill Office not later than the day before the close of the present Session of their intention to suspend further proceedings and that all Fees due on the Bill up to that date be paid;
    That on the fifth day on which the House sits in the next Session the Bill shall be presented to the House;
    That there shall be deposited with the Bill a declaration signed by the Agents for the Bill, stating that the Bill is the same, in every respect, as the Bill at the last stage of its proceedings in this House in the present Session;
    That the Bill shall be laid upon the Table of the House by one of the Clerks in the Private Bill Office on the next meeting of the House after the day on which the Bill has been presented and, when so laid, shall be read the first and second time and committed (and shall be recorded in the Journal of this House as having been so read and committed);
    That all Petitions relating to the Bill presented in the present Session which stand referred to the Committee on the Bill, together with any minutes of evidence taken before the Committee on the Bill, shall stand referred to the Committee on the Bill in the next Session;
    That no Petitioners shall be heard before the Committee on the Bill, unless their Petition has been presented within the

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    time limited within the present Session or deposited pursuant to paragraph (b) of Standing Order 126 relating to Private Business;
    That in relation to the Bill, Standing Order 127 relating to Private Business shall have effect as if the words 'under Standing Order 126 (Reference to committee of petitions against Bill)' were omitted;
    That no further Fees shall be charged in respect of any proceedings on the Bill in respect of which Fees have already been incurred during the present Session;
    That these Orders be Standing Orders of the House—[The Second Deputy Chairman of Ways and Means.]
    Hon. Members: Object.
    To be considered tomorrow.

    MIDLAND METRO BILL
    Motion made,
    That the Promoters of the Midland Metro Bill shall have leave to suspend proceedings thereon in order to proceed with the Bill, if they think fit, in the next Session of Parliament, provided that the Agents for the Bill give notice to the Clerks in the Private Bill Office not later than the day before the close of the present Session of their intention to suspend further proceedings and that all Fees due on the Bill up to that date be paid;
    That on the fifth day on which the House sits in the next Session the Bill shall be presented to the House;
    That there shall be deposited with the Bill a declaration signed by the Agents for the Bill, stating that the Bill is the same, in every respect, as the Bill at the last stage of its proceedings in this House in the present Session;
    That the Bill shall be laid upon the Table of the House by one of the Clerks in the Private Bill Office on the next meeting of the House after the day on which the Bill has been presented and, when so laid, shall be read the first and second time and committed (and shall be recorded in the Journal of this House as having been so read and committed);
    That all Petitions relating to the Bill presented in the present Session which stand referred to the Committee on the Bill, together with any minutes of evidence taken before the Committee on the Bill, shall stand referred to the Committee on the Bill in the next Session;
    That no Petitioners shall be heard before the Committee on the Bill, unless their Petition has been presented within the time limited within the present Session or deposited pursuant to paragraph (b) of Standing Order 126 relating to Private Business;
    That in relation to the Bill, Standing Order 127 relating to Private Business shall have effect as if the words 'under Standing Order 126 (Reference to committee of petitions against Bill)' were omitted;
    That no further Fees shall be charged in respect of any proceedings on the Bill in respect of which Fees have already been incurred during the present Session;
    That these Orders be Standing Orders of the House.—[The Second Deputy Chairman of Ways and Means.]
    Hon. Members: Object.
    To be considered tomorrow.

    CARDIFF BAY BARRAGE BILL [Lords]
    Motion made,
    That the Promoters of the Cardiff Bay Barrage Bill [Lords] shall have leave to suspend proceedings thereon in order to proceed with the Bill, if they think fit, in the next Session of Parliament, provided that the Agents for the Bill give notice to the Clerks in the Private Bill Office not later than the day before the close of the present Session of their intention to suspend further proceedings and that all Fees due on the Bill up to that date be paid;
    That, if the Bill is brought from the Lords in the next Session, the Agent for the Bill shall deposit in the Private Bill Office a declaration signed by him, stating that the Bill is the same, in every respect, as the Bill which was brought from the Lords in the present Session;
    That, as soon as a certificate by one of the Clerks in the Private Bill Office, that such a declaration has been so deposited, has been laid upon the Table of the House, the Bill
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    shall be read the first and second time and committed (and shall be recorded in the Journal of this House as having been so read and committed);
    That all Petitions relating to the Bill presented in the present Session which stand referred to the Committee on the Bill, together with any minutes of evidence taken before the Committee on the Bill, shall stand referred to the Committee on the Bill in the next Session;
    That no Petitioners shall be heard before the Committee on the Bill, unless their Petition has been presented within the time limited within the present Session or deposited pursuant to paragraph (b) of Standing Order 126 relating to Private Business;
    That, in relation to the Bill, Standing Order 127 relating to Private Business shall have effect as if the words 'under Standing Order 126 (Reference to committee of petitions against Bill)' were omitted;
    That no further Fees shall be charged in respect of any proceedings on the Bill in respect of which Fees have already been incurred during the present Session;
    That these Orders be Standing Orders of the House—[The Second Deputy Chairman of Ways and Means.]
    Hon. Members: Object.
    To be considered tomorrow.

Oral Answers to Questions
  EMPLOYMENT

    Footwear and Textiles
    Mr. Vaz: To ask the Secretary of State for Employment if he will make a further statement about job losses in the footwear and textile industries.
    The Parliamentary Under-Secretary of State for Employment (Mr. Eric Forth): The unprecedented job growth achieved under this Government is testimony to the success of their policies, which have allowed industry and workers to adapt to changing circumstances and seize new opportunities. It would be counterproductive to try to bolster uncompetitive sectors.
    Mr. Vaz: Nothing that the Minister has said will give comfort to those who work in the footwear and textile industries. Is he aware that since 1979, 197,000 jobs have been lost in those two industries—2·5 jobs for every hour that the Government have existed? Will he, please, as a matter of urgency, in consultation with the Department of Trade and Industry, set up a task force to look at the specific problems of the footwear and textile industries in order to save them from devastation? If he continues to fiddle, by the end of the decade there simply will not be a British footwear and textile industry left.
    Mr. Forth: Of course, we are conscious of the problems in those industries, but it is worth stressing that both, in their different ways and in certain sectors, are successful. I am rather surprised that the hon. Gentleman should try to give the impression that we can magic away any problems with a wand, or even with a task force. Apart from anything else, he must realise that about 38 per cent. of imported footwear comes from the EC, and he and his party, with their belief in all that is good in the EC, must realise that no measures that even they would want to take could possibly do anything about that. I hope that the hon.

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    Gentleman will recognise that unemployment in his constituency, at 4·4 per cent., is lower than that for the United Kingdom.
    Mr. Marlow: May I say that we in Northampton are proud that we produce the best footwear in the world and have one of the lowest levels of unemployment in the country? Is not that something to do with the fact that we do not whinge, we are proud of ourselves and we get on with the job?
    Mr. Forth: Yes, that well illustrates the difference in attitude between the Government and the Opposition. My hon. Friend is proud of his constituency and of the companies in it, whereas Opposition Members can only decry what happens in their constituencies and constantly talk it down.
    Mr. Beggs: Will the Minister continue to bear in mind the importance of the textile industry in Northern Ireland, where there has been rapid growth and where many new jobs have been created? Will he bear that in mind especially when negotiations on the importation of textiles are taking place?
    Mr. Forth: I am delighted to join the hon. Gentleman in recognising the achievements in his part of the world. He is entitled to be proud and to bring to the attention of the House the fact that people in Northern Ireland are working very hard to built up those key sectors, and to demonstrate their capacity to be competitive and productive. We can all share the hon. Gentleman's pleasure and pride in that.

    Dock Labour Scheme
    Mr. Nicholas Bennett: To ask the Secretary of State for Employment whether he has received representations seeking the reintroduction of the national dock labour scheme.
    The Secretary of State for Employment (Mr. Michael Howard): I have received no such representations.
    Mr. Bennett: Does my right hon. and learned Friend recall the words of the hon. Member for Kingston upon Hull, East (Mr. Prescott), who said that the scheme provided what Labour wanted all industries to have, and the words of the hon. Member for Oldham, West (Mr. Meacher), who said that to abolish the scheme was a wilful act of sabotage against the country's economic interest? Will my right hon. and learned Friend say what has happened to productivity and to industrial relations in the docks since the dock labour scheme was abolished?
    Mr. Howard: Productivity has increased. We have lost only two days since the collapse of the strike against abolition, compared with an average of three disputes a week when the scheme was in operation. The national dock labour scheme provides an object lesson in what life would be like if we were ever to have another Labour Government.
    Dr. Godman: Whatever the merits of the national dock labour scheme, it provided our maritime communities with highly skilled workers. It is essential that the training facilities for those workers are maintained. In terms of industrial relations and productivity, the few Greenock dock workers who are still at work are among the best.
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    They may take a few minutes off their work tomorrow to welcome the QE2 as she berths at the container terminal in Greenock.
    Mr. Howard: I am delighted that the abolition of the scheme has given new opportunities to port workers at Greenock, as elsewhere. However, the hon. Gentleman is entirely incorrect if he suggests that there has been any deterioration in training since the abolition of the scheme. All surveys show that training has improved, that more of it is available and that it has been of a better quality since the scheme was abolished.
    Mr. Rowe: Is my right hon. and learned Friend aware that it comes as no surprise to the people of Medway that he has received no representations about the scheme, as both the Medway ports authority and the new container port on the Isle of Grain could be there, thriving and increasing the number of people in employment, only once the scheme had been removed?
    Mr. Howard: My hon. Friend is right. Only a week or so ago, I opened a new facility at Sheerness for fruit storage, which cost £3·5 million. It was conceived, designed and executed after the abolition of the scheme and it certainly would not have been there if the scheme had still been in existence.

    Rural Employment
    Mr. Pike: To ask the Secretary of State for Employment if he has any new proposals to increase job opportunities in rural and semi-rural areas.
    Mr. Howard: Rural areas have shared in the increased job opportunities that have become available on an unprecedented scale in recent years. Training and enterprise councils are introducing new initiatives to reinforce that trend.
    Mr. Pike: Let us dismiss the nonsense with which the Secretary of State started his comments. Does he accept that in rural areas there is a lack of choice of jobs and that there are many low-paid jobs? Will he do something to increase the opportunity for choice of jobs and for higher pay in rural and semi-rural areas?
    Mr. Howard: But choice and job opportunities are increasing constantly in rural areas. They are sharing in the increased job opportunities that are becoming available. We have 3·5 million more jobs than we had in 1983 and rural areas have fully shared in that prosperity.
    Miss Emma Nicholson: Does my right hon. and learned Friend agree that when he came to my constituency on Friday, he saw a welcome increase in excellent and well-paid jobs that require high qualifications in several parts of my constituency? Does he further agree that the increase by one quarter in jobs in the south-west—which is, in essence, rural—since 1983 is laudable and that we have a magnificent increase in jobs in the tourism industry?
    Mr. Howard: My hon. Friend is absolutely right. I was delighted to join her on Friday in her constituency, where we saw some magnificent examples of the dynamic enterprise which has flourished under this Government and which is providing job opportunities in rural areas. My hon. Friend, unlike the hon. Member for Burnley (Mr. Pike), is living in the real world.
    Mr. Kirkwood: Will the Secretary of State undertake to look carefully at the way in which the new regime under which the training centres are operating is discriminating against potential trainees from rural areas? Is he aware that the amount of money that the Government give to the training centres per head must embrace an element for expenses? It is obviously more expensive to travel the 50 miles from my constituency to Edinburgh than it is to go round the corner. Will he make sure that potential trainees from rural areas are not discriminated against in that way?
    Mr. Howard: The hon. Gentleman will appreciate that one reason behind the setting up of the training and enterprise councils in England and Wales and the local enterprise companies in Scotland is to enable training to be provided that more closely fits the needs of local areas, including rural areas. They will be able to take the needs of their areas into account in a way that will be far more responsive than has previously been the case.

    Labour Statistics
    Mr. Speller: To ask the Secretary of State for Employment what are the unemployment figures in the towns of Barnstaple, Ilfracombe and South Molton in 1979 and the present day: and if he will make a statement on the future employment prospects in this area.
    Mr. Forth: The figures are 1,441 and 1,656, although they are not comparable, the travel-to-work area having been redefined and changes having been made in the coverage of the count. With unemployment at only 4·5 per cent. for the Barnstaple and Ilfracombe area, prospects for future employment are excellent, bearing in mind the fact that there are over 500 vacancies locally.
    Mr. Speller: Does my hon. Friend accept that the figures of 4·5 per cent. unemployment in the Barnstaple and Ilfracombe area and a mere 2·5 per cent. in South Molton show how wise we were to take away grant that was based on development areas and to substitute good roads and infrastructure? Can he promise me that when we get our downstream bridge, unemployment may virtually disappear in north Devon?
    Mr. Forth: I join my hon. Friend in celebrating the success in job creation in his constituency in the past few years. He is tempting me on to the territory of another Department. I shall resist that temptation, but I undertake to raise the point that my hon. Friend raises with the Department of Transport to see what can be done.

    Youth Training
    Mrs. Maureen Hicks: To ask the Secretary of State for Employment if he will list the improvements made by switching from YTS to youth training.
    Mr. Howard: New youth training builds and improves on the achievements of YTS. It offers the promise of a level 2 qualification or more for every trainee who can achieve it. It offers flexible design and duration of training and wider eligibility. It will provide improved help for those with special training needs and those seeking employment after training.
    Mrs. Hicks: Does my right hon. and learned Friend agree that, while a disappointing number of youngsters over 16 are staying on for further education, it is vital for
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    the career development of young people and for the needs of the economy that we offer each and every young person who wants it, a tailor-made training, which truly assesses their individual needs, which, we hope, matches the needs of industry, particularly in relation to skill shortages, and which, most of all, guarantees them a good qualification that will be welcomed in the workplace and be highly regarded?
    Mr. Howard: I entirely agree with my hon. Friend. The combination of new youth training and the training and enterprise councils offers us the best possible prospect of achieving the objectives that she identified.
    Mr. Leighton: Will the Secretary of State please try to do better this year in protecting the budget of his Department than he did in last year's autumn expenditure round, when several hundred million pounds were lopped off the expenditure on employment training and youth training? In particular, will he note that the London borough of Newham feels cheated as do 20 other local authorities, because they wanted to co-operate with the Government on the technical and vocational education initiative but now find that the cash for it has been substantially cut? Does he appreciate that investing in the technical and vocational education of our young people is the best use that can be made of public money?
    Mr. Howard: The hon. Gentleman, who follows those matters closely as Chairman of the Select Committee on Employment, will know that in the past four years funding for training has increased by 60 per cent. in real terms at a time when unemployment has halved. That is the context in which this year's settlement must be seen.
    Mr. Andrew Mitchell: Will my right hon. and learned Friend confirm that two members of the England World cup football squad first acquired their footballing skills under YTS? Will he further confirm that the same opportunities for young people to develop their world-class football skills will be available under youth training?
    Mr. Howard: My hon. Friend is entirely right. David Platt and Paul Gascoigne, who combined to score the goal that put England in the quarter final of the World cup, were both YTS trainees. I am confident that youth training will enable the England World cup team to do even better in 1994 than in 1990.
    Mr. Blair: Will the right hon. and learned Gentleman confirm that even after the recent Cabinet discussions, and despite the chaos caused by the cuts in the youth training budget for this year, he still intends to cut next year's budget by over £120 million? What went wrong? Did the right hon. and learned Gentleman lose or did he simply not fight?
    Mr. Howard: As the hon. Gentleman knows perfectly well, there is no chaos. As I said to his hon. Friend the Member for Newham, North-East (Mr. Leighton), the Chairman of the Select Committee on Employment, and as he too knows perfectly well, spending on training has increased in real terms by 60 per cent. in the past four years at a time when unemployment has fallen by 50 per cent. That is a measure of the Government's commitment to training.

    Work Permits (Hong Kong Nationals)
    Mr. Stern: To ask the Secretary of State for Employment how many work permits were issued to Hong Kong nationals in the latest available year.
    The Parliamentary Under-Secretary of State for Employment (Mr. Robert Jackson): The number of work permits issued to Hong Kong nationals during the 12-month period ending on 30 June 1990 was 868.
    Mr. Stern: I am grateful to my hon. Friend for that answer, and should like to take this opportunity to congratulate him on his latest appointment. Will my hon. Friend offer some reassurance to those who are concerned about the total number of permits to be issued under the British Nationality (Hong Kong) Bill, that the issue of work permits to people coming to this country and applying for permits once here will not be used as a means of circumventing the provisions of that Bill?
    Mr. Jackson: I think that I can give my hon. Friend the assurance that he seeks. The strict conditions of the main work permit scheme will not be relaxed for Hong Kong citizens. Under the main scheme, work permits will continue to be issued only to those Hong Kong nationals who are recruited by employers for employment in high-level jobs that employers are unable to fill from resident labour.
    Mr. Madden: Will the Minister confirm that, come the single market, 300 million EEC nationals could—I emphasise the word "could"—seek employment in this country without the need to obtain a work permit? Against that background, does he agree that the number of work permits issued to Hong Kong nationals pales into insignificance?
    Mr. Jackson: Of course, European Community nationals will be able to seek jobs in this country and British nationals will be able to seek jobs in European Community countries.
    Mr. Dickens: Is my hon. Friend aware that a few years ago a lot of illegal work permits were issued from his Department? Has he been in the Department long enough to know for certain whether that practice has ceased?
    Mr. Jackson: I thank my hon. Friend for that question. When I have got my feet under the desk—when I have even seen the desk—I shall look into that point.

    ILO Convention III
    Mr. Archer: To ask the Secretary of State for Employment when Her Majesty's Government will ratify International Labour Organisation convention 111 on discrimination, employment and occupations.
    Mr. Howard: Convention 111 was adopted by the ILO in 1958. Every United Kingdom Government since then have declined to ratify the convention, and the present Government have no plans to do so.
    Mr. Archer: Are the Government proud that standards in this country are so far below those of other countries? Is the reluctance to ratify the convention possibly connected with the findings of the committee of experts that the Government are in breach of the ILO conventions that they have ratified?
    Mr. Howard: Certainly not. Convention 111 has nothing to do with standards. Indeed, the Act of Parliament that is expressly inconsistent with convention 111 is the Race Relations Act 1976, which was passed when the right hon. and learned Gentleman was Solicitor-General.
    Mr. Simon Coombs: Is my right hon. and learned Friend aware of the growing concern about the difficulty in obtaining employment that is faced by ex-offenders? Will he undertake to look at that matter with a view to improving the regime under which they seek jobs?
    Mr. Howard: My hon. Friend raises an important matter, which gives rise to concern. I entirely accept his concern about this problem, which, with the training and enterprise councils, we are taking forward positively and realistically.
    Mr. Tony Lloyd: May I congratulate the Secretary of State on his productivity today, which is an enhancement on previous Question Times? Do the Government have any difficulty with the parts of the ILO conventions on employment that allow for greater disclosure? Does the right hon. and learned Gentleman accept that the concept of disclosure would mean that the report by the accident prevention unit of the Health and Safety Executive into the channel tunnel, where so many people have died and where there is clearly a real problem with management, should be published and come into the public domain, to ensure that we could have a sensible and rational debate about the quality of safety on that project?
    Mr. Howard: The hon. Gentleman will know that the reports to which he refers are compiled by the HSE and rely on the full co-operation of employers. If that co-operation is to be continuing and available in future, it is important that confidentiality should apply. That is why it is unlikely that that particular report will be published, but the hon. Gentleman will know the recent action taken by the HSE in relation to the channel tunnel.

    Labour Statistics
    Mr. Boswell: To ask the Secretary of State for Employment what was the increase in the numbers of people self-employed during 1989.
    Mr. Forth: Between December 1988 and December 1989, the number of self-employed people in the United Kingdom rose by nearly 200,000 to reach 3·3 million.
    Mr. Boswell: I thank my hon. Friend for that reply and congratulate him on his translation. Can he confirm that that was the 10th successive year of increase in self-employment and that the figures are now some three quarters higher than when the Government took office? Will he take it from me, from personal experience, that it is a satisfactory way of employing oneself and serving the customers?
    Mr. Forth: Indeed. My hon. Friend has made the point better than I could. We know that the main hope for future wealth creation and growth in employment is precisely the growth of the self-employed sector. The Government have demonstrated that we welcome and encourage self-employment. Our track record is excellent and we intend to maintain it.
    Ms. Short: I do not suppose that the Minister has had time yet, but if he looks at the figures for the incomes of self-employed people, he will find that large numbers of them are on very low incomes. Given the stress that his Government place on self-employment, will he consider securing better standards of protection against unemployment, sickness and low income levels for the self-employed, most of whom are extremely low-paid workers?
    Mr. Forth: The answer must be no, because the great strength of the self-employed sector is precisely that most self-employed people do not want intervention, interference, or the pseudo-protection that the hon. Lady suggests. Self-employed people are vigorous, self-maintained people; they want to get on with wealth creation and job creation unencumbered by the measures for which the hon. Lady asks.
    Mr. Butler: Does my hon. Friend agree that the number of self-employed people would be much higher had the Inland Revenue not engaged in a campaign classifying entire groups of people from the self-employed to the employed?
    Mr. Forth: On my first day in the job, I welcome the advice that my hon. Friend has given. He has given me a broad hint as to the direction that I might take better to discharge my responsibilities and I am most grateful to him.

    Disabled People
    Mr. Ashley: To ask the Secretary of State for Employment if he is taking any steps to introduce anti-discrimination legislation for disabled people.
    Mr. Howard: The consultative document, "Employment and Training for People with Disabilities", which was published on 29 June, sets out various options for encouraging the employment of disabled people. I shall be considering what action to take in the light of the comments that we receive.
    Mr. Ashley: Is the Secretary of State aware that good intentions and guidance may influence good employers, but will not affect bad employers who discriminate against disabled people? That is why the United States Government are enacting legislation outlawing unjustifiable discrimination. As many disabled workers in Britain suffer discrimination, why cannot we have the same legislation?
    Mr. Howard: We see considerable difficulties in the way of following the path that the United States Government have chosen, but that is one of the matters on which we have consulted in the document, and I certainly should not want to prejudge the result of that consultation in responding to the right hon. Gentleman this afternoon.
    Mr. Thurnham: Will my right hon. and learned Friend expand the numbers of sheltered placement schemes? Is not the success of the Government's voluntary schemes demonstrated by the fact that nearly 1 million disabled people are in jobs?
    Mr. Howard: My hon. Friend is absolutely right. The sheltered placement schemes represent one of our great
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    successes. There have been huge increases in the numbers on those schemes in the past few years and we look forward to an expansion of the schemes as resources allow.
    Mr. Alfred Morris: Do not the disturbing figures for unemployment and low pay from the Office of Population Censuses and Surveys point to widespread discrimination? Is the right hon. and learned Gentleman aware that the major disability organisations accept that disability can be relevant to job performance? They are asking not for deaf piano tuners or blind bus drivers, but for the outlawing of unjustifiable discrimination. Is he further aware of the findings of the Spastics Society that job applicants are 1·5 times less likely even to be interviewed if they are disabled? Will he consider the case for legislation? Does he agree that there should be an early parliamentary debate on the consultative document?
    Mr. Howard: I understand the right hon. Gentleman's point and am aware of the research conducted by the Spastics Society. It has welcomed our consultative document, which canvasses a wide range of options. We shall consider the responses to that document with great care.

    Part-time and Temporary Work
    Mr. Michael Brown: To ask the Secretary of State for Employment what assessment he has made of the impact upon those in low-paid employment of the European Commission's draft directives on part-time and temporary work.
    Mr. Howard: The draft directives would require an extra 1·75 million low-paid employees to pay national insurance contributions. I shall shortly be issuing a consultative document asking for comments on the proposals. A copy of the document will be placed in the Library.
    Mr. Brown: In the light of my right hon. and learned Friend's answer, is not it clearly the Government's duty to do everything possible to ensure that the draft directive in its present form does not become European law?
    Mr. Howard: My hon. Friend is absolutely right. I hope that Opposition Members, who are so quick to leap to the defence of the low paid, will join us in ensuring that they will not be docked a significant proportion of their income as a consequence of that directive.
    Mr. John Evans: Will the Secretary of State confirm that while it is the European Commission's policy to try to increase the wages of the low paid, it is the Tory Government's policy—especially through the privatisation programme—to reduce those wages?
    Mr. Howard: The hon. Gentleman is wrong. The result of this and other draft directives emanating from the Commission would be to destroy jobs. We have an unrivalled record of job creation during the past few years, and we do not intend to have it put at risk by directives from the Commission or any other source.
    Mrs. Currie: Is my right hon. and learned Friend aware that many businesses such as those in the retail sector which rely heavily on part-time labour, especially women, are already giving pro-rata benefits, including pensions? Does he agree that that is a most welcome development

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    which should be encouraged as it will mean that, in future, such staff will not be dependent on the public purse for pensions and other benefits when they retire?
    Mr. Howard: As usual, there is a great deal of substance in my hon. Friend's point. These matters are best left to the workers and the employers. It is not appropriate for burdens to be imposed on employers that they may not be able to meet and which will lead to a fall in the number of jobs available.
    Mr. Blair: So that the Secretary of State does not mislead the House, can he tell us the Government's policy towards the proposal that part-time workers should be given the same rights of maternity leave, so that more women can return to work as part-time employees?
    Mr. Howard: That directive has not yet been published. We shall consider its text as and when it becomes available, and regard it on its merits, as we regard all the other directives that emanate from the Commission.
    Mr. Bill Walker: Does my right hon. and learned Friend agree that in the rural parts of Scotland, where part-time and temporary work are an essential part of the local economy, there could be a devastating effect if anything was done to put such jobs in jeopardy?
    Mr. Howard: My hon. Friend is right, which is why we have approached these matters with such care and caution—apparently in contrast to the hon. Member for Sedgefield (Mr. Blair), who is prepared to give a warm welcome to directives that have not yet been published, and to sign a blank cheque to the Commission without knowing what costs are involved.

    Disabled People
    Mr. Wigley: To ask the Secretary of State for Employment if he will make a statement on his Department's proposals for employment services for disabled people.
    Mr. Jackson: The consultative document "Employment and Training for People with Disabilities" sets out our intentions for the development of services in the 1990s. These take forward themes established in the 1980s of integration into the work force and the active commitment of employers to good practices in creating employment opportunities for people with disabilities. The document has been widely distributed and the period for consultation lasts to 31 December.
    Mr. Wigley: Does the Minister accept that disabled people need legal protection at work? Has the Department studied practice in France and Germany, which operate a quota and levy system? If not, will he undertake to study it before the conclusion of the current consultations?
    Mr. Jackson: Much work lies behind the consultative document to which my right hon. and learned Friend referred. We shall consider all the submissions and comments made, and they will be taken into account before decisions are taken.
    Mr. Soames: I warmly welcome my hon. Friend to his new job. Will he discuss these new services with the architects responsible for designing many of our industrial
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    buildings to ensure that they are far more user-friendly for disabled people, to the advantage of those who would like to employ more disabled people?
    Mr. Jackson: I thank my hon. Friend for his welcoming remarks. His comments about the adaptation of buildings and the construction of new buildings that are user-friendly for disabled people are important and we shall pursue them.
    Mrs. Heal: Does the Minister recognise that the review that the Department is about to undertake should not reduce the length of courses for disabled people who are on assessment, nor reduce the level of skills of the people who assess them?
    Mr. Jackson: The hon. Lady makes an interesting point and I should like to consider it further with her later. This is an important debate which is not yet concluded.
    Mr. Conway: When my hon. Friend has had an opportunity to catch his breath, will he consider the work of the Shropshire committee for the employment of disabled people, which does a spendid job in the county promoting the employment of disabled people in not only the municipal sector but private business? Will he take the earliest opportunity to come to Shropshire to see the excellent work that it does in encouraging placement?
    Mr. Jackson: I thank my hon. Friend and I shall accept his kind invitation.
    Rev. Martin Smyth: In view of some of the concerns expressed in the Department's review of July 1989, will there be any resource implications or will additional funds be made available to implement the recommendations?
    Mr. Jackson: We have a good record for expenditure on supporting employment among disabled people. Last year about £400 million was spent on 225,000 people, which is an increase from expenditure of £270 million on 165,000 people. Resources are under constant review, but the record speaks for itself.

    Labour Statistics
    Mr. Amos: To ask the Secretary of State for Employment if he will make a statement on the unemployment figures for the Hexham constituency for May.
    Mr. Jackson: In May 1990, in the parliamentary constituency of Hexham, unemployment was 19·4 per cent. lower than a year ago.
    Mr. Amos: Does my hon. Friend agree that the Government policies that have reduced unemployment in my constituency by more than half since June 1987 contrast strongly with the policies of the Labour party, which deliberately seek to undersell the region on every possible occasion by spreading doom and gloom, which simply is not true?
    Mr. Jackson: I can confirm what my hon. Friend says. Unemployment in Hexham has fallen by 59·8 per cent. since 1986. I visited the north-east frequently in my former capacity at the Department of Education and Science and saw the work done by its higher and further education institutions, and I look forward to visiting the training and

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    enterprise councils that are being established so effectively in the area. Much good work is being done, which is reflected in the figures.
    Mr. Bell: As a former candidate in Hexham, may I ask the Minister to give the House the exact numbers, not percentages, of unemployed people in Hexham?
    Mr. Jackson: I shall have to look that up. The exact number of those unemployed in Hexham is 1,036.

    Tourism
    Mr. Harry Greenway: To ask the Secretary of State for Employment what was the total amount spent in the United Kingdom by overseas visitors in (a) 1988 and (b) 1989.
    Mr. Forth: It is estimated that overseas residents spent £6,184 million in the United Kingdom during 1988 and £6,877 million during 1989.
    Mr. Greenway: Does my hon. Friend accept that, welcome though that money is for our poor country, some of our institutions are being swamped by visitors? Will he use his weight to secure a second daily changing of the guard ceremony? Will he persuade my right hon. and learned Friend the Secretary of State to put his Department's weight against pressure for the interchange for the proposed new underground service at Parliament square? This would have a detrimental effect on the 4 million people who visit Westminster abbey each year. It could be, and should be, relocated to the St. James's park area.
    Mr. Forth: I am disappointed that on this first occasion at the Dispatch Box in my new incarnation, I must slightly disagree with my hon. Friend. I cannot endorse his description of our country as poor. I cannot undertake to deliver him a second changing of the guard, no matter how desirable that may be. As for the location of interchanges, that is a matter which, in all conscience, I must leave to my right hon. and hon. Friends in the Department of Transport, but I shall, of course, draw his points to their attention.
    Mr. Cryer: Will the Minister assure the House that he will not encourage tourism and jobs in tourism at the expense of manufacturing? He will be keenly aware that some 200,000 jobs—[Interruption.]
    Mr. Speaker: Order. Carry on, please.
    Mr. Cryer: The hon. Gentleman will be keenly aware that some 200,000 jobs have gone from textiles and clothing, which is a major manufacturing industry. Will the hon. Gentleman use all his efforts to ensure that the Department of Trade and Industry renegotiates the multi-fibre arrangement to ensure that textile jobs continue to survive?
    Mr. Forth: May I join all my colleagues in welcoming to the Chamber my right hon. Friend the Member for Cirencester and Tewkesbury (Mr. Ridley). It is most gratifying to see him here.
    I see no conflict or contradiction between employment in tourism and employment in manufacturing. This country is outstandingly successful in both regards and will continue to be so. It is significant that 54,000 new jobs
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    have been created in tourist-related industries over the past year alone. We can be proud of that record. We shall continue to encourage tourism and manufacturing.
    Mr. Butterfill: I congratulate my hon. Friend on the action that he and other members of the Government have taken to encourage tourism, especially improved standards. This drastically contrasts with the Opposition's attitude. What representations has my hon. Friend received about the operation of the 100-day rule for business rating?
    Mr. Forth: I join my hon. Friend in paying tribute to everyone involved in tourism—the British Tourist Authority and tourist boards throughout the country—on doing an excellent job. They will continue to have the fullest possible support of the Government.
    Having recognised the difficulties that have arisen from the 100-day rule, the Government will consult on alternatives to it. We regard it as unworkable and unfair.

    Construction Sites
    Mr. McAllion: To ask the Secretary of State for Employment how he intends to improve health and safety on construction sites.
    Mr. Howard: The prime legal responsibility to bring about improvements rests with the industry itself. As part of a continuing process to promote long lasting change in the industry, the Health and Safety Commission is to take forward proposals for new legislation to strengthen the legal requirements relating to the management of health and safety on construction sites.
    Mr. McAllion: Why is it that in a high-risk industry such as construction—where, according to the Health and Safety Executive 90 per cent. of the deaths that occur could be prevented—there are only 20 overworked specialist construction inspectors for the whole country?
    Mr. Howard: As the hon. Gentleman should know, I recently approved the Health and Safety Commission's plan for 1990-91. I look forward to attending its launch at a ceremony on Monday. The Health and Safety Executive is aware of the need to make proper arrangements to deal with monitoring and safety at construction sites.
    Mr. Ian Bruce: Does my right hon. and learned Friend agree that however much one legislates, and however many inspectors one employs, at the end of the day it is a question of the employees and their employers taking action to protect themselves? Does he further agree that we have seen a great improvement in the way in which the major national firms in the construction industry look after their employees?
    Mr. Howard: My hon. Friend is absolutely right. As is recognised by the more enlightened Opposition Members, it is absurd to suggest that the number of inspectors is the chief determinant of safety on construction sites.
    Mr. Heffer: Does the Minister agree that what is now required is a strengthening of the legislation to deal with instances of genuine criminal activity on the part of employers who do not provide proper safety for their workers? Perhaps if some of the directors thought that

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    they might have to go to prison and not just pay a miserable fine, there would be an improvement in the position.
    Mr. Howard: The hon. Gentleman will know that there is concern in all quarters about some of the fines that have been imposed. One of the first things that I did on assuming my present responsibilities was to write to the chairman of the Magistrates Association asking him to examine the level of penalties that are being imposed.

  PRIME MINISTER

    Engagements
    Mr. John Garrett: To ask the Prime Minister if she will list her official engagements for Tuesday 24 July.
    The Prime Minister (Mrs. Margaret Thatcher): This morning I had meetings with ministerial colleagues and others. In addition to my duties in the House, I shall be having further meetings later today. This evening I hope to have an audience of Her Majesty the Queen.
    Mr. Garrett: The Prime Minister has now had 20 major ministerial reshuffles during her reign. As a result, 115 Ministers and Whips have been sacked or disposed of. By and large, what was wrong with them?
    The Prime Minister: We have a lot of good talent on these Benches waiting to come in. My second and third team could knock the Opposition's top team into a cocked hat.
    Mrs. Maureen Hicks: Can my right hon. Friend believe that, once upon a time, only half my constituents paid anything for their services? The other half were totally subsidised. Can my right hon. Friend imagine going back to the bad old days, and explain to my constituents what a rating revaluation would mean—the removal of a spending assessment providing my authority with a guideline on what it should be spending, and hence no accountability whatever?
    The Prime Minister: To go back to rates would indeed be a step backward. It was the most unpopular tax that we have ever had; it was also totally unfair. A system that permits 35 million or 36 million people to vote for local authorities and taxes only half of them is totally unfair and unaccountable. I understand that the Opposition are totally against capping local authority expenditure. That would mean higher rates, higher local authority spending and higher taxation all round.
    Mr. Kinnock: Will the Prime Minister confirm that she is willing—even eager—to sell off PowerGen at a knockdown price to Lord Hanson, another friend of the family?
    The Prime Minister: As my right hon. Friend the Secretary of State for Energy said yesterday, the Government have a duty to get the best deal for the taxpayer. The right hon. Gentleman takes his customary swipe at private enterprise: he cannot stand it. He would far rather have nationalisation, run by politicians who know nothing.
    Mr. Kinnock: There is private enterprise, and there is looking after your friends. I think that the country can tell the difference between the two. [HON. MEMBERS:
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    "Withdraw!"] How can anyone who is selling off the electricity industry say that he is trying to get a good deal for the country, in any case? Most of all, how can anyone who is selling off that industry at a third of its value say that he is getting good value for the country? Whatever happened to the undertaking given by the Secretary of State for Energy that no one—neither organisation nor individual—would ever be allowed to own more than 15 per cent. of the company?
    The Prime Minister: PowerGen will be sold off at the highest price. My right hon. Friend the Secretary of State for Energy has an indicative price and other bids will be asked for. Is the right hon. Gentleman against selling it off at the highest price? Or does he allow his prejudices against private enterprise to dictate his every sentence?
    Mr. Kinnock: The Prime Minister can twist and turn all she likes. The truth is that, in breach of the promises that she has already made, she is selling off at a fraction of its value a highly profitable company to a bosom chum and major contributor to the Conservative party. Is not it obvious that this Session is ending as it began—with sleaze and shadiness at the heart of the Government?
    The Prime Minister: In one respect the Session is ending as it began, with the right hon. Gentleman not listening to any reply, but going on with a supplementary question that he had worked out before the reply. My right hon. Friend the Secretary of State for Energy indicated that he will maximise the price, and he is duty bound to do that to get the best value for the taxpayer. However, other bids will be asked for. If the right hon. Gentleman thinks that PowerGen is being sold at a knockdown price, why do not he and some of his trade union friends put forward a consortium and bid at a higher price? No, the right hon. Gentleman is talking nonsense as usual. [Interruption.]
    Mr. Speaker: Order. Settle down now.
    Mr. Gerald Howarth: As this is the last Prime Minister's Question Time before the 50th anniversary of the battle of Britain which will be celebrated in September, will my right hon. Friend take this opportunity to pay her tribute to the heroism of the few and assure those 1,000 or so who remain that they are not forgotten? Will she join me in commending to the British public the Reach for the Sky appeal to raise £20 million so that those who so valiantly fought for the freedom that we in the House take for granted today will not be forgotten?
    The Prime Minister: I am sure that hon. Members in all parts of the House will gladly respond to my hon. Friends invitation. We shall never forget and can never repay the debt of gratitude that we owe in particular to those pilots and to the other people who lost their lives during the second world war. I hope that people will respond gladly to that appeal.
    Mr. Ashdown: Did the Prime Minister notice yesterday that her Chancellor of the Exchequer said that the alternative to his plan was a two-speed Europe? Would the Prime Minister prefer that to Britain joining a single currency and a central bank?
    The Prime Minister: I believe that the plan that we have put up can gather support from all European countries. It will be an effective next stage to Delors stage 1. I think that we all approve of Delors stage 1, or at least most of us do,

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    and we are prepared to have a stage 2 which would unite people. Why is the right hon. Gentleman constantly trying to divide them?
    Mr. Boswell: Will my right hon. Friend find time to commission a special inquiry into the administrative cost and duration of a revaluation of every house in the country to effect a return to the rating system, or would she rather proceed with figures that are 20 years out of date?
    The Prime Minister: I did at one time consider a rating revaluation which would have been 17 years after the previous one. However, we had enough experience in Scotland of a domestic rating revaluation only seven years after the previous one. That resulted in a bigger proportion being paid by the domestic ratepayer and rates on individual ratepayers which were utterly intolerable as well as grossly unfair.
    Mr. Ron Davies: To ask the Prime Minister if she will list her official engagements for Tuesday 24 July.
    The Prime Minister: I refer the hon. Gentleman to the reply that I gave some moments ago.
    Mr. Davies: Is there any truth in the rumour that the hon. Member for Ealing, Acton (Sir G. Young) is still a man of principle, that he has not sacrificed his beliefs for a little patronage and that he has been appointed to the Government Whips Office only to mastermind the repeal of the poll tax?
    The Prime Minister: My hon. Friend the Member for Ealing, Acton (Sir G. Young) shares those characteristics with every other person on the Government side of the House.
    Mr. Thurnham: Will my right hon. Friend give strong guidance to local authorities on their priorities for community care? Is she aware that the 64-year-old mother of my constituent Paul Hargreaves cannot go on holiday tomorrow because Bolton council says that his disabilities are too severe for it to look after him? Should not local authorities get their act together before taking on more responsibilities?
    The Prime Minister: I am sure that we all sympathise with that family. I know of the particular attention that my hon. Friend pays to those with disabilities and the amount of work that he has done for them. I hope that he will be able to get the mother a holiday.—[HON. MEMBERS: "Aah."] Yes, I do. Most of us have experienced cases of that kind in our constituencies and know that, during August, hospitals will frequently take in for a fortnight people who are in need of attention to permit their parents to go away.
    Mr. Alan W. Williams: To ask the Prime Minister if she will list her official engagements for Tuesday 24 July.
    The Prime Minister: I refer the hon. Gentleman to the reply that I gave some moments ago.
    Mr. Williams: As a chemist, and having been Prime Minister for 11 years, which environmental achievement would the Prime Minister like to be remembered for—the deterioration in Britain's beaches, the continued dumping of sewage sludge in the North sea, the 10-fold growth in the import of toxic waste, the continuing increase in carbon dioxide emissions, Britain's exports of chlorofluorocarbons—[Interruption.]
    Mr. Speaker: Order. Normally we have one question.
    Mr. Williams: Or the fact that when this Government leave office not a single one of our power stations will have been fitted with desulphurisation equipment. Is it any surprise that Britain is now the dirty man of Europe?
    The Prime Minister: Like many other people, I could scarcely hear what the hon. Gentleman said, except for his remarks about beaches and water right at the beginning. The hon. Gentleman asked me which I prefer to be remembered for. I should like to recall to the House that the European Community sent a directive in 1975 to the then Labour Government requiring that all beaches that were not up to standard or in accordance with the directive be identified and that something be done about them. The Labour Government did absolutely nothing. It took a Tory Government—[Interruption.]
    Mr. Speaker: Order. It takes a lot of time to answer multiple questions.
    The Prime Minister: The Labour Government, I am reminded by one of my right hon. Friends, promptly cut capital expenditure on water. It took a Conservative Government to come in and increase capital expenditure on water, to identify those beaches, to deal with three quarters of them in the first 11 years, and, in the next few years, to have a £3 billion investment programme to bring all those beaches up to standard. I am glad to go on to answer the rest of the hon. Gentleman's question. I have a lot of information. For example, on achievements since the 1987 election, the national debt has been reduced by £30,000 million—[Interruption.]
    Mr. Speaker: Order. I have already said that multiple questions always take more time.
    The Prime Minister: Two hundred thousand more businesses opened than closed, we had the top number of jobs in this country ever, and the 1988 Budget reduced basic income tax to 25p—et cetera, et cetera, et cetera.
    Mr. Barry Field: Did my right hon. Friend see the report in The Sunday Times that the Roman Catholic and Anglican bishops of Liverpool have requested a meeting with my right hon. Friend the Secretary of State for the Environment because of the financial chaos into which Liverpool city council has been plunged as a result of the Liberal Democrats voting with Militant Tendency? Is not that the worst case of political prostitution we have ever seen?
    The Prime Minister: I accept what my hon. Friend says and it shows precisely what happens when local government gets into the hands of Labour authorities with no overall control. That is precisely what would happen if socialism ever got in charge of Britain.
    Mr. Campbell-Savours: To ask the Prime Minister if she will list her official engagements for Tuesday 24 July.
    The Prime Minister: I refer the hon. Gentleman to the reply that I gave some moments ago.
    Mr. Campbell-Savours: As the Prime Minister was so keen to defend the right of Mr. Salman Rushdie to publish his book "The Satanic Verses", may we have an assurance that she will be equally diligent and vigorous in defending the rights of Muslims who want the film "International

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    Guerillas" to be distributed, particularly as Mr. Rushdie has said that no question of criminal libel arises, or are we simply to have double standards?
    The Prime Minister: I am grateful to the hon. Gentleman. The decision to refuse the film "International Guerillas" a certificate was taken by the British Board of Film Classification which, having received legal advice
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    that the recording might constitute a work of criminal libel, decided in accordance with normal practice that it would not be appropriate to issue a certificate. The board is an entirely independent body and if the distributors of the recording wish to appeal against its decision, they may apply to the Video Appeals Committee in the usual way. That is what the House decided and we cannot overturn it.

Civil List
3.30 pm
The Prime Minister (Mrs. Margaret Thatcher): With permission, Mr. Speaker. I should like to make a statement on future arrangements for expenditure on the civil list for the support of Her Majesty the Queen in carrying out her duties as Head of State. I shall also announce some changes on the management of the occupied royal palaces.
The Government propose, with the Queen's agreement and following consultation with the right hon. Gentleman the Leader of the Opposition, that Civil List provision should return to the form recommended by the 1971 Select Committee on the Civil List and contained in the Civil List Act 1972. Under those arrangements, the Consolidated Fund made a fixed annual payment related to the anticipated expenditure over a period of years. The Queen's official expenses will thus revert to a standing service on the Consolidated Fund. The need for annual voted supplements under the Civil List Act 1975, introduced as a temporary expedient, will cease.
As the House will know, the financing mechanism in the Civil List Act 1972 supplies, in the early years, provision in excess of need. That surplus will be accumulated as a reserve for use in due course to deal with any future shortfall in income towards the end of the period. If provision is to be adequate to support the Civil List over a decade, the annual payment needs to be set at a realistic level.
Subject to the agreement of the House to the necessary statutory instrument, the Government propose that, from 1 January 1991, the yearly sum for Her Majesty's civil list should be about £7·9 million per year for 10 years, which the Select Committee recommended as the appropriate review period.
The yearly sum is the average of estimated need over the period. It is built up by taking the civil list sum for the present year of £5·09 million—increased by agreed additions for current and capital expenditure—and increasing that sum at 7·5 per cent. per year. That is the average annual rate of inflation over the past decade. The yearly sum also allows for efficiency savings which the Royal Household is expecting to make from continuing improvements in management, in line with the best financial practice.
Should the provision be more than necessary, the surplus at the end of the 10-year period would be carried forward and taken into account by the Government in setting the figure for the new period. Should the proposed provision prove insufficient, there would be a report from the Royal Trustees, and the Government of the day would bring forward proposals for a new settlement. The Civil List Act 1975 and the powers that it contains for additional payments from the Treasury vote will be left in place as a means of financing of last resort.
The same principles have been constructed in adopting a yearly sum for each of the other households that receive annuities under the Civil List Acts. I will, with permission, circulate in the Official Report a note about the Queen's civil list, which will also show the amounts for the other annuitants. The total net cost to the consolidated fund of the other members of the royal family will be about £1·9 million a year after taking account of the amounts that the Queen will continue to refund to cover the payments made to three of the annuitants.
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The Government will present a Royal Trustees report on civil list expenditure later in the year together with a new civil list order-making provision for the new arrangements to come into effect from 1 January 1991. The order is subject to negative resolution.
The Government also propose that the Royal Household should be given greater responsibility for the management of, and expenditure on, the occupied royal palaces. This change is also in keeping with modern financial management. The new arrangements will not disturb the source of finance, so that my right hon. Friend the Secretary of State for the Environment will continue to ask Parliament to vote annually moneys to provide for the necessary maintenance of the occupied royal palaces. Operational responsibility for the upkeep of the palaces within the moneys provided will in future rest with the Royal Household.
The arrangements will be settled under an agreement between the Royal Household and the Department of the Environment. The Comptroller and Auditor General will continue to audit moneys in the hands of the Secretary of State. Expenditure provision will be included as is it now in the civil estimates provided to Parliament. The Government propose that the changes will come into effect on 1 April 1991.
The arrangements that I have announced for the civil list and the occupied royal palaces are, in the view of the Government, in tune with modern financial management. Moreover, they are in keeping with dignity of the Crown and with the esteem and affection in which the royal family are held.
Mr. Neil Kinnock (Islwyn): I thank the Prime Minister for her statement. May I tell her that there will be widespread support for the decision that the basis of civil list expenditure should be that set out by the 1972 Act, as it obviously serves the purposes of good management? The practical commitments to modernised administration, to the improved efficiency of the Household and to a planned basis for Household expenditure are all welcome.
Can the Prime Minister tell the House what steps have already been taken by the Royal Household to improve efficiency in the use of publicly provided resources? Will she confirm that, because of the assumed efficiency savings to which she referred, the cost to public funds will actually increase by less than 7·5 per cent. in all but one of the years in the 10-year programme?
Finally, will the right hon. Lady accept that the new arrangements under the statute will provide for greater continuity and more effective planning in the financing of the Royal Household and therefore commend themselves to the House?
The Prime Minister: I am grateful to the right hon. Gentleman for his support. He asked what steps had already been taken to improve efficiency. The Household has engaged management consultants to advise it upon these matters. It has had a study made of the use of information technology and, as the right hon. Gentleman knows, some of the extra requirements in the first year will go to providing information technology.
The role of the Lord Chamberlain has been crucial in getting extra good financial management. The appointment of a Director of Property Services will shortly be

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announced so that the Royal Household can the better manage the moneys that are available for the upkeep of the occupied palaces.
As for the right hon. Gentleman's question as to whether the cost will go up by less than 7·5 per cent.—which, he said, happened in every year except the first—the efficiency savings over the period will amount to some £5 million. In the last three years, the increased Civil List expenditure by the Queen has been of the order of 18 per cent. That compares very well with local authorities, whose expenditure in the last three years has been up by 34 per cent.
Mr. Toby Jessel: Is my right hon. Friend aware that my constituents cherish Hampton Court palace as a royal palace and that they want it to remain a palace, not to become merely a museum? Will my right hon. Friend confirm that it will retain its status as a royal palace?
The Prime Minister: Yes, Hampton Court is one of the unoccupied royal palaces. The arrangements will continue precisely as now for the upkeep of that palace.
Mr. Robert Sheldon: Since the Royal Household is to be responsible for the expenditure of the greater amount of the moneys concerned, can the Prime Minister say something about the accounting arrangements? She mentioned the responsibilities that would be attached to the National Audit Office, but since the financial arrangements have changed, will a memorandum be published? If there is to be a memorandum, will it be made available to the Public Accounts Committee, if it should wish to see it?
The Prime Minister: The amount spent on the upkeep of the occupied royal palaces will be detailed, as it has been in the past, in the usual Department of the Environment estimates. That sum will be negotiated each year and will be reported in the supplementary estimates. The sum will therefore be subject to audit by the National Audit Office. The civil list will be subject to Treasury audit.
Sir Alan Glyn: May I join my right hon. Friend in welcoming the new proposals, which give financial continuity to the royal family, who render singular service to the nation? They will also allow the royal family to plan their arrangements in advance. I welcome also the new arrangements for the royal palaces and the very clever and clear study that was undertaken before the proposals were made.
The Prime Minister: I am grateful to my hon. Friend for his support. The new arrangements for the civil list, which revert to the Select Committee proposals in 1971, will give much more dignity and continuity to the Crown and enable its administration to be much more efficient than was previously the case.
Mr. James Molyneaux: May I be permitted to add to the tributes that have been paid to Her Majesty and to the members of the royal family, not least for their frequent visits to Northern Ireland which do so much to stabilise the community in Northern Ireland? My party is, in principle, in favour of reversion to the 10-year period, as laid down in the 1972 Act, but we wonder about the timing. Does not the Prime Minister feel that it will prove somewhat difficult to fix the allowance for inflation some 10 years ahead?
The Prime Minister: I am grateful to the right hon. Gentleman. We have made no prediction; we have taken the average annual increase in the retail price index, which was 7·5 per cent. in the decade 1979·89. That sounds a lot, but in the previous decade, 1969·79, the average annual rate of inflation was 12·5 per cent. Therefore, we have taken what it was and said that the annual amount will be increased by that figure. If that is too much, there will be a surplus in the fund, which will be taken into account when the Government of the day look at the next 10 years. They will then be able to see what the surplus was.
Mr. Terence L. Higgins: Does my right hon. Friend recall, as I do, that in 1971 the Select Committee spent many months devising a sensible system for this arrangement, and that the reversion to it now is greatly to be welcomed? May I also welcome the improvements in efficiency, which in future will give us even better value for money?
The Prime Minister: I am grateful to my right hon. Friend. In 1971·72, the Select Committee went into the matter more thoroughly than ever before and came up with the good proposal that we are restoring today. The 1975 arrangement was the exception, and now we have reverted to the rule.
Mr. Tony Benn: Is the Prime Minister aware that many people believe that the sums paid to the royal family far exceed the services rendered? Can she give us an assurance that, when the order comes before the House, the House will have an opportunity to consider the functions and role of the Crown in modern society, so that people can strike a proper balance on those matters?
The Prime Minister: I think that the right hon. Gentleman will also agree that an overwhelming number of people in the nation regard the royal family as the greatest asset that the United Kingdom has and greatly admire everything that it does. A report of the Royal Trustees will be laid before the House and a new order brought and that order will be subject to negative resolution so that, if the right hon. Gentleman wishes to debate it, he will have an opportunity to do so.
Mr. Patrick Cormack: Is my right hon. Friend aware that in answering that question she spoke, as always, for more people than the right hon. Member for Chesterfield (Mr. Benn)? But does she agree that, in the commendable and proper search for economy and efficiency, it is important that the royal family do not forget that the British people like pomp and circumstance?
The Prime Minister: The royal family are a great asset and everything must be done in keeping with the role that they play so superbly.
Mr. Dennis Skinner: Will the Prime Minister confirm that we are talking about a woman who is the wealthiest person in Britain and who does not pay the poll tax? If almost 10 million old-age pensioners can be robbed of the £13·20 that they would have received if the 1979 formula still existed, why should the taxpayer hand out large sums of money to the Queen and all the hangers-on at the palace?
The Prime Minister: I think that most people in Britain will thoroughly disagree with the hon. Gentleman and wish to be totally and utterly dissociated from his words.
Rev. Ian Paisley: Does the right hon. Lady agree that Her Majesty the Queen and the royal family do a service to this country that could not be done as well or as efficiently under any other system of government, and that the nation prefers a monarch and prefers to pay the monarch the proper rate for the job?
The Prime Minister: The deal under the original civil list was a good one for the Treasury, and we must now make proper provision for Her Majesty and the royal family, which I believe has widespread support.
Mr. John Evans: Is the Prime Minister aware that I fully support the principle of the royal family being protected from the ravages of inflation, but can she explain why, in its standard spending assessment last year, St. Helens council was given an allowance of only 4 per cent. for inflation? Surely the people of St. Helens are entitled to the same treatment as the royal family?
The Prime Minister: As I told the Leader of the Opposition, Her Majesty the Queen's civil list expenditure during the past three years has increased by 18 per cent., but during the same period local authorities' expenditure has increased by 34 per cent.
Mr. Ian Gow: Since my right hon. Friend formed her first Administration 11 years and more ago, has she not stressed the importance of getting value for public expenditure? Is there any area of the nation's life where value is better secured than the value from the expenditure to which my right hon. Friend has referred in her statement?
The Prime Minister: The value from the expenditure of this money is supreme. It will be much easier for the Royal Household to look after the occupied palaces under the new arrangement than under the old. It will be much better for them to plan for the future with the 10-year arrangement to which we have now reverted.
Mr. Eddie Loyden: Does not the Prime Minister agree that it has been the policy of this Government and of previous Governments that, when the state is handing out benefits, they are subject to a means test? Does she not think that, if that is the case, it should be applicable to the civil list?
The Prime Minister: I have set out the new arrangements for the civil list. They will be overwhelmingly welcomed and accepted in the House.
Mr. Julian Brazier: Does my right hon. Friend agree that, at a time when there are many instabilities and insecurities in different parts of Europe and of the rest of the world, the royal family provide a rock with which the British nation can identify and that those hon. Members who seek to pour scorn on them show how little they care about the tranquillity of this realm?
The Prime Minister: I believe that the royal family are a focus of patriotism, of loyalty, of affection and of esteem. That is a rare combination, and we should value it highly.
Mr. D. N. Campbell-Savours: May I press the Prime Minister on the question of any memoranda that Sir Terence Heiser may produce? May we have an assurance that such documentation would go before the Public Accounts Committee?
The Prime Minister: It will come, as now, in the Department of the Environment estimate in the published supply estimates, and in the same form as it does now, because the property sum for the occupied palaces has to be negotiated each year between the palace and the Department of the Environment. Instead of it going through the Property Services Agency and the Department of the Environment, that sum will go to the palace after agreement, and details will be published, as now, in the supplementary estimate.
Mr. Anthony Beaumont-Dark: Does my right hon. Friend accept that most of us think that this is a proper and dignified way in which to deal with the problems of sovereignty and with the way in which the royal palaces are run? There is something terribly undignified about having almost a row each year about how much money is spent on maintaining a superb system of royal government. However, does my right hon. Friend agree that it would be even better if the private wealth and private income of however high a person, even the sovereign, were taxed, as is the case for everyone else? That would seem proper, just and laudable government.
The Prime Minister: No, Her Majesty the Queen has not been subject to tax for a long time. It would require a major change, and that is not a change that I would support.
Dr. Norman A. Godman: In light of what the Prime Minister has said this afternoon, has not the time arrived for the House to modify the Crown Estate Act 1961 and, in particular, should we not be arguing the case for a curtailment of the power exercised by the Crown Estate Commissioners, especially in maritime communities and in the management and ownership of the sea bed? Many people in Scotland living in maritime communities, who are loyal subjects of the Queen, actively desire such a change in the power of those shadowy figures in Edinburgh's New Town.
The Prime Minister: If the hon. Gentleman wishes to debate that, I am sure that he will request to do so. It has nothing to do with my announcement this afternoon.
Mr. Ron Brown: We live in a democracy. Is not that the case? Who elected the royal family? I will answer that question for the Prime Minister: no one. Why should they get a penny, bearing in mind that they live in splendour while millions of people live in poverty, thanks to the policies of the Prime Minister and of the ruling class?
The Prime Minister: I will refrain from answering the last point of the hon. Gentleman's question. As he knows, all people of all incomes have increased their standard of living under this Government. I am amazed by what he says in the main part of his question. Most of our actions, whether under the law or as Government, are taken in the name of the Crown.
Following is the note:

THE CIVIL LIST PROPOSALS: REVERSION TO THE 1972 Act
1. Subject to the preparation and passage of the necessary order, the yearly sums proposed for Her Majesty's Civil List will be about £7·9 million. This is the simple average

305
of the estimated annual provision over the period 1991-2000. Provision, in round terms, for Her Majesty is as follows:

Her Majesty's Civil List

£ million (rounded)

1991

5·9

1992

6·2

1993

6·6

1994

7·0

1995

7·5

1996

8·0

1997

8·5

1998

9·1

1999

9·8

2000

10·4

79·0

£7·9 million a year

2. The annual estimates are arrived at by adopting the 1990 Civil List of £5·09 million, allowing for necessary current and capital expenditure on information technology, and increasing the total by 7·5 per cent. a year. The result for each year is then adjusted downwards by a percentage factor each year to reflect efficiency.
3. The proposed yearly sums for the other members of the royal family have been calculated consistently with the approach adopted for the Queen's Civil List.
The sums are:

£ million

The Queen Elizabeth, The Queen Mother

0·64

HRH The Prince Philip, The Duke of Edinburgh

0·36

HRH The Duke of York

0·25

HRH The Prince Edward

0·1

HRH The Princess Royal

0·23

£ million

HRH The Princess Margaret, Countess of Snowdon

0·22

HRH Princess Alice, Duchess of Gloucester

0·09

HRH The Duke of Kent

0·63

HRH Princess Alexandra

HRH The Duke of Gloucester

2·52

As the Queen has agreed to continue to refund the annuities made under section 3 of the Civil List Act 1972, the annual net cost to the Consolidated Fund for the other members of the royal family is thereby reduced to £1·88 million.

BILL PRESENTED
  TAMPONS (SAFETY)
  Mrs. Maria Fyfe, supported by Ms. Jo Richardson, Mrs. Alice Mahon, Ms. Joan Walley and Ms. Joyce Quin, presented a Bill to make provision for tampon packaging and advertisements for tampons to carry certain warnings and information, and to require the Secretary of State to make regulations for these purposes; to lay upon the Secretary of State duties with respect to research into, and publicity for, tampons and health; and for connected purposes: And the same was read the First time; and ordered to be read a Second time tomorrow and to be printed. [Bill 191.]

  STATUTORY INSTRUMENTS, &c.
  Ordered,
  That the Police and Criminal Evidence Act 1984 (Codes of Practice) Order 1990 be referred to a Standing Committee on Statutory Instruments, &c.—[Mr. Chapman.]

Poverty Statistics
3.54 pm
Mr. Michael Meacher: On a point of order, Mr. Speaker. Yesterday at about 6·30 in the evening the Government placed in the Press Gallery a copy of the latest poverty figures for which the House has waited more than five years. The figures were sneaked out without reference to the House, without a press conference and without even a single ministerial comment on the press statement.
They are sensational figures. They rebut what the Prime Minister said a few moments ago about all sections of the population having gained. They show for the first time that the 10 million people in this country on the lowest incomes—[Interruption.]—were worse off in real terms in 1987 than they were in 1979—
Mr. Speaker: Order. What is the point for me? Does the hon. Gentleman think that I can do anything about it?
Mr. Meacher: The Minister has so far refused to come to the House, and I am raising this point of order in an endeavour to ask you to use your good offices, Mr. Speaker, with the Government to ensure that they come forward with a statement urgently tomorrow so that the Minister who has evaded the House may now answer for his deplorable record.
Mr. Speaker: The hon. Member knows, as I think the whole House knows, that that is not a matter for me. But it will certainly have been heard by the Patronage Secretary on the Government Front Bench, and I am sure that it is a matter that he will calculate tomorrow.

Local Authorities (Elections) Bill
3.56 pm
Mr. Gary Waller: I beg to move,
That leave be given to bring in a Bill to provide for annual elections to all local authorities; for one third of the members of each local authority to stand down each year, by rotation; and for connected purposes.
The electoral pattern of local authorities in England and Wales is, to put it bluntly, a mess. It is not governed by logic or reason, and it is overdue for reform. That fact was recognised by the Widdicombe inquiry into the conduct of local authority business, the report of which was published in 1986. It pointed out that, for county councils, elections take place every four years, with all members retiring simultaneously. Of the shire districts, about 60 per cent. have whole council district elections, while the remainder have elections by thirds. Whether district councils fall into one category or the other essentially seems to depend on whether or not they were boroughs before the 1974 reorganisation.
The metropolitan districts already have elections by thirds, but since the abolition of the metropolitan county councils, there is curiously now an off year, every fourth year, when no elections take place. Finally, in the London boroughs, all members retire simultaneously every fourth year, although, as in other councils, there is considerable variation in the number of members per ward.
This lack of uniformity owes nothing to recent ideas, being attributable to provisions laid down in the Municipal Corporations Act 1835 and the Local
308
Government Acts 1888 and 1894 and being dependent on the changing fashions of the time. It has been criticised by successive committees of inquiry and royal commissions.
The Widdicombe committee considered the choice between elections by thirds and all-out contests, and got it wrong, almost certainly because of its possibly misplaced attraction towards single-member wards, which are at odds with annual elections for a proportion of each authority. The Government wisely rejected all-out elections every four years but failed to substitute any other system in its place.
The House now has an opportunity to consider an alternative, the time for which has truly come. Conversations that I have had with colleagues suggest that electing a third of all authorities each year would enjoy great support.
Perhaps the strongest argument relates to accountability, a case made stronger by the introduction of the community charge, although not exclusively linked to it. In all too many cases, councils can arrange their programmes, and distort their spending, in such a way as to match the electoral cycle. They can ensure that any overspending hits the community charge payers' pockets at a time when the electors have no opportunity to cast a verdict on what is done with their money. My right hon. Friend the Member for Henley (Mr. Heseltine) recently proposed the introduction of a referendum on overspending. In my view, annual elections are a more realistic and more viable alternative.
Perhaps Widdicombe unconsciously put the strongest case against his report's own conclusions when he pointed out that, in Liverpool, a preoccupation with annual elections was a factor in the period 1974–83 when rate levels were kept under tight control, but when important expenditure decisions were deferred. I suggest that a greater preoccupation with the attitudes of charge payers could only be beneficial.
Another factor is continuity, which would surely be greater if all-out elections ceased. There have been numerous examples of the exaggerated effects of swings in political opinion. Is it really beneficial to the democratic process that in Greater Manchester, for instance, the Conservatives swung from 82 to 19 seats between the 1977 and 1981 elections, while Labour jumped from 23 to 78 seats? In similar circumstances, new controlling parties have sometimes had to appoint to their senior committee chairmanships people with no local government experience.
It is argued that annual elections discourage forward planning. However, local authorities do not have powers to legislate. Annual elections would be nonsense for the House of Commons, because there would never be an opportunity to assess the effect of a new law before it had to be judged. Nobody is talking about elections each year for the whole council, but the fact that a proportion of members was answerable to the electorate would concentrate minds wonderfully. A similar benefit would flow from a change from four-year to three-year terms for councillors.
Others claim that annual elections would put too much of a burden on party machines. In essence, however, political party organisations have no other purpose than to nominate candidates for election and to campaign for their success in those elections. Everything else is subsidiary to that aim. If they cannot contest elections

309
once a year, they are not worthy of their role. I am sure that annual elections would encourage all parties to keep their machines in good trim.
In short, the reform that I propose would create a system that is simple and uniform, encourages continuity and, above all, accentuates accountability. I hope that it will commend itself to the House.
Question put and agreed to.
Bill ordered to be brought in by Mr. Gary Waller, Sir Rhodes Boyson, Mr. James Pawsey, Mr. Graham Riddick, Mr. Jerry Hayes, Mr. Donald Thompson, Mr. Chris Butler, Mr. Cecil Franks, Mr. Gerald Bowden, Mr. Richard Alexander, Mr. William Powell and Mr. Simon Coombs.

Local Authorities (Elections) Bill
  LOCAL AUTHORITIES (ELECTIONS)
  Mr. Gary Waller accordingly presented a Bill to provide for annual elections to all local authorities; for one third of the members of each local authority to stand down each year, by rotation; and for connected purposes: And the same was read the First time; and ordered to be read a Second time upon Monday 15 October and to be printed. [Bill 192.]
Opposition Day
[I8TH ALLOTTED DAY, SECOND PART]
Opposition Day

  The Economy
  Mr. Speaker: I have selected the amendment in the name of the Prime Minister.
  4.2 pm
  Mr. John Smith: I beg to move,
  That this House deplores the mismanagement of the economy which has resulted in crippling interest rates, damagingly high inflation, and the largest balance of payments deficit in history; condemns the neglect of investment in the public sector and in public services, which has damaged the economy and diminished the quality of life of the nation; urges the Government to adopt a strategy for economic recovery which promotes innovation in industry through the application of science and technology and the promotion of new products and processes, which realises the potential of the whole of the United Kingdom through an imaginative and sustained regional economic policy, and which, by means of a thoroughgoing commitment to the improvement and expansion of education and training, aims to develop to the full the skills of the people; and concludes that if the decline in the economy and in public services is not halted and a programme of recovery embarked upon, Britain will continue to fail to reach the levels of economic success and social progress enjoyed by other nations in the European Community.
  On the verge of the summer recess, we look back on a parliamentary Session that has been bad news for the Government. Perhaps the announcement last week, that the plans for improving community care had to be shelved for years because of the poll tax, was symptomatic of a Session in which the Government have become increasingly entangled in snares of their own making. As the Chief Secretary has already warned his colleagues, there will be fierce struggles over the summer between the Treasury and other Departments because inflation has disrupted the Government's spending plans.
  As I look at some of the disappointed faces on the Government Back Benches, I am reminded that yesterday—[HON. MEMBERS: "Not many."] Indeed, there are not many of them, because some hon. Members are concealing their disappointment elsewhere. Yesterday we had the diversion of yet another ministerial shuffle, a rather purposeless rearrangement of the chairs on the middle and lower decks. With no disrespect to the feelings of those included—or of those excluded—that was small beer compared with the other changes that we have seen over the Session.
  It all started in a different tone when the Chancellor of the Duchy of Lancaster addressed his first Conservative party conference as chairman. Last October, under the banner
  "The Right Team for Britain's Future",
  the right hon. Gentleman had stirring words for the delegates:
  "this is not the time for fretting, this is not a time for poring over opinion polls. This is not a time for being faint-hearted. The fight is on. And, in the words of Henry, before Agincourt, 'he which hath no stomach to this fight, let him depart."'
  That is just what they have done. The first to depart was the right hon. Member for Blaby (Mr. Lawson), trailing Sir Alan Walters, that other family concern of the Prime Minister, in his wake. The process ended just a few days

  311
  ago with that spectacular display of teamwork which marked the exit of the right hon. Member for Cirencester and Tewkesbury (Mr Ridley) from the Cabinet. In between, it is worth noting that so right was that team for Britain that only nine months later we have a new Chancellor of the Exchequer, a new Foreign Secretary, a new Home Secretary, a new Secretary of State for Trade and Industry, a new Secretary of State for Employment, a new Secretary of State for Wales and even a new Chief Whip. So imbued was the team with the spirit of Agincourt that four of them have left the Government completely, demonstrating a novel facet of the new concern for family life.
  Bad though the personnel position is, demonstrating the confusion and disarray in the Government, the Government's main problem and the nation's main concern is their woeful mismanagement of our economy. We hold the Government to account for bringing Britain to a position in which we are the worst of all performers among the leading industrial nations. The facts are clear and they cannot be seriously in dispute. I take the OECD as a objective source. I understand that the statistics for the individual countries which that organisation deploys are approved by individual member Governments.
  Let us look at the growth league. The growth in real gross national product for 1990 predicted for Japan is 4·7 per cent. That for West Germany was 3·9 per cent., now revised upwards to 4·4 per cent. The figure for France is 3·1 per cent.; for Italy 3·1 per cent.; for the United States 2·3 per cent.; and for Canada 2 per cent. For the United Kingdom, it is 0·9 per cent., against an average of 3 per cent.
  Let us consider the league table for the projected increase in investment in 1990. The figure for Japan is 10·2 per cent.; for Germany 6·6 per cent.; for France 6·5 per cent.; for Italy 5·7 per cent.; for Canada 4·1 per cent.; and for the United States 3·2 per cent. For the United Kingdom, it is minus 1 per cent.—a negative projection for investment in the United Kingdom, against an average for the G7 countries of 5 per cent.
  What about inflation? We are top of the league with 9·8 per cent. The figure for Italy is 5·7 per cent.; for Canada 4·5 per cent.; for the United States 4·4 per cent.; for France 3 per cent.; for Japan 2·7 per cent. and for West Germany 2·3 per cent. Britain has an inflation figure of 9·8 per cent. against an average of 4·3 per cent. Those facts show our position among the G7 countries.
  Mr. Phillip Oppenheim: Will the right hon. and learned Gentleman give way?
  Mr. Smith: I shall give way to the hon. Gentleman in case he wishes to challenge.
  Mrs. Oppenheim: As the right hon. and learned Gentleman is so keen on OECD figures, he will be aware that the latest set shows that, during the 1980s, productivity in British manufacturing rose at the fastest rate of any industrial country and that manufacturing output in Britain rose by one quarter—the best performance in Europe. That compares with the experience under the last Labour Government, for which OECD figures show that manufacturing output fell and
  312
  that during the 1960s and 1970s, our manufacturing output and productivity rose more slowly than those of all other European countries.
  Mr. Smith: First, let me correct the hon. Gentleman on one fact. Productivity in the manufacturing sector did not fall under the Labour Government. However, it is interesting that the hon. Gentleman takes much the same line as the Government appear to do in their amendment. They look back to what they claim as some credits during the 1980s. There was a one-off improvement in productivity caused by running down the work force at the beginning of the decade, but the problem is that it is not sustained productivity. If I were the hon. Gentleman, I would not pursue the point about productivity because the figures are already turning against the Government, and will continue to do so.
  I noted that the hon. Gentleman did not challenge any of the OECD figures on Britain's relative position on growth, investment and inflation—three important criteria.
  Sir William Clark rose—
  Mr. Smith: No doubt the hon. Gentleman wishes to correct me, so I shall give way to him.
  Sir William Clark: I am grateful to the right hon. and learned Gentleman. I am sure that he wishes to be fair. If we are to compare like with like on inflation, the underlying rate of inflation in Britain is 6·9 per cent., not 9·8 per cent.—[Interruption.] It is. Indeed, it is unfair to take different arithmetical calculations in the retail price index than other countries that do not include mortgage and housing costs. Surely the right hon. and learned Gentleman agrees with that.
  Mr. Smith: I intend to deal with precisely that point during my speech. If the hon. Gentleman or the Government think that there should be some other means of assessing the rate of inflation, they should make representations to the official committee that regulates the basis on which the RPI is composed. I understand that the Government put to that committee the questions of both mortgage interest and the poll tax, and the committee said that they should be included, as most of us think they should be.
  As Conservative Members would judge other Administrations on the basis of the RPI figures, I hope that they are prepared to be judged on that same basis. The whole reason for the exercise is because the hon. Gentleman, like his colleagues, is acutely embarrassed that inflation is knocking 10 per cent.
  There has been a steady increase in inflation since 1988 —two years of remorseless increases. I shall remind the House of the Government's technique with economic problems. From their foundation, the Government have always been about hype rather than reality; about presentation rather than achievement. When inflation had almost doubled in 1988, the former Chancellor of the Exchequer told us not to worry because it was just a blip, a temporary phenomenon. The Government's first approach to the problem is to claim that it does not exist. Unfortunately for them and for us, inflation has continued to blip upwards, until it is now knocking 10 per cent.
  The next technique is to rejig the figures, and that was most blatantly shown in the perpetual readjustment of the unemployment figures in the Government's favour. We

  313
  had another example of that yesterday, which my hon. Friend the Member for Oldham, West (Mr. Meacher)—the shadow Secretary of State for Social Security—drew to the attention of the House on a point of order only a few minutes ago. The Government surreptitiously had to admit that their figures for poverty in Britain were hopelessly out of line with reality. I remind the House that, once again, the Government's defence was to say that increasing poverty did not exist in Britain, although Opposition Members knew from their constituency experiences that increasing poverty was precisely what was happening.
  The Government not only claimed that the trickle-down from those whom they favoured at the top benefited the poor, but that their relative position had improved. The trouble with using statistics to belie reality is that reality has a disconcerting habit of breaking through. That is what happened in the new figures that were so shamelessly and covertly issued last evening. They revealed the extent of the Government's error and the fact that the living standards of 10 million people in Britain have declined while the Government have been in office.
  All the figures to the contrary that were issued previously, and which were the basis not only of criticism but of justification of the Government's position, have turned out to be bogus. At the very least, a Minister should come to the House as soon as possible to explain why the Government have misled both Parliament and the nation for so long, and why it has taken them three years to admit that. Those of us familiar with the Government's techniques are not surprised by the way that they have dealt with the matter.
  The handout from the Department of Social Security last night stated:
  "Net incomes of the population as a whole rose by about 20 per cent. in real terms over the period 1981–87. The incomes in the lower income groups also rose in real terms, but less rapidly."
  The actual figure for the average was 20 per cent., but for those in the lower income groups it was 2 per cent. What a euphemism for the difference between 20 per cent. and 2 per cent. to say "less rapidly". That shows the technique, the Government's sleight of hand and how they choose to deploy their statistics.
  Mr. Conal Gregory: The right hon. and learned Gentleman will recall that, under the Labour Administration, inflation rose to about 27 or 28 per cent. Does he share the view of the Leader of the Opposition, who, when asked on "The World at One" how he would control inflation, said:
  "To cut a long story short, we don't know."
  Mr. Smith: The hon. Gentleman has a selective memory. Under this Administration, inflation reached 22 per cent. and, in case he wants to blame the last Labour Government, his party doubled VAT from 8 to 15 per cent. We have persistently and consistently set out our policies to control inflation, which we believe are an important objective of Government policy. We are not in a mood to take lectures from a Government who have so lamentably failed to control inflation.
  The statistics on inflation and the balance of payments show once again that the Government's first reaction when things start to go wrong is to claim that it is only temporary, a blip for inflation. The Prime Minister told us, the first time that the balance of payments deficit for the
  314
  month was more than £1 billion, that they were freak figures. Almost every month, those freak figures have reasserted themselves. Every month has been a freak month since the Prime Minister announced that that was the explanation for our deteriorating balance of payments.
  The next stage is to misrepresent the figures—the exercise on which the hon. Member for Croydon, South (Sir W. Clark) was embarked. Because the high RPI is embarrassing, two other versions are being introduced—RPI minus mortgage interest and RPI minus mortgage interest and the poll tax. Those two alternatives are being trailed across the scene. The hon. Gentleman selected the first alternative, and with a bit of encouragement he would probably adopt the second.
  In the first version for which the Treasury produces figures, mortgage interest is struck out as though it did riot exist, as though it were not paid and were not afflicting families in this country. Unfortunately for the Government, the figures are still embarrassingly high—too high for presentation—so what do they do? They fiddle the figures again. They briefed and encouraged willing participants in the press to devise a new method of assessing it—RPI minus the poll tax.
  The Government know that the official committee which regulates the basis of the RPI thinks that mortgage interest rates and the poll tax should be included. If the Government have nothing to do with this, I hope that they will take the opportunity to criticise the Sunday Times and the Institute of Fiscal Studies and tell people not to believe them.
  Mr. Robert Sheldon: The Government are not only trying to fiddle the figures downwards but have succeeded in fiddling the RPI because it does not take account of exchange rate changes, which would have put it well over 10 per cent., and perhaps up to 11 per cent.
  Mr. Smith: I am grateful to my right hon. Friend for a wise and apt observation, which adds to the strength of the attack that we are making on the Government on this point.
  The Government cannot exclude mortgage payments, because the public cannot exclude them. Other countries include different housing statistics because they are organised on a different basis. There is a different pattern of house ownership in comparable countries, with much more rented accommodation, but they take account of them in their prices index and do not strip them out, as the Government propose.
  To try to remove the poll tax from the RPI is the worst example, because rates were always included in it. What is embarrassing for those who argue that the poll tax should not be included because it is alleged to be a tax is that they called it the community charge. They want to call it the community charge, and when we say "poll tax", they wince and say "community charge" back at us. If it is a charge, it is a charge and it should stay in the RPI.
  Mr. Tim Smith rose—
  Mr. Smith: It is a short debate; I must get on.
  The Chancellor is adopting a new approach, a wholly new wheeze, the "proximate" rate of inflation. That applies solely to our relationship with other European Community countries. Proximate is not exactly precise; it

  315
  gives the Chancellor a certain amount of flexibility and movement, because he has only approximately to meet his figures.
  That is just as well in relation to the so-called Madrid conditions for joining the exchange rate mechanism. I remind the House that inflation had to come down to the Community level before Britain could contemplate joining the ERM. As inflation is now higher than it was when those conditions were outlined, the Chancellor has a bit of a problem, so that is why we are into the "proximate" dodge.
  The Chancellor cannot dodge the fact that inflation is higher than it was when the conditions were set. When we consider the Government's record over the decade, we go back to their early days and to the setting out of the medium-term financial strategy of happy memory. We hear little about it today. The truth is that there is now no effective strategy. The medium-term financial strategy did not even rate a mention in the Chancellor's Budget speech.
  The Government are now involved in a new stratagem—the STES, or short-term election strategy. The plan is to maintain high interest rates—as indeed the Government must—until Britain joins the ERM and then, in the period of lower interest rates which may occur following entry, to encourage a boomlet to coincide with the election at a time when, for statistical reasons, the headline RPI is falling, although the underlying rate may be rising.
  The Government do not reveal that all the economic commentators who have speculated on this outturn of events—which they note will be a politically favourable scenario for the Government—point out that not long afterwards the problems get worse, and that every economic indicator goes in the opposite direction, contrary to the national interest. Why? There is a simple reason: because the underlying problems will not have been tackled by that device. That is the heart of the matter and, I hope, of our debate.
  The Government have not tackled the underlying problems of the British economy, although their hype proclaimed until relatively recently that they had overcome them. The Government started the decade with the bonus of North sea oil. Eleven years and £91 billion-worth of North sea oil revenue later, we are at the bottom of the G7 leagues for growth and investment and the top for inflation.
  There was a period when Conservative Members almost believed their propaganda. On 26 April 1988, speaking in the debate on the Finance Bill, the Chancellor, who was then the Chief Secretary, said:
  "During the 1960s we praised and envied the German economic miracle. In the 1980s the situation has been precisely reversed."—[Official Report, 26 April 1988; Vol. 132, c. 214.]
  Note the careful words "precisely reversed". There can be only one meaning for that—Britain now has the economic miracle, and Germany has to learn from the British model.
  This reminds us that the fascination with West Germany goes back some time before the inglorious seminar at Chequers which received extensive publicity recently. That seminar revealed some curious attitudes to West Germany, with an obsession with German history and a patronising and insulting identification of so-called German characteristics and habits. The habits relate to the economic success and the characteristics to the foreign
  316
  policy fears that the Government detect at every hand. These characteristics were identified, in the careful hand of the Prime Minister's perpetual private secretary, as
  "angst, aggressiveness, assertiveness, bullying, egotism, inferiority complex, sentimentality".
  Many might think that, with the exception of sentimentality, all those characteristics could be applied with some appropriateness to the present British Administration and its head.
  In the record of that seminar, was there any substantial reference to the German economic success, still less to how it had been achieved? Going through what I am sure was the full record, I noted that any notion that Britain had overtaken Germany was not mentioned in those private discussions. That was for the House of Commons. When one gets down to the real discussions at Chequers, one does not delude oneself with any of that nonsense.
  The seminar did not spend time considering that matter, because the Chancellor's claim is absurd. If we have precisely reversed the position with West Germany, why is its projected growth rate for this year 4·4 per cent., while ours will be lucky to reach 1 per cent.? Why is its inflation rate 2·6 per cent., while ours is 9·8 per cent.? Why are its interest rates 8 per cent., while ours are 15 per cent.? Why has its growth in output since 1979 been twice ours? Why is the percentage of its work force who are skilled 62 per cent.—according to the European Commission—while our figure is only 38 per cent.? Why did a British balance of payments deficit of under £1 billion in 1979 become a balance of payments deficit of £9 billion today?
  The Government have been hoist by their own petard: they chose Germany as the comparison, but the most cursory analysis confounds their claim, and reveals that the weakness of the British economy is alarming in comparison with German success. I hope that the Government, in their slightly more subdued mood of recent months, will appreciate the point.
  To establish that, it might be sensible for the Prime Minister to organise another seminar at Chequers—this time, to examine German economic achievement; this time, not to patronise but to learn. In the course of such an examination of the experience of West Germany since the war, the seminar would learn that the keys to a modern successful economy are—as Opposition Members maintain—to initiate supply-side policies, to increase investment in research and development, education and training and regional economic development, and to give proper and sustained priority to manufacturing industry.
  Mr. A. J. Beith: Surely, when the right hon. and learned Gentleman mentions the German success in interest rates and inflation rates, he should not omit from the list the existence of an autonomous central bank with a responsibility for price stability?
  Mr. Smith: I do not believe the superficial analysis of the position indulged in by the hon. Gentleman and his colleagues. The German success in countering inflation has been achieved over a much wider front than the existence of an autonomous bank. It has much to do with popular culture and a partnership economy—
  Mr. David Shaw: Are you in favour of that?
  Mr. Smith: No, I am not in favour of having an autonomous bank. I do not know why the hon. Gentleman is in any doubt about that, as we have stated clearly that

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  we are not in favour of an autonomous bank in Britain or in Europe. On that, we disagree with the hon. Member for Berwick-upon-Tweed (Mr Beith) and his colleagues. It is taking superficiality to excess—I know that that has long been a habit of the Liberal party, but it should not persist in it—to think that there is a casual connection between an autonomous central bank and a low rate of inflation. After any serious analysis, I do not think that that idea can be maintained.
  Mr. Ian Gow: Should the proposed Chequers seminar examine the contribution that socialism has made to the German economic miracle?
  Mr. Smith: I think that it should. I am grateful to the hon. Gentleman for adding an interesting extra half-hour to the discussion. It would he constructive for the Prime Minister and her colleagues to examine the success of the SPD-led coalition Government Germany, during whose time in office a great deal of German economic success and social partnership was achieved. If the hon. Member for Eastbourne (Mr. Gow) gets any more bright ideas, will he speedily communicate them to me? I feel almost like writing to the Prime Minister, saying that this is not my suggestion but that of her former Parliamentary Private Secretary, and that it must therefore be treated with some respect.
  When we compare West Germany's investment in research and development with that of Britain, we discover what a state Britain is in. West Germany spends £432 per employed person, compared with £265 in the United Kingdom; in industrial development, its Government funding for research and development is 61 per cent. higher than that of the United Kingdom; its investment in pure science is 135 per cent. higher, its spending on transport and communications research is 194 per cent. higher; and its spending on environmental planning is 225 per cent. higher.
  Worst of all is the comparison on training. Germany really does invest in training: more than 2 million people in West Germany are constantly in training. That is why it has technicians and craftsmen who are paid well because they produce well and sustain a productive and competitive economy.
  More than 70 per cent. of engineers in West Germany have recognised qualifications, compared with only 40 per cent. in Britain after 11 years of Conservative government. Only 30 per cent. of our work force have recognised qualifications equivalent to at least one O-level, compared with 70 per cent. in West Germany. I hope that Conservative Members will ponder that—only 30 per cent. of our work force are qualified to the standard of one O-level. How are we ever to compete with the new circumstances in 1992 if we neglect education and training on that scale? I do not need to go into the figures in more detail.
  Mr. Nigel Forman: The right hon. and learned Gentleman has an important point about education and training. I notice that the Opposition motion refers to education and training as an Opposition commitment. To what extent would the right hon. and learned Gentleman finance that expansion of education and training, to which he attaches such importance, from taxation or borrowing? If it is the latter, as I suspect it would be, what would be the implications for interest rates?
  Mr. Smith: The hon. Gentleman is making a valiant effort in that respect, but he must know that we have made it absolutely clear that our spending programme will be related to the capacity of the economy to sustain it. For education and training, I believe that that is an absolutely fundamental investment which must be made by this country. I suggest that the hon. Member for Carshalton and Wallington (Mr. Forman) should read an editorial which I believe appeared in The Independent yesterday, which attacked the Labour party for not promising to spend more than we had announced.
  It is absolutely crucial that the investment is made. We will consider how best that investment can be made when we become the Government in the light of the economic circumstances that we inherit. If the concern of the hon. Member for Carshalton and Wallington for education and training is genuine, what does he think about the record on that over the past 10 or 11 years? Does he believe that it has been a good deal for Britain to neglect our investment in education and training so that we have the most demoralised teaching force ever this century, and when our industrial training is pitiful when compared to training in other countries? As an important part of our investment programme, we must finance education and training which will at least raise us to the level of our industrial competitors.
  In addition to education and training, we could add as a subject for the seminar the value of social cohesion, indicated by German support for the social charter which the Government always attack. Our most successful competitors embrace and endorse the social charter. It is not even a matter of political controversy. The German Chancellor, head of a CDU-led coalition, went to the German trade unions and told them that he would support their claim for a social charter. Would that our Prime Minister espoused something in the national interest like that. The value of partnership between management and the trade unions in creating a successful economy might also be studied with profit at the seminar.
  However, I fear that such a process of self-education is unlikely to happen, demonstrable though its advantages would be. I fear that, in the spending cuts in store over the summer, regional investment which has already been cut by 70 per cent. over the decade will once again be the victim of the foolish priorities of the disastrous Department of Trade and Industry. I fear that the cuts of £190 million in the training budget at a time when our training is pitifully inadequate will not be restored.
  Now that the hon. Member for Carshalton and Wallington, who has been asking me about expenditure on education and training, has been liberated to some extent by changes in the Administration—although I commiserate with him on the fact that he has not yet joined it—will he use his freedom to ask the Government why they cut the training programme by £190 million? Why on earth, at this stage in our development, we should be contemplating cutting one penny from the training programme is hard to understand. I hope that that cut will be restored.
  On 31 May 1990, the Financial Times published some comparative figures with regard to publicly funded training for employed adults, which show how disastrous is Britain's record on training. I will pick the figures at random. The figure is $1,000 per trainee in France, $3,500 in Germany, $5,000 in Greece, $1,000 in Japan and $600

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  in Spain; but it is $400 in the United Kingdom. We are not only bottom of the league again, but we are bottom by a very long shot.
  Why is it that, every time we look at international comparisons, Britain is at the wrong end of the league? It is at the bottom of the league when we should be at least halfway up, and it is at the top of the league when we should be half way down. It will not do for us to enter the 1990s unless we secure an economic base that can sustain our standard of living and finance our hopes of social progress.
  Mr. Michael Grylls: Will the right hon. and learned Gentleman give way?
  Mr. Smith: I have given way enough.
  The Government claimed that they made a breakthrough to a competitive and productive economy in the 1980s. Anyone who looks at any of the statistics can see at a glance that that manifestly has not happened. One thing is certain—it had better happen in the 1990s, or there will be no economic future for this country.
  I do not believe that that can happen under a Government with such a lamentable record for the 1980s. However, it will occur under a Government who recognise the problems we face, but who believe that, with effort and determination, we can overcome them; who face reality—even awkward reality—rather than seek to abolish it by statistical sleight of hand; who recognise the problems but are prepared to develop opportunities; and who, by adopting the policies outlined in the motion, can create a better economic future for this country. The Conservatives have failed. It is Labour's chance in the 1990s.
  4.35 pm
  The Chancellor of the Exchequer (Mr. John Major): I beg to move, to leave out from "House" to the end of the Question and to add instead thereof:
  "congratulates Her Majesty's Government on the improvement in economic performance over the last 10 years, with the United Kingdom's growth of output, manufacturing productivity, employment and investment since 1980 exceeding that of almost any other major European Community country; and endorses the priority the Government attaches to reducing inflation, in order to safeguard and build on these achievements."
  For all its customary charm, the speech by the right hon. and learned Member for Monklands, East (Mr. Smith) had a familiar ring. Perhaps a touch scaled, it is an old favourite that the House has heard on a number of occasions. It is no wonder that the right hon. and learned Gentleman delivers it so well, for he has delivered it so often. None the less, as ever, we enjoyed it. Despite that, it was an empty speech because it was empty of the alternatives that he and his colleagues would bring into operation were they in government.
  If the right hon. and learned Gentleman wishes to be taken seriously as a potential Chancellor, he will need to produce in some detail policies that, when examined, can be seen to be capable of being carried out and to add up in economic and political terms. The right hon. and learned Gentleman will achieve nothing if he continues to condemn the disease and also condemn the cure, which he should know must involve monetary policy of the sort that we are using at the moment.
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  The right hon. and learned Gentleman has no policies to curb the central problem that exists at present—the problem of inflation. Neither does he have any policies to prevent it from recurring in future. All that he has to offer are the same old traditional recipes that have been handed down from generation to generation in his party—looser monetary policy and looser fiscal policy, that is lower interest rates and higher spending. Where does the right hon. and learned Gentleman think that that would leave him and his party? That is the classic recipe for the debt and devaluation that have been the legacy of every Labour Government.
  I was intrigued a few weeks ago to listen to the leader of the Labour party when he appeared on "Panorama". He said then that, when monetary policy was loosened at the end of 1987 in the wake of the stock market crash, "We"—that is, the right hon. Gentleman and the Labour party—"were saying steady, steady." In retrospect, it would certainly have been right to say, "Steady, steady." However, I was not sure whether that was how I remembered the Labour party's posture at the time, so I had a brief look to see what the right hon. Gentleman was advising at the time, and I certainly did not find "steady, steady" among the right hon. Gentleman's pronouncements. Indeed, I offer a prize to anyone who can find the term "steady, steady" used in any context by the right hon. Gentleman at that time. I found what I had expected to find. Then, as now, the right hon. Gentleman was arguing for lower interest rates and described the modest cuts we had made as "inconsequential". He told us:
  "This is a time for judgment, and that judgment should be a big cut in interest rates."—[Official Report, 29 October 1987; Vol. 121, c. 446.]
  No "steady, steady" there.
  Perhaps, I thought, the right hon. Gentleman leads a collegiate team and is remembering the words of his colleagues, so I checked those too. I found that his hon. Friend the Member for Dagenham (Mr. Gould) spoke in the House on 5 November, but he did not say "steady, steady" either. He said:
  "If the Americans were to follow the Chancellor's monetarist advice, and if the interest rates and taxes were to be raised or social security benefits were to be cut, it could only bring the threat of worldwide recession so much closer."—[Official Report, 5 November 1987; Vol. 121, c. 1154.]
  It is clear what the hon. Member for Dagenham had in mind. He was not saying "steady, steady"; he wanted a reduction in interest rates too. I then wondered whether the Leader of the Opposition had remembered the words of his right hon. and learned Friend the Member for Monklands, East—that pillar of fiscal rectitude. I checked and I found it as I remembered. The right hon. and learned Gentleman did not say anything in the House that I could find, but he went to Paris to talk to the OECD on 13 November 1987. Did he tell the OECD that things should be taken "steady, steady"? Did he heck. He called for
  "A stimulation of the economy by cuts in interest rates".
  Just to make sure that there was no doubt that the right hon. and learned Gentleman wanted to loosen policy he said it again the next day at Airdrie:
  "Now is the time for cuts in interest rates to stimulate the economy".
  So much for "steady, steady". "Steady, steady" is fiction, fiction. In retrospect we all acknowledge that it was the relaxation of monetary policy that helped cause the difficulties.
  Mr. John Smith: As we are trailing over the years since 1987, let us look to the Budget of 1988. Will the Chancellor tell us—given that the situation was so obvious in 1987—what on earth was the justification for the huge tax cuts in 1988, which were attacked by me and my right hon. Friend the Leader of the Opposition, but which the right hon. Gentleman defended?
  Mr. Major: I believe that the right hon. and learned Gentleman has just taken economic advice from the leader of the Labour party, and if that is so, he has just made a material mistake. The underlying problem that generated many of the difficulties that we faced was, in retrospect, a relaxation of monetary policy because of fear of a recession. One could see that, with credit growth of £40 billion in the subsequent year, the problems were not caused by the cuts in income tax that amounted to only £4 billion, as a supply-side measure. The figures do not remotely add up and I suggest that the right hon. and learned Gentleman should get a new and better economic adviser than his right hon. Friend.
  Mr. John Smith: With the benefit of hindsight, can the right hon. Gentleman tell us whether the Government were right to let a credit boom rip to the extent that he has just described? If so, what on earth was the justification for making tax cuts in such a situation?
  Mr. Major: Does the right hon. and learned Gentleman not realise that one of the things that generate a credit boom is lower interest rates, which he was precisely calling for? The reduction of taxation was on the back of a huge fiscal surplus in 1988—a point which the right hon. and learned Gentleman and his right hon. Friend have momentarily overlooked.
  Given that the Leader of the Opposition has criticised us for causing inflation, the uncomfortable truth is that, judged by his words and those of his colleagues, he would have made bigger mistakes on monetary policy than anyone else. The problem of the credit boom would have been materially worse. I suspect that the right hon. Gentleman has remembered that only latterly, but it is about time that he admitted that he was wrong in 1987. The uncomfortable truth—
  Mr. Neil Kinnock: As a matter of history, it is important to refresh the Chancellor's memory, as I believe that he is trying to offer the view that the difficulties, to which, presumably, he will own up, only began with the relaxation of policy in response to the slip in the stock markets in the back end of 1987. The right hon. Gentleman should understand that, before the 1987 election, in order to make a contribution to try to win that election, policy was greatly slackened with the intention of tightening it up after the election. The Government, however, were taken by surprise and made an utterly incompetent response to the events on the stock markets. Until now I thought that the Chancellor was a candid man; if we are to have a story, let it be the whole story.
  Mr. Major: I shall not only provide the whole story, but remind the right hon. Gentleman of the other element he has overlooked.
  Just before the November stock exchange crash, in August, my predecessor, my right hon. Friend the Member for Blaby (Mr. Lawson), unexpectedly increased the interest rate by 1 per cent. because of concern about the growth of credit. That was a considerable shock and
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  surprise to people, but he acted so because he wanted to restrain what he thought might be an incipient growth of credit. If the Leader of the Opposition would also care to come to the Dispatch Box again to give me chapter and reference of when he said "steady, steady" in 1987 I shall happily give way. [HON. MEMBERS: "Come on."] I should be happy for the right hon. Gentleman to advise the House on that.
  Mr. Kinnock: I shall do so on the understanding that my reply will be given in exchange for the right hon. Gentleman's readiness to get on with addressing the present problems. He is the Chancellor and we want to know what he will do about dealing with the problems, because that is what will most interest the British people, business and anyone else concerned about the future of our economy.
  The right hon. Gentleman will recall that, in 1987, and definitely as we came up to the Budget of 1988, which he has defended, we proffered urgent counsel that everything possible should be done—it should also be done now—to assist the supply side of British industry. We included in that the reduction in interest rates and the avoidance of the type of tax cuts the Government were then making. That was the policy for stability, steadiness and production, but instead the Government pursued their policies that have resulted in a disastrous balance of payments deficit and an inflation rate of 10 per cent. "Steady, steady", John.
  Mr. Major: That was an amazingly skilful reinterpretation of events, as one would have expected from the right hon. Gentleman. If he will forgive me for saying so, it was more slippery, slippery than "steady, steady". Let me be sufficiently unkind to quote again what the right hon. Gentleman said:
  "This is a time for judgment, and that judgment should be"—
  as Leader of the Opposition, his judgment is important—
  "a big cut in interest rates."—[Official Report, 29 October 1987; Vol. 121, c. 446.]
  That is what the right hon. Gentleman said in October 1987.
  Let us leave it to stand on the record between us whether that judgment was "steady, steady" or slippery, slippery. [HON. MEMBERS: "What about inflation?"] I am about to deal with that, because the uncomfortable truth for Governments of whatever complexion is that inflation does not respond to soft options. It certainly does not respond to speeches. It takes tough measures, which are inevitably unpleasant, to defeat inflation. There is no choice in my mind about the necessity to defeat inflation.
  It was difficult and often painful and unpopular measures that brought inflation down at the beginning of the 1980s. I understand that monetary policy is often unwelcome to people, but that is how every other major industrial country deals with inflationary pressures. That is why we are using interest rates and that is why the Leader of the Opposition should know that we shall continue to use them. We shall use them for one simple overriding reason: they work. No one should doubt that, and that is the only recipe for getting inflation down.
  Mr. John Smith: The Government will ruin industry.
  Mr. Major: So the right hon. and learned Gentleman would not use monetary policy, but let inflation rise. That is excellent.

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  The evidence that interest rates will work is indisputable. It is now there to be seen in the housing market, which has cooled down. It is evident in the high street and in sales of new cars. In recent weeks, it has been evident in slower money growth, in the easing of capacity constraints in industry and in a better export performance.
  Mr. John Smith: What about imports?
  Mr. Major: Imports are down. They are higher than I would wish them to be, but they are down, and in the past 10 months, exports have grown five times as fast as imports. When did that happen under a Labour Government?
  Perhaps the real concern in the Opposition's mind is that the policy is working. In this, unusually, they are right. No doubt that is why the right hon. and learned Member for Monklands, East is so concerned and agitated. But it is perfectly true that although the policy is working, its job is not yet done. I readily concede that the inflation rate is still too high and, because of the time that it takes for policy to have its full effect, it may move a little higher yet before it begins to turn down. But turn down it undoubtedly will, towards the end of this year and on through next year—although perhaps a bit more slowly than we had hoped.
  We are determined to keep a tight policy in place to secure this fall in inflation. There should be no doubt about that. I have made it clear before—and I willingly do so again in view of what the right hon. and learned Gentleman said—that this policy is not a short-term attack on inflation. It is not a question of bringing inflation down by a few per cent. and then letting up. There will be no pre-election boomlet of the sort sketched out by the right hon. and learned Gentleman. The policy is a long-term attack on inflation. First, we must get our inflation down to our competitors' average level. Then we must get it down further still, then down to the level of the best and onward down beyond that. That is clearly the policy.
  Perhaps I may attract the attention of the right hon. and learned Member for Monklands, East. [Interruption.] I shall endeavour to do so, and I shall certainly give way to the Leader of the Opposition if he wishes me to do so.
  My remarks about inflation do not mean that I am unaware of, or insensitive to, the difficulties that high interest rates cause. I am fully aware of the feeling that they arouse and I do not ignore them or weigh them lightly. But there is another consideration which any Government are bound to take into account and which, in my view, is decisive: the damage that inflation does if it is permitted to entrench itself. If it entrenches itself and goes unchecked, it can cause long-term damage to the economy, as we saw only too clearly in the 1970s when the Labour party did, indeed, leave it unchecked. The legacy of that was acutely painful.
  Mr. D. N. Campbell-Savours: Has Mr. Leigh-Pemberton made any representations to the Government about a pre-election boom?
  Mr. Major: I think that the conduct of monetary policy, and economic policy generally, is a matter for the Chancellor of the Exchequer and not for the Governor of the Bank of England, however distinguished. Moreover, Mr. Leigh-Pemberton's discussions with me, whatever
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  they may contain, are a matter for Mr. Leigh-Pemberton and me and not for the hon. Gentleman. [HON. MEMBERS: "Steady, steady."] I am entirely steady and, as I have been reminded of the matter, I still look forward to the Leader of the Opposition telling me the time and the place at which he voiced that extremely interesting proposition.
  I know that some people who are struggling with high interest rates may think that nothing could be worse, but the banana republic rates of inflation in the 1970s were definitely worse. To return to that at a time when—once inflationary problems are stripped away—the prospects in every other respect are extremely promising would be quite unforgivable. Under the right hon. and learned Gentleman's prescriptions, of course, a return to high inflation would be inevitable, for reasons to which I shall come in a moment. If the right hon. and learned Gentleman will forgive me for saying so, the leopard has certainly not changed its spots, even if it has developed a Scottish accent.
  I find it truly astonishing that the right hon. and learned Gentleman argues for a let-up on inflation—that is implicit in what he says—on the grounds that that is what business wants and needs. That is the way in which the Labour Government acted and we saw what that did to the condition of British industry. The success that British business men and women have made of their enterprises in the past decade has represented the clearest possible rejection of the misguided economic policies and industrial strategies that the Labour party left to us in 1979. Individual business men and women have shown beyond a doubt the results that can be achieved if Governments spend less time interfering, less time regulating and less time feather-bedding them.
  It was precisely because the Labour Government neglected their real duties that business and commerce entered the 1980s in such a fragile and pathetic state. Contrast that with the resilience of the economy today: even with interest rates in double figures for two years, business starts still exceed stops by a massive margin, week after week. That is the clearest illustration of the revitalisation of British industry. We have more people in work than ever before. We have managed to halt decades of decline in our share of world trade, actually increasing it in the past year. None of those points managed to find a place in the right hon. and learned Gentleman's familiar speech, but I offer them to him for the future.
  The strong growth in exports over the past year, itself a result of strong investment in recent years, is, in my judgment, the best possible omen for the long-term future of the British economy. I note that the right hon. and learned Gentleman made no acknowledgement of that performance, although I am sure that he would welcome it. Our performance did not fit in with the picture of doom and gloom that the right hon. and learned Gentleman sought to paint. As I said a moment ago, in response to a sedentary comment, in the past few months, British exports have been growing five times as fast as imports. In fact, exports have been growing faster than imports for the past 10 consecutive months.
  For the future, the prospects opening up in the single market in the next few years will massively increase the opportunities for British firms to trade abroad. There is still more to come as we free up the areas that remain for the completion of the single market. There is still a considerable amount to be done to achieve that. It is in no sense a remit that we can put on the back burner. Britain

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  is determined to make sure that the laggards in the Community—and we are not among the laggards when it comes to implementing Community directives—keep up with implementing the single market measures and do so with all possible speed.
  We face even more far-reaching questions as we consider proposals by our Community partners to enhance economic and monetary integration beyond what has become known as stage 1. There is not a shred of doubt in my mind that at present that is the most important issue facing the whole Community. But so far, the debate in Europe has not fully covered the many important issues at stake, and in the months to come, we are determined to ensure that it does.
  There are undoubtedly significant points of disagreement within the Community about how we progress beyond stage 1. But I believe that there are some important areas of general agreement. First, we agree that it is desirable to move forward together—if we can.
  Secondly, I believe that it is generally accepted that to make a premature attempt to introduce monetary union while levels of inflation in the Community are as disparate as at present and before we have much more flexible markets would be to risk great strains and tensions.
  Thirdly, I think that we all share the ultimate aims of greater price and currency stability and more fully integrated economies.
  We think that it is essential to bring out the key criteria that we should be aiming to meet as we examine options. We believe that it is desirable to achieve a greater economic convergence on the performance of the best in the Community. We must also respect the principle of subsidiarity which—to avoid doubt in anyone's mind—specifically means that nothing should be done at Community level that could better be done at national level. Above all, there is an overriding need to ensure that any future arrangements have a strong anti-inflationary character.
  The proposals that we have developed, which are now being studied across the Community, will, I believe, meet those criteria, and we shall be advancing them very forcefully throughout the coming months. The United Kingdom's proposed approach centres on the creation of a new anti-inflationary currency, which we have called the hard ecu, and which would be managed by a new Community institution, a European monetary fund.
  We believe that the hard ecu would provide an attractive common currency for the whole Community. It would be for people, businesses, and Governments to choose whether and how much they wished to use it. Our approach is new and different in one important respect from the parallel currency proposals that were examined and rejected by the Delors committee: it has been designed in a way that would strengthen, not weaken, the anti-inflationary forces in the Community. It could not lead to extra money creation. We believe that that is essential, since the concern that a parallel currency would lead to undue growth in the money supply is a legitimate one, which we share.
  First, the new currency would be part of the exchange rate mechanism, but, by definition, it would never be devalued at exchange rate mechanism realignments against any European Community currency. It would therefore set a stiff standard of competition for national monetary policies and would reinforce monetary discipline.
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  Secondly, the hard ecu could be purchased only by surrendering national currencies. Thirdly, the requirement on national central banks to buy back national currency from the European monetary fund would oblige them to run a tight ship. This is a novel requirement which was not considered when previous parallel currency ideas were floated.
  Mr. John Smith: And rejected.
  Mr. Major: And rejected for good reasons—that absent from the proposals were many of the features that are included in the proposals that we have now put forward. It was right to reject those ideas.
  Our proposal avoids falling into the trap of blurring responsibilities for monetary policy. Responsibility for the hard ecu would clearly lie with the European monetary fund, while national monetary authorities would still retain overall responsibility for their own currencies. In particular—this is a point that I shall be making very clear to my colleagues in other European nations—our proposals respect the roles of national Parliaments and, as such, are entirely in tune with the overwhelming consensus in this Parliament, as expressed in our debate on these matters last November.
  Mr. David Howell: Is not my right hon. Friend right to emphasise that the scheme he is outlining is for the whole Community? Would not the alternative idea of a single Eurofed currency certainly exclude some countries whose convergence with the Community's monetary policy had not been fully achieved, which would lead to the divisive two-tier Europe that most good Europeans do not want?
  Mr. Major: I agree entirely with my right hon. Friend. It would either exclude some Community countries or, if they were included, create considerable economic turbulence within the Community. On that basis, therefore, they would clearly in reality be excluded, as my right hon. Friend said.
  Mr. Brian Sedgemore: Does the Chancellor agree that if there were to be genuine competition between the pound and the hard ecu, the hard ecu would need to have the same legal status, the same access and the same ability to be transferred, which would lead to the hard ecu having to be made legal tender? Will the Chancellor confirm that in answer to me he said that the hard ecu would not be made legal tender?
  Mr. Major: The hard ecu does not have to be made legal tender in any member state of the Community. If, however, it were to be adopted, many states might choose to make it legal tender. Provided that it were accepted by the parties who consented to a transaction, the hard ecu could perfectly legally be utilised without formally being made legal tender. I suspect that the hon. Gentleman and I may be able to debate this matter at length at the meeting tomorrow of the Treasury and Civil Service Select Committee. I much look forward to that bi-annual encounter.
  On the point of our debate last November, there seems to be some common ground between us and a number of Opposition Members. I find it not surprising, although perhaps a little sad, that there is little common ground between us anywhere else. There is certainly no common ground between the parties on public expenditure. Despite

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  the appearance of rectitude and virtue that the right hon. and learned Member for Monklands, East seeks to establish, shadow Ministers vie with one another almost daily to pile up more and more spending pledges.
  The hon. Member for Derby, South (Mrs. Beckett) made a valiant effort, but her claim that Labour has only two spending commitments—increased child benefit and higher retirement pensions—is, frankly, ludicrous. She says that other spending proposals would be fulfilled only when the money was there. She knows, as everybody else knows, that she has no chance whatsoever of convincing the country of that while the leader of her party, the shadow Chancellor and assorted colleagues implicitly and explicitly commit themselves to extra spending in nearly every speech that they make. The right hon. and learned Gentleman referred to the restoration of cuts, but he must surely realise that to restore something means that expenditure must be increased from its present level. Even today he referred to the restoration of expenditure.
  The hon. Lady's trenchant message clearly has not got through to her spending colleagues in the shadow Cabinet. With the solitary exception of the armed forces—and how well we understand that—all Labour spokesmen shadowing a spending Department have promised massive increases in expenditure for their client groups. They have not told us, of course, where the money is to come from. In essence, however, it can come from only two places. It can be funded by increased borrowing, with inevitably higher interest rates, or by increased taxation. We know some of the bad news already. The Opposition are pledged to phase out the married couple's income tax allowance. That would make every married couple in the country worse off. Labour would abolish the upper earnings limit on national insurance, thereby making nearly 3·5 million people worse off.
  Mr. John Smith: Where does the Chancellor get that from?
  Mr. Major: I get it from the right hon. and learned Gentleman's own commitments.
  That would add 9 per cent. to the marginal tax rates of nearly 3·5 million people. Labour would extend national insurance to what it has the temerity to refer to—rather inelegantly, I think—as unearned income: what the man in the Monklands high street might conceivably call savings. So much for the encouragement of thrift.
  Mr. Smith: Apart from the fact that there is no Monklands high street—the Chancellor ought to understand that it is a district, not a town—on the question of the upper earnings limit for employees national insurance contributions, what is the justification for asking everybody earning up to £18,200 to pay national insurance on the whole of their salary while those who earn more than £18,200 pay national insurance only on part of their salary, with employers having to pay it in every respect?
  Mr. Major: The progressive nature of taxation is in the income tax system, not in the national insurance system, and has been there from the moment that the scheme was first conceived. I apologise to the right hon. and learned Gentleman for having assumed that there was a
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  Monklands high street. I now know that there is not, although the right hon. and learned Gentleman no doubt wishes that there were.
  What is perfectly clear from the right hon. and learned Gentleman's policies is that his message to the individual is to spend now and pay later—just like Labour's policies would be as a Government. We know precisely where their policies landed us last time.
  The fact is that, if Labour spends as it promises to do, it cannot tax as it implies. I hope that the right hon. and learned Gentleman will absorb that point. If Labour sticks to its tax pledge, its spending pledges are meaningless, for the two are wholly irreconcilable. If they are not irreconcilable, let the Opposition show us their arithmetic. If they cannot do so, we shall assume that the Opposition would do what they have always done: have their hands in taxpayers' pockets more often than taxpayers have their hands in their own pockets. That is precisely the way in which Labour Governments have always behaved.
  The Labour party called this debate out of a mixture of timidity and desperation—timidity because it was too timid and nervous to call a censure motion, desperation because its fleeting hopes of last spring are disappearing before its eyes.
  Mr. Sedgemore: Go on; let us have more of this.
  Mr. Major: Yes, there is more of it. The hon. Gentleman, who clearly had an extremely good lunch, must know that in their heart of hearts the Opposition realise that they will not win and that they cannot win. The Opposition have seen their best days in this Parliament and they have now passed.
  When inflation comes down, as it will; when, in due course, interest rates can prudently be brought down, as they will be; when 11 years' improvement to the economy brings more prosperity, as it undoubtedly will, the electorate will know where to turn. They will put their trust, once again, in a Government who believe in the market rather than in paying lip service to it; a Government who deliver freedom rather than just talk about it, and a Government who can deliver prosperity rather than seeking merely to redistribute it. That is why, after the next election, Opposition Members will be precisely where they are now—opposite—and Conservative Members will be on the Government Benches.
  5.10 pm
  Mr. John Battle: Despite the television coverage of our proceedings in the House and the need to cultivate our media personalities, a curious paradox seems to be emerging in our politics which could be encapsulated in the words, "Whatever you say, say nothing." That is precisely what the Chancellor has done today and it is precisely what the former Secretary of State for Trade and Industry, the right hon. Member for Cirencester and Tewkesbury (Mr. Ridley), discovered to his cost from the article in The Spectator.
  I was interested to note on the midday television news yesterday that, when asked to comment on the deteriorating trade figures, the Chancellor had nothing to say. The Chancellor does not seem to have a word to say either to those who have lost their jobs in the basic manufacturing, textile and engineering industries. I suspect that it is the silences, the gaps, the absences in

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  Government statements, press releases and the words of Ministers, that show the real underside of the Government's economic policies.
  Has the Chancellor nothing to say about the increasing unemployment that is becoming a daily experience with closures and redundancies in many constituencies? We now have the new Cityspeak, with redundancies being described by the euphemism "down sizing". For real people it means losing their source of income.
  On 14 June the Department of Employment issued a press notice which said:
  "The rise in unemployment is not unexpected".
  It went on to say that unemployment in Yorkshire and Humberside is falling. But according to the figures in the Library, at the same time the rate in my constituency was increasing. It had risen to 6·9 per cent. If we take into account the 30 changes in calculating unemployment figures, the real rate in my constituency is 10·4 per cent. —4,478 people without full-time work. That is double the Government's figures of 2,965, twice the rate that the Government calculate and, I assume, on which they base their policies.
  Has the Chancellor nothing to say? Perhaps he has said nothing about unemployment because unemployment has never been a priority, an election issue, with the Conservative party in the past. The unemployed can simply be written off because they cannot determine the outcome of an election. Their stake in an election is too low. The unemployed do not matter. They can be made, statistically, to disappear.
  I am interested that the Chancellor had nothing to say today about the increase in poverty. He gave not a word of apology for the fact that the Government have repeatedly used figures in the House against our arguments which they have now revealed to be completely wrong and misleading. Only yesterday, a document entitled "Households Below Average Income 1981-87" was published which showed that the number of people living on less than half average income rose by 50 per cent. to 7·7 million in the two years 1985-87.
  When they are discussing a policy for the family, I hope that the Chancellor will remind the Prime Minister that in 1981 the number of children living in households on below average income was 1·8 million. In 1987, it was 2·4 million—20 per cent. of children. If we were to look at the facts of poverty, we might start to have policies for the family which address that issue rather than the rhetoric that we have heard in recent weeks.
  The facts in the document "Households Below Average Income" show that, in 1979, 9·4 per cent. of the population had incomes below half the average. In 1987, 19·4 per cent. of the population had incomes below half the average. The poorest 10 per cent. saw their real incomes reduced by almost 6 per cent., and that in the face of the overall average going up some 23 per cent.
  Mr. Anthony Nelson: To put the figures in context, will the hon. Gentleman say what the average incomes were in the two years to which he refers, and what the real increase in average incomes was during that period?
  Mr. Battle: The hon. Gentleman will be aware that the average income was £239 a week, well above the incomes of many of my constituents. They would be glad to be on the average income. The Government base their calculations on averages, but some Conservative Members
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  do not seem to realise that, if incomes at the top go up, they will pull that average up at precisely the same time as the incomes at the bottom are going down. They have a Heineken theory of economics. It is as though the adverts have taken on real life.
  The document "Households Below Average Income" shows beyond a shadow of doubt that there has been no trickle-down effect in our society, by which with wealth generated in our economy is supposed to reach the poorest. The Government used to claim—the hon. Gentleman might care to reflect on this—that the incomes of the poorest 10 per cent. grew faster than those of the rest of the population. Then, in a footnote to a written parliamentary question, it was revealed that the statistical basis of that calculation was wrong and that the incomes of the poorest 10 per cent. did not grow as fast as those of the rest of the population.
  It may be of interest to hon. Members to know that annexe 1, table d, of "Households Below Average Income" shows that the real income of the poorest 10 per cent. between 1979 and 1987 was—wait for it—minus 5·7 per cent.; in other words, a reduction in income, not an increase, as my right hon. and learned Friend the Member for Monklands, East (Mr. Smith) made plain. How can we hide that behind the euphemism that their incomes are increasing less rapidly? They are decreasing, yet the Government's press release which accompanied the publication of that document yesterday claimed:
  "More people had below half the average 1987 income, reflecting a wider income distribution."
  What a euphemism for the fact that the rich are getting richer and the poor poorer. At last the Government acknowledge the fact, but the next Labour Government will be looking for policies which address that fact.
  We effectively have two Budgets. We have the real Budget and we have a statement on benefits some time in advance of that each winter which has always reduced the incomes of the poorest. Yet the Chancellor has the nerve to tell us today that £4 billion of public money was given back in tax cuts and that is now seen to have been a mistake by the former Chancellor of the Exchequer.
  Yesterday, the first edition of the new Treasury bulletin was published, for which we are grateful. In the foreword to that document the Chancellor says:
  "It is important for public debate that we have accurate statistics and accurate information."
  I urge the Chancellor to insist that such accuracy should apply to press releases, answers to written questions and answers at the Dispatch Box. It is all right for Mr. Jim Hibberd, who works for the Treasury, to point out in that bulletin that there were misleading indicators which
  "clearly underestimated the buoyancy of the economy."
  That underestimate may have misled the former Chancellor of the Exchequer. It also resulted in millions in Britain paying the price for this Government's economic policies and in the rash, tax-cutting, classic Tory, old-fashioned methods which unleashed the consumer boom for which this Chancellor is now having to pick up the pieces.
  I noticed that the Treasury bulletin also said that there would now need to be "judgmental revision". I hope that that does not mean that we shall be told that the Government will make judgments about unemployed people. I also hope that that does not mean that the decision will be, as was suggested by one of the institutes,

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  that the unemployed should no longer receive unemployment benefit and that people should take out private insurance against times when they might lose their jobs. There would, in other words, be no unemployment benefit as a basic national social security cover. The Treasury is forcing people to pay the price for the decisions of the previous Chancellor.
  Over the past 10 years, we have experienced the sustained and systematic statistical abolition of poverty, unemployment, low pay and housing need. Blindness has been deliberately fostered in Government policy to the very existence of the unemployed and of the poor as real people. There has been an insistent silence when appeals have been made to tackle the increasing structural poverty in our society. There have been denials that the divisions have been increasing.
  The Treasury bulletin says:
  "There are clearly very different stories".
  I hope that Conservative Members will listen carefully to some of the stories that they may hear in the recess from their constituents who struggle to pay their mortgages, struggle to pay the poll tax and struggle to find homes that are appropriate to their needs. The poor should not be derided as freeloaders, as one Minister referred to them recently in a televison interview on the poll tax. It may not occur to Ministers when they say that people on rebates are freeloaders that they receive a rebate precisely because their income is too low to enable them to pay their own way. The Government should raise their incomes and we might then tackle the problem of rebates. I remind Conservative Members before they go on television and castigate the poor as freeloaders that the poor are all means-tested before they have access to those rebates.
  It is fair to point out that the Chancellor did not refer to the unemployed or to the poor. However, he also says nothing about the report in the Financial Times yesterday that, according to the latest surveys, Britain's managers are all on course for a 13 per cent. rise in total pay. The Chancellor says nothing about the fact that former state-owned organisations reacted to their newly found private status by awarding large increases in earnings to their best-paid directors. In four of them—Enterprise Oil, British Airways, the British Airports Authority and Jaguar—the directors all received an initial year's increase in salary of 100 per cent. The Chancellor says nothing about the recent report on City fringe benefits, which include that special perk of a cheap 5 per cent, mortgage. This year alone, for 200,000 people it is estimated to be worth £380 million. The Chancellor says little about how the £91 billion benefits of North sea oil revenues of the past decade, which the Government had at their disposal, have been squandered.
  The Chancellor has nothing to say about the recent regional inequality. The regional trends survey published this month showed a widening of the north-south division in terms of regional differences in income, share ownership and the growth in second jobs. The number of people with second jobs increased massively in the south-east—between 1981 and 1988 it increased from 162,000 to more than 300,000. The increase in second jobs is far smaller in Yorkshire and Humberside. The increase in income disparity between 1985 and 1988 was 30 per cent. per head in the south-east, 32 per cent. per head in the south-west and 24 per cent. in Yorkshire and Humberside. If we use
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  an index under which national average income is taken as 100 in 1988, the south comes out at 117, and Yorkshire and Humberside at 89·9, lowest of all and only just above the figures for Northern Ireland. The region that I represent is a low-wage, part-time job area and the Government's policies are intent on keeping it that way.
  The Chancellor may be quietly trying to lay the ghost of Professor Sir Alan Walters. The new Treasury bulletin says that the Central Statistical Office will be shifted from the Cabinet Office to the Treasury. The Prime Minister may be quietly undermining that strategy by ensuring that one of the Chancellor's new junior Ministers is a member of the "No Turning Back" group. What characterises that group is that it has a classic formula for turning its back on whole sections of the British population.
  When a Government adopt a policy of "whatever you say, say nothing", I am reminded of a comment that was shouted out by Conservative Members about the phrase in the United States election, "Watch my lips". That is the say nothing politics and the ultimate in economic and political body language of 1988. What happened? Last month, President Bush carried out that long-awaited U-turn. He acknowledged that he needed to increase some taxes to bring his runaway budget deficit under control. There will now be new taxes and it is interesting to note that they will be indirect taxes, which are precisely the taxes about which this Government forget to tell the people. They have increased indirect taxes to almost double the level that they were when they came into office.
  The people of Britain should be reminded that the overall tax burden of personal tax under this Government has risen from 34 per cent., which it was under Labour, to 37 per cent. of personal income. Yet the Chancellor has nothing to say about the fact that people are paying more tax now. The Government still deny that the Tories tax people; that is not even to be whispered.
  The time of the monetarists and of the Chicago school has come and gone. I hope that, when we have a new Chancellor in a Labour Government, the policies of this Government will be rejected and that those who have been marginalised and left out of the Budget will be included.
  5.26 pm
  Mr. Tim Smith: I congratulate my hon. Friend the Economic Secretary on his appointment to the Treasury Bench. I met one of his constituents last night who was bathing in the reflected glory. His constituents have every right to be proud, as he will make a most valuable addition to the Treasury team.
  I also congratulate my right hon. Friend the Chancellor of the Exchequer on his speech. I congratulate him especially for one reason. He succeeded in ensuring that the Leader of the Opposition finally conceded that, in late 1987 and early 1988, the Opposition called for substantial cuts in interest rates. I recall that a motion on the Order Paper at that time set out that demand. Everything that the right hon. and learned Member for Monklands, East (Mr. Smith) says now should be seen in that light. There is no credibility in his position now because of his position then. If we had followed his policies then, we should have been back to the 27 per cent. or 28 per cent. inflation that we had in 1975-76. We should have had a complete re-run of the record of the previous Labour Government. We should address ourselves to that record and to the right hon. and learned Gentleman's words at that time, and not

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  to the hot air earlier in this debate, with little specific information about what he would do to address the country's current problems.
  Although the right hon. and learned Gentleman rather pooh-poohed this, there is an important point about the construction of the retail prices index. When the index looks at housing costs, it concentrates on mortgage interest and not on house prices. If house prices were included in the index, we should have had an earlier sign of the inflationary problems to come. Rising house prices are in themselves a useful early sign of coming inflationary problems. If we gave more weight to house prices in the RPI, that would give a better impression of inflationary trends in the economy.
  Another important reason why we should address that problem is that the figures that the right hon. and learned Gentleman quoted, as the Chancellor said, are not comparable. Rates throughout the rest of the EC show that the inflation indices of other countries are compiled on a different basis, a subject which the Public Accounts Committee examined recently and to which, in due course, the Retail Prices Index Advisory Committee will have to return.
  We must consider the construction of the index in relation to the community charge. The reference on the community charge was made to the advisory committee before transitional relief was announced in the autumn of last year. As a result, the decision to take no account of transitional relief was made not by that committee but by the Central Statistical Office.
  It is wrong not to take account of transitional relief, because it is not an income-related relief. It is available automatically to people, regardless of their income, depending on the rateable value of their homes under the previous arrangements. I hope that Treasury Ministers will examine that point, because the committee will soon be publishing a report recommending that the matter be referred to the RPI advisory committee.
  I am glad that the hon. Member for Leeds, West (Mr. Battle) has taken part in the debate, because he was unwell recently and was unable to attend some of the Standing Committee meetings on the Finance Bill. I am pleased to see that he is better. He said that Conservatives did not care about unemployment. To suggest that a Government who have presided over a larger increase in the number of jobs in the economy do not care about people without jobs is absurd.
  We also share the concern that the hon. Gentleman expressed about people on low incomes. What better solution is there to unemployment or low incomes than to create more jobs? More people now have jobs, providing them with a standard of living that they have not previously enjoyed.
  Mr. Battle: I thank the hon. Gentleman for his kind remarks.
  Although the Government claim that the total number of jobs has increased, that may be because part-time jobs are included in the statistics. Is it not a fact that the total number of unemployed people has been consistently high under Conservative rule, higher than was ever the case under Labour? In other words, there are more people unemployed now, even though more people may be working in part-time jobs.
  Mr. Smith: I would not dismiss part-time jobs as of no value. They are not normally the sole source of a household's income. Indeed, a second earner normally has the part-time job, and such jobs provide a considerable improvement in the standard of living of the avarage family. In the last 10 years, average earnings of the average man with two children have risen by about 30 per cent. That has been an outstanding achievement, especially compared with the situation under the last Labour Government, when the increase was only 1 or 2 per cent. over six years.
  I am sorry that the hon. Member for Leeds, West derided the performance of some privatised companies. Privatisation has made a tremendous contribution to the supply side of the economy in recent years. A major improvement during those years has occurred in productivity. The Library recently published a background paper which examined British manufacturing productivity. A table on page 1 showed that, from 1980 to the third quarter of 1989, manufacturing productivity in the United Kingdom rose by 28·5 per cent. whereas the figure for West Germany, about which the hon. Gentleman made such a song and dance, was 13 per cent.
  I appreciate that we are still some way behind, but we have narrowed the gap considerably. One example—admittedly an outstanding one, but it is worth considering the best—is the record of the British Steel Corporation, and that document looked into its performance. There are three reasons for the huge increase in manufacturing productivity. The first is the restructuring of British industry, so that it is more efficient. The second is the much higher rate of capital investment—and the main source of funds for that investment has been retained profits, with profits now back at levels not seen since the early 1960s. The third is the degree of improved capacity usage.
  That record has been aided and abetted by the many supply side changes that the Government have made in the last 11 years. For example, we have not interfered with business. We have got off the backs of business and have allowed management to manage. I believe that to be the main reason for privatising companies—getting rid of unnecessary bureaucratic regulations.
  Also important has been our low corporation tax regime since 1984. That has been attractive for investors at home and abroad. Another factor was drawn to my attention at lunchtime by a business man who said, when I told him that I would speak in the debate, "Don't forget to mention the massive improvement in industrial relations in Britain in the last 11 years, and the fact that we have had a record low number of days lost through strikes."
  All those factors have enabled British industry to operate so much more efficiently that we have such a good record on productivity. We have much increased profitability and, as the Chancellor said, we have a good export story to tell. Figures for the last year show that, although we still have a large trade deficit, the trend is now in the right direction. While the volume of exports is rising at about 12 per cent. per annum, the volume of imports is rising at about only 3 to 4 per cent.
  What should we do to maintain the momentum in the 1990s? We must maintain our attractive tax regime and not fiddle with it, because it has encouraged much inward investment. We must continue to examine Government regulation, deregulate where possible and make further supply side changes to make the economy more efficient.

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  I agree with the right hon. and learned Member for Monklands, East that we need to invest more in education and training, although he should not pretend to the House that it is somehow a short-term solution. I fully support the introduction of the national curriculum, but that is only just getting under way and the first school kids to have gone right through the curriculum will not emerge from our schools for another 10 years. So it is wrong to pretend that the investment will pay off in the next year or two. It is important that the curriculum is adequately resourced, and I hope that that will receive attention in the context of the current public expenditure round.
  Most important—this is why the Chancellor paid such attention to it—is the need to get inflation down. That is why I support the tough monetary policy that he has adopted in the last year. In my view, it must be supported by an equally firm fiscal policy.
  There are signs, to which my right hon. Friend referred, of a slowdown in the economy. This is a difficult time for public spending, but it is vital that it is kept under firm control. The only Departments that should be allowed a real increase are the Department of Health and the Department of Education and Science, for the reasons I have given. There is room for cuts to be made in the expenditure of other Departments' budgets, such as the Ministry of Defence, the Department of Trade and Industry and the Department of Energy.
  The Labour party is always trying to pretend that, in some way, the period 1964 to 1970 was a fine time for public spending, and that since then we have done nothing but cut public expenditure. A significant table in the Autumn Statement sets out trends in public spending over the last quarter of a century. In 1973-74, in real terms, spending was £150 billion, at 1988 prices. In the following year—the first year of a Labour Government—it shot up to £169 billion, an increase of over 10 per cent. in one year.
  In every successive year from then on, public spending was cut, and by the end of Labour's period in office it was back down to £165 billion, £4 billion less than it had been five years previously. That was the starting point for this Administration—£165 billion—and this year public spending is £192 billion. That gives the lie to anybody who suggests that in overall terms this Government have cut public spending. They have not. However, what they have succeeded in doing—this is the trick—is to decrease public spending as a proportion of our national income. At the low point under Labour, it was about 48 per cent. of GDP; today, it is 38 per cent.
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  We should be quite clear about Labour's policy. The right hon. and learned Member for Monklands, East has said that his only spending commitments are to increase child benefit and to increase pensions. However, when asked on "Panorama" where he would find the money for the extra spending commitments, the Leader of the Opposition said that any other spending commitments must depend on the economic situation and on securing economic growth. He was then asked, "That is all very well, but how are you going to secure economic growth?" The answer was, "Ah, well, we must invest more money in education, training and the infrastructure." If that is not public spending, I do not know what is.
  The Labour party must make up its mind about what comes first: are we to have more spending followed by economic growth, which is fuelled by that spending, or are we to have the growth first—and if so, where will it come from? The right hon. and learned Gentleman has not answered that question. As long as he fails to do so, his policies have no credibility.
  Mr. Jacques Arnold: Has my hon. Friend noticed that the hon. Member for Kingston upon Hull, East (Mr. Prescott) has said that £3 billion will be spent in the early days of the next Labour Government, which he foresees, on the high-speed rail link, which would be financed totally by borrowing, which he seems to believe will have no effect on the capital position, let alone on the revenue costs?
  Mr. Smith: My hon. Friend is right to draw my attention to today's spending commitment from the Labour party—another £3 billion on the high-speed link—
  Mr. Battle: From where?
  Mr. Smith: I do not know—presumably from the channel to London. I think that that is what is suggested, but it is £3 billion—
  Mr. Battle: Where is the money coming from?
  Mr. Smith: That is the question that the Labour party should answer. There are only two possibilities: either the money is borrowed, in which case interest rates rise, or taxes are increased. There are no other sources of revenue for a Labour Government or for any other Government. It is about time that Opposition Members had the honesty to recognise that and to tell the country how they will finance all their projects.
  5.42 pm
  Mr. A. J. Beith: Although the debate began with good-humoured contributions, it seems to be degenerating into an exchange of insults about who will spend what. The hon. Member for Beaconsfield (Mr. Smith) did not really refer to the purposes—and perhaps the achievements—of the Government's economic policy on a broader canvas. If one were looking for some examples of what one thought the Government had been trying to achieve—it is not an easy task—one could pick out certain things.
  The hon. Gentleman did refer to the improvement in industrial relations that was brought about when the Government took on some of the measures that we have been pressing on them for years—such as holding postal ballots before strikes and putting unions more effectively under the control of their members through that postal ballot system. However, he could also have turned his attention to the reassertion of the role of private enterprise as the primary engine of economic success in the public mind.
  That is one of the most useful things that has happened in the lifetime of this Government. However, there has been a signal failure to tackle the monopoly prevalence in our system. Indeed, the Government have converted public monopolies into private monopolies by the way in which they have carried out their privatisation policy, and have failed to address the consumer protection issues or the social issues, to which the hon. Member for Leeds, West (Mr. Battle) referred, without which the success of private enterprise seems hollow to the people who do not have the means to purchase the goods that are produced.
  There seems to be no sense of the Government having any continuing overall purpose to their economic policy, which is a strange thing to have happened after so long. However, perhaps it is not all that surprising, when one considers the way in which the Government are bogged down in their economic failures and the consequences of their mistakes. No one can look at the trade figures, the inflation figures, or the balance of payments figures without seeing a history of failure, which owes its existence to a series of mistakes made by the Government in their economic management, which is the focus of this debate.
  The Conservative party now likes to place much emphasis on the failures of the former Chancellor of the Exchequer. There is always somebody previous who is responsible for inflation. It used to be the previous Labour Government or the preceding Conservative Government—the Heath Government—but now the former Chancellor of the Exchequer is recognised as having made mistakes. Some of the most significant mistakes were made in the 1988 Budget, some of which the right hon. Member for Blaby (Mr. Lawson) has now admitted. He has admitted, for example, that it was a mistake to stage the ending of multiple mortgage tax relief until the August of that year because, along with the expansion of the credit, the right hon. Gentleman added another engine of increase.
  There is a whole series of mistakes, of which the major one must be the tax cuts themselves—
  Mr. Major: I do not recall the hon. Gentleman mentioning those matters as mistakes at the time. I do not recall him criticising the reductions in interest rates in late 1987, and I expressly do not recall him criticising the four
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  or five-month period in which people could keep multiple mortgage interest relief—for the very good social reason, which the hon. Gentleman should understand, that it enabled young people who were purchasing to complete the transactions into which they had entered.
  Mr. Beith: The right hon. Gentleman must look at the record. He will then find that I did indeed criticise his predecessor on that count. Interestingly, when his predecessor appeared before the Select Committee on the Treasury and Civil Service to explain why that had been done, he did not give the good social reason that the right hon. Gentleman has just advanced. The right hon. Member for Blaby said that he had been advised by the Revenue that the computer system could not cope with the change as rapidly as he had intended to make it. He did not have a social reason: he had a technical and administrative reason. I pointed out the effects of that measure and of the other measures in the Budget at that time.
  However, the present Chancellor himself has made mistakes. In a debate only last week, the hon. Member for Eastbourne (Mr. Gow) pointed out that the Chancellor should have raised taxation in his last Budget, and said that, by not doing so, he had made the current inflationary problems worse. The Chancellor has been slow—his predecessor was also slow—to take any of the voluntary steps to dampen credit that should have been taken, but he has now advised the banks that they should stop their high-pressure circulars that encourage people to take out loans that they cannot afford. That could have been done long ago.
  Alongside those management mistakes, it has also been a mistake on the Government's part constantly to encourage high expectations of the Government's success. Even now, the Chancellor seems to have private meetings with Conservative Members, at which he tells them that things are not really going all that well, that it will be a tough winter and that the public expenditure round will be extremely difficult; but he does not often say such things in public.
  The Government's practice—this applies even more to the right hon. Gentleman's predecessor than to himself—has been to lead people to believe that everything is fine and that they can reasonably take out large borrowings, because everything will get better and interest rates will come down in due course, although they will have to be kept high for a little longer. All those expectations, which are generated by rosy economic statements, do not help to bring about the self-discipline for which the Chancellor is asking and which he knows the economy requires.
  Perhaps the most remarkable errors of all are those that the Government are making over Europe. The Government seem incapable of any clear, settled or united policy towards Europe. The plans for the hard ecu, which the Chancellor has devised with the assistance of Mr. Butler and others, has the singular merit that it enables one set of people in the Conservative party to believe that it will never lead to a single currency, a European central bank and full monetary union, and another set of people in the Conservative party to believe that it is a constructive and significant step along that road, which I suspect is the Chancellor's own view.
  The right hon. Gentleman is assisting the Labour party in the same respect, because a number of Labour Members take the same view of the conditions that the Labour party has set down for joining the exchange rate mechanism. I

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  believe that it was the hon. Member for Great Grimsby (Mr. Mitchell) who said that he was quite satisfied with the Labour party's attitude to the exchange rate mechanism, because the conditions were such that they could never be satisfied. He is probably right, because the condition that the whole exchange rate mechanism should become a reflationary process, which is effectively one of the four conditions, will not be satisfied. Those conditions also have the merit that they can mean different things to different people.
  Mr. Major: I am grateful to the hon. Gentleman for making that point, which in essence is entirely right. People must understand that the specific circumstances under which the Labour party has said that it will join the exchange rate mechanism would mean nothing other than the destruction of the exchange rate mechanism itself. It is a piece of flimsy oratory to cover the fact that the Labour party has no policy. The hon. Gentleman may be right in his implicit criticism that I should have made that point earlier.
  Mr. Beith: I hope that the right hon. Gentleman recognises the beam in his own eye, or that of the Government. Setting up structures which mean different things to different people makes a wide political impression.
  I was fascinated by the response from the Leader of the Opposition during Prime Minister's Questions the day after the Chancellor's plan was unveiled. He said to the Prime Minister:
  "I have read the speech. I wonder whether the Chancellor explained to the right hon. Lady that if the idea that he put forward were accepted, with the European Monetary Fund and the hard ecu, it would be the final.surrender of monetary sovereignty by Britain".—[Official Report, 21 June 1990; Vol. 174, c. 1107.]
  I was most intrigued by that, as it was not clear whether the right hon. Gentleman was saying to the Prime Minister, "How outrageous it is that you, the Prime Minister, should even contemplate the surrender of monetary sovereignty which I, as the Leader of the Labour party, would never contemplate"; or whether he was simply pointing to an obvious inconsistency in the Prime Minister's attitude. I suspect that, when he said that, he thought that the Labour party would never contemplate such a move in any circumstances, so the ambivalence surrounding the Labour party's attitude to Europe is similar to that of the Government.
  It is carried through in their attitude to a European central banking mechanism, which is part of the all the plans put forward so far, except that proposed by the Chancellor. The right hon. and learned Member for Monklands, East (Mr. Smith) made Labour's position quite clear in his response to my earlier intervention. He said that the Labour party would have none of that and did not want an independent autonomous central bank. He is at one with the Government in that. There are stages in serious prospect in the minds of our major partners in Europe which neither the Conservative party nor the Labour party is prepared to contemplate. They are key elements in European monetary union.
  The refusal to accept what is happening in Europe seems to sow the seeds of downfall for any policy pursued by the Conservative party or the Labour party as long as
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  they retain those prejudices. I do not understand what role the Government or the Labour party envisage for Britain in future. I do not believe that the rest of Europe will accept the Chancellor's plan. It has been accepted by many of our European partners as evidence that he is in earnest about trying to find a basis on which Britain can play a part in the future economic development in Europe, and he has dragged the Prime Minister into that testimony of earnestness. However, I shall be most surprised if his plan is preferred to the proposals in the minds of the Germans, the French and our other European partners.
  What will the Chancellor do if our European partners decide to go ahead and we are left out? The obvious conclusion is that we will remain in the second division, eventually to be joined by Hungary and Czechoslovakia in years to come, when they become supplicants to join the European Community, and that we shall remain outside the major developments in Europe. That would be disastrous for Britain. It would be disastrous for Britain's industrial position and for the hopes of the City, which could reasonably expect to be the financial capital of Europe when financial and monetary union is achieved. It would leave Britain in a very much weaker position.
  Within that argument about our future there has suddenly broken out the row about what we think about the Germans—a most extraordinary episode. The remarks subsequently disowned by the right hon. Member for Cirencester and Tewkesbury (Mr. Ridley), which seemed to be fuelled by a mixture of malevolence and jealousy against a nation that has succeeded where Britain has failed, were given substance by that extraordinary Chequers seminar and the assortment of prejudices drawn up there.
  Why was there no serious analysis about what has made Germany a successful economy in the post-war years? The writings of the commentators on what has happened in Germany show common agreement on a number of key elements. Some of those elements are political, such as having a decentralised system of government with centres of power away from the capital and the consensus produced by a fair electoral system which ensures that Governments have to carry wider support than that of their own party. Some of them are about economic decision-making, in particular having a central bank which has an autonomous responsibility for price stability and therefore effective control of monetary policy.
  That is not a superficial claim about the German economy. No serious economist would not regard that as having played a major part in Germany's success in fighting inflation. Yet today the Chancellor made it clear that the Chancellor of the Exchequer and not the Bank of England will have responsibility for monetary policy in future. Can he or the official Opposition pretend that Britain can demonstrate that it has been more successful by leaving the control of inflation solely in the hands of the Government than has a country which has given its central bank a major role in the control of inflation? Of course they cannot.
  Among the other features which have been important in Germany's success is the record of training through the education system and in employment. The hon. Member for Beaconsfield referred to the budgets of Government Departments. He should remember that the Department of Employment's budget was one of the casualties of the last public expenditure round. Just when we should have been increasing expenditure on training, it was cut.

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  In Germany, trade unions have played a more constructive role than has traditionally been expected or encouraged in Britain. I took part in a discussion in Germany in which a Labour Member asked, "Surely what you say will happen in East Germany will not happen because the trade unions will insist that they do not suffer all those job losses as the firms are made more efficient."
  The German officials to whom we were putting those questions were amazed, because the idea that a trade union would not understand the need to increase efficiency had not even crossed their minds. In Germany, the trade unions traditionally have operated a more progressive approach to industrial change, and that has been a major factor in Germany's success. Germany has also recognised the need for essential public investment in the transport system, for example.
  We are not learning the lessons of German success. Instead, we are complaining about that success. Decentralised government, a fair electoral system, an autonomous central bank with responsibility to deal with inflation, training, investment and constructive trade unions do not form a package that the Government or the Labour party can accept in its entirety. They should be part of a package of change for Britain. They have long been part of the policies of my party. That is why our approach to Britain's economic policies has proven marks of success.
  Why do those who believe that leaving the field open to German dominance in the European Community poses a danger to Britain persist in supposing that the proper response is to keep Britain on the sidelines, to resist the development of the policies that I have described and to leave Britain in Europe's second division? That would be a recipe for economic failure.
  5.57 pm
  Mr. John Browne: I congratulate my right hon. Friend the Chancellor on a quite outstanding speech and support him and the Government's policies in the proposals submitted to our European partners on economic and monetary union. As the Chancellor said, they are based on the so-called hard ecu. Our economy has been and will be vitally affected by currency and interest rates.
  At the outset, I declare a financial interest that may be affected by European monetary union or the strength or otherwise of the European economy. At the heart of European monetary union lies the political and economic integration of Europe. Economically, the forces are for integration in economy of scale and flow production, and the lowering of customs barriers. These factors force us towards economic integration.
  But the key to integration is political. The political elements often hold back for understandable reasons, such as the protection of jobs and prices, and even for cultural reasons. These are two competing forces—one to integrate and one to hold back. Political integration is all about sovereignty, but sovereignty is an emotional matter of the heart. We must ask why politicians would willingly yield sovereignty. I submit that the answer is similar to that given by entrepreneurs when they yield equity or sovereignty in their companies—that it is survival. The survival of Europe must mean the yielding of sovereignty. It is a question of how far and how much at any time.
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  European monetary union is mainly dependent on the outlook for Europe. What are Europe's prospects until the turn of the century? The evolution of the 1990s in Europe has been already dramatically affected by one man, Mr. Gorbachev—or Gorby, as he is known at the grass roots. He has unlocked the static trench warfare of the cold war and has challenged the world to mobile competition. Gorbachev has issued the world a new challenge which, unusually, is not of war but of peace. He proposes to change the nature of peace itself, from the peace of nuclear deterrence under which we have lived for 45 years, to a peace of detente. It is to swap mass mutual destruction for the hope of mutual trust.
  Mr. Gorbachev's new challenge has successfully removed the bogey man from the strategic scene. It has also had other interesting consequences, which will crucially affect the future of Europe.
  First, it has heralded the end of the second world war. I sometimes find it hard to remember that the losers of the hot part of that war were Japan and Germany.
  Secondly, it has catapulted Europe back to the centre of gravity in world politics. The main question is, what Europe? Is it a Europe that ends in Berlin, or a Europe that ends in Moscow? Thirdly, Gorbachev's new challenge has catapulted Europe back on to the centre stage of world politics. But it is an uncertain Europe. It has changed so much. The two clenched fists—the Warsaw pact and NATO—have now opened. At one time they faced each other antagonistically, with great forces for union within their membership. Now, individual nations wish to do more of their own thing.
  Mr. Gorbachev has also lit the fire of freedom throughout central and eastern Europe. When the Governments of the west lit the fires of freedom in the western economies, the problem that had to be faced was greed. With the lighting of the fire in totalitarian states, the problem that must be faced is revolution.
  Europe is at the centre of a world stage that is showing signs of an ominous growth in trade blocs. I am thinking especially of the United States and Canada, of Japan and China, and of the European Community. There is potential for those three trade blocs to become isolated from each other. However, there is the counter force of globalisation. The lesson of Chernobyl is that to love one's country is no longer anywhere near good enough in itself. If we really love our country, we must watch and take interest in what is happening in neighbouring countries.
  Fourthly, Mr. Gorbachev's new challenge has exposed a change in the super-power structure. In 1945, Great Britain was replaced as a super-power by Russia. Now, 45 years later, Russia itself is being replaced as a super-power. The question is, by whom? Will it be the new Europe or the new Germany? The new Europe is big—some 350 million people and an economy of $4 trillion accounting for about 20 per cent. of the world's free trade. What is more, that trade is balanced, with about $400 billion of exports and $400 billion of imports a year. That is a powerful bloc.
  What form will the new Europe take? Economic and monetary union is crucial to that decision. Will it be a Europe of member sovereign states; will it be a Europe of one federal state; or will it be a Europe dominated by a single member state?
  Germany is a country of about 100 million people. Even the Romans failed to conquer it. The praetorian guard was heavily Germanic. It was the protector of

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  Europe for many years under the Teutonic Knights. The West German miracle is a modern example of the strength and vibrance of the German nation.
  What has Germany already achieved and what will it possibly achieve now that it is united? What will it achieve as a member of the EEC and adjacent to central European and Soviet Union markets? A major force has suddenly erupted within the EEC. The vital question that the whole of Europe must answer, including the Germans, is how Europe can best assimilate Germany in the longer-term interests of Europe in general. At the heart of that answer will lie our policies towards European monetary union.
  I beleve that the headlines of history will record this time as one of legend, of great opportunity and of risk, of unprecedented change, and of uncertainty—almost the fog of a sudden peace. At a time of such great uncertainty, risk and opportunity, the House and many like it throughout Europe are being asked to make a dramatic decision about something that is dear to us and to the hearts of our constituents—the future of our national sovereignty. In this uncertain world, we are being pressed to go ahead with European monetary union or a single European currency, yet that proposition is being put to us before the establishment of a single European market, let alone a single European economy.
  We are being asked to join the exchange rate mechanism. It is clear that it is dominated by the deutschmark. An illustration of that is the Government's action in the wake of the financial near-crash of October 1987, when there was a risk of a resultant economic crash. The Governments of most western nations correctly injected a great deal of cash into their systems. It is easy with hindsight to say that that was incorrect, but at the time we all believed that it was correct. That cash injection was highly inflationary. Germany, with a much more disciplined economy, brought its inflation under control much more rapidly than we did, and it started to drop deutschmark interest rates. However, Britain had shifted its focus from the Unites States dollar to the deutschmark, and to keep the sterling-deutschmark parity we also started to drop our interest rates. Economically, it was far too soon and inflation kicked up yet further and brought the Government under great strain. It even called into question the future of the Prime Minister. The "Thatcher factor" in the value of sterling should not be underestimated.
  The vital lesson of that example was that the interests of the deutschmark are not always or necessarily the same as the economic interests of the other member countries. While joining a deutschmark-dominated bloc may be seen as anti-inflationary on the surface, we must question whether that is true in terms of members' individual economies. The answer is far from clear and can often lead to an inflationary impetus in a domestic economy within the EEC. The ERM is certainly no panacea for sterling or the United Kingdom economy.
  European monetary union is the ultimate surrender of sovereignty. History shows that the old Saxon capital of England, Winchester, was taken over by the Normans in 1066 or thereabouts. Winchester and London were then the joint capitals of England. When the Treasury and the mint were moved from Winchester to London in 1240,
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  London became the undisputed capital. There is a lesson in that, because where the mint, the Treasury and the money go is where sovereignty goes.
  At this time of uncertainty, we must question how much sovereignty we should yield, particularly as European monetary union is based not on gold, which is supranational, but on paper currencies, which are geared to politics and over which politicians have influence. There is not even a single European market, let alone a single European economy, and paper currencies tend to reflect the political aspects of economies. Before we reach that stage, is it wise to contemplate moving to a single European currency?
  The deutschmark is strong and reflects an extremely strong German economy. If the economies of less competitive nations of the EEC are exposed to the full gale of German economic competition in one sudden blast, many companies, even entire industries, will be blown away, causing massive unemployment in some regions, and Britain will become a region. There could be massive unemployment and much suffering. It is in the interests of member states to bide their time not only to allow members to grow more competitive but to adjust our economies. In other words, we need an economic shield, an economic greenhouse, such as we use for young plants. The Government discriminate quite heavily in favour of small and new businesses in terms of employment legislation and tax, and we should do that in Europe. We need time to allow for the evolution of European currency and to avoid European currency revolution.
  We are at a crossroads in Europe. We face the options of an EEC of sovereign nations, a federal state or a state dominated by a single country. We are an amalgam of widely disparate economies reflecting different strengths and weaknesses, and until the disparity of EEC nations is resolved we should avoid any sudden or abrupt move to a single currency.
  The EEC is young, it is not yet a single market and it is facing uncertainty. It needs time to develop, by evolution rather than revolution. At the same time, there is pressure to do something because, if Governments do not do so, the grass roots may take the initiative and select their own single currency, which is likely to be the deutschmark.
  The British proposal for evolution based on the hard ecu is good. It is non-inflationary and I particularly welcome the buy-back provisions for the central banks. It allows time for EEC members to adjust to the international competition of a single market and to harmonise or converge their economies in the single market of 1992. It will allow for politically humane economic adjustment within EEC countries and it offers the flexibility which any prudent person or banker would demand when facing an era of such change and uncertainty. Most important, it is in the best interests of Europe in general.
  The British proposal should be adopted by all EEC members and I wish my right hon. Friend the Chancellor good luck in persuading his colleagues in the EEC to adopt it.
  6.14 pm
  Mr. Joseph Ashton: I shall make an astounding revelation for tomorrow's Financial Times by saying when interest rates will change. There will be a full 1 per cent. cut at 3.30 pm on Thursday 11 October, and it will be announced at the Conservative party conference.
  Mr. Irvine Patnick: That is my birthday.
  Mr. Ashton: Mine is the day before, and it is the Prime Minister's two days afterwards, when she will be 65 and ready for the old-age pension.
  It will be announced then because the only economic plan is to get the Tories elected at every election and it does not matter a damn what happens in between. If they have their eyes set on October next year, they will try to reduce interest rates by 5 per cent. between this October and next October to give them a chance in the general election. I think that they have left it too late and that they will have to wait until 1992, but that is obviously their plan. Let us not hear any nonsense from Conservative Members; the Government are rigging the economy.
  That put us in the mess that we are in now. Immense numbers of credit cards were given out in 1985 and 1986 to get the Tories elected in 1987. Anyone, whether they were unemployed, had tuppence in the bank, could not read or write or had a long history of bad hire purchase payments, was allowed to walk into Debenhams, Marks and Spencer or Rackhams and take on a credit card.
  Newspapers sent 17 and 18-year-olds to see how much they could borrow. They bought £10,000-worth of high-fashion clothes, and that was all geared to the Tories winning the 1987 election. Industries were sold off, British Gas was sold to Sid, who never bought a share in his life, and we were allowed to believe that he was becoming rich. People were allowed to take on massive mortgages until it all collapsed.
  What happened when we were younger? There was no such thing as a credit card, but we had normal, old-fashioned hire purchase. You could not borrow more than a certain amount of your wages and had to pay a deposit to show that you had cash to start off with. It was paid back over two years a little bit at a time, and you could not get one thing without paying for the first. If you wanted a fridge, you had to wait until you had paid off the carpet. That system discouraged people from getting into debt.
  When I bought my first house, I could borrow two and a half times my annual income and had to have 10 per cent. to put down. That worked, house prices increased with wages and we did not have a rocketing boom as in 1986 and 1987. People could afford to buy a place to live.
  What happened? The Tories removed controls in 1986 and people were allowed to borrow £50,000 or £60,000 when they were earning only £10,000. The two-and-halftimes annual income limit for borrowing on mortgage went through the window. People were allowed to borrow three, four or five times their annual income. No wonder house prices rocketed.
  I shall reveal another secret of the universe. Everybody wants to know the magic moment in time when house prices take off. It is about three months after the Prime Minister buys one. If hon. Members want to buy a house and see its price double, they should wait until the Prime Minister buys one. They all do it. Harold Wilson bought
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  one in 1969, Denis Healey bought one in 1977, the Prime Minister bought one in 1985 and within months prices rocketed.
  Mr. Jacques Arnold rose—
  Mr. Ashton: I am sorry; I am limited for time.
  The Tories are always attacking the Labour party for the inflation of the mid-1970s. That inflation was caused not by the Labour party but by oil prices, and they know it. They kept on blaming the Labour Government until it stuck in people's minds. The Arabs fought the Israelis, the price of oil trebled and it caused inflation in every country in the civilised world. It was not just the Labour Government. We reacted to that inflation with the co-operation of the unions and with an incomes policy until we reduced inflation from 25 per cent. to 8 per cent.
  The Government cannot blame other countries, because we have had the benefit of oil. Inflation, which is much higher than in other countries in Europe, must have been caused by the Government. It was caused in 1985, 1986 and 1987 by indiscriminate borrowing from anyone, for anything, at any interest rate. Gullible people borrowed.
  Many people were encouraged to buy their council house. I am not knocking that, because the authorities in Bassetlaw sold council houses long before the Tories thought of it. Many people paid £6,000 for a house worth £20,000, but then the loan sharks came knocking on their door, asking, "Do you realise that your house is worth £20,000 and that you owe only £6,000 on it? Why don't you borrow with an additional loan?"
  Cedar Holdings used that approach on many people in mining areas who bought National Coal Board houses. Some gullible people thought that they could borrow £2,000 or £3,000 and that it did not matter if they could not pay it back. They thought that, somehow, the difference between the £6,000 and the £20,000 would be reduced a little. They thought that they could not be turned out of their house. Many families were turned out of their houses because they did not realise that they had to make repayments each month to Cedar Holdings and similar companies.
  There was a Niagara of debt. Obviously, such a debt will mean that more people will demand bigger wage rises, especially given the massive profits made even today by many firms. The Government complain about inflation, but they do nothing about bringing down prices and controlling inflation. They do nothing to alter the rate of VAT. Why is there a flat rate of 15 per cent? Why do not the Government cut the VAT on British fish and chips to 4 per cent. and increase the VAT on Japanese microwaves to 25 per cent? In that way, we might save a few jobs. That might be a better way of functioning. I offer those ideas because new thinking is needed, and nothing comes from the Government.
  6.21 pm
  Mr. Conal Gregory: We have the opportunity of an important, wide-ranging debate on the economy. It might be prudent at the beginning of my short speech to remind ourselves of the economic indicators which have been the success of our strategy.
  Britain has had some eight years of sustained economic growth, averaging over 3 per cent.—a period unmatched since the second world war. The growth rate in the United

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  Kingdom has been faster than that in France, West Germany and Italy. In the 1960s and 1970s, Britain was at the bottom of the growth league of the major European states.
  The average family of a husband, wife and two children have seen the real value of take-home pay increased by one third under the Conservative Administration. Under Labour, there was an increase of 0·6 per cent. That is not a comparison which I should like to take with me into the next general election if I were a Labour parliamentary candidate. Fortunately, I shall not do so, because I shall be proud of our record. Industry is more effective and more competitive than ever. Manufacturing productivity has increased by 60 per cent. In the three months to May there was an increase in production of 1·5 per cent. on the previous three months.
  Any hon. Member can see that, with such a catalogue of success, a prosperous economy is necessary to ensure investment in British Rail, which is the highest for 29 years; an increase of more than 60 per cent. in road building, after allowing for inflation; almost 350 major hospital schemes finished since 1979; and a real-terms increase of almost one quarter in benefits for the family. An expanding economy needs innovation and new companies. I praise the net increase in business start-ups. Between the end of 1981 and the end of 1988, business start-ups exceeded stops by 238,000, with an average net business start-up of 1,600 each month last year. What a contrast with the Labour party.
  The Labour party's policy document "Looking to the Future", which in many ways is a misnomer, as it looks to the past, contains 81 spending commitments. The hon. Member for Kingston upon Hull, East (Mr. Prescott), who is not in the House at present, gave another major commitment today, making it 82. Even allowing for the 81 commitments, Midland Montagu has calculated that Labour's pledges will cost £50 billion—equivalent to doubling the basic rate of income tax. That is the message from this debate, apart from the great address by my right hon. Friend the Chancellor. That is a scandalous amount, as I hope the hon. Member for Derby, South (Mrs. Beckett) will confirm.
  There are two taxes about which the ordinary man or woman must be concerned. The first is Labour's savings tax, which would penalise the thrifty. It would be levied on the investment of anyone who has more than £3,000 in a piggy bank, or £5,000 a year for pensioners. The second is Labour's jobs tax, which would be a cost on the payroll. It would punish British industry and increase unemployment. Fixed capital expenditure in my region of Yorkshire and Humberside increased from £346 million in 1979 to more than £606 million by 1987. Private sector manufacturing investment increased by £1,981 million in 1979, when we took over from Labour maladministration, to £3,288 million in 1987—staggering figures.
  We should nail four Labour myths, the first of which is that rising inflation shows that the supply side of the economy is in poor shape. In fact, inflation and the trade deficit are symptoms of excess growth in demand. British industry is now more efficient, and is producing and exporting more than ever before. As John Banham of the CBI said:
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  "We enter the 1990s with the supply side of the British economy in incomparably better shape than at any time in our history."
  The second myth is that credit controls are the best way to curb inflation. We frequently hear that statement made by the right hon. and learned Member for Monklands, East (Mr. Smith). Credit controls could easily be avoided by borrowing overseas. To be effective, they would have to cover 85 per cent. of all borrowings in the form of mortgages. In the 1970s, credit controls failed to prevent inflation reaching Labour's figure of 27 per cent.
  The third myth is that Britain has under-invested. British investment has risen faster than investment in the other European countries to which I referred earlier.
  The fourth myth is that British industry cannot compete in world markets. Britain exports more per head of population than Japan. In the 1980s, Britain held on to its share of world markets after decades of decline. Over the three months to March, exports rose by 6 per cent. compared with a year earlier, while imports rose by just 2 per cent.
  How can one understand a leader of a major party who says that 14 out of 15 taxpayers would not have to pay more under Labour? I am, of course, referring to the Leader of the Opposition. He meant, being sloppy in his language, that 14 out of 15 basic rate taxpayers would not have to pay more. The 1981 pledges will mean that everyone will have to pay more. He referred to social security pledges of £2 billion, but he meant £3·3 billion.
  Labour is as hostile as ever to denationalisation. Labour is still wedded to clause four of its constitution which its marketing jargon now describes as "social ownership". Does Labour really believe that it will take back British Airways—which, 10 years ago, was rated lower than Romania Airlines—British Telecom, the British Airports Authority and National Freight? Am I going to go back to the constituents of York and say to those employed in British Rail Engineering Ltd., in station catering and Travellers Fare, in British Gas and Yorkshire Water that their profit in the future will be taken from them and that we will face the socialist threat to reimpose the dead hand of the state?
  The message is stark. Labour mismanaged the economy. Its proposals make no sense. The right way forward is Conservative control of the economy and our vision of a country in which the individual has freedom and in which investment comes through enterprise.
  6.29 pm
  Mr. Stuart Randall: The only thing that I have in common with the hon. Member for York (Mr. Gregory) is the county area that we both represent. I think that his perception of how well the economy is being managed by the Government is extraordinary.
  The motion before us is a good motion. It is accurate in the way in which it refers to the "mismanagement of the economy" and the "quality of life", and says that we need more innovation as well as regional policy.
  To obtain a reasonable measure of the Government's performance in handling the economy, one should talk to business people. I regularly do that, and I know that they are all fed up with the Government. They are people who have traditionally always supported the Government, but I now find that, certainly in Hull—
  The Chief Secretary to the Treasury (Mr. Norman Lamont): Labour win!
  Mr. Randall: That is for sure. If a Tory were to be elected in Hull, I think that he would be lynched and hung from a lamp post. The business people of Hull are waving a red light: they are saying that they are not happy with the way in which the Government are managing the economy, especially the way in which they are dismally failing to come up with a policy to provide industry in our region with the right skills and education to ensure that we can be innovative.
  Hull contains a number of hi-tech companies, notably Kingston Communications. The Chief Secretary to the Treasury and I have discussed this topic in the past; we are very proud of the way in which that company has brought high technology into our area. I would like similar companies to come to our region, but that will not happen unless there is a good skilled work force.
  I wish to discuss the motion in the context not solely of my constituency and its region, but also within that of the EC. No one would dispute the fact that our performance, compared with Germany's in particular, is nothing short of abysmal. Our balance of payments and balance of trade, and all the major economic indicators, are remarkable. They augur badly for Britain in the 1990s, unless the British economy is fundamentally reshaped to mould it into a form that will make our industry innovative and competitive—and, above all, equipped with the appropriate skilled people.
  Terrific neglect has resulted from the Government's "hands off" ideology, and their view that we should not intervene in industry. The Department of Trade and Industry is now a shell organisation with no role to play. I believe that Government should manage their affairs to help industry to perform effectively. That light touch could remove many of the bottlenecks that are currently inhibiting the performance of the British economy and British industry in comparison with our European competitors. Until we do that, the quality of life of the British people will deteriorate. The gap between rich and poor has already widened since the Government came to power, and I condemn that totally: it is not something we should be proud of.
  Over the weekend, I discovered that 400 eye operations will no longer be carried out in my constituency, because of the poor performance of the national health service. To enter an eye clinic in my district health authority, one must now wait for 10 to 12 months. In our region, the performance of the economy is crucial to ensure that industry generates the wealth that will enable us to provide the services that are necessary to secure an effective and efficient public sector that will improve the quality of life of the people of Britain. That is what we are after.
  The motion that my right hon. and hon. Friends have tabled today encapsulates many of our concerns about the way in which the Government have miserably mismanaged the economy of Britain.
  6.35 pm
  Mrs. Margaret Beckett: It is just two years since, in July 1988, the rhetoric of the economic miracle—used so much by the Government—was at its height. Those were halcyon days, when inflation was running at 4·6 per cent., interest rates were at 10·5 per cent. and the balance of payments was heading for what was
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  then thought to be a worrying deficit of some £12 billion at an annual rate. In those days, it was within memory that the Government had been talking of achieving nil inflation, repaying the national debt and other grandiose schemes.
  Even as recently as July 1989, there was still optimism. As my right hon. and learned Friend the Member for Monklands, East (Mr. Smith) pointed out, the problems were said to represent a mere blip. Inflation was then running at 8·3 per cent. and interest rates at 14 per cent., and the balance of payments was heading for an even more worrying annual deficit—then expected to be some £18 billion, although the outturn was worse than that.
  Today, when the Government have been in power for 11 long years, we have before us the record of their economic policy as it now stands: headline inflation at 9·8 per cent., interest rates at 15 per cent., mortgage rates at their highest ever and a balance of payments that is again heading for a yearly rate of some £18 billion—although, so far this year, the outturn has been worse than it was for the same period last year. Yet the Government still want us to believe that those are temporary difficulties, because we have had an economic miracle.
  Certainly, the events that have passed before our bewildered eyes have been, if not miraculous, "wonderful"—in the sense that they are full of wonder. We have seen the squandering of what—in today's terms—would be £91 billion of income from the North sea. We have seen the disappearance—with nothing but three election victories to show for it—of the proceeds of the sale of the family silver. Speaking from memory, I think that that is about £40 billion or £50 billion of taxpayers' money lost. We have seen about £20 billion of savings made at the expense of pensioners, with total savings nearer £30 billion if we take account of other social security cuts. The Government have cut earnings-related benefits, while not just retaining but increasing earnings-related national insurance contributions.
  In those and a variety of other ways, there has been a substantial movement of substantial resources. What have we to show for it? We have a worse-trained work force than any of our major competitors, one of the poorest records in research and development and in investment and one of the most rundown systems of transport—and one of the most uncaring, unthinking, unlistening and arrogant Governments we have ever had. The Government have been re-elected three times through the ruthless manipulation of resources that should have been used to secure the future of the country, but instead have been used to try to secure the future of the Conservative party. If I may paraphrase John Fitzgerald Kennedy "ask not what you can do for your country—ask what your country can do for you."
  We have also seen a decline in the Government's probity. The Secretary of State for Health spends as much—for the second time—on propaganda to sell his health service reforms as he is prepared to spend on a drug abuse programme that was saved from the cancellation of the community care programme. What sort of a sense of priorities is that? The Government have repeatedly sold off public assets at knockdown prices, to the benefit of their friends—for "friends", of course, read "large contributors to Tory party funds".
  The fruits of growth have been steadily diverted into the pockets of the wealthy; but there has still been an overall increase in the tax burden. A two-child family on average

  351
  earnings is £300 a year worse off when against their income tax cuts are set the increases in national insurance contributions and value added tax. That is the other side of the coin. That is without the costs of a mortgage, the poll tax, electricity, gas, water and fares, and all the things that have made such a family between £11 and £34 a week worse off under this Government.
  What about the future? Well, we heard very little about that from the Chancellor. Over the lifetime of this Government, there has been no serious investment in the future, and none is planned now. In fact, further cuts are planned, for example in the training budget, the importance of which is universally acknowledged—universally, that is, except among the ranks of the Government.
  Unfortunately for the Government, the future stops at the next general election. The factors which interest the Government about the future involve the level of mortgage interest rates, the level of inflation and, to a lesser extent, the balance of payments. There has been much talk lately—we have heard a little tonight—about the inadequacies of our measurement of inflation through the retail prices index. Of course, we have heard that before; the right hon. Member for Blaby (Mr. Lawson) invented the new tax and prices index, only to discard it when it inconsiderately started to show higher levels than the retail prices index.
  Over recent months, as the RPI has slowly but inexorably risen, we have been told that what really matters is not the headline rate of inflation but the underlying rate once mortgage costs have been stripped out. We were told that that is a better approximation to the way in which the rest of the European Community measures inflation. Indeed, the hon. Member for Beaconsfield (Mr. Smith) repeated that today.
  As a matter of fact, that is not really true. Other members of the European Community include measures of housing costs in the way in which they measure inflation. A number of studies recently into how they measure inflation have revealed the differences between the way we do it and the way they do it. However, the sad fact is that it does not matter how we measure inflation: once any measure of housing costs is included, our inflation is still many points ahead of our competitors.
  The Government's measure of the underlying rate of inflation, which they have been talking about for so long, simply left out the cost of mortgages. Unfortunately, that figure is rising as well. Last month, it was 8·1 per cent., and that was the highest rate for eight years. Therefore, last month the Government redefined the underlying rates of inflation. This time they left out the poll tax cost as well as mortgage costs. That gave a figure of 6·9 per cent., but unfortunately that was still three points above the ERM average for inflation.
  Now we know what the Government mean when they say that they will bring inflation down no matter what it takes. They mean that they will do that no matter what they have to take out of the index to make inflation appear to come down. Inflation, like unemployment, can be as high as it likes. This is a resolute Government; we all remember their resolute approach. The Government had to change the unemployment statistics 30 times to get them
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  down to a reasonable level, and if they have to change the inflation statistics 30 times to get inflation down to a reasonable level, they will do so. They are not afraid.
  I can offer the Government a new index. They desperately need a new one, because they are not doing very well with the one they have. I suggest that they have an index which I call the NBG index—the "not by Government" index. That index would enable the Government to leave out what the Governor of the Bank of England has called the administered price rises, which he correctly identified as directly due to political decisions.
  The Government are already leaving out mortgage interest rates and the poll tax. If they adopt my index and deal with inflation as it is not influenced by the Government, they can leave out the cost of the electricity price increases which they forced through as a result of privatisation. They can also leave out gas price increases and the fare increases upon which they insisted. They can also leave out the rent increases which they insisted upon. They would then have a very low inflation figure.
  Why are the Government so anxious to get the figures down? Whatever they leave out of the index, people cannot leave those things out of the household bills which they must pay. We all know how good the Government are at selling their case. Although all this sounds good, any changes to the figures can have only a limited impact while people must still pay their bills.
  Of course, the figures matter for two reasons related to entry into the exchange rate mechanism and to the election. The first reason is that they are part of the Madrid conditions that inflation must be lower. When the Madrid conditions were set, inflation was at 8·3 per cent. and the underlying rate was 5·9 per cent. Far from getting nearer to the Madrid conditions, we are actually moving away from them. The gap between the ERM average level of inflation and our own is the widest that it has been for a decade.
  Secondly, the inflation figures are also important because of the Chancellor's definition that inflation in this country must be proximate to that of our ERM fellows for us to enter the mechanism. Whenever we have asked the Chancellor to define "proximate", he has said that it means what it says. I think that it was the Red Queen in Lewis Carroll's books who said that something meant whatever she wanted it to mean. That is an excellent definition of "proximate" as the Chancellor uses it.
  It is not the record, but the forecast for inflation, interest rates and the balance of payments that so worries the Government and makes them so eager to secure entry to the exchange rate mechanism sooner rather than later. We have heard much lately of the golden scenario, in which the rate of inflation, interest rates and the balance of payments deficit all come down. That was scheduled for the spring and summer of 1991. Unfortunately, the one-club golfing has been slow to take effect. Interest rates have been used as the mechanism since 1988, and the window in which the golden scenario is to occur has been receding steadily—from the summer of 1991 towards the autumn of 1991 and perhaps to the spring of 1992.
  Horror of horrors, that will never do. The Government need that window of six months when things are improving to manipulate things for the election so that they can convince the general public that things are looking good for longer than just the period of the election. It must all be carefuly timed. Entry into the ERM is necessary to bring the figures within the proper scope

  353
  before the Government can hold the election. Of course, the nature of the improvement in the figures is causing the Government so much concern.
  The universal prediction is that the improvement in inflation, in interest rates and in the balance of payments, will be temporary and that the improvement will last at the most six or perhaps nine months. As soon as the squeeze has been lifted, gradually and steadily things will deteriorate again.
  In essence, we are on a roller coaster. We are on the long steep slope and we are gradually approaching the top. We will then run at roughly the same level for a little while and then, as the excessive mortgage increases and the poll tax figures are taken out of the main figure, inflation will fall dramatically. However, having done that, it will start slowly but inexorably to rise once more.
  After the election, the people and the Government will face some harsh choices. I have a very interesting question for the Chief Secretary to the Treasury and it is one which people continually ask. The Government in power will face harsh choices. The Chancellor says that the Conservatives will be in power. What are the Conservatives planning? We have said that we believe in prudent control of spending. We have set out the need for investment and we have said what we think the needs are.
  What are the Government's plans? Are they still in favour of income tax cuts? If so, how much will they cut public expenditure to go with it? Where will the cuts fall? Will they fall on training, transport, education or health? We want to know what the Government are promising after the next election.
  That is the truth that the Government seek to hide from the electorate. The Government have mismanaged the economy. They know it, we know it and the country knows it.
  6.48 pm
  The Chief Secretary to the Treasury (Mr. Norman Lamont): The surprising thing is not that we are having this debate but that we did not have it some weeks ago. With some less than brilliant economic indicators, we might have thought that we would have a full-scale economic debate, not a half day just at the end of the Session. We would have thought that such a debate would be led by the alternative Prime Minister, the Leader of the Opposition, who does not seem to want to speak on the economy these days. That is not very surprising after his disastrous appearance on "Panorama", explaining the Labour party's tax policy.
  We have heard a certain amount from hon. Members and from the hon. Member for Derby, South (Mrs. Beckett) about competence. Of course, "competence" is not a word which comes naturally to mind when one thinks of the Labour party, either out of office or in office. Competence, for all his endearing features and fine qualities, is not the Leader of the Opposition's strongest suit. Was it competence when the Leader of the Opposition made his remarks about 14 out of 15 working taxpayers, and the shadow Chancellor had to rush out a statement correcting his leader? One could almost hear the right hon. and learned Member for Monklands, East (Mr. Smith) saying, as Hardy used to say to Laurel, "That's another fine mess you've gotten us into."
  We have heard much in recent debates and in Treasury questions about the Government's errors in forecasting.
  354
  Of course, forecasting always involves judgments about human behaviour. Will people borrow more? Will they save less? If they run down their savings, at what rate will that happen, and how quickly will it feed into consumer spending?
  I discovered that there is an infallible guide to the future. We would have done very well if we had got rid of our statisticians and the Treasury model. We should have relied on the predictions of the Labour party. What the Labour party says will happen is always a good guide to what will not happen. In fact, going right back to the early 1980s, Labour Members have an infallible record of forecasting. There is practically not a single year in which they have not got it precisely wrong. We would have done very well just to follow the opposite of their advice right from the early 1980s.
  In 1981, they sided with the 364 economists—recovery was just not going to happen; it was impossible. In May 1983, the shadow Chancellor said that inflation would go into double figures. A year later it was 5·1 per cent. In November 1984, the shadow Chancellor forecast a slump. In 1985, we grew faster than any other major European country. In October 1986, the hon. Member for Dunfermline, East (Mr. Brown) predicted that unemployment could not fall. Since then, unemployment has halved. At the time of the stock market crash, the Leader of the Opposition told us that we should cut interest rates further than we did. If we had followed that advice, inflation today would be far worse.
  I criticise the right hon. Gentleman not just for his judgment but for pretending on "Panorama" that that was not actually what he said. To call his words on "Panorama" incompetent is perhaps the politest thing that one can say about them.
  Opposition Members have put their case—we have had high interest rates, high inflation and a large current account deficit. As my hon. Friend the Member for York (Mr. Gregory) said, we should note the selectivity of the statistics and the indicators. Opposition Members do not tell us that we have had the fastest growth rate of any major EC country in the past decade. They do not tell us that we have had the fastest growth of total investment of any major country other than Japan. They do not tell us that we have had the highest level of profitability in British commerce since the 1960s. They do not tell us that our level of unemployment today is well below the EEC average. They do not tell us that this year we have had the lowest number of stoppages in industrial relations for 35 years.
  The right hon. Gentleman made a number of comparisons with Germany—one was misleading and one was incorrect. On the misleading one, the right hon. Gentleman told us that, this year, output growth would be less in this country than in Germany. That is true on a one-year basis, but it is not true if we look— [Interruption.] Opposition Members scoff. In six out of the past 10 years, German output growth was below ours. They did not tell us then, "You are doing very well compared with Germany." The right hon. Gentleman got it totally wrong. In the 1980s, output in the United Kingdom grew by 2·7 per cent. per annum compared with 2 per cent. per annum in Germany. The right hon. Gentleman did not get it right, and in another respect was misleading.
  Of course inflation is too high—far too high. After all, our present rate of inflation, which we hope is about to

  355
  peak, is about two thirds the average rate that was achieved under the previous Labour Government. Two thirds of the average rate under the previous Labour Government is far too high for us.
  We might take the Opposition's criticisms of the rate of inflation more seriously if they had acknowledged some of our success in getting down inflation over the past decade. Since 1983 the differential of inflation between this country and the EEC has actually narrowed. We do not hear a word from the Opposition about that. We might take them a bit more seriously on inflation if they had not actually elected as deputy leader of their party a man who had the grand title of Secretary of State for Prices and Consumer Protection when inflation rose to more than 26 per cent. They pretend to care about inflation, but their spending plans show that they are merely arsonists dressed up in firemen's uniforms.
  We might take Opposition Members more seriously if the Leader of the Opposition did not keep telling us that the way in which to deal with inflation is to increase spending and to cut interest rates. To do the right hon. Gentleman justice, when he says "cut interest rates", he does not mean some time in the future, he means now. Of course, to cut interest rates now would have a cosmetic effect on the retail prices index. But that would be at the cost of setting off another surge of borrowing. Just when inflation is coming under control, it would inflate house prices and set off consumer spending yet again. The position of the right hon. Gentleman and the Labour party on inflation is incredible. I find it incredible, but, as P. G. Wodehouse used to say, there are limits to every man's imagination.
  Despite the Leader of the Opposition's gaffes, the right hon. and learned Member for Monklands, East has been trying his best in the City to tell us that Labour has changed. He promises us prudent control over public spending, but for years he has been telling us and the nation that we should spend billions more on hospitals, schools, roads, training and education. For years he has been accusing us of being miserly with education and social spending. For years the Opposition have been encouraging public sector workers to seek the moon in pay settlements. For years they have been encouraging Labour councils to spend more, more and more. The truth was told us by the hon. Member for Bolsover (Mr. Skinner). We know that he does not represent only the beastly tendency in the Labour party. During Treasury questions, he shouted, "Just because we haven't got any money doesn't mean we won't spend it." He speaks more truthfully than Opposition Front-Bench Members.
  The Labour party has yet again relaunched its policy document. We have all been waiting to hear what the big idea is in that policy document. We now know what the big idea is. The big idea is our idea. Opposition Members are all in favour of the market. The Leader of the Opposition tells us that he favours market forces and competition and that he wants to take steps to make the market work. In the profile to the policy document, he said:
  "Helping to make the market work means creating the conditions for enterprises to be more successful, enabling them to take a greater market share at home."
  Ten years ago—was it the same man?—he said:
  356
  "The answer to the weakness, injustice and rottenness of capitalism is not more of the same. That is like trying to clean a wound with handfuls of filth."
  That is the language of the Leader of the Opposition. Can anybody really believe that anyone who said that about the market is really a convert to competition, open trade, free enterprise and the market system? We know that the right hon. Gentleman has changed his mind on the European Community and unilateral disarmament, but those words show what his convictions are and what he really thinks about the market system and free enterprise.
  Opposition Members are not convincing when they use phrases such as "the market". They do it because the intellectual case for, and the experience of, their political philosophy has collapsed throughout the world. They do not believe in it and we know it. They know themselves that they do not believe in it. The Labour party is an organised hypocrisy and we intend to expose it.
  Question put, That the original words stand part of the Question:—
  The House divided: Ayes 211, Noes 309.

  Division No. 311]

  [6.59 pm

  AYES

  Abbott, Ms Diane

  Davies, Rt Hon Denzil (Llanelli)

  Adams, Allen (Paisley N)

  Davies, Ron (Caerphilly)

  Allen, Graham

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

  Alton, David

  Dewar, Donald

  Anderson, Donald

  Dixon, Don

  Archer, Rt Hon Peter

  Dobson, Frank

  Armstrong, Hilary

  Doran, Frank

  Ashdown, Rt Hon Paddy

  Duffy, A. E. P.

  Ashley, Rt Hon Jack

  Dunnachie, Jimmy

  Ashton, Joe

  Dunwoody, Hon Mrs Gwyneth

  Barnes, Harry (Derbyshire NE)

  Eadie, Alexander

  Barnes, Mrs Rosie (Greenwich)

  Evans, John (St Helens N)

  Barron, Kevin

  Ewing, Harry (Falkirk E)

  Beckett, Margaret

  Ewing, Mrs Margaret (Moray)

  Beith, A. J.

  Fatchett, Derek

  Bell, Stuart

  Fearn, Ronald

  Benn, Rt Hon Tony

  Field, Frank (Birkenhead)

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

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

  Bermingham, Gerald

  Fisher, Mark

  Bidwell, Sydney

  Flannery, Martin

  Blair, Tony

  Flynn, Paul

  Blunkett, David

  Foot, Rt Hon Michael

  Boateng, Paul

  Foster, Derek

  Boyes, Roland

  Foulkes, George

  Bradley, Keith

  Fraser, John

  Bray, Dr Jeremy

  Fyfe, Maria

  Brown, Gordon (D'mline E)

  Galbraith, Sam

  Brown, Ron (Edinburgh Leith)

  Garrett, John (Norwich South)

  Bruce, Malcolm (Gordon)

  Garrett, Ted (Wallsend)

  Buckley, George J.

  George, Bruce

  Caborn, Richard

  Gilbert, Rt Hon Dr John

  Callaghan, Jim

  Godman, Dr Norman A.

  Campbell, Menzies (Fife NE)

  Golding, Mrs Llin

  Campbell, Ron (Blyth Valley)

  Gordon, Mildred

  Campbell-Savours, D. N.

  Gould, Bryan

  Cartwright, John

  Graham, Thomas

  Clark, Dr David (S Shields)

  Grocott, Bruce

  Clarke, Tom (Monklands W)

  Hardy, Peter

  Clelland, David

  Harman, Ms Harriet

  Clwyd, Mrs Ann

  Hattersley, Rt Hon Roy

  Cohen, Harry

  Haynes, Frank

  Coleman, Donald

  Heal, Mrs Sylvia

  Cook, Frank (Stockton N)

  Henderson, Doug

  Cook, Robin (Livingston)

  Hinchliffe, David

  Corbett, Robin

  Hoey, Ms Kate (Vauxhall)

  Cousins, Jim

  Hogg, N. (C'nauld & Kilsyth)

  Crowther, Stan

  Home Robertson, John

  Cryer, Bob

  Hood, Jimmy

  Cummings, John

  Howarth, George (Knowsley N)

  Cunliffe, Lawrence

  Howells, Dr. Kim (Pontypridd)

  Cunningham, Dr John

  Hoyle, Doug

  Darling, Alistair

  Hughes, John (Coventry NE)

  357

  Hughes, Robert (Aberdeen N)

  Powell, Ray (Ogmore)

  Hughes, Roy (Newport E)

  Prescott, John

  Hughes, Simon (Southwark)

  Primarolo, Dawn

  Illsley, Eric

  Radice, Giles

  Janner, Greville

  Randall, Stuart

  Jones, Barry (Alyn & Deeside)

  Redmond, Martin

  Jones, Martyn (Clwyd S W)

  Rees, Rt Hon Merlyn

  Kennedy, Charles

  Richardson, Jo

  Kinnock, Rt Hon Neil

  Robertson, George

  Kirkwood, Archy

  Robinson, Geoffrey

  Lambie, David

  Rogers, Allan

  Lamond, James

  Rooker, Jeff

  Leadbitter, Ted

  Ross, Ernie (Dundee W)

  Leighton, Ron

  Rowlands, Ted

  Lestor, Joan (Eccles)

  Ruddock, Joan

  Lewis, Terry

  Salmond, Alex

  Litherland, Robert

  Sedgemore, Brian

  Lloyd, Tony (Stretford)

  Sheerman, Barry

  Lofthouse, Geoffrey

  Sheldon, Rt Hon Robert

  Loyden, Eddie

  Shore, Rt Hon Peter

  McAllion, John

  Short, Clare

  McAvoy, Thomas

  Sillars, Jim

  McCartney, Ian

  Skinner, Dennis

  Macdonald, Calum A.

  Smith, Andrew (Oxford E)

  McKay, Allen (Barnsley West)

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

  McKelvey, William

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

  Maclennan, Robert

  Smith, J. P. (Vale of Glam)

  McNamara, Kevin

  Snape, Peter

  McWilliam, John

  Soley, Clive

  Madden, Max

  Spearing, Nigel

  Mahon, Mrs Alice

  Steel, Rt Hon Sir David

  Marek, Dr John

  Steinberg, Gerry

  Marshall, David (Shettleston)

  Stott, Roger

  Marshall, Jim (Leicester S)

  Straw, Jack

  Martin, Michael J. (Springburn)

  Taylor, Mrs Ann (Dewsbury)

  Martlew, Eric

  Turner, Dennis

  Meacher, Michael

  Vaz, Keith

  Meale, Alan

  Walley, Joan

  Michael, Alun

  Wardell, Gareth (Gower)

  Michie, Bill (Sheffield Heeley)

  Wareing, Robert N.

  Michie, Mrs Ray (Arg'l & Bute)

  Watson, Mike (Glasgow, C)

  Mitchell, Austin (G't Grimsby)

  Welsh, Andrew (Angus E)

  Moonie, Dr Lewis

  Welsh, Michael (Doncaster N)

  Morgan, Rhodri

  Williams, Rt Hon Alan

  Morley, Elliot

  Williams, Alan W. (Carm'then)

  Morris, Rt Hon A. (W'shawe)

  Wilson, Brian

  Mowlam, Marjorie

  Winnick, David

  Murphy, Paul

  Wise, Mrs Audrey

  Nellist, Dave

  Worthington, Tony

  Oakes, Rt Hon Gordon

  Wray, Jimmy

  O'Brien, William

  Young, David (Bolton SE)

  Orme, Rt Hon Stanley

  Parry, Robert

  Tellers for the Ayes:

  Patchett, Terry

  Mr. Ken Eastham and

  Pendry, Tom

  Mr. John Battle.

  Pike, Peter L.

  NOES

  Alexander, Richard

  Biffen, Rt Hon John

  Alison, Rt Hon Michael

  Blackburn, Dr John G.

  Amery, Rt Hon Julian

  Blaker, Rt Hon Sir Peter

  Amess, David

  Body, Sir Richard

  Amos, Alan

  Bonsor, Sir Nicholas

  Arbuthnot, James

  Boscawen, Hon Robert

  Arnold, Jacques (Gravesham)

  Boswell, Tim

  Ashby, David

  Bottomley, Peter

  Aspinwall, Jack

  Bottomley, Mrs Virginia

  Atkins, Robert

  Bowden, A (Brighton K'pto'n)

  Atkinson, David

  Bowden, Gerald (Dulwich)

  Baker, Rt Hon K. (Mole Valley)

  Boyson, Rt Hon Dr Sir Rhodes

  Baker, Nicholas (Dorset N)

  Braine, Rt Hon Sir Bernard

  Baldry, Tony

  Brandon-Bravo, Martin

  Banks, Robert (Harrogate)

  Brazier, Julian

  Batiste, Spencer

  Bright, Graham

  Beaumont-Dark, Anthony

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

  Bellingham, Henry

  Browne, John (Winchester)

  Bendall, Vivian

  Bruce, Ian (Dorset South)

  Bennett, Nicholas (Pembroke)

  Buchanan-Smith, Rt Hon Alick

  Benyon, W.

  Buck, Sir Antony

  Bevan, David Gilroy

  Budgen, Nicholas

  358

  Burns, Simon

  Hannam, John

  Burt, Alistair

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

  Butler, Chris

  Hargreaves, Ken (Hyndburn)

  Butterfill, John

  Harris, David

  Carlisle, John, (Luton N)

  Haselhurst, Alan

  Carlisle, Kenneth (Lincoln)

  Hayes, Jerry

  Carrington, Matthew

  Hayhoe, Rt Hon Sir Barney

  Carttiss, Michael

  Hayward, Robert

  Cash, William

  Hicks, Robert (Cornwall SE)

  Chalker, Rt Hon Mrs Lynda

  Higgins, Rt Hon Terence L.

  Channon, Rt Hon Paul

  Hill, James

  Chapman, Sydney

  Hind, Kenneth

  Chope, Christopher

  Holt, Richard

  Churchill, Mr

  Hordern, Sir Peter

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

  Howard, Rt Hon Michael

  Clark, Dr Michael (Rochford)

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

  Clark, Sir W. (Croydon S)

  Howarth, G. (Cannock & B'wd)

  Clarke, Rt Hon K. (Rushcliffe)

  Howe, Rt Hon Sir Geoffrey

  Colvin, Michael

  Howell, Rt Hon David (G'dford)

  Conway, Derek

  Howell, Ralph (North Norfolk)

  Coombs, Anthony (Wyre F'rest)

  Hughes, Robert G. (Harrow W)

  Coombs, Simon (Swindon)

  Hunt, Sir John (Ravensbourne)

  Cormack, Patrick

  Hunter, Andrew

  Couchman, James

  Irvine, Michael

  Cran, James

  Irving, Sir Charles

  Critchley, Julian

  Jack, Michael

  Currie, Mrs Edwina

  Janman, Tim

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

  Jessel, Toby

  Davis, David (Boothferry)

  Johnson Smith, Sir Geoffrey

  Day, Stephen

  Jones, Gwilym (Cardiff N)

  Devlin, Tim

  Jones, Robert B (Herts W)

  Dicks, Terry

  Jopling, Rt Hon Michael

  Dorrell, Stephen

  Kellett-Bowman, Dame Elaine

  Douglas-Hamilton, Lord James

  Key, Robert

  Dover, Den

  Kilfedder, James

  Dunn, Bob

  King, Roger (B'ham N'thfield)

  Durant, Tony

  King, Rt Hon Tom (Bridgwater)

  Dykes, Hugh

  Kirkhope, Timothy

  Eggar, Tim

  Knapman, Roger

  Emery, Sir Peter

  Knight, Greg (Derby North)

  Evans, David (Welwyn Hatf'd)

  Knight, Dame Jill (Edgbaston)

  Evennett, David

  Knowles, Michael

  Fairbairn, Sir Nicholas

  Knox, David

  Fallon, Michael

  Lamont, Rt Hon Norman

  Favell, Tony

  Lang, Ian

  Fenner, Dame Peggy

  Lawrence, Ivan

  Field, Barry (Isle of Wight)

  Lee, John (Pendle)

  Finsberg, Sir Geoffrey

  Leigh, Edward (Gainsbor'gh)

  Fishburn, John Dudley

  Lennox-Boyd, Hon Mark

  Fookes, Dame Janet

  Lester, Jim (Broxtowe)

  Forman, Nigel

  Lilley, Peter

  Forsyth, Michael (Stirling)

  Lloyd, Sir Ian (Havant)

  Forth, Eric

  Lloyd, Peter (Fareham)

  Fox, Sir Marcus

  Lord, Michael

  Franks, Cecil

  Luce, Rt Hon Richard

  Freeman, Roger

  McCrindle, Robert

  French, Douglas

  Macfarlane, Sir Neil

  Gale, Roger

  MacKay, Andrew (E Berkshire)

  Gardiner, George

  Maclean, David

  Gill, Christopher

  McLoughlin, Patrick

  Gilmour, Rt Hon Sir Ian

  McNair-Wilson, Sir Michael

  Glyn, Dr Sir Alan

  McNair-Wilson, Sir Patrick

  Goodhart, Sir Philip

  Madel, David

  Goodlad, Alastair

  Major, Rt Hon John

  Goodson-Wickes, Dr Charles

  Malins, Humfrey

  Gorman, Mrs Teresa

  Maples, John

  Gorst, John

  Marland, Paul

  Gow, Ian

  Marlow, Tony

  Grant, Sir Anthony (CambsSW)

  Marshall, John (Hendon S)

  Greenway, Harry (Ealing N)

  Marshall, Sir Michael (Arundel)

  Greenway, John (Ryedale)

  Martin, David (Portsmouth S)

  Gregory, Conal

  Maxwell-Hyslop, Robin

  Griffiths, Sir Eldon (Bury St E')

  Mayhew, Rt Hon Sir Patrick

  Griffiths, Peter (Portsmouth N)

  Meyer, Sir Anthony

  Grist, Ian

  Miller, Sir Hal

  Ground, Patrick

  Mills, Iain

  Grylls, Michael

  Miscampbell, Norman

  Hague, William

  Mitchell, Andrew (Gedling)

  Hamilton, Neil (Tatton)

  Mitchell, Sir David

  Hampson, Dr Keith

  Moate, Roger

  359

  Monro, Sir Hector

  Soames, Hon Nicholas

  Montgomery, Sir Fergus

  Speller, Tony

  Morris, M (N'hampton S)

  Spicer, Sir Jim (Dorset W)

  Morrison, Sir Charles

  Spicer, Michael (S Worcs)

  Morrison, Rt Hon P (Chester)

  Squire, Robin

  Moss, Malcolm

  Stanbrook, Ivor

  Moynihan, Hon Colin

  Stanley, Rt Hon Sir John

  Mudd, David

  Steen, Anthony

  Neale, Gerrard

  Stern, Michael

  Nelson, Anthony

  Stevens, Lewis

  Neubert, Michael

  Stewart, Allan (Eastwood)

  Newton, Rt Hon Tony

  Stewart, Andy (Sherwood)

  Nicholls, Patrick

  Stewart, Rt Hon Ian (Herts N)

  Nicholson, David (Taunton)

  Stradling Thomas, Sir John

  Nicholson, Emma (Devon West)

  Sumberg, David

  Norris, Steve

  Summerson, Hugo

  Onslow, Rt Hon Cranley

  Tapsell, Sir Peter

  Oppenheim, Phillip

  Taylor, Ian (Esher)

  Page, Richard

  Taylor, John M (Solihull)

  Paice, James

  Tebbit, Rt Hon Norman

  Patnick, Irvine

  Temple-Morris, Peter

  Pattie, Rt Hon Sir Geoffrey

  Thompson, D. (Calder Valley)

  Pawsey, James

  Thompson, Patrick (Norwich N)

  Porter, Barry (Wirral S)

  Thorne, Neil

  Porter, David (Waveney)

  Townend, John (Bridlington)

  Portillo, Michael

  Townsend, Cyril D. (B'heath)

  Powell, William (Corby)

  Tracey, Richard

  Price, Sir David

  Tredinnick, David

  Raffan, Keith

  Trippier, David

  Raison, Rt Hon Timothy

  Twinn, Dr Ian

  Redwood, John

  Viggers, Peter

  Renton, Rt Hon Tim

  Waddington, Rt Hon David

  Rhodes James, Robert

  Wakeham, Rt Hon John

  Riddick, Graham

  Waldegrave, Rt Hon William

  Ridsdale, Sir Julian

  Walden, George

  Rifkind, Rt Hon Malcolm

  Walker, Bill (T'side North)

  Roberts, Sir Wyn (Conwy)

  Waller, Gary

  Roe, Mrs Marion

  Ward, John

  Rossi, Sir Hugh

  Wardle, Charles (Bexhill)

  Rost, Peter

  Watts, John

  Rowe, Andrew

  Wells, Bowen

  Rumbold, Mrs Angela

  Wheeler, Sir John

  Ryder, Richard

  Widdecombe, Ann

  Sackville, Hon Tom

  Wilshire, David

  Sainsbury, Hon Tim

  Winterton, Mrs Ann

  Sayeed, Jonathan

  Winterton, Nicholas

  Scott, Rt Hon Nicholas

  Wolfson, Mark

  Shaw, David (Dover)

  Wood, Timothy

  Shaw, Sir Michael (Scarb')

  Woodcock, Dr. Mike

  Shelton, Sir William

  Yeo, Tim

  Shephard, Mrs G. (Norfolk SW)

  Shepherd, Richard (Aldridge)

  Tellers for the Noes:

  Shersby, Michael

  Sir George Young and

  Sims, Roger

  Mr. David Lightbown.

  Smith, Tim (Beaconsfield)

  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 300, Noes 191.

  Divison No. 312]

  [7.18 pm

  AYES

  Alexander, Richard

  Batiste, Spencer

  Alison, Rt Hon Michael

  Beaumont-Dark, Anthony

  Amery, Rt Hon Julian

  Bellingham, Henry

  Amess, David

  Bendall, Vivian

  Amos, Alan

  Bennett, Nicholas (Pembroke)

  Arbuthnot, James

  Benyon, W.

  Arnold, Jacques (Gravesham)

  Biffen, Rt Hon John

  Ashby, David

  Blackburn, Dr John G.

  Aspinwall, Jack

  Blaker, Rt Hon Sir Peter

  Atkins, Robert

  Body, Sir Richard

  Atkinson, David

  Bonsor, Sir Nicholas

  Baker, Rt Hon K. (Mole Valley)

  Boscawen, Hon Robert

  Baker, Nicholas (Dorset N)

  Boswell, Tim

  Baldry, Tony

  Bowden, A (Brighton K'pto'n)

  Banks, Robert (Harrogate)

  Bowden, Gerald (Dulwich)

  360

  Boyson, Rt Hon Dr Sir Rhodes

  Gregory, Conal

  Braine, Rt Hon Sir Bernard

  Griffiths, Sir Eldon (Bury St E')

  Brandon-Bravo, Martin

  Griffiths, Peter (Portsmouth N)

  Brazier, Julian

  Grist, Ian

  Bright, Graham

  Ground, Patrick

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

  Grylls, Michael

  Browne, John (Winchester)

  Hague, William

  Bruce, Ian (Dorset South)

  Hamilton, Neil (Tatton)

  Buchanan-Smith, Rt Hon Alick

  Hampson, Dr Keith

  Buck, Sir Antony

  Hannam, John

  Budgen, Nicholas

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

  Burns, Simon

  Hargreaves, Ken (Hyndburn)

  Burt, Alistair

  Harris, David

  Butler, Chris

  Haselhurst, Alan

  Butterfill, John

  Hayes, Jerry

  Carlisle, John, (Luton N)

  Hayhoe, Rt Hon Sir Barney

  Carlisle, Kenneth (Lincoln)

  Hayward, Robert

  Carrington, Matthew

  Hicks, Robert (Cornwall SE)

  Carttiss, Michael

  Higgins, Rt Hon Terence L.

  Cash, William

  Hill, James

  Chalker, Rt Hon Mrs Lynda

  Hind, Kenneth

  Channon, Rt Hon Paul

  Holt, Richard

  Chapman, Sydney

  Hordern, Sir Peter

  Chope, Christopher

  Howard, Rt Hon Michael

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

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

  Clark, Dr Michael (Rochford)

  Howarth, G. (Cannock & B'wd)

  Clark, Sir W. (Croydon S)

  Howe, Rt Hon Sir Geoffrey

  Clarke, Rt Hon K. (Rushcliffe)

  Howell, Rt Hon David (G'dford)

  Colvin, Michael

  Howell, Ralph (North Norfolk)

  Conway, Derek

  Hughes, Robert G. (Harrow W)

  Coombs, Anthony (Wyre F'rest)

  Hunt, Sir John (Ravensbourne)

  Coombs, Simon (Swindon)

  Hunter, Andrew

  Cormack, Patrick

  Irvine, Michael

  Couchman, James

  Irving, Sir Charles

  Cran, James

  Jack, Michael

  Critchley, Julian

  Janman, Tim

  Currie, Mrs Edwina

  Jessel, Toby

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

  Johnson Smith, Sir Geoffrey

  Davis, David (Boothferry)

  Jones, Gwilym (Cardiff N)

  Day, Stephen

  Jones, Robert B (Herts W)

  Devlin, Tim

  Jopling, Rt Hon Michael

  Dicks, Terry

  Key, Robert

  Dorrell, Stephen

  Kilfedder, James

  Douglas-Hamilton, Lord James

  King, Roger (B'ham N'thfield)

  Dover, Den

  King, Rt Hon Tom (Bridgwater)

  Dunn, Bob

  Kirkhope, Timothy

  Durant, Tony

  Knapman, Roger

  Dykes, Hugh

  Knight, Greg (Derby North)

  Eggar, Tim

  Knight, Dame Jill (Edgbaston)

  Emery, Sir Peter

  Knowles, Michael

  Evans, David (Welwyn Hatf'd)

  Knox, David

  Evennett, David

  Lament, Rt Hon Norman

  Fairbairn, Sir Nicholas

  Lang, Ian

  Fallen, Michael

  Lawrence, Ivan

  Favell, Tony

  Lee, John (Pendle)

  Fenner, Dame Peggy

  Leigh, Edward (Gainsbor'gh)

  Field, Barry (Isle of Wight)

  Lennox-Boyd, Hon Mark

  Finsberg, Sir Geoffrey

  Lester, Jim (Broxtowe)

  Fishburn, John Dudley

  Lilley, Peter

  Fookes, Dame Janet

  Lloyd, Peter (Fareham)

  Forman, Nigel

  Lord, Michael

  Forsyth, Michael (Stirling)

  Luce, Rt Hon Richard

  Forth, Eric

  McCrindle, Sir Robert

  Fox, Sir Marcus

  Macfarlane, Sir Neil

  Freeman, Roger

  MacKay, Andrew (E Berkshire)

  French, Douglas

  Maclean, David

  Gale, Roger

  McLoughlin, Patrick

  Gardiner, George

  McNair-Wilson, Sir Michael

  Gill, Christopher

  McNair-Wilson, Sir Patrick

  Gilmour, Rt Hon Sir Ian

  Madel, David

  Glyn, Dr Sir Alan

  Major, Rt Hon John

  Goodhart, Sir Philip

  Malins, Humfrey

  Goodlad, Alastair

  Mans, Keith

  Goodson-Wickes, Dr Charles

  Maples, John

  Gorman, Mrs Teresa

  Marland, Paul

  Gorst, John

  Marlow, Tony

  Gow, Ian

  Marshall, John (Hendon S)

  Grant, Sir Anthony (CambsSW)

  Martin, David (Portsmouth S)

  Greenway, Harry (Eating N)

  Mayhew, Rt Hon Sir Patrick

  Greenway, John (Ryedale)

  Meyer, Sir Anthony

  361

  Miller, Sir Hal

  Sims, Roger

  Mills, Iain

  Smith, Tim (Beaconsfield)

  Miscampbell, Norman

  Soames, Hon Nicholas

  Mitchell, Andrew (Gedling)

  Speller, Tony

  Mitchell, Sir David

  Spicer, Sir James (Dorset W)

  Moate, Roger

  Spicer, Michael (S Worcs)

  Monro, Sir Hector

  Squire, Robin

  Montgomery, Sir Fergus

  Stanbrook, Ivor

  Morris, M (N'hampton S)

  Stanley, Rt Hon Sir John

  Morrison, Sir Charles

  Steen, Anthony

  Morrison, Rt Hon P (Chester)

  Stern, Michael

  Moss, Malcolm

  Stevens, Lewis

  Moynihan, Hon Colin

  Stewart, Allan (Eastwood)

  Neale, Gerrard

  Stewart, Andy (Sherwood)

  Nelson, Anthony

  Stewart, Rt Hon Ian (Herts N)

  Neubert, Michael

  Stradling Thomas, Sir John

  Newton, Rt Hon Tony

  Sumberg, David

  Nicholls, Patrick

  Summerson, Hugo

  Nicholson, David (Taunton)

  Tapsell, Sir Peter

  Nicholson, Emma (Devon West)

  Taylor, Ian (Esher)

  Norris, Steve

  Taylor, John M (Solihull)

  Onslow, Rt Hon Cranley

  Tebbit, Rt Hon Norman

  Oppenheim, Phillip

  Temple-Morris, Peter

  Page, Richard

  Thompson, D. (Calder Valley)

  Paice, James

  Thompson, Patrick (Norwich N)

  Patnick, Irvine

  Thorne, Neil

  Pattie, Rt Hon Sir Geoffrey

  Thurnham, Peter

  Pawsey, James

  Townend, John (Bridlington)

  Porter, Barry (Wirral S)

  Townsend, Cyril D. (B'heath)

  Porter, David (Waveney)

  Tracey, Richard

  Portillo, Michael

  Tredinnick, David

  Powell, William (Corby)

  Trippier, David

  Price, Sir David

  Twinn, Dr Ian

  Raffan, Keith

  Viggers, Peter

  Raison, Rt Hon Timothy

  Waddington, Rt Hon David

  Redwood, John

  Wakeham, Rt Hon John

  Renton, Rt Hon Tim

  Waldegrave, Rt Hon William

  Rhodes James, Robert

  Walden, George

  Riddick, Graham

  Walker, Bill (T'side North)

  Ridsdale, Sir Julian

  Waller, Gary

  Rifkind, Rt Hon Malcolm

  Ward, John

  Roberts, Sir Wyn (Conwy)

  Wardle, Charles (Bexhill)

  Rossi, Sir Hugh

  Watts, John

  Rost, Peter

  Wells, Bowen

  Rowe, Andrew

  Wheeler, Sir John

  Rumbold, Mrs Angela

  Widdecombe, Ann

  Ryder, Richard

  Wilshire, David

  Sackville, Hon Tom

  Winterton, Mrs Ann

  Sainsbury, Hon Tim

  Winterton, Nicholas

  Sayeed, Jonathan

  Wolfson, Mark

  Scott, Rt Hon Nicholas

  Wood, Timothy

  Shaw, David (Dover)

  Woodcock, Dr. Mike

  Shaw, Sir Michael (Scarb')

  Yeo, Tim

  Shelton, Sir William

  Shephard, Mrs G. (Norfolk SW)

  Tellers for the Ayes:

  Shepherd, Richard (Aldridge)

  Sir George Young and

  Shersby, Michael

  Mr. David Lightbown.

  NOES

  Allen, Graham

  Buckley, George J.

  Anderson, Donald

  Caborn, Richard

  Armstrong, Hilary

  Callaghan, Jim

  Ashdown, Rt Hon Paddy

  Campbell, Menzies (Fife NE)

  Barnes, Harry (Derbyshire NE)

  Campbell, Ron (Blyth Valley)

  Barnes, Mrs Rosie (Greenwich)

  Campbell-Savours, D. N.

  Barron, Kevin

  Clark, Dr David (S Shields)

  Beckett, Margaret

  Clarke, Tom (Monklands W)

  Beith, A. J.

  Clelland, David

  Bell, Stuart

  Clwyd, Mrs Ann

  Benn, Rt Hon Tony

  Cohen, Harry

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

  Coleman, Donald

  Bermingham, Gerald

  Cook, Frank (Stockton N)

  Bidwell, Sydney

  Cook, Robin (Livingston)

  Blair, Tony

  Corbett, Robin

  Blunkett, David

  Crowther, Stan

  Boateng, Paul

  Cryer, Bob

  Boyes, Roland

  Cummings, John

  Bradley, Keith

  Cunliffe, Lawrence

  Bray, Dr Jeremy

  Cunningham, Dr John

  Brown, Ron (Edinburgh Leith)

  Darling, Alistair

  362

  Davies, Rt Hon Denzil (Llanelli)

  Marshall, David (Shettleston)

  Davies, Ron (Caerphilly)

  Marshall, Jim (Leicester S)

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

  Martin, Michael J. (Springburn)

  Dewar, Donald

  Martlew, Eric

  Dixon, Don

  Meacher, Michael

  Dobson, Frank

  Meale, Alan

  Doran, Frank

  Michael, Alun

  Duffy, A. E. P.

  Michie, Bill (Sheffield Heeley)

  Dunnachie, Jimmy

  Michie, Mrs Ray (Arg'l & Bute)

  Eadie, Alexander

  Mitchell, Austin (G't Grimsby)

  Evans, John (St Helens N)

  Morgan, Rhodri

  Ewing, Harry (Falkirk E)

  Morley, Elliot

  Ewing, Mrs Margaret (Moray)

  Morris, Rt Hon A. (W'shawe)

  Fatchett, Derek

  Mowlam, Marjorie

  Fearn, Ronald

  Murphy, Paul

  Field, Frank (Birkenhead)

  Nellist, Dave

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

  Oakes, Rt Hon Gordon

  Fisher, Mark

  O'Brien, William

  Flannery, Martin

  Orme, Rt Hon Stanley

  Foot, Rt Hon Michael

  Parry, Robert

  Foster, Derek

  Patchett, Terry

  Foulkes, George

  Pendry, Tom

  Fraser, John

  Pike, Peter L.

  Fyfe, Maria

  Powell, Ray (Ogmore)

  Galbraith, Sam

  Prescott, John

  Garrett, John (Norwich South)

  Primarolo, Dawn

  Garrett, Ted (Wallsend)

  Radice, Giles

  George, Bruce

  Randall, Stuart

  Godman, Dr Norman A.

  Redmond, Martin

  Golding, Mrs Llin

  Rees, Rt Hon Merlyn

  Gordon, Mildred

  Richardson, Jo

  Gould, Bryan

  Robertson, George

  Graham, Thomas

  Robinson, Geoffrey

  Grocott, Bruce

  Rogers, Allan

  Hardy, Peter

  Rooker, Jeff

  Hattersley, Rt Hon Roy

  Ross, Ernie (Dundee W)

  Haynes, Frank

  Rowlands, Ted

  Heal, Mrs Sylvia

  Ruddock, Joan

  Henderson, Doug

  Salmond, Alex

  Hinchliffe, David

  Sedgemore, Brian

  Hoey, Ms Kate (Vauxhall)

  Sheerman, Barry

  Hogg, N. (C'nauld & Kilsyth)

  Sheldon, Rt Hon Robert

  Home Robertson, John

  Shore, Rt Hon Peter

  Hood, Jimmy

  Short, Clare

  Howarth, George (Knowsley N)

  Sillars, Jim

  Howells, Dr. Kim (Pontypridd)

  Skinner, Dennis

  Hoyle, Doug

  Smith, Andrew (Oxford E)

  Hughes, John (Coventry NE)

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

  Hughes, Robert (Aberdeen N)

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

  Hughes, Roy (Newport E)

  Smith, J. P. (Vale of Glam)

  Hughes, Simon (Southwark)

  Snape, Peter

  Illsley, Eric

  Spearing, Nigel

  Janner, Greville

  Steel, Rt Hon Sir David

  Jones, Barry (Alyn & Deeside)

  Steinberg, Gerry

  Jones, Martyn (Clwyd S W)

  Stott, Roger

  Kennedy, Charles

  Straw, Jack

  Kinnock, Rt Hon Neil

  Taylor, Mrs Ann (Dewsbury)

  Kirkwood, Archy

  Turner, Dennis

  Lambie, David

  Vaz, Keith

  Lamond, James

  Walley, Joan

  Leadbitter, Ted

  Wardell, Gareth (Gower)

  Leighton, Ron

  Wareing, Robert N.

  Lewis, Terry

  Watson, Mike (Glasgow, C)

  Litherland, Robert

  Welsh, Andrew (Angus E)

  Lloyd, Tony (Stretford)

  Welsh, Michael (Doncaster N)

  Lofthouse, Geoffrey

  Williams, Rt Hon Alan

  Loyden, Eddie

  Williams, Alan W. (Carm'then)

  McAllion, John

  Winnick, David

  McAvoy, Thomas

  Wise, Mrs Audrey

  McCartney, Ian

  Worthington, Tony

  McKay, Allen (Barnsley West)

  Wray, Jimmy

  McKelvey, William

  Young, David (Bolton SE)

  McNamara, Kevin

  McWilliam, John

  Tellers for the Noes:

  Madden, Max

  Mr. Ken Eastham and

  Mahon, Mrs Alice

  Mr. John Battle.

  Marek, Dr John

  Question accordingly agreed to.
  MR. SPEAKER forthwith declared the main Question, as amended, to be agreed to.
  Resolved,
  That this House congratulates Her Majesty's Government on the improvement in economic performance over the last 10 years, with the United Kingdom's growth of output, manufacturing productivity, employment and investment since 1980 exceeding that of almost any other major European Community country; and endorses the priority the Government attaches to reducing inflation, in order to safeguard and build on these achievements.
  7.31 pm
  Rev. Martin Smyth: On a point of order, Mr. Speaker. Your attention will not yet have been drawn to the tragedy in South Armagh this afternoon when three members of the Royal Ulster Constabulary, serving the community, and a Sister of Mercy were done to death in a bomb explosion allegedly caused by the IRA. I believe that the House will join me in paying tribute and extending sympathy to the families bereaved and at the same time suggesting that investigative journalists might do a better job for the community if they exposed the perpetrators of such crimes instead of disguising them.
  Mr. James Kilfedder: Further to that point of order, Mr. Speaker. I extend my sympathy and that of the people whom I represent to the relatives of the three police officers and the nun who were brutally murdered this afternoon. The one message from this House and from Northern Ireland is clear—that decent people everywhere, regardless of religion, condemn those murderers.
  The Chancellor of the Exchequer (Mr. John Major): Further to that point of order, Mr. Speaker. I was not aware, until the hon. Member for Belfast, South (Rev. Martin Smyth) spoke, of the events of this afternoon, and I should like to say, on behalf of the Government, how much we regret the senseless and apparently ceaseless murders, and to offer our warmest sympathy to the bereaved and their families.
  Mr. Stanley Orme: Further to that point of order, Mr. Speaker. I was in Dublin this afternoon talking to members of the Dail and I know that they will join this House in condemning what has taken place. It is outrageous and must be opposed.
  Mr. Simon Hughes: Further to that point of order, Mr. Speaker. My right hon. Friend the Member for Yeovil (Mr. Ashdown), who not only speaks for the party but is our spokesman on Northern Ireland, had to leave early and he asked me to associate him and our party with the sympathies of hon. Members from Northern Ireland.
  Mr. Speaker: I am sure that what has been said will be felt by hon. Members on both sides of the House, and thank the hon. Member for Belfast, South (Rev. Martin Smyth) for having raised the point of order with me.

  London Underground Bill (By Order)
  [Relevant document; Third Report of the Select Committee on House of Commons (Services) of Session 1989–90, New Parliamentary Building (Phase 2) and the Jubilee Line Proposals (HC334).]
  Order read for resuming adjourned debate on Question proposed [12 July], That the Bill be now read a Second time.
  Question again proposed.
  Madam Deputy Speaker (Miss Betty Boothroyd): I remind the House that Mr. Speaker has already selected the instruction standing in the name of the right hon. Member for Bethnal Green and Stepney (Mr. Shore). He has now selected the instruction standing in the name of the hon. Member for Ogmore (Mr. Powell). Mr. Simon Hughes had the Floor.
  7.34 pm
  Mr. Simon Hughes: In the last sentence recorded in Hansard in the debate on 12 July I say that other hon. Members wish to speak. I understand that, with the passage of time, that is still the case, so as I have told the Minister, I shall be brief and conclude my remarks and allow other hon. Members to do just that.
  It is 12 days since we last debated this matter and that is a long time in politics. Some people who were here yesterday are gone today. I am happy that the Minister for Public Transport remains the same as yesterday. I do not know about for ever. I am sure that he would not wish that himself. But I am glad to see that our proceedings have not been further disrupted by any change on the Front Bench in this debate and higher up in the same Department.
  I have not had a chance to check the precedents, but it struck me as amazing that the Bill came back so quickly. Private Bills sometimes take a long time to return. I just observe—it may be an appropriate metaphor for the debate—that there can be wheels within wheels when matters are thought important enough.
  Two points were made in our debate 12 days ago. The first, made by hon. Members on both sides of the House, was about the effect of the Jubilee line on and around Westminster. The second, made particularly by Members from docklands and detailed in the instruction in the name of the hon. Member for Newham, South (Mr. Spearing) and other dockland Members which was selected, was about the effect that the Jubilee line would have south of the river and in docklands.
  For many of us, and I think for the majority of people, the second is the more important issue. Without in any way wanting to interfere with or alter the effect of the contributions made so far and to be made by many hon. Members about the effect on Westminster, when the history of the proposal comes to be written we will see that the great issue was whether the Jubilee line should be extended to become a community line or a developers' line. I think that the Minister and others agree with that.
  Since our previous debate, in the light of publicity and reports of the debate, I have received some unsolicited correspondence, as, I understand, has the Minister. I shall quote one or two letters to confirm that it is not just those of us with a vested interest—although being an elected

  365
  representative of the people is a pretty justifiable vested interest—who would argue for stations for local communities.
  I received a copy of the letter sent by the Jubilee and Bakerloo Line Users' Committee to the Secretary of State for Transport, a copy of which has also been received by the hon. Member for Ilford, South (Mr. Thorne) and others, about the Southwark and Bermondsey stations. It says:
  "On the matter of the proposed stations at Southwark and Bermondsey, we do most strongly represent that they be retained in the Bill. Though inclusion of Waterloo and London Bridge was the largest single factor in influencing us some seventeen months ago to propose the Westminster route (as against the Aldwych version—then the only one on offer), the second highest consideration was that it would serve areas of London that greatly warranted an Underground service. Inner Cities revival greatly relies on such provision. Our Line would be opened up to entirely fresh usage and thus make its contribution to the relief of congestion in London."
  The committee also wrote to me separately to say:
  "We very much support retention of Southwark and Bermondsey stations in the extension plans (as well as Canada Water)."
  I also received a letter from the British Property Federation headed "Transport Infrastructure" and dated 13 July. Its director general, Sir Peregrine Rhodes, said:
  "I note that you are campaigning to oppose any decision to omit stations at Southwark and Bermondsey on the proposed Jubilee Line extension. The British Property Federation has for some time been urging on the Government the need for immediate and decisive action to cope with the problems of transport infrastructure both in London and throughout the country. I thought that you would like a copy of the enclosed press release which we have just issued following a meeting of those associated with our initiative. You will see that there is specific reference to the point about Bermondsey and Southwark".
  I also have a press release dated 13 July, which I shall not cite in its entirety. This is from a federation representatives' meeting on 11 July, attended also by the City of London corporation, Westminster city council, the Confederation of British Industry, the Royal Institution of Chartered Surveyors, the Chartered Institute of Transport, the Westminster Property Owners Association and the Associated Owners of City Properties. It ends:
  "They were also concerned about reports that the Government are for short team reasons to abandon plans for the Bermondsey and Southwark stations on the proposed Jubilee Line extension. These stations would make a valuable contribution to the urgently needed urban regeneration in these deprived areas.
  Delay in coping with London's problems will create an image of London as outdated and failing to grasp the need to modernise existing systems."
  The letter continues in similar vein. The British Property Federation, as well as the users, came out clearly in favour of the two stations—about which there was some doubt—after our previous debate.
  One letter reflects that there was even internal lobbying among those professionally concerned. It would be improper for me to reveal the source, although I am happy to show the Minister the letter later. I had a letter from somebody who is involved in the process of getting the Bill round the circuit here who said that behind-the-scenes lobbying has been going on because people recognise the importance of the issue.
  have a copy of a more personal letter sent to the Secretary of State for Transport. Copies were sent to me and also to the hon. Member for Dagenham (Mr. Gould), who is a constituent of mine and who lives within walking distance of where Bermondsey station would be if it were
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  built. The letter is from a woman constituent who lives in Wrayburn House, which is a Southwark council block near the river in the middle of Bermondsey. She says:
  "Dear Mr. Parkinson,

  London Underground Bill (By Order)

    JUBILEE LINE EXTENSION
    I read with dismay the article published in the Times newspaper on Tuesday, 10 July 1990 revealing that the proposal to build two stations on the Jubilee Line extension at Southwark and Bermondsey may be dropped.
    As a daily commuter I regularly struggle the two miles from my home in Bermondsey to my place of work near St. Paul's. This journey, which usually involves the use of two buses, can take anything from forty minutes to an hour and a quarter—I can walk it in thirty-five minutes. You might ask why I then do not walk daily. This is because the route passes various men's hostels and poorly lit railway arches—mugging territory. A direct link by tube would put women's minds at ease.
    A radio news bulletin this morning stated that a recent report into road usage in London showed that it had increased significantly, marking a trend away from the use of public transport towards private cars. I should have thought that the new Jubilee Line extension, including the stations at Southwark and Bermondsey, was one way of enticing the public away from private car usage and onto public transport by giving them a better choice of travel facilities.
    I take exception to the opinion that the cost of these two stations cannot be justified on cost grounds because there are no associated property schemes. Surely public transport is just that—for the public. Both the sites for new stations are in highly residential areas. Bermondsey in particular has seen a spate of riverside development, which is poorly served by the current public transport infrastructure. Surely there is also the possibility that if proposals for these stations are confirmed then property developers may look favourably at these areas with a view to investment, especially as a new link would provide easy commuting to the West End, and the new industrial base in the Isle of Dogs.
    I do not think it is fair that the population of a basically older residential area should be penalised because of a lack of new money.
    I therefore urge you to put the considerations of the people before monetary considerations and proceed with the building of stations at Southwark and Bermondsey on the new Jubilee Line extension."
    I cite that letter in full because it contains a very ordinary request. It asks that public transport be provided where the public are, to make the whole of life—not just getting from A to B by an improved method of transport—better.
    The Minister said—I accept this—that the stations do not depend on private contributions. It is important that that is confirmed and I hope that the Minister will be able to do so. The Minister has also said that the money has been provided and that there would be no need to go to the Treasury for more. I hope that that, too, can be on the record. The hon. Member for Ilford, South (Mr. Thorne) has confirmed that we are in any event to have substantial work sites in north Southwark at Ewer street and at Old Jamaica road whether we have the stations or not. We are to have the disbenefit irrespective of whether we have the benefit. That is all the more reason why we should have the benefit as well.
    One view is shared by all of us who are docklands Members and by the hon. Members who represent the City of Westminster, who also see a benefit for their constituents from stations at Southwark and at Bermondsey. Southwark especially would relieve the congestion from Green Park to Charing Cross. I hope that tonight the Minister will go as far as possible. I hope that he will say, "You can have your stations." He may not

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    quite be able to say that. However, I see my job as ensuring that the Bill does not reach its final stage unless we have our stations.
    Mr. Nigel Spearing: I am grateful to the hon. Gentleman for his remarks about supporting the instruction which he and some of my hon. Friends have signed. Does he recall that London Regional Transport has a statutory duty—little known and not always universally acclaimed—to co-ordinate transport in London? London Regional Transport is the promoter of the Bill. How can the Government, therefore, throw doubt on the question of funding when they, in legislation that they promoted, put the duty of deciding what co-operation should be on London Regional Transport? Is not that a point that the Committee might consider if the Bill receives a Second Reading?
    Mr. Hughes: The hon. Gentleman is right. Perhaps I am sometimes a bit unfair to Ministers in that this is not a Government Bill—as I shall no doubt shortly be told. [HON. MEMBERS: "They are whipped."] It is clear that the Government have an interest in the Bill, which is welcome even if hon. Members are whipped—which they deny. People certainly appear from strange places at the right moment, which seems to be more than coincidence. Just as some people regard you, Madam Deputy Speaker, as the fount of all knowledge, I take the general view that in the public sense, the Government are the fount of all money. If they are persuaded, London Regional Transport will deliver the goods as well. The hon. Member for Newham, South is right to say that, formally, I should address my remarks to the hon. Member for Ilford, South so that, when he winds up, he can say, after the arguments of last week, that the case is even more persuasive than we had previously thought.
    We have had one bit of good news south of the river today. I suspect that the hon. Member for Vauxhall (Miss Hoey) will want to expand on this. We have heard that the Secretary of State for the Environment has not approved the developers' plans for county hall. I hope that tonight we shall have a second bit of good news and we shall hear from the Minister and the sponsors that, before the Bill gets much further, we shall have our stations in Southwark and in Bermondsey. When we hear that news, I will vote for the Bill. Until then, I reserve my judgment. I shall wait, hoping that we shall get the right answer, but threatening all sorts of mayhem if we do not.
    7.47 pm
    The Minister for Public Transport (Mr. Roger Freeman): I sought to defer my remarks to the House when we debated the issue a week or so ago because certain important points had to be made. I have no doubt that more points will be made which may be addressed more appropriately by the sponsor of the Bill. However, it may be helpful to the House if I set out briefly some of the issues that should be addressed properly to the Government. I admire the eloquence of the hon. Member for Southwark and Bermondsey (Mr. Hughes) in drawing his remarks to a close and taking 30 minutes to do so. I shall seek to address some of the points that he and other hon. Members raised.
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    I compliment my hon. Friends the Members for Ilford, South (Mr. Thorne) and for Harrow, West (Mr. Hughes) as the sponsors of the Bill. They work diligently. The House will not be surprised to learn that we strongly support the Bill. It is a private Bill, but on behalf of the taxpayer, the Government have provided more than £1 billion to ensure that the Jubilee line is built. I place on record our strong support for the Bill and I hope earnestly that it receives a Second Reading tonight.
    The Jubilee line is clearly needed. We know that passenger traffic on the London underground has increased significantly in recent years. It is 60 to 70 per cent. up in passenger miles travelled since 1982. The line will bring a welcome new service to docklands, where employment is forecast to rise by between 90,000 and 150,000 by the turn of the century—a significant increase. The line will also bring welcome benefits not only to south London—I shall say more about Southwark and Bermondsey later—but to east London.
    The instruction of the hon. Member for Newham, South (Mr. Spearing) is in accord with the sentiments that I express—that we wish to see economic and social benefits brought not only to south London but to east London by this line. The hon. Gentleman and I would not be at odds on that score.
    The line will open up docklands to a wide catchment area, from the north and north-west on the Jubilee line from Baker Street and Green Park; from the west and south-west by interchanging from the District and Circle lines at Westminster; from the south-west counties via the Waterloo main line terminal, where it will provide access to Europe via the channel tunnel terminal—
    Mr. Harry Greenway rose—
    Mr. Freeman: I will give way shortly to my hon. Friend. I was about to refer to the area from Kent and south-east London on British Rail lines into London Bridge; and from the east and north-east on lines into Liverpool Street and Fenchurch Street via Stratford and West Ham.
    Mr. Greenway: Is the Minister aware of concern in Westminster Abbey, for example, about the interchange being at Parliament square? There are strong suggestions that the fabric of the Abbey could be damaged by the interchange. It has been suggested that, while it might be more expensive to have the interchange located at St. James's Park, that should be faced by the developers. In other words, it would be better to have a more expensive interchange there than a cheaper one at Parliament square, where great institutions of that nature could be damaged.
    Mr. Freeman: I am grateful to my hon. Friend for raising that point and, as the hon. Member for Ogmore (Mr. Powell) rightly said, the arguments for and against location at Westminster or at St. James's Park—or, indeed, continuing the tube line whence it cometh at the present time, which is Green Park to Charing Cross—should be examined properly in Committee so that the Committee and the House may be clearly convinced of the arguments.
    That is not a matter which the Government should address. The arguments have been set out in detail in the report of the Select Committee on House of Commons Services, having examined some of the advantages. The hon. Member for Ogmore and my hon. Friend the

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    Member for Staffordshire, South (Mr. Cormack) drew attention to the disruption to Parliament Square, and I shall come to that shortly.
    In addition to supporting the rapid growth in the docklands, the new line will relieve congestion on roads and the existing rail network, including the docklands light railway, will strengthen public transport links with BR lines at Waterloo and London Bridge, and improve accessibility in areas poorly served by public transport south of the Thames, and, in the east end, in Tower Hamlets and in Newham. So not just docklands will benefit. The benefits will be felt across London as a whole.
    A number of points have arisen which are properly addressed to the Government. The hon. Member for Newham, South asked questions about where the finance would come from and about the contribution by developers. I have said that £1 billion has been appropriately provided by the Government to construct the line. Olympia and York will contribute £100 million in the next three years—that is, payments in April 1992 and April 1993 and a further £300 million in subsequent years—towards the construction of the line. Further, British Gas is to contribute £25 million in cash and benefit for a station to be constructed on the Greenwich peninsula.
    Mr. Ron Leighton: Will the Minister clarify the contribution from Olympia and York? He mentioned £100 million, which I understood him to say he would get soon. When does he expect to get that? When will the other £300 million be paid?
    Mr. Freeman: I am sorry if I did not make the position clear. The position is that £40 million is payable on 1 April 1992, £60 million on 1 April 1993—that is, £100 million in the next three years—and the balance, £300 million, is spread in relatively small payments over 10 to 15 years thereafter. I think that the facts are on record, but if the hon. Gentleman tables a question, I shall be pleased to spell out precisely—I do not have the figures in my head—the payments and the time scale.
    Mr. Spearing rose—
    Mr. Freeman: I shall give way to the hon. Gentleman shortly.
    The hon. Member for Newham, South then asked from where the public moneys would come, and he mentioned that he had heard it referred to as a contingency fund. The funds are firmly provided for in the Government's expenditure profile. It is taxpayer's money and it comes by way of grant from the Department of Transport's vote to London Regional Transport in a non-repayable, non-interest bearing form. It is a once-and-for-all grant of money which will be used to construct the line.
    If there is any excess of expenditure over the amount provided, the sums will have to be negotiated in the normal course of events with the Treasury. Any additional sums provided over and above that needed to provide for inflation—any real increase in sums—would come, presumably, in the same way, by way of taxpayer grant.
    Mr. Spearing: I am grateful to the Minister for spelling out almost the full picture of financing and for the clarification he gave to my hon. Friend the Member for Newham, North-East (Mr. Leighton). It appears to be a novel method of financing. In respect of the moneys that
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    the Government will provide, will he give information on two matters? If he cannot do so tonight, perhaps he will give it by letter.
    First, if there is a cost overrun, which is not abnormal in matters to do with tunnels, will it be entirely a pro rata additional payment, discounted for inflation on the long-term 15-year period that he mentioned, or will public funds have to carry any additional estimate over the relatively modest sum of £1 billion?
    Secondly, despite what the Minister said about its not being a contingency in the normal way, may we be assured that the funding of the line, other than in relation to the private sums which he mentioned, will not differ in any material respect from that which might go either to the Chelsea-Hackney line or to the projected cross rail link, an announcement about which may perhaps be expected after the House has risen?
    Mr. Freeman: If there is a cost overrun, it will be borne in the same way as cost overruns are borne in any other public sector project—by the Department of Transport's vote and not by the developer contributions, which are fixed in money terms.
    The hon. Gentleman is right to allude to the fact that we should take the present value of the stream of payments, and I calculate that the developer contributions, in present value terms, amount to about 15 per cent. of the total cost of the line. That may not seem a great percentage, but it is the largest percentage of developer contributions to any public sector project of which I am aware anywhere in the world.
    However, it is not £400 million as a proportion of £1 billion. One should take the present value as alluded to by hon. Members at today's prices and compare that with the present value of the total construction cost. The public sector contribution of £1 billion is being provided in the same way as provision would be made for any other underground line. As and when a decision is made, it would be financed in exactly the same way.
    Four important points have been made and I will deal with them because it is appropriate that the Government should answer them. The first, raised by the hon. Member for Newham, South, concerned the extension to the royal docks. He asked where that was in the Government's thinking. I can confirm, as my hon. Friend the Member for Ilford, South (Mr. Thorne) confirmed in his opening remarks, that there will be a step plate junction built south of Canning Town to facilitate an extension to the royal docks. That seems a logical extension for the future. Clearly, as the future development of the royal docks will take many decades, whichever Government are in office, that seems a sensible option to consider. The hon. Gentleman would not expect me to make any commitments beyond that at the moment, but it will be facilitated.
    Secondly, the hon. Members for Bradford, South (Mr. Cryer), who is not in his place, and for Newham, South asked me about the environmental impact study. I confirmed that I have placed copies of that document, which is dated January 1990 and is headed "London Underground's Proposed Jubilee Line Extension—Environmental Assessment", in the Library for the convenience of hon. Members. I hope that I have placed sufficient copies there, and if any hon. Member has any difficulty obtaining a copy, I shall be glad to write to him or her and to send a copy.

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    Thirdly—this is one of the two most important points that have been raised—I turn to the impact on Parliament square and Parliament buildings. I know that several hon. Members who are present served on the New Building Sub-Committee of the Select Committee on House of Commons Services. My hon. Friends the Members for Staffordshire, South (Mr. Cormack), and for Ealing, North (Mr. Greenway) and the hon. Member for Ogmore have drawn my attention to the disruption to Parliament square. As the hon. Member for Ogmore has said, this is a matter for detailed examination in Committee. One cannot build an underground railway line without disturbance.
    On behalf of the Department of Transport, I can say that we shall be accommodating toward whatever sensible accommodation is reached during the progress of the Bill to minimise disruption both in terms of the number of construction vehicles, length of construction and the location of the ticket hall—and there is some flexibility about the location of the ticket hall. It is most important that those issues are examined in detail in Committee. I commend London Regional Transport and London Underground for being so flexible so far.
    The important point relates to phase 2 of the new parliamentary building and the payment for the concrete raft. The New Building Sub-Committee recommended that that should be paid for in its entirety by London Underground. Clearly, London Regional Transport should pay for the concrete rafting over the part of the station area that is covered by the prospective phase 2 parliamentary building, because that will be built over. London Regional Transport has budgeted for and is prepared to pay that cost, which, I understand, amounts to between £2 million and £3 million. However, at issue is the rest of the building which has nothing to do with the construction of the Jubilee line. As the hon. Member for Ogmore fairly put it, in terms of a payment on account of the disruption created not only for Parliament but in Parliament square, LRT should pay for the concrete rafting for the whole building.
    The Department of Transport and I are seized of the significance and importance of that and of the fact that, although we hope that there will be no delay, some considerable delay could occur if Parliament, in exercising its role as, essentially, the planning authority, took a considerable time to consider the Bill because this issue has not been resolved. That would not be in anyone's interest. Clearly, if the parliamentary building is to go ahead, it would make a great deal of sense for LRT to construct the concrete raft in its entirety because, one way or another, the cost of the raft would be paid for out of public funds. If the parliamentary building is to go ahead, I am sure that sensible arrangements could be reached in terms of which vote the money comes out of and when construction takes place.
    I am sure that the House would not wish to put London Regional Transport in the position of having to find the extra funds from its funding for transport services in London and of having to ask members of the travelling public to fund the £7 million or £8 million to build the entire concrete slab. That would be unreasonable.
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    Nevertheless, although I cannot make any concrete proposals or guarantees this evening, I am seized of the importance of this matter.
    The hon. Member for Ogmore is in his place. I say to him again, through you, Madam Deputy Speaker, that I understand the seriousness of this issue. He implied that this issue should be addressed in Committee. I believe that it must be addressed in the autumn, and, I hope, before any Select Committee considers the Bill. I give the hon. Gentleman and his colleagues my assurance that I will treat this matter with the utmost seriousness. It is in the interests of London Regional Transport that that matter is resolved.
    Mr. Don Dixon: Will the Minister explain why the Committee that will deal with this Bill should take any more notice of London Underground than did the New Building Sub-Committee, on which I serve? The first time that we saw London Underground, we asked its officials whether there was a feasible alternative site. The obvious site was St. James's park. They told us that on engineering grounds that site was not feasible. We then appointed our own advisers who said that it was feasible. When that point was put to London Underground, it accepted it—after our advisers had advised us. Why should London Underground be any more forthcoming to the Committee that will consider the Bill than it was to the New Building Sub-Committee that is dealing with phase 2 of the parliamentary building?
    Mr. Freeman: I understand the hon. Gentleman's concern, but surely that is a matter for the Select Committee that will be appointed to consider the Bill. That Committee is the appropriate body further to consider the evidence and to reach its own conclusions. Although I note the conclusions of the New Building Sub-Committee, it is not for me to argue that point tonight.
    I understand and accept that the Select Committee will examine that issue and will doubtless wish to take into account the consequences for other buildings, including Westminster Abbey, the alignment of the route and the deviation that would be entailed in any other station than Westminster, and the ease with which the line can come into Waterloo. For the benefit of commuters coming in to Waterloo, it is important that the underground line runs smoothly and squarely into Waterloo and that it does not approach Waterloo from a difficult angle, which I gather would be the case with Charing Cross.
    Mr. Harry Greenway: I am grateful to my hon. Friend for giving way again and promise that I shall not interrupt him again. Is my hon. Friend concerned about the suspicion that is felt both in the country and the House on this matter? Does he not remember that in the 1930s people were told that they were in poverty and that although the judge's heart bled for them, it was better for them to go to the workhouse? Others have said that it would be terrible to demolish Westminster Abbey, but that that may have to be done one day for a housing estate. Such arguments are devastating. We should face up to this now and put first things first.
    Mr. Freeman: As I understand it, a station at St. James's would entail severe disruption and difficulty for Westminster Abbey. A station at Westminster involves problems for Parliament square. As the spoil from the

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    tunnel running from Green Park to Waterloo would come out at Jubilee gardens, there would thus be some inconvenience there. The hon. Member for Ogmore put me in my place when I intervened earlier and he is right to say that the spoil from constructing the ticket hall would have to come out at Parliament square if that is the location.
    Mr. Ray Powell: Will the Minister give way before he leaves this point?
    Mr. Freeman: I have not left it yet.
    Mr. Powell: The Committee has put its objections to the Bill on record, but we must bear in mind the fact that the New Building Sub-Committee was already preparing for the development of phase 2 of the building around Bridge street and had undertaken a lot of work when London Underground came up with these proposals months later. We are concerned not only about the rafting and its cost, but about the inconvenience and the delay that have been caused to the building of new office accommodation for hon. Members. I assume that the Minister appreciates all the problems that hon. Members are suffering in terms of office accommodation and that he will therefore appreciate also the inconvenience of new phase 1 being developed before phase 2 had been started. A great deal of inconvenience will be caused to hon. Members by the further development of phase 2 and the building of the raft. Given all those considerations, London Underground should be responsible for the raft covering the building. That is why some of the objections that I have outlined were made in Committee.
    Mr. Freeman: I understand the strength of that argument. If the parliamentary buildings on Bridge street are to go ahead—that is not clear in terms of financial provision, but perhaps the hon. Gentleman knows more about that than I do—there is a great deal of common sense in the proposal that London Regional Transport should finance and execute the entire raft in one go. Sooner or later, the cost of the construction of that raft will come out of the taxpayers' pocket. I accept the logic of that argument.
    As a Transport Minister, I must also protect the position of London Regional Transport. It would not be reasonable for the travelling public in London to pay for rafting which is not strictly required for the line and the cost of which may be irrecoverable. When it becomes clear that the building is to proceed, sensible accommodation can be made.
    Mr. Ray Powell: Let me stress one or two other points to clear the issue. We have already appointed architects and the building will already be approved when we have permission for it to proceed. The delay has been caused by the London Underground Bill. Had the Bill had not come about, we would have been a long way ahead with the development. I should make it clear to the Minister that the phase 2 development of the building on that site has already been approved.
    The Minister referred to the travelling public. The Sub-Committee has as much sympathy with the travelling public as anyone else. As my hon. Friend the Member for Jarrow (Mr. Dixon) said, we have already appointed advisers to suggest and recommend a different route so that the line could avoid Parliament square and all the disruption that will be caused to the House and to the
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    travelling public. People travelling by tube, car, coach or bus will be disrupted. Surely the Minister has some responsibility in that matter.
    Mr. Freeman: I regret the possible disturbance as much as the hon. Gentleman does. He, I and other right hon. and hon. Members have much to lose in terms of convenience, as have our guests visiting Parliament. Design approval of the new parliamentary building is one thing; funding is another. Funding is not my responsibility. I accept the hon. Gentleman's argument about construction in one fell swoop, possibly by London Underground. That may well facilitate or accelerate the construction of the building.
    My final point concerns the south London stations at Southwark and Bermondsey. The hon. Member for Southwark and Bermondsey knows, as I have given him a commitment personally and in writing, that it is the Government's policy that stations should be built at Southwark and Bermondsey. He will remember from the east London rail study that they were firmly in the plan. He also knows that there were question marks over both those stations and the proposed stations at Greenwich and at other points on the line, which suggested that there was further analytical work to be carried out.
    I am not backtracking on the Government's commitment to a policy that stations should be built at Southwark and Bermondsey. I confirm that the construction of those stations is provided for and is not dependent on developer contributions. If the hon. Member for Southwark and Bermondsey were standing at the Government Dispatch Box, he would be the first to say that, in order to assure the Public Accounts Committee and the House that those decisions were soundly based, there should be a robust justification. I am grateful to him and to the borough of Southwark for helping to provide that justification. That exercise will conclude by 1 October, well in advance of the Committee stage of the Bill. I am committed to meet him and Southwark when that exercise is concluded. I have no reason to believe that the cost benefit appraisals—not the financial justification—for building those two stations will be anything but positive.
    Mr. Harry Cohen: I really should have got in before the Minister moved on from his point about the costs. He said that he thought that the cost of the concrete rafting would eventually fall to the taxpayer. Can he assure the House that the cost will not be met by increased fares to passengers or through poll tax bills across London, but that the taxpayer will pick up the bill directly?
    Mr. Freeman: I am happy to give the hon. Gentleman a categorical assurance that it will be paid for by the taxpayer in the form of a grant voted from the Department of Transport. It will not fall on the fare-paying passenger who pays a proportion of the operating cost. It certainly will not fall on the community charge payer in London. It will come from the national taxpayer, who will be paying for an enhancement of transport facilities in London. I hope that the House will give the Bill a Second Reading and will note the assurances and promises that I have given.
    8.15 pm
    Ms. Joan Ruddock: Before I start my speech, let me associate the Labour Front Bench with the condemnation, during the point of order before

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    the debate, of the atrocities committed this afternoon on the outskirts of Armagh, and express our sympathies to those who have been bereaved.
    I give the Bill on the extension of the Jubilee line a general but qualified welcome. In the previous debate, several hon. Members, including my hon. Friend the Member for Ogmore (Mr. Powell), clearly expressed the concerns of the House about Parliament square. I shall not dwell further on that issue or reiterate the points made on behalf of the Accommodation and Administration Sub-Committee, but will deal instead with the wider transport issues.
    The Bill comes before us at the behest of a Government who have repeatedly failed in their duty to plan strategically for our capital city. It comes before us despite the evidence of the Government's own central London rail study, which found the extension of the Jubilee line the least likely of the proposals studied to relieve the extreme congestion experienced by users of London Underground in the central area. Even the borough of Newham, which stands to benefit from the Jubilee line extension, agrees with all other expert and interested parties in London that an east-west cross rail would have done more for London. London Regional Transport, in its latest annual report, maintains the position of the central London rail study—that the east-west cross rail and the Chelsea-Hackney line are essential if there is to be any real solution to the problem of central area congestion.
    The Bill comes before us because the free-market, profit-first priorities of the Government have determined that new transport infrastructure in London is development-led. That is why it is so important that, as the instruction in the name of my right hon. Friend the Member for Bethnal Green and Stepney (Mr. Shore) says,
    "the Committee on the Bill … have regard to the need for regeneration of local communities and local industries in and around the areas of London Dockland and Lower Lea Valley."
    Only by proper strategic planning can the needs of all our communities in London—not just the needs of developers—be met. The Bill must be set in the context of the extent and scale of the transport crisis afflicting London and the Government's response to it. Only then can we assess its merits.
    It is remarkable that, with such a powerful consensus about the extent of that crisis, the Government continue to make a complete mess of transport in the capital. In London, the chorus of criticism about the Government's inaction comes from all sides. For example, the CBI states in a recent report:
    "The problems exemplify the need for a co-ordinated, integrated, intermodal approach."
    The London Regional Passengers Committee, in its annual report, was scathing in its criticisms. It said:
    "On the Underground, more miles were lost, waiting times grew and while the chance of a train running on time rose, so did the chance of it not running at all. More lifts were working, but escalator stoppages hit bottom before improving gradually. The performance targets set for LRT require an improvement in all these areas."
    The director of planning summed it up when he said:
    "If you regard London grinding to a halt as a crisis, then we're not there—yet. But if you regard wasting billions of pounds a year through congestion at a time when we face increasing competition, then I think you would say that we are."
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    Against that background, the Jubilee line extension begins to appear a little like the proverbial fig leaf. However, as the Minister said, it will give additional tube capacity. It will provide much-needed access to docklands and it will be a much-valued public resource in a city that is increasingly privatised, unplanned and lacking in co-ordination. As a result of lobbying by myself, my colleagues in Greenwich and others, it will also provide a loop into north Greenwich, bringing an important tube link into an area that is poorly served by public transport.
    For those reasons, and despite some reservations, the Opposition generally support the Bill. We do so also because we believe that investment in the public infrastructure in London is now an urgent task. It is the only answer to the crucial need to begin to limit the use of private cars in the city. The Bill at least shows some commitment from the Government improving and extending the capital's public transport. However, they must demonstrate their wholehearted commitment to those who do not have the developers' chequebook to hand. It appears that developers can obtain the stations that they want, but can the ordinary citizens of London?
    The Minister has made some response to the representations about the construction of the Southwark and Bermondsey stations. As we heard previously in our debates, above all those stations would benefit the established residential communities that currently have to travel on inadequate public transport. Some of my constituents would be among those who would use the stations, as would the constituents of my hon. Friend the Member for Peckham (Ms. Harman), who regrets that she cannot be here tonight.
    It is significant that the technical officer in the borough of Southwark could demonstrate that, on the estimates provided by London Underground, those stations would be used by more people than use some of the stations on the present Jubilee line. Given all the evidence, I should have thought that the Minister would agree that it is not just financial considerations alone that should determine the building of stations such as those in south London, but the important grounds of social justice and economic development for very poor areas with very poor people. They would benefit enormously from job opportunities that would be more accessible if they had stations nearby at Bermondsey and Southwark.
    The Minister has not removed all doubt that those stations will not, in some way, be dropped from the plans. I urge him to think again. As the hon. Member for Southwark and Bermondsey (Mr. Hughes) said, there will be public outrage if those stations are not built when developers with their cheque books can get what they demand.
    There are further questions about the Bill with which the Minister has not dealt. Clause 29 allows London Underground to close a section of the Jubilee line from Green Park to Charing Cross at a future date, without going through the usual consultation procedure. Consumer interests are protected by law and if London Underground wishes to close a section of line, at present it is required to notify the London Regional Passengers Committee. That committee may then hold a hearing and report to the Secretary of State for his decision. It feels that there is no justification for changing that procedure.
    I appreciate that London Underground intends to keep open the line nominally and use it for football specials, for example, but that is hardly a reassurance for the 20,000

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    commuters who use that section of the line every day. London Underground believes that many commuters will benefit from the change in the line, but those matters should be subject to a proper hearing. I urge the Minister, London Underground and the sponsor to reconsider denying transport users a voice and the opportunity to consider the implications of the proposed changes.
    Mr. Spearing: Did my hon. Friend notice that the Minister referred to the alternative alignment—which was not considered by the advisers to the Services Committee—of maintaining a Charing Cross terminal and extending it via Temple to Waterloo, as being for the convenience of passengers? He did not deny that it was impractical and had certain limitations. Is not that something that the passengers committee should consider?
    Ms. Ruddock: My hon. Friend makes an excellent point. Indeed, all his points about London transport are excellent. I am sure that the committee will consider carefully what he has said.
    We want clause 14 to be removed because there is no justification for taking away standard procedures. After the defeat on the King's Cross Railways Bill, I hope that the promoters of this Bill will reconsider.
    We are disappointed by London Underground's apparent unwillingness to make the new section of the Jubilee line fully wheelchair accessible. I understand that it is technically feasible to do so, even in deep tunnels, by building a walkway. Given that London Underground has said that new lines will be wheelchair accessible, it would be a missed opportunity not to start with this section of line. I urge London Underground to reconsider, and I ask the Minister to clarify the Government's policy on access to public transport for people with disabilities. I shall give way to him if he wishes to intervene.
    Mr. Freeman: I do not wish to duck the question, because it is extremely important. I regret that I cannot answer a question on the adaptation of the design of the Jubilee line to accommodate wheelchairs. Although the Department does not plan the details of the line, I undertake to make inquiries of the chairman of LRT about accommodating disabled people.
    If the hon. Lady reflects on the performance not only of LRT but of British Rail, I think that she will agree that it is a great deal better than has been achieved in the past, and a great deal better than other European countries. We have a great deal to be proud of, but a long way to go.
    Ms. Ruddock: I invited the Minister to intervene because, as is so often the case, when judgments are made on technical matters there is always the question of finance. We are all aware that the line is primarily to be financed out of the public purse, so these considerations are relevant to Government. I am grateful to the Minister for his response.
    Millions of potential travellers nationwide are denied access to many modes of public transport through lack of foresight in planning and design. When a major operator such as LRT begins construction of a new system that is essentially for the 21st century, we should insist that those who are wheelchair-bound have equal access to the system.
    I noted that the promoter concluded his remarks by referring to the substantial contribution of Olympia and York and British Gas to the project. In fairness, he did not over-emphasise the important of their contributions;
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    Minister, however, have been much more fulsome, as was the hon. Member for Kettering (Mr. Freeman), about the value for money of the scheme. Many of my hon. Friends and I have already said that the Governmetn's central London rail study did not consider the line such good value. It gave it a negative rate of return, computing its benefit to cost ratio at 0·6:1 compared with 1·6:1 for the east-west cross rail.
    The Government do not have a programme for rail investment that is truly analogous to their trunk road programme. If they did, the inclusion of a scheme that does not represent the best value for money might be acceptable on the grounds that other preferable schemes would follow without hindrance. However, no such programme exists and we fear that the scheme may lead to other schemes being starved of capital. Despite the invitation extended by my hon. Friend the Member for Newham, South (Mr. Spearing), the Minister has not satisfied us that there is no jeopardy to other schemes, and we hear persistent rumours that the Treasury might veto the introduction of a Bill this autumn to build another new line in the London transport system.
    We hope that the Government will soon make clear their intention for the cross rail and the Chelsea to Hackney line. Without those two new lines, there will be no answer to the major problems of congestion.
    New public investment and public transport provision in London is welcome, but yet again we debate a piecemeal provision in isolation. London cries out for a strategic plan. As my hon. Friend the Member for Newham, South reminded us, British Rail's review of alternative routes for rail links to the channel tunnel keeps open the possibility of Stratford becoming an international station. It is symptomatic of Government action on planning that the clearly related issues of international passenger traffic and cross rail are not part of our considerations. It is hardly surprising that London's transport is in a mess if this is the nearest to sensible planning that the Government can attain.
    There can be no doubt that in the two debates on the Bill, the promoters and the Government have received clear warnings of the diversity of interests involved and the necessity to respond to the needs and aspirations of the travelling public in London. We believe that the Jubilee line should be extended, but only in an environmentally sensitive way, which must include consideration of the parliamentary area of London. It must have maximum access for local residents and, I hope, full access for wheelchair-bound passengers. With those provisos, we can support the Second Reading.
    8.33 pm
    Mr. James Arbuthnot: The Bill raises several complex issues, including compulsory purchase and compensation. My name appears on the blocking motion to the Bill on behalf of only one of my constituents, Mr. Michael Downey, whose land and business will be compulsorily purchased.
    I make no apology for concentrating on one man, because any hon. Member's constituent is as important in this respect as is the House of Commons putting its objections to disruption in Parliament square. My constituent, like me, has no objection to the general

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    principle of the extension of the Jubilee line and agrees that it would be beneficial. His agreement means that I shall vote for the Second Reading of the Bill.
    Although I generally enjoy following the hon. Member for Lewisham, Deptford (Ms. Ruddock), I would have wished to follow a more gracious welcome for the principle of the line.
    My constituent believes, and again I entirely agree, that those whose land will be purchased should be treated fairly. He and his sister own some land near the proposed Canning Town station in the constituency of the hon. Member for Newham, South (Mr. Spearing) who spoke when we last debated the Bill. They have two businesses, a petrol station and an engineering business. The first, Fleet service station, has been in business on the site for about 60 years and has built up a large clientele, mostly with local businesses. Indeed, 60 per cent. of its turnover is with account customers in the immediate vicinity. Moving that business would considerably damage that account business.
    Therefore, to minimise the damage, Mr. Downey must find replacement premises as near as possible to his present premises. His business requires a prominent road position. Replacement premises that fulfil both those requirements will obviously be extremely hard to find. One must not overstate that problem, because he may find new premises in a more prominent position or he may gain in passing trade what he loses in account customers, but, nevertheless, the problem exists and it is serious. Compensation would give him not the reinstatement value of his premises but its current market value. If he had to find premises on which to reinstate his business, he would have to compete with the Essos and Shells of this world, which would regard the business and the area as a major money-spinner. They would be able to provide much more money in bidding for new businesses, and the likely result is that he would be forced out of business. That would be an unreasonable result of the Bill.
    It strengthens the case that many hon. Members feel that the structure for compensation for road and rail development should be reconsidered by the House and that a new structure should apply not only in general but in particular to the Bill.
    The third and most important point in Mr. Downey's case is that to be able to keep his account customers, who comprise 60 per cent. of his turnover, any replacement business must open at the same time as his existing business closes. If there is any gap between closing and opening, his account business will melt away. It might trickle back in later years, but it would be severely damaged by the hiatus.
    A new business must be bought and equipped before Mr. Downey is forced out of his old business. I understand that it takes many months to equip a petrol filling station. Planning applications, and possibly planning appeals, would lengthen the time during which the equipment would have to be installed.
    J. and J. Downey is an engineering business and it raises similar concerns, although they are not identical. It needs not prominent premises but premises equipped to an exceptionally high standard. It has a large overhead travelling crane weighing 5 tonnes. Obviously, that takes
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    much time to build and install. To avoid a hiatus, it must be installed long before Mr. Downey has to move out of his existing building.
    The business needs to be situated in an area where Mr. Downey could expect his business to last, because it works on long-term contracts. The Bill has already affected the type of contracts that he has been able to attract, because they sometimes require guarantees by means of performance bonds. If my constituent's business is under threat of compulsory purchase, he will obviously find it more difficult to attract more contracts. That should be taken into account in the compensation granted to him.
    I am talking about my constituent, but this matter applies as well to the many other businesses that face compulsory purchase.
    Mr. Spearing: This matter affects not only businesses and proprietors but the many people living and growing up in Newham who might be or hope to be employed by those businesses.
    Mr. Arbuthnot: That is right. Serious consideration should therefore be given to the hon. Gentleman's instruction.
    I said that, unlike the petrol station, the engineering business did not need prominent premises, and it does not. However, my constituent has found it helpful over the years to be able to manage the two businesses from the same site. If he finds a reinstatement site with the same benefits from managing the petrol station and the engineering business, resulting in a reduction in the number of staff, there will be cost savings in terms of manning, office space and efficiency gains with respect to control and management. Any loss of that benefit should be taken into account in any compensation.
    The possibility of finding the right replacement site, at the right time, with appropriate compensation, is central to my constituent's business. It is not overstating the case to say that, unless that is done, there is a possibility that my constituent will go out of business. Not surprisingly, therefore, he has been looking hard for replacement premises. He has instructed Grant and Partners to pursue this matter on his behalf. It has looked hard, but there has been little reaction in the area. Property owners appear to take the view that in the present state of the property market they would do better to hang on to their property rather than sell, perhaps in order simply to see what happens.
    There is one site that my constituent has identified as suitable. The land is currently owned by the British Rail Property Board and consists of disused rail sidings next to the southern roundabout of the Connaught crossing. Although British Rail was asked about the site in January this year, so far it has said that it is under review.
    My constituent clearly needs help from someone like London Underground, British Rail or the London Docklands development corporation—someone with more clout than he has alone. I am pleased to say that London Underground has offered some help, for which I am grateful because it goes in the right direction, but it does not solve the problem. I am afraid that more needs to be done. London Underground has said that it is prepared to offer to buy the Fleet service station in advance of Royal Assent. I have been told that it would agree to allow Mr. Downey to trade from his existing premises even after that acquisition until London Underground needs it for the

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    railway. That would give Mr. Downey the chance to take his compensation money and to find other premises and, if he found them, to use the money to re-equip them without any hiatus in the business.
    The problem is not the money—money can be borrowed and the loss of money can be compensated for with replacement money. The problem is that Mr. Downey by himself cannot find the replacement site. He needs help, and that is the sort of help that so far he has been refused. It is at this stage that my constituent begins to wonder if the compulsory purchase is needed.
    Is too much land being taken? The hon. Member for Newham, South raised that point. In the Bill, London Underground is taking powers to take a great deal of land. The question must arise whether it is taking more than it needs for the purposes of building the Canning Town station and building a Jubilee line station and a bus interchange. All the evidence possessed by my constituent suggests that London Underground is taking too much land, but that evidence is extremely sketchy. The plans for the station and the bus interchange are unclear. The risk is that they will remain so. The injustice from my constituent's point of view is that he does not know what case he will have to answer. That goes against all the principles of British justice and will, I hope, be seriously considered by the Committee.
    I hope that London Underground will lean over backwards to prove to my constituent that it is not taking too much land and to give him the information that he needs to satisfy himself to that effect. I said in an intervention in the speech of the hon. Member for Newham, South that if London Underground took too much land it would benefit from the uplift in value which would follow. I do not suggest that London Underground has any such motive, but it should make it plain that it has no such motive by giving the information that my constituent and others in a similar position need to satisfy themselves that not too much land is being taken.
    8.46 pm
    Mr. Stanley Orme: I intervene in the debate as a member of the New Building Sub-Committee and as a provincial Member, and I make no apology for speaking as a provincial Member. Hundreds of millions of pounds of public expenditure will be invested in this development and we are entitled to question it. This development in the capital will affect many people—not just those who live there but those who visit it—and will be important to them.
    I agree with my hon. Friend the Member for Lewisham, Deptford (Ms. Ruddock) that the development of new undergound links in London is crucial. Public transport must be promoted if we are to discourage the use of the motor vehicle, thereby easing traffic congestion and lessening environmental damage. I start from that point. I am not opposed to the extension of the Jubilee line. As other hon. Members have said, when we look at London Transport 2000 and transport forecasts, this is not necessarily the first priority that comes to mind; it is third or fourth on the list of what is needed in the capital.
    Faced with the Bill, we must examine it on its merits. The Minister said that the Government were not promoting the Bill although they were very much in favour of many aspects. Questions were raised about the siting of stations in Southwark and the use of Parliament square as
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    the junction for the new Jubilee line extension and the Central and District lines. It is extraordinary that the Minister did not discuss these matters with London Transport. He said that they were a matter for the Committee. The New Building Sub-Committee discussed these matters in detail with London Underground. First, we were dismayed at its proposals for a Bill preceded by no consultation.
    Mr. Dixon: The report by the Services Committee states, in paragraph 17 on page ix,
    "We must put on record at this point our regret that neither the Services Committee nor the authorities of the House were consulted during preparation of the bill. We find it astonishing that neither London Underground nor the Department of Transport realised that the parts of the bill relating to Westminster would cause considerable concern to Members of Parliament."
    Mr. Orme: Neither the actions nor the attitude of London Underground have been to its credit. Following our initial discussions with its officers—including the chairman—we went to see the Secretary of State for Transport, who told us that the Government would support the Bill. We asked, "What about all the criticisms of your proposal to put hundreds of millions of pounds of public money into a project that your Department has not examined?" We were told that the Government would go ahead, using private Bill procedure—which is, of course, the subject of a good deal of criticism in the House at present.
    Mr. Dixon: Not only the private Bill procedure but the rotation of Chairmen is under close examination. It has not gone unnoticed that all the Committees debating controversial Bills have had Conservative Chairmen. Moreover, all those Chairmen have, with their casting votes, opposed the introduction of any amendments in Committee, making a Report stage impossible.
    Mr. Orme: I hope that the House will indeed examine private Bill procedure. The conduct to which my hon. Friend has referred is most regrettable, and we must hope that it will not be repeated.
    In the past, the purpose of private Bill procedure was to assist the railway industry, in particular, with the purchase of land that crossed many estates and many counties. That was done on an individual basis; what is so regrettable about this and other recent Bills is their use by the Government as a vehicle to push through legislation. I hope that the Minister will tell his Department that, if the Bill is given its Second Reading, we shall be watching the way in which it is handled very carefully, for we have serious misgivings.
    Mr. Andrew F. Bennett: Is it not worrying when the Minister says that it is up to the Committee? Traditionally, with private Bills, efforts have been made to negotiate away most of the problems so that the Committee is left with only the minimum of residual difficulties and not much time is taken up. We have already seen how much time—hon. Members' time—has been taken up by the King's Cross Railways Bill: I understand that the Whips have encountered considerable difficulty in persuading hon. Members to serve on the Committee. I hope that my right hon. Friend will press the promoters to find ways of resolving the outstanding problems, so that the length of the Committee stage can be minimised.
    Mr. Orme: My hon. Friend is quite an expert on this kind of procedure; I hope that note will be taken of what he has said.
    We cannot but suspect that enthusiasm for the Bill has a great deal to do with the fact that a private development is under way on Canary wharf and in the east end. Of course, I accept that others will benefit. I have received a letter from Rita Bensley, secretary of the Barkantine tenants association, expressing regret that some of us do not support the Bill. She writes:
    "I am sure that you must be aware that this extension is vital to the regeneration programme for Docklands. The worst possible scenario for the local people of Docklands is for this programme to fail".
    She adds that she and her neighbours live in an area that has been used as a building site for 10 years, with another seven to come. I understand her feelings; our criticisms are intended not to stop the Bill, but to ensure that it is substantially improved.
    The interchange of Parliament square is not a little local issue. We are not talking about the self-interest of Members of Parliament; we are talking about the centre of the capital, which attracts millions of people. As has already been pointed out, this area contains not only both Houses of Parliament but St. Margaret's church, Westminster abbey, the Queen Elizabeth II conference centre, the Methodist Central hall, Whitehall and the Thames and its immediate surroundings. Phase 1 of the new building programme is in progress; it is behind schedule, and members of our Committee are being severely criticised by hon. Members for allowing the delay.
    My hon. Friend the Member for Deptford is one of our strongest critics. If, however, we allow the Bill to proceed unchanged, we shall have to take people out of the new building. Occupation may be delayed for two or three years, depriving hon. Members and staff of necessary accommodation. This is not special pleading; we are continually told that the accommodation is essential, and that anything that stops or delays its completion is detrimental to the working of the House. We have an alternative to London Underground's proposals.
    Ms. Mildred Gordon: Does my right hon. Friend agree that the use of county hall might provide a temporary solution to the problem of accommodation for hon. Members?
    Mr. Orme: That proposal has often been put forward and the next thing we will see is a proposal for an underground link from County hall to Westminster.
    If we can complete phase 1 and start phase 2, we can begin to provide the kind of accommodation which some of the newer hon. Members who are present in the Chamber now are crying out for. We want to see that development proceed.
    The interchange at Westminster will delay phases 1 and 2 and it will add an extra 30,000 people a day to Westminster. Westminster city council, in its petition against the Bill
    "expressed considerable concern for the safety and convenience of pedestrians and other passengers leaving the station in such numbers."
    The council believes that congestion in the area could be increased with a
    "concentration of passengers requiring interchange with private cars, taxis and buses."
    An extra 30,000 people a day is an extra 10 million a year travelling into this centre.
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    It is clear from the present congestion in Westminster as people pass through the square on public transport and in other ways what would happen if Parliament square were to become a building site. We have an alternative to London Underground's proposals.
    Mr. Bob Cryer: My right hon. Friend described the conditions that would exist after the building works were concluded and the number of people in Parliament square had increased. However, he has not explained to the House that the building work could occupy the site for between five and seven years. The environmental impact statement explains that the National Heritage Act 1983 provides powers for an archaeological inspector to apply for a suspension of constructional activity if any areas of archaeological interest are discovered during the excavations. Does my right hon. Friend agree that there are likely to be many areas of archaeological interest in Parliament square and the building period may be extended for a longer period?
    Mr. Orme: Bringing this interchange into Parliament square is not in the interests of the capital and it is certainly not in the interests of the general public. Because of that we examined the proposal and we suggested an alternative to London Underground. We suggested that the interchange should be at St. James's Park. London Underground told us that that was not feasible. London Underground told us that its engineers said that that was not possible.
    Therefore, we employed our own engineers to examine the site. They said that it would be feasible for the interchange to be at St. James's Park. London Underground then accepted that, but it still objects to our proposal. I wonder whether it opposes that because London Underground's headquarters happens to be over St. James's Park tube station.
    We are driven to the conclusion, after the very reasonable case that we put to London Underground, that there are obviously other forces at work that are opposed to the interchange being moved.
    If the Bill is passed and the development begins in the next Parliament and Parliament square becomes a building site for five or six years, I hope that hon. Members do not come screaming to the New Building Sub-Committee wanting to know why we allowed the development to proceed when an alternative was available.
    Mr. Dixon: Does my right hon. Friend accept that our prime concern in the New Building Sub-Committee was to provide adequate office accommodation for hon. Members and staff? While we may have the finest car park in central London, this House has possibly the worst office accommodation. That is why the New Building Sub-Committee was concerned about the connection at Westminster and its effect on phase 2 of the new building.
    Mr. Orme: The development will probably put phase 2 back into the next century. Phase 2 will take between eight and 10 years. Phase 1 is nearly complete and it would be an outrage if, because of the development, people had to be decanted from the new development and moved back into a crowded Palace of Westminster.
    I hope that the Government will consider this matter. We are not being Luddites. [Interruption.] The promoter of the Bill wants to be careful about the way in which he handles the matter. We can make the passage of the Bill

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    very difficult. I should have thought that the hon. Gentleman wanted co-operation and would not laugh when I say that we are not Luddites. We have a solution to the problem. We want his and the Government's co-operation, and we shall continue to press for it.
    9.4 pm
    Sir John Stanley: I intervene briefly in the debate, as have other provincial Members, but my constituency is rather closer to London than that of the right hon. Member for Salford, East (Mr. Orme). Thousands of my constituents come to London every day and are then dependent on the efficiency and capacity of London transport to be able to get to work. I earnestly hope that the House will give the Bill a Second Reading on two grounds—first, because of the general transport situation in London and, secondly, because of the specific area of London the transport needs of which the Bill is designed to help. The Bill deserves support.
    As has been said, London is in a very serious transport position. The seriousness of London's transport position is undoubtedly already having some effect on its attractiveness as a place for tourists and on the general perception of London as a capital city compared with other European capital cities, and must have an impact on the long-term attractiveness of our capital as a major international financial and commercial centre.
    I am in no doubt that, if there is to be a significant improvement in London's transport, it must be through a public transport system. The only way in which we can make a satisfactory improvement in the public transport system in a way in which we can provide sufficient capacity and is environmentally acceptable is through rail systems, in particular through sub-surface rail systems. I very much welcome the Bill.
    On the Bill meeting the needs of the east end and docklands, I share with the House one of the most remarkable aerial experiences that I have ever had. It was about 10 years ago, shortly after we came into government, and when I was in the Department of the Environment. At the time, we were considering the powers that were to be included in the first Local Government Bill, and, in particular, powers to establish the urban development corporations. Along with my right hon. Friends the Members for Henley (Mr. Heseltine) and for Bridgwater (Mr. King), now Secretary of State for Defence, I took the helicopter journey down the Thames towards the docklands. That was the first time that I had had that aerial view of the east end of London. It was a staggering spectre of enormous desolation on a vast scale 10 years ago—miles and miles of waste, dereliction and abandonment. It is one of the most signal achievements of the Government that, in that dramatic period of just 10 years, there has been a total visual and built transformation of that crucial part of our capital city.
    The creation of better homes, new homes and jobs on an enormous scale has outstripped the provision of transport capacity. That process is continuing: indeed, it looks like becoming worse, with the further development of the Isle of Dogs and the enormous development of Canary wharf. Almost certainly the process, which I welcome, will spread further east, eventually into the development of the royal group of docks. Therefore, it is vital that we begin to provide that area with a proper mass transit system of which the Bill is a crucial component.
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    The Bill is vital to docklands and the east end, and I hope that it will be a precursor to the Government introducing the first of the London cross-rail links in the forthcoming session. The Bill relates to the extension of one tube line, but the cross-rail links are even more important than the Bill as a means of solving London's transport problems.
    The Bill is important, and I hope that the House will support it.
    9.9 pm
    Mr. Ron Leighton: I am pleased to follow the right hon. Member for Tonbridge and Mailing (Sir J. Stanley), who, as a latter-day Dr. Livingstone, discovered the east end in a helicopter. That is about the only way in which one can get around London these days.
    Those of us who represent the east end believe that we should evaluate the proposal to extend the Jubilee line against the background of London's crisis of traffic and transport. The congestion in London is now deplorable and one gets the impression that London is almost strangling itself.
    Things are getting worse. Public transport is dirty, squalid and congested. Surface traffic is slower moving than in the days of the horse and cart. I do not know whether the right hon. Member for Tonbridge and Mailing ever travels on the underground—
    Sir John Stanley: Every day.
    Mr. Leighton: In that case he will be aware, should he travel at rush hour, that the overcrowding is obscene. I agree with the right hon. Gentleman that such conditions are completely unworthy of a European capital city. It is vital that our transport infrastructure is internationally competitive. The French would not allow similar conditions to develop in Paris, and should Berlin become the capital of the united Germany, just watch the transport infrastructure that will develop.
    Congestion leads to inefficiency. The Confederation of British Industry has said that congestion in London costs £10 billion—that is a big bill, which must be paid by every London family. Some of the costs of that congestion are obvious and can be quantified—for example, the late arrival of staff. Vehicles that are constantly stuck in traffic jams must be serviced more frequently than others and are subject to extra repairs. Those traffic jams also lead to an increased consumption of fuel. One must also consider the overtime payments to staff who are delayed as well as the cost of those inordinate delays.
    Other costs faced by Londoners are less tangible. Many of our constituents find their journeys to and from work a twice-daily nightmare. No one can cost the frustration and sheer physical discomfort with which those people are obliged to put up every day. Millions of people who work and live in London must endure that and we cannot gauge easily the effect of that on their health and productivity. We are aware, however, that more and more days are lost to mental and stress-related illnesses. Many of those illnesses are related to the strain of getting to and from work. The congestion and the hours that it adds to the working day also add a huge cost to the social and family lives of Londoners.
    The problem is that no one is responsible for transport in London. The Secretary of State for Transport has told

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    us that he is not responsible. London must be the only major city in the world, east or west, without an elected authority responsible for transport. There is no co-ordination, coherence or strategy. Everything is piecemeal and ad hoc.
    The London transport infrastructure has been subject to decades of neglect, but our forefathers built a first-class transport system when they established the tube lines. That development took place when the country was not as wealthy as it is today. Now we hear about the economic miracle and all the rest of it, but in the past decade we have done nothing serious to improve our transport systems.
    On a previous occasion the Secretary of State told us that there was over-demand in London and that therefore he intended to put up fares—such was the policy behind the increases in fares. In recent years, fares have increased above the rate of inflation.
    For the foreseeable future, the policy is to increase fares higher than the rate of inflation. The idea is to price people off London Transport services. I know that London Transport quibbles about that and says that its policy is to put up fares to constrain the increase in the use of its services. I had lunch with the management last week and we discussed the matter. London Transport is playing with words. Constraining the increase in the use of London Transport services amounts to the same thing as pricing people off them.
    When the docklands light railway was first thought of—a Mickey Mouse elevated tram which was to cost £70 million—some of us said that it would not be sufficient and that we should have a proper railway. Now, the whole thing is being rebuilt and there will be no docklands light railway service of an evening or of a weekend until 1992. Incidentally, I agree with the right hon. Member for Tonbridge and Mailing that the solution to our transport problems lies in public transport rather than in making arrangements for the private motor car.
    Studies have produced three ideas. The first is the east-west cross rail, the second is the north-south Chelsea to Hackney line and the third is the extension of the Jubilee line. That third idea has been given priority. I represent the London borough of Newham, to which the line will come. I cannot oppose the line coming to Newham, but I have to ask whether this should have been the priority if our main aim was to end congestion in London. The answer to that is a clear no.
    The line is being built as a developers' railway. It is being built because of the Canary wharf development by Olympia and York, which will be importing people to 50,000 jobs. The developers need that railway and they have been leaning on the Government. The development in that area has been market-led. No infrastructure was built and there has been no planning. So what happens? Olympia and York leans on the Government with its cheque books or whatever. It has more power and more clout than the rest of us, so we get the extension of the Jubilee line. I asked the Minister what Olympia and York was to put in and was told that it would be £100 million over three years and the rest in a period of up to 15 years. Bearing in mind inflation, what are we talking about here? Very little. We are not talking about putting money up front. The truth is that Olympia and York has had an extremely good deal.
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    The House is familiar with the Public Accounts Committee's report on the development of Canary wharf, which said that Olympia and York had bought the land very cheaply. At the time, the land was changing hands at £5 million an acre but Olympia and York got its for £440,000 an acre. The PAC also said that there should have been an arrangement whereby the community should have reaped the benefit had there been super-profits. There has been no such arrangement.
    The idea of the Jubilee line has been around for 40 years; it is not a new idea. We are told that this is not the Government's Bill, although the Minister spoke for half an hour on it and so more or less took paternity for it. Why should he have spoken for half an hour on a Bill that had nothing to do with him?
    The truth is that the Government are always doing too little, too late. The idea of the Jubilee line first surfaced in 1948, when the London planning working party approved proposals for a number of new tube railways in the capital. They included a route J from Moorgate to New Cross and on to Woolwich and Plumstead and a line D, which included a section from Trafalgar square to Ludgate circus. For four decades the link to docklands has refused to die, although it has appeared in a number of guises. At one time it was called the River line; then it was called the Fleet line; now it is an extension of the Jubilee line.
    In 1970 London Transport sought powers to construct a line from Stanmore to Lewisham. The necessary consents were obtained for the first section to Charing Cross, which included a new tube tunnel from Baker Street, via Bond Street and Green Park. Debate continued about the line's future beyond that point.
    In October 1973, a study reported that the line could be a catalyst for the rejuvenation of docklands, so there is nothing new about the proposal. Sir Richard Way, who was then chairman of London Transport, observed:
    "transport and land use planning could work together so as to give maximum economic and social benefits."
    One of the main planks of the study was that the provision of homes, employment and commerce should be integrated with rapid transit to minimise the use of the private car. What, therefore, was being talked about then is our instruction now.
    A year later, Sir David Barran, who chaired the London rail study, described as "speculation" newspaper reports that the Fleet-Jubilee line would not run beyond Trafalgar Square-Charing Cross. There were doubts about that then.
    In 1976, the strategic study of the docklands joint committee—a committee of local authorities that the Government knocked on the head—described the line as
    "the key to the transformation of Docklands and east London."
    In 1976, therefore, the local authorities in east London asked for an extension of the Jubilee line.
    By 1979, the Greater London council said that it was prepared to go it alone by extending the line from Charing Cross to Fenchurch Street. Sir Horace Cutler, who was then leader of the Greater London council, said that the line was an integral part of the investment in London's future.
    The coup de grace seemingly fell on the Charing Cross to docklands link in July 1980 when the Government came out in favour of a £100 million programme of road improvements. The then Secretary of State for Transport, the right hon. Member for Sutton Coldfield (Sir N.

    389
    Fowler) and Sir Horace Cutler set out in a joint statement what they called a "firm" programme of docklands transport improvements over the next 15 years.
    The total cost of the roads programme was then put at £359 million. It included the docklands northern relief road, a new east London river crossing and road improvements on the Isle of Dogs.
    Nine years later, the Jubilee line extension to docklands has suddenly sprung back into the frame, but at something like five times the estimated £200 million cost of the proposed 1977 link to Thamesmead and Woolwich. All these ideas were on the stocks during the last 40 years. Had they been carried out then, they would have cost only a fraction of the total cost now. Our instruction asks that this development should take into account the economic and social benefits and the provision of homes and employment.
    My last and most important point is that the Jubilee line will not be the main means of solving London's congestion. There are two other proposals: the east-west crossrail and the north-south Hackney to Chelsea line. When we raised the matter with the Secretary of State for Transport, especially after he had abandoned his roads programme which would have cost £3 billion—so arguably that sum of money would have been available—we said that both proposals should be carried out, not just the one. However, he told us that it could not be done technically; it would be impossible to cope with the disruption and the spoil.
    Last week my hon. Friend the Member for Newham, South (Mr. Spearing) and I met the management of London Transport and asked whether both proposals could be carried out simultaneously. They said that without any doubt both could be carried out. Last week, London Transport gave evidence to the Select Committee on Transport and said that it wanted both simultaneously. I asked the Royal Institution of Chartered Surveyors, whose members would have to carry out the work, and asked whether it could be done, technically. The answer was yes. Therefore we support the extension of the Jubilee line to the London borough of Newham and understand why it has been given priority. But we want those other two lines as well and we want them carried out at the same time. That is technically possible and that cannot be denied. They are needed now to ease London's congestion.
    9.24 pm
    Mr. Hugo Summerson: I shall not detain the House for long and I shall confine my remarks largely to the Bill. It is a good thing to have extra underground lines in London, not merely because they are a good thing in themselves but because some areas of London are not well served and the Jubilee line extension will serve them well.
    The Jubilee line extension will also serve Canary wharf. Those two words are guaranteed to drive many Opposition Members to apoplexy. To them Canary wharf is a temple of capitalism, a place where large profits will be made. It is because of Canary wharf that many Opposition Members cannot bring themselves to offer a completely unequivocal welcome to the Bill.
    Ms. Ruddock: Let me put it on record that we have no objection to Canary wharf in principle. The developers have a job to do and their business is to make a profit. What we object to is that the Government's transport
    390
    policy and the transport of London is developer-led, and the Canary wharf developers are among those who appear to be able to set priorities.
    Mr. Summerson: I am delighted to hear the hon. Lady say that she does not object to Canary wharf. That is certainly not my impression from the speeches of several Opposition Members.
    I attended a debate in the early hours of this morning, or rather yesterday in parliamentary terms, on the subject of global warming and I spoke about the internal combustion engine and how I hoped that the day would come when it would be banned from our towns and cities. But before that can happen we need a good public transport system—not a publicly owned transport system.
    My constituency in north-east London, arguably in the lower Lea valley, is served by the Victoria line, but I am sure that many of my constituents would find the Jubilee line extension irresistible.
    I have heard a great deal, especially from Opposition Members, about the effect that the Jubilee line extension will have on Parliament square. I have listened to them with complete incredulity. The line is needed, yet we hear complaints about the effect that it will have on us and our work. I am sure that we can manage perfectly well to get on with our work. Our facilities are appalling, but we still manage to do our work. We would be displaying ourselves to the public as people who think more of their own interests than of the interests of the travelling public and of London itself if we opposed this.
    I also believe that we would get a new station. The present Westminster station is grotty. It is a disgrace. It is a place through which many people pass when they come to visit this famous and historic part of London, yet it has a horrible concourse and in heavy rain the underpass drips. It is revolting. We need a new station.
    Some hon. Members have said that the proposals will bring in more tourists and that that would be appalling. It may bring more tourists in but, my goodness, it will take them away again just as quickly. A new station and a new line may encourage tourists to come by underground and that would mean fewer coaches bunging up Parliament square and parking in the surrounding streets with their engines running.
    The new line will be to my convenience as well. I use the tube frequently to reach my constituency. At the moment I have to make a detour. I have to go from here to Victoria station and then on the Victoria line. To travel from Westminster up to Green Park and then straight on up the Victoria line will certainly cut my travelling time. The opposite side of the coin is that my constituents will have a quicker journey down to see me—and very welcome they will be.
    It is most important for London to maintain its position as a world capital and as a world financial centre. If we do not do that, we shall drop behind other places in Europe. We need the financial centre at Canary Wharf. We need a better transport infrastructure. The Bill will provide both, and I support it.
    Mr. Thorne rose in his place and claimed to move, That the Question be now put—
    Question put, That the Question be now put—
    The House divided: Ayes 180, Noes 65.

    Division No. 313]

    [9.30 pm

    AYES

    Alexander, Richard

    Hargreaves, Ken (Hyndburn)

    Amess, David

    Harris, David

    Amos, Alan

    Hayhoe, Rt Hon Sir Barney

    Arbuthnot, James

    Holt, Richard

    Arnold, Jacques (Gravesham)

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

    Ashby, David

    Howarth, G. (Cannock & B'wd)

    Aspinwall, Jack

    Hughes, Robert G. (Harrow W)

    Atkins, Robert

    Hunt, David (Wirral W)

    Baker, Rt Hon K. (Mole Valley)

    Irvine, Michael

    Baker, Nicholas (Dorset N)

    Jack, Michael

    Batiste, Spencer

    Janner, Greville

    Beaumont-Dark, Anthony

    Jessel, Toby

    Bellingham, Henry

    Jones, Gwilym (Cardiff N)

    Bendall, Vivian

    Key, Robert

    Bennett, Nicholas (Pembroke)

    Kilfedder, James

    Benyon, W.

    King, Roger (B'ham N'thfield)

    Bevan, David Gilroy

    King, Rt Hon Tom (Bridgwater)

    Blaker, Rt Hon Sir Peter

    Knapman, Roger

    Body, Sir Richard

    Knowles, Michael

    Boscawen, Hon Robert

    Lang, Ian

    Boswell, Tim

    Leigh, Edward (Gainsbor'gh)

    Bowden, A (Brighton K'pto'n)

    Lennox-Boyd, Hon Mark

    Bowden, Gerald (Dulwich)

    Lester, Jim (Broxtowe)

    Bowis, John

    Lightbown, David

    Braine, Rt Hon Sir Bernard

    Lord, Michael

    Brandon-Bravo, Martin

    MacKay, Andrew (E Berkshire)

    Brazier, Julian

    Maclean, David

    Bright, Graham

    McLoughlin, Patrick

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

    Major, Rt Hon John

    Bruce, Ian (Dorset South)

    Mans, Keith

    Budgen, Nicholas

    Maples, John

    Burns, Simon

    Marshall, John (Hendon S)

    Burt, Alistair

    Maxwell-Hyslop, Robin

    Butterfill, John

    Mayhew, Rt Hon Sir Patrick

    Carlisle, John, (Luton N)

    Miller, Sir Hal

    Carlisle, Kenneth (Lincoln)

    Mills, Iain

    Carrington, Matthew

    Miscampbell, Norman

    Cash, William

    Mitchell, Andrew (Gedling)

    Chalker, Rt Hon Mrs Lynda

    Mitchell, Sir David

    Chapman, Sydney

    Monro, Sir Hector

    Chope, Christopher

    Moss, Malcolm

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

    Moynihan, Hon Colin

    Clark, Dr Michael (Rochford)

    Neale, Gerrard

    Conway, Derek

    Newton, Rt Hon Tony

    Coombs, Simon (Swindon)

    Nicholls, Patrick

    Couchman, James

    Nicholson, David (Taunton)

    Currie, Mrs Edwina

    Norris, Steve

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

    Onslow, Rt Hon Cranley

    Davis, David (Boothferry)

    Oppenheim, Phillip

    Devlin, Tim

    Page, Richard

    Douglas-Hamilton, Lord James

    Paice, James

    Dover, Den

    Patnick, Irvine

    Dunn, Bob

    Pattie, Rt Hon Sir Geoffrey

    Durant, Tony

    Porter, David (Waveney)

    Dykes, Hugh

    Portillo, Michael

    Emery, Sir Peter

    Redwood, John

    Fairbairn, Sir Nicholas

    Renton, Rt Hon Tim

    Fallon, Michael

    Rhodes James, Robert

    Favell, Tony

    Ridsdale, Sir Julian

    Fenner, Dame Peggy

    Rifkind, Rt Hon Malcolm

    Field, Barry (Isle of Wight)

    Roberts, Sir Wyn (Conwy)

    Fishburn, John Dudley

    Rumbold, Mrs Angela

    Fookes, Dame Janet

    Sackville, Hon Tom

    Forsyth, Michael (Stirling)

    Scott, Rt Hon Nicholas

    Fox, Sir Marcus

    Shaw, David (Dover)

    Fraser, John

    Shaw, Sir Michael (Scarb')

    Freeman, Roger

    Shephard, Mrs G. (Norfolk SW)

    Gale, Roger

    Smith, Tim (Beaconsfield)

    Gill, Christopher

    Spicer, Sir Jim (Dorset W)

    Goodhart, Sir Philip

    Spicer, Michael (S Worcs)

    Goodlad, Alastair

    Squire, Robin

    Grant, Sir Anthony (CambsSW)

    Stanley, Rt Hon Sir John

    Gregory, Conal

    Steen, Anthony

    Griffiths, Peter (Portsmouth N)

    Stern, Michael

    Hague, William

    Stevens, Lewis

    Hamilton, Neil (Tatton)

    Stewart, Allan (Eastwood)

    Hampson, Dr Keith

    Stewart, Andy (Sherwood)

    392

    Stradling Thomas, Sir John

    Walker, Bill (T'side North)

    Sumberg, David

    Waller, Gary

    Taylor, Ian (Esher)

    Ward, John

    Taylor, John M (Solihull)

    Warren, Kenneth

    Tebbit, Rt Hon Norman

    Wells, Bowen

    Thompson, Patrick (Norwich N)

    Wheeler, Sir John

    Thorne, Neil

    Winterton, Mrs Ann

    Thurnham, Peter

    Wood, Timothy

    Townsend, Cyril D. (B'heath)

    Woodcock, Dr. Mike

    Tredinnick, David

    Yeo, Tim

    Trippier, David

    Young, Sir George (Acton)

    Twinn, Dr Ian

    Viggers, Peter

    Tellers for the Ayes:

    Waldegrave, Rt Hon William

    Miss Ann Widdecombe and

    Walden, George

    Mr. Hugo Summerson.

    NOES

    Anderson, Donald

    Hughes, Roy (Newport E)

    Armstrong, Hilary

    Hughes, Simon (Southwark)

    Banks, Tony (Newham NW)

    Jones, Barry (Alyn & Deeside)

    Barnes, Harry (Derbyshire NE)

    Lamond, James

    Beith, A. J.

    Lewis, Terry

    Bermingham, Gerald

    Lofthouse, Geoffrey

    Blackburn, Dr John G.

    Loyden, Eddie

    Callaghan, Jim

    McKay, Allen (Barnsley West)

    Campbell, Menzies (Fife NE)

    McWilliam, John

    Campbell-Savours, D. N.

    Martin, Michael J. (Springburn)

    Clwyd, Mrs Ann

    Meale, Alan

    Cohen, Harry

    Michie, Bill (Sheffield Heeley)

    Coleman, Donald

    Morris, Rt Hon A. (W'shawe)

    Cook, Frank (Stockton N)

    Mowlam, Marjorie

    Cryer, Bob

    Nellist, Dave

    Davies, Rt Hon Denzil (Llanelli)

    Neubert, Michael

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

    O'Brien, William

    Dixon, Don

    Orme, Rt Hon Stanley

    Duffy, A. E. P.

    Parry, Robert

    Dunnachie, Jimmy

    Pike, Peter L.

    Eadie, Alexander

    Powell, Ray (Ogmore)

    Eastham, Ken

    Primarolo, Dawn

    Ewing, Mrs Margaret (Moray)

    Redmond, Martin

    Fearn, Ronald

    Ruddock, Joan

    Foster, Derek

    Skinner, Dennis

    Fyfe, Maria

    Steel, Rt Hon Sir David

    Godman, Dr Norman A.

    Vaz, Keith

    Golding, Mrs Llin

    Wareing, Robert N.

    Gordon, Mildred

    Wilson, Brian

    Greenway, Harry (Ealing N)

    Wise, Mrs Audrey

    Hoey, Ms Kate (Vauxhall)

    Hogg, N. (C'nauld & Kilsyth)

    Tellers for the Noes:

    Home Robertson, John

    Mr. Andrew F. Bennett and

    Hood, Jimmy

    Mr. George J. Buckley.

    Howarth, George (Knowsley N)

    Question accordingly agreed to.
    Question put accordingly, That the Bill be now read a Second time—
    The House proceeded to a Division:—
    Ms. Gordon: On a point of order, Mr. Deputy Speaker—
    Mr. Deputy Speaker (Sir Paul Dean): I shall take it after the Division.
    The House having divided: Ayes 188, Noes 50.

    Division No. 314]

    [9.42 pm

    AYES

    Alexander, Richard

    Bendall, Vivian

    Amess, David

    Bennett, Nicholas (Pembroke)

    Amos, Alan

    Benyon, W.

    Arbuthnot, James

    Bermingham, Gerald

    Arnold, Jacques (Gravesham)

    Bevan, David Gilroy

    Ashby, David

    Blaker, Rt Hon Sir Peter

    Aspinwall, Jack

    Body, Sir Richard

    Atkins, Robert

    Boscawen, Hon Robert

    Baker, Rt Hon K. (Mole Valley)

    Boswell, Tim

    Baker, Nicholas (Dorset N)

    Bowden, A (Brighton K'pto'n)

    Beaumont-Dark, Anthony

    Bowden, Gerald (Dulwich)

    Bellingham, Henry

    Bowis, John

    393

    Braine, Rt Hon Sir Bernard

    Leighton, Ron

    Brandon-Bravo, Martin

    Lennox-Boyd, Hon Mark

    Bright, Graham

    Lester, Jim (Broxtowe)

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

    Lightbown, David

    Bruce, Ian (Dorset South)

    Lord, Michael

    Buchanan-Smith, Rt Hon Alick

    MacKay, Andrew (E Berkshire)

    Budgen, Nicholas

    Maclean, David

    Burns, Simon

    McLoughlin, Patrick

    Burt, Alistair

    McNair-Wilson, Sir Michael

    Butterfill, John

    Major, Rt Hon John

    Carlisle, John, (Luton N)

    Mans, Keith

    Carlisle, Kenneth (Lincoln)

    Maples, John

    Carrington, Matthew

    Marshall, John (Hendon S)

    Cash, William

    Maxwell-Hyslop, Robin

    Chalker, Rt Hon Mrs Lynda

    Mayhew, Rt Hon Sir Patrick

    Chapman, Sydney

    Miller, Sir Hal

    Chope, Christopher

    Mills, Iain

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

    Miscampbell, Norman

    Colvin, Michael

    Mitchell, Andrew (Gedling)

    Conway, Derek

    Mitchell, Sir David

    Cook, Frank (Stockton N)

    Monro, Sir Hector

    Coombs, Simon (Swindon)

    Moss, Malcolm

    Couchman, James

    Moynihan, Hon Colin

    Currie, Mrs Edwina

    Needham, Richard

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

    Neubert, Michael

    Davis, David (Boothferry)

    Newton, Rt Hon Tony

    Devlin, Tim

    Nicholls, Patrick

    Douglas-Hamilton, Lord James

    Nicholson, David (Taunton)

    Dover, Den

    Norris, Steve

    Dunn, Bob

    Oppenheim, Phillip

    Durant, Tony

    Page, Richard

    Dykes, Hugh

    Paice, James

    Emery, Sir Peter

    Patnick, Irvine

    Fallon, Michael

    Porter, David (Waveney)

    Favell, Tony

    Portillo, Michael

    Fenner, Dame Peggy

    Redwood, John

    Field, Barry (Isle of Wight)

    Renton, Rt Hon Tim

    Fishburn, John Dudley

    Rhodes James, Robert

    Fookes, Dame Janet

    Rifkind, Rt Hon Malcolm

    Forsyth, Michael (Stirling)

    Roberts, Sir Wyn (Conwy)

    Forth, Eric

    Ruddock, Joan

    Fox, Sir Marcus

    Rumbold, Mrs Angela

    Fraser, John

    Sackville, Hon Tom

    Freeman, Roger

    Scott, Rt Hon Nicholas

    Gale, Roger

    Shaw, David (Dover)

    Gill, Christopher

    Shaw, Sir Michael (Scarb')

    Goodhart, Sir Philip

    Shephard, Mrs G. (Norfolk SW)

    Goodlad, Alastair

    Smith, Tim (Beaconsfield)

    Gordon, Mildred

    Spearing, Nigel

    Grant, Sir Anthony (CambsSW)

    Spicer, Sir Jim (Dorset W)

    Gregory, Conal

    Spicer, Michael (S Worcs)

    Griffiths, Peter (Portsmouth N)

    Squire, Robin

    Ground, Patrick

    Stanley, Rt Hon Sir John

    Hague, William

    Steen, Anthony

    Hamilton, Neil (Tatton)

    Stern, Michael

    Hampson, Dr Keith

    Stevens, Lewis

    Hargreaves, Ken (Hyndburn)

    Stewart, Allan (Eastwood)

    Harris, David

    Stewart, Andy (Sherwood)

    Hayhoe, Rt Hon Sir Barney

    Stradling Thomas, Sir John

    Holt, Richard

    Sumberg, David

    Home Robertson, John

    Taylor, Ian (Esher)

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

    Taylor, John M (Solihull)

    Howarth, G. (Cannock & B'wd)

    Tebbit, Rt Hon Norman

    Howe, Rt Hon Sir Geoffrey

    Thompson, D. (Calder Valley)

    Hughes, Robert G. (Harrow W)

    Thompson, Patrick (Norwich N)

    Hunt, David (Wirral W)

    Thorne, Neil

    Irvine, Michael

    Thurnham, Peter

    Jack, Michael

    Townsend, Cyril D. (B'heath)

    Janner, Greville

    Tredinnick, David

    Jessel, Toby

    Trippier, David

    Jones, Gwilym (Cardiff N)

    Twinn, Dr Ian

    Key, Robert

    Waldegrave, Rt Hon William

    Kilfedder, James

    Walden, George

    King, Roger (B'ham N'thfield)

    Walker, Bill (T'side North)

    King, Rt Hon Tom (Bridgwater)

    Waller, Gary

    Kirkhope, Timothy

    Ward, John

    Knapman, Roger

    Warren, Kenneth

    Knowles, Michael

    Wells, Bowen

    Lang, Ian

    Wheeler, Sir John

    Leigh, Edward (Gainsbor'gh)

    Winterton, Mrs Ann

    394

    Wood, Timothy

    Woodcock, Dr. Mike

    Tellers for the Ayes:

    Yeo, Tim

    Miss Ann Widdecombe and

    Young, Sir George (Acton)

    Mr. Hugo Summerson.

    NOES

    Anderson, Donald

    Jones, Barry (Alyn & Deeside)

    Banks, Tony (Newham NW)

    Lamond, James

    Beith, A. J.

    Lewis, Terry

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

    Lofthouse, Geoffrey

    Blackburn, Dr John G.

    Loyden, Eddie

    Blunkett, David

    McKay, Allen (Barnsley West)

    Callaghan. Jim

    McWilliam, John

    Campbell, Menzies (Fife NE)

    Martin, Michael J. (Springburn)

    Campbell-Savours, D. N.

    Meale, Alan

    Clelland, David

    Michie, Bill (Sheffield Heeley)

    Cohen, Harry

    Morris, Rt Hon A. (W'shawe)

    Cryer, Bob

    O'Brien, William

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

    Orme, Rt Hon Stanley

    Dixon, Don

    Parry, Robert

    Duffy, A. E. P.

    Powell, Ray (Ogmore)

    Dunnachie, Jimmy

    Primarolo, Dawn

    Eadie, Alexander

    Redmond, Martin

    Eastham, Ken

    Skinner, Dennis

    Ewing, Mrs Margaret (Moray)

    Steel, Rt Hon Sir David

    Fearn, Ronald

    Turner, Dennis

    Foster, Derek

    Wareing, Robert N.

    Fyfe, Maria

    Wilson, Brian

    Godman, Dr Norman A.

    Wise, Mrs Audrey

    Golding, Mrs Llin

    Greenway, Harry (Ealing N)

    Tellers for the Noes:

    Howarth, George (Knowsley N)

    Mr. Harry Barnes and

    Hughes, Roy (Newport E)

    Mr. George Buckley.

    Question accordingly agreed to.
    Bill read a Second time and referred to the Examiners of Petitions for Private Bills.
    Ordered,
    That it be an Instruction to the Committee on the Bill to have regard to the need for regeneration of local communities and local industries in and around the areas of London Dockland and Lower Lea Valley.—[Mr. Spearing.]
    Ordered,
    That it be an Instruction to the Committee on the Bill that in its consideration of the Bill it take account of the findings and recommendations contained in the Third Report of the Select Committee on House of Commons (Services) of Session 1989–90, New Parliamentary Building (Phase 2) and the Jubilee Line Proposals.—[Mr. Ray Powell.]
    Ms. Gordon: On a point of order, Mr. Deputy Speaker. Only two hon. Members were waiting to speak at 9.30 pm, both of whose constituencies are affected by the Bill. Both hon. Members sat through the whole of the debate on 12 July, and again today—yet the debate was closed at 9.30 pm when it could have continued till 10.30 pm. I hope that my constituents, who support the extension of the Jubilee line but have suffered from years of disruption because of the building of the docklands light railway, Canary wharf and the docklands highway, will be treated with more consideration during the building of this extension than their representative was tonight.
    Miss Kate Hoey: On a similar point of order, Mr. Deputy Speaker. I hope that the reason why the two hon. Members were not called was not that they are women. I am sure that that is not so. My constituents are concerned about Jubilee gardens and the effect of it. I hope that London Underground will treat them with more respect than the promoter treated the two hon. Members tonight.
    Mr. Cryer rose—
    Mr. Andrew F. Bennett rose—
    Mr. Deputy Speaker: Order. I shall deal with the points of order by the hon. Members for Vauxhall (Miss Hoey) and for Bow and Poplar (Ms. Gordon). I am sorry that they were disappointed and that time ran out, but if it helps I can confirm that they were here for the majority of the Second Reading debate.
    Mr. Cryer: On a point of order, Mr. Deputy Speaker. In the debate on 12 July, I mentioned the environmental statement that London Underground had produced. The promoters have provided a statement for the Bill, and this links with the two points of order that have been made. I was sent a copy of the statement through the post, but only because I had said that the statement was not available to hon. Members in the Vote Office. Will you, through your good offices, Mr. Deputy Speaker, draw the attention of promoters to the desirability of making environmental statements readily available? I know that they are expensive, but compared with the hundreds of millions of pounds that are being poured into the line, a small amount of money is involved. Hon. Members who will serve on the Committee that considers the Bill should be provided with it as a matter of right. I know that this is not a Standing Order obligation, but I hope that you can use your good offices to ensure that that is done.
    Mr. Deputy Speaker: As the hon. Gentleman knows, as he has raised this with the Chair before, it is the job of the Chair to be satisfied that the relevant parliamentary documents are available. His comments about documents being provided by promoters will be heard in the appropriate quarter. As he recognises, it is not a matter for the Chair.
    Mr. Andrew F. Bennett: On a point of order, Mr. Deputy Speaker. Will you consider how the Chairman of the Committee will be appointed? My hon. Friend the Member for Jarrow (Mr. Dixon) mentioned how Chairmen have been appointed to Committees in recent months. The feeling in some quarters is that there has been manipulation of the order in which Bills have been taken to ensure a Conservative Chairman for controversial Bills and an Opposition Chairman for non-controversial Bills. As I understand it, the tradition of private business is that hon. Members are totally independent and are not involved with the Bill. Are you satisfied, Mr. Deputy Speaker, that any hon. Member can be totally impartial on a Bill that will affect our access to and from the House?
    If the tradition of hon. Members being independent is to be maintained—four of them will consider the Bill, one of whom will have a casting vote—careful inquiries must be made to discover whether the Bill was set down for consideration a fortnight ago and again today to secure a
    396
    Conservative Member as Chairman of the Committee. I think that that would have serious implications for the impartiality of that Committee and of hon. Members.
    Mr. Simon Hughes: On a point of order, Mr. Deputy Speaker.
    Mr. Deputy Speaker: Is it the same point of order?
    Mr. Hughes: Yes, Mr. Deputy Speaker. It is further to and in support of the point of order made by the hon. Member of Denton and Reddish (Mr. Bennett). I ask you and your colleagues to reflect on the matter. I do not make a personal comment when I say that the Bill's sponsor is a Conservative Member—[Interruption.] No, that is not an offence. The issue of the impartiality of the Chairman of a Committee is relevant in view of the direction of the promotion. For understandable reasons, London Transport chooses—as it is entitled to do—which Member sponsors its Bill. Surely that should be a factor in influencing the choice of Chairman of the Committee, by having someone other than a Conservative Member as the Chairman. I hope that a balance can be sustained to show that the Committee is truly impartial.
    Mr. Deputy Speaker: I understand the points of order that have been made by the hon. Members for Denton and Reddish (Mr. Bennett) and for Southwark and Bermondsey (Mr. Hughes). The House recognises the onerous task of hon. Members who chair and serve on Opposed Bill Committees. I do not believe that any of the points raised are issues for the Chair, although of course I shall carefully consider the hon. Members' comments. This is a matter for the Committee of Selection. I feel sure that the two hon. Members will wish to draw their points to the attention of the Chairman of that Committee.

    Redbridge London Borough Council Bill
    Order read for consideration of Lords amendments.
    9.59 pm
    Mr. Martin Redmond: On a point of order, Mr. Deputy Speaker.
    Mr. Deputy Speaker: Order. In a moment. Lords amendments to be considered what day?
    Ordered,
    That the Lords amendments be considered tomorrow.
    Mr. Redmond: That answers my question, Mr. Deputy Speaker.

    BUSINESS OF THE HOUSE
    Ordered,
    That, at this day's sitting, the Contracts (Applicable Law) Bill [Lords] may be proceeded with, though opposed, until any hour.—[Mr. Lightbown.]

Orders of the Day

  Contracts (Applicable Law) Bill [Lords]
  Not amended (in the Standing Committee), considered—[Queen's Consent, on behalf of the Crown, signified.]
  Bill reported, without amendment; not amended, considered; read the Third time, and passed, without amendment.

  European Bank for Reconstruction and Development
  [Relevant document: European Community Document No. 5962/90 on conclusion of the Articles of Agreement establishing a European Bank for Reconstruction and Development.]
  10.2 pm
  The Minister for Overseas Development (Mrs. Lynda Chalker): I beg to move,
  That the draft European Bank for Reconstruction and Development (Subscription to Capital Stock) Order 1990, which was laid before this House on 13th July, be approved.
  I understand that it is agreeable that the House should consider at the same time the other motion on the Order Paper:
  That the draft European Bank for Reconstruction and Development (Immunities and Privileges) Order 1990, which was laid before this House on 13th July, be approved.
  Mr. Deputy Speaker (Sir Paul Dean): If the House agrees, so be it.
  Mrs. Chalker: The explanatory memorandum circulated on the EC proposal—Document No. 5692/90—for a Council decision on the conclusion of the articles of agreement establishing a European Bank for Reconstruction and Development is most relevant and I greatly welcome the interest of the House of Commons Select Committee on European Legislation, which has recommended a debate at an early stage.
  I spoke with the Chairman of the Select Committee, the hon. Member for Newham, South (Mr. Spearing) and explained that, in the short time available, it has not been possible to arrange the separate debate recommended. I look forward tonight to a thorough debate on the orders and on all aspects raised by establishment of the new bank. It may be helpful to the House if I also deal with points arising from the Community document.
  The House will acknowledge the extraordinary change in central and eastern Europe. Yesterday's dictatorships have been replaced by today's reborn democracies. The spurious certainties of centrally planned economies have given way to the opportunities and disciplines of the free market. The free world has reacted quickly to this momentous process, and must continue to do so if it is to help and influence events. It would be difficult to find a clearer example of quick reaction and long-term commitment than this new European Bank for Reconstruction and Development, or EBRD, which we are to discuss today.
  It was only in December last year that the European Council decided at its meeting in Strasbourg to establish, as soon as possible, a new European bank to further the implementation in central and eastern European countries
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  of democracy and economic reform. I shall have more to say about the purposes of the new bank in a moment. That decision in Strasbourg set in train a process of urgent, but careful, diplomacy. Preparatory discussions began in Paris in January this year, and continued almost unbroken until the articles of agreement establishing the bank were signed by representatives of its 42 prospective members in Paris on 29 May.
  Mr. Bowen Wells: Can my right hon. Friend tell us whether, during the course of the negotiations, any of the European countries involved ever consulted any of their Parliaments, or presented any document to any of their national Parliaments or to the European Parliament?
  Mrs. Chalker: I remember that, after the European Council meeting at Strasbourg, my right hon. Friend the Prime Minister reported to the House on the sort of procedures that would be undertaken. Further to that, we got on with the basic organisational work—which was purely organisational. Subsequently, we have presented an explanatory memorandum to the Select Committee on European Legislation, and have carried out the work that was necessary to enable us to implement the decisions made at Strasbourg last December.
  My right hon. Friend the Chancellor of the Exchequer and our ambassador in Paris signed the articles of agreement for the United Kingdom, and the European Commission and the Irish presidency signed on behalf of the Community. However, the House's approval of the two draft orders is requested tonight before the Government move to ratify the agreement. The agreement could not even have been considered further unless it had been signed by all the members back in May. Equally, the scrutiny aspect will need to be resolved to the satisfaction of the House, and it was on that matter that I consulted the Chairman of the Select Committee.
  Members of the new bank will include the world's leading economic powers—all members of the Organisation for Economic Co-operation and Development—including Japan, the United States and, of course, all European Community member states, the European Economic Community itself and the European Investment Bank. All the emerging democracies of central and eastern Europe have signed and are potential recipients. Assistance from the new bank will be an important element in their continued progress towards political and economic reform.
  However, the new bank has attracted support not only from the free-market West, but also from the old communist East. Egypt, Israel, the republic of Korea, Mexico and Morocco have also signed the articles; so it is truly an international effort, and we must ensure that the impetus of that effort is maintained.
  The articles of agreement will come into force—and the bank will come into existence—only when ratified by signatories representing two thirds of the total voting power, including at least two countries from central and eastern Europe. It is thus imperative that the process of ratification be completed thoroughly but quickly: France has already done that.
  We want to exercise our vote when the first decisions are made on bank strategy and investment proposals. As host nation, the United Kingdom wishes—with the consent of both Houses of Parliament to the draft orders

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  —to be among the first to ratify, so encouraging early ratification by others. The president-designate, Mr. Attali, wants the agreement to enter into force early next year, so that the bank can begin quickly to make its vital contribution to the development of eastern European economies, and hence underpin the emerging free-market democracies. That would be consistent with the leading role that the Government have taken in encouraging reform in eastern Europe, and in ensuring that the Community responds positively to it.
  Mr. Nicholas Budgen: Why does my right hon. Friend use the word "vital"? Is that a mere pun to try to excite us about the size or does it really mean that this will be a substantial and subsidised institution which will be spreading a lot of the taxpayers' money around eastern Europe?
  Mrs. Chalker: I follow precisely what my right hon. Friend the Prime Minister has said in the matter. We intend that the bank should provide the stimulus for private investment in eastern Europe and not be a drain on the resources of the British or any other taxpayer. Instead, it should stimulate the development of the central and eastern European economies that we know they are well capable of.
  The need to have capital to start up is obvious and understandable. However, I cannot divert from anything that my right hon. Friend the Prime Minister said in that respect on 1 May in the House, when she reported back from the European Council in Dublin which also discussed the matter, as did the European Council in Strasbourg last December.
  Mr. Bob Cryer: As the money will be invested in eastern European economies as seed money and so forth, is it sensible for the Government to spend £10,000 million on Trident nuclear weapons which will presumably be aimed at those economies? Are the Government not investing money with the threat of mass extermination and destruction of that investment?
  Mrs. Chalker: If I strayed into the realms that the hon. Gentleman tempts me into, I do not believe that I would have your support, Mr. Deputy Speaker. Therefore, I will not follow the hon Gentleman's path.
  Mr. Budgen: Will my right hon. Friend give way?
  Mrs. Chalker: I want to get on with the debate. I have already given way to my hon. Friend the Member for Wolverhampton, South-West (Mr. Budgen) and I want to continue, because we have only one and a half hours to debate the subject. I do not want to cut the time available for Back Benchers.
  It would be helpful if I set out the Government's view on the proposal for a Council decision on Community ratification of the articles.
  As I mentioned earlier, it was the Strasbourg Council of 8 and 9 December last year which set in train the detailed negotiations which led to the articles of agreement. It is thus very much an initiative of the Heads of Government of the Twelve. This is acknowledged in the majority shareholding specified in the articles for the member states of the Community, the Community itself and the European investment bank.
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  The board of governors of the EIB has already authorised its membership as it is entitled to do under the EIB statute. If approved, the proposed Council decision will authorise Community membership of the EBRD. As is usual in these cases, we think that the Community should ratify only when all member states have done so. The draft decision is presently before the European Parliament, and we expect it to come to the Council in the autumn. It will require unanimous approval by the Council of Ministers.
  Under the proposal, the Commission would have the right to appoint the Community's own governor and director, and would represent the Community within the EBRD, alongside member states and other shareholders, including the European Investment Bank. The Community and EIB will each hold 3 per cent. of voting power.
  The House will want to know the financial implications. The Community's capital subscription will be for 300 million ecu—about £225 million, of which the paid-in element will be 90 million ecu—about £65 million. Our share of the EC capital subscription—based on our current share of the EC budget—will be approximately £45 million, of which £15 million would be paid in.
  I hope that the House will agree that it is important that the Community becomes a member of the new institution quickly, so giving it a voice in the new institution. The Community and its 12 members can take much of the credit for the bank's existence and future.
  It is possible that the draft Council decision may come to the Council in the autumn while the House is still in recess. The United Kingdom may thus be asked to give agreement in the Council before Parliament reassembles in October. As host nation and a leading member of the new bank, the United Kingdom would not want to delay unduly its entry into force. I hope, therefore, that the House will agree, after tonight's full debate, when hon. Members have had the opportunity recommended by the Scrutiny Committee to examine the matter in detail, that we should proceed.
  Mr. Nigel Spearing: I thank the Minister for mentioning that point. As she will know, for reasons that she has explained, the orders have come before the final decision and ratification of the articles in the regulations, which we are not formally discussing tonight. Does she agree that, if discussions are necessary, there might be another debate after the measure is set up, which will not be before the decision but perhaps after, when the full details are known?
  Mrs. Chalker: As the hon. Gentleman knows, I shall certainly bear in mind what he says. At present, the proposed Council decision is not likely to come back perhaps even until the October session of the Foreign Affairs Council. Obviously that is a matter that I shall consider with great care. It is subject to negotiation, but, given the work that has been done earlier in the year to prepare for this stage, I suspect that there is unlikely to be any great diversion from what we have already seen and what we know.
  I should now address the significance of the two orders that I ask the House to approve tonight. The articles of agreement signed by the Chancellor on 29 May were presented in Parliament as Command Paper 1116 on 28 June. The orders commit the United Kingdom to certain

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  obligations which I ask the House to approve tonight before we can move to the ratification of the articles of the agreement.
  I should like to discuss the subscription order first. The total authorised stock of the bank will be worth 10 billion ecu. The United Kingdom will subscribe to 85,175 shares in the new Bank—a total subscription of 851·75 million ecu, or about £600 million. That makes us equal-second largest contributor, along with France, the Federal Republic of Germany and Italy—that is, the four largest European Community members—and Japan. The largest shareholder will be the United States of America, with 100,000 shares
  Much consideration was given to the question of what share of the capital should be paid in if the bank was to make an effective contribution to economic development. We think that the agreed figure of 3 billion ecu, or 30 per cent. of the capital stock, is the right one for the bank's initial operations, given that bank finance is intended to act as the catalyst for the generation of private investment.
  Thirty per cent. of our subscription will thus be paid in, and the remainder will be callable, so our paid-in shares will be for 255·5 million ecu, or about £190 million. That will be payable in five equal annual amounts, the first of which must be made within 60 days after the articles have been ratified by the necessary two thirds of members and the agreement enters into force. Half our subscription can be paid in cash, and half in promissory notes. Each cash payment and each note would therefore be for just under £20 million.
  As my right hon. Friend the Member for Bristol, West (Mr. Waldegrave) told the House on 2 July, we agree with the recommendation of the Foreign Affairs Select Committee in its recent report on Foreign and Commonwealth Office/Overseas Development Administration expenditure that our subscription to the EBRD should be paid out of the aid vote for eastern European support and not from the money voted for our contributions to multilateral organisations. Those funds, like our other assistance for eastern Europe, are additional to and quite separate from our traditional aid programme. I can assure the House that our support for eastern and central Europe is not at the expense of developing countries. The Government entirely agree that this should not be so.
  As the House is aware, the new bank is to be based in London. There was a great deal of interest by other members in the question of location; and good cases were indeed made for several other European cities. I am very pleased, however, that London's advantages were clearly acknowledged to be compelling, when the final choice was made. I am sure that this will be good for London and for the bank. I should like to pay tribute to the negotiators, who put so much hard work into ensuring that the bank should come to London.
  As a member of the bank, we shall, of course, need to grant it certain immunities and privileges. The draft order will give effect to the immunities and privileges set out in chapter VIII of the articles of agreement, and attested to by all signatories as necessary to enable the bank to fulfil its purpose and functions. All member states will grant the bank these immunities and privileges. The order will confer legal status upon the bank and give it certain exemptions from duties and taxation; its property will also enjoy certain immunities from seizure.
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  The officers and employees of the bank will be exempt from taxation on the salaries paid to them by the bank, although they will pay an internal tax for the benefit of the bank, and they will be immune from suit and legal process in respect of their official acts.
  While the order cannot come into force until the date on which the agreement establishing the bank comes into force—that is, after ratification by members with two thirds of the total voting power—it is important that the draft order be approved now so that the United Kingdom can ratify as proposed.
  We shall also need to negotiate a headquarters agreement with the bank, as an international organisation to be established in this country. This headquarters agreement will set out in detail the immunities and privileges of the bank and its employees, within the limits imposed by the International Organisations Act 1968, and will require a further order to be approved by the House when negotiations are completed.
  The headquarters agreement, once approved by Parliament, will not have effect until the bank comes into existence, but as host nation, we would of course wish matters to be settled before entry into force of the articles of agreement. We would therefore expect to return to the House with the second order as soon as possible in the autumn.
  The United Kingdom is already home to several important international organisations, but this is the first multilateral development bank to be established here. In basing the bank in London, the international community acknowledges and signifies its intention to make use of London's continuing pre-eminence as a financial centre. The bank will be able to draw on unrivalled banking expertise, and will be a part of the most important financial market in Europe.
  This is not only to the advantage of the bank; we think that it is of tremendous benefit to the City also. Even the healthiest of bodies can benefit from new blood; and great institutions must attract important new players if they are to stay out in front. The location of the bank in London, with close access to its investors and its customers, is to our mutual credit and advantage. I look forward to the further strengthening of British financial involvement in central and eastern Europe.
  That is why the Government have pledged support to the new bank in finding a home in London. We have already, at Mr. Attali's request, arranged a lease on temporary premises at Broadgate in the City, and the bank's transitional team of experts will start operations from there next month. We have also engaged a firm of London surveyors to help the bank locate a permanent headquarters, and I understand that steady progress is being made. The choice of a building is for the bank itself; I hope that an announcement will be possible soon on the bank's permanent location.
  I should like now to put these detailed comments into context, by saying something of the purpose of the new bank. The EBRD is a notable first in another area too, which is of greater historical significance than those mentioned so far. The Government have insisted from the start of negotiations to establish the bank that it should make an explicit commitment to promoting democratic principles and acknowledging the importance of economic and political progress.
  That commitment is clearly stated in the bank's articles. The countries of eastern and central Europe have missed

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  out on 40 years or more of the developments which we have experienced in the free world. Events of the past year have confirmed the essential health and vigour of the democratic spirit; but economic well-being is not easily or quickly restored.
  It is worth a brief look at article 2 of the new bank's articles of agreement to see how it is intended to help. It intends
  "To promote, through private and other interested investors, the establishment … of productive, competitive and private sector activities, in particular small and medium size enterprises … To mobilise domestic and foreign capital and experienced management"—
  Mr. Budgen: Will my right hon. Friend give way?
  Mrs. Chalker: I shall give way once more to my hon. Friend.
  Mr. Budgen: The central question here is why the private sector cannot do these things. My right hon. Friend is using exactly the same language that the Labour Government used in promoting the Industrial Reorganisation Corporation. We are talking about a state bank interfering in European affairs.
  Mr. D. N. Campbell-Savours: A joint state bank.
  Mr. Budgen: A joint state bank perhaps, but a state bank nevertheless.
  Mr. Wells: An unaccountable state bank.
  Mr. Budgen: Yes, an unaccountable state bank.
  Will my right hon. Friend please explain why private merchant banks cannot do the job?
  Mrs. Chalker: It is interesting to be taking part once more in a European debate of the kind that so excites the interest of my hon. Friend the Member for Wolverhampton, South-West (Mr. Budgen). I find it slightly strange, after all the months that have gone by during which my right hon. Friend the Prime Minister has made it absolutely clear to the House—
  Mr. Budgen: Never mind the Prime Minister.
  Mrs. Chalker: My hon. Friend may not mind what the Prime Minister says; I happen to support my right hon. Friend and agree with her.
  I believe that it is a good thing to have a bank that fosters and encourages private investment in the region because it will give a lead in eastern and central Europe. But the bank will not be in competition with the private sector. It will not lend when funding is available for project proposals from other sources on reasonable terms, but it will lend for a number of activities, one of which I should have been coming to shortly had my hon. Friend given me the opportunity to reach that point in my remarks.
  The bank will enable things to be done which might otherwise not have been done but which are in the international interest. I refer, of course, to the control of pollution and the improvement of the environment. I have no hesitation in saying that I believe that it is right that the developed nations, which are economically active in a free market, should give help to the developing economies of central and eastern Europe to improve the environment, which knows no geographical bounds.
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  Let me return to what I was saying a few moments ago. It is important that the new bank's articles of agreement are well understood. I quoted one of them and I should like to mention two others. The second is the one that refers to
  "environmentally sound and sustainable development".
  The other refers to fostering
  "productive investment in related infrastructure where that is necessary to support private and entrepreneurial initiative".
  Only people who have travelled in central and eastern Europe and who know of the dearth of such infrastructure will fully understand that that is necessary before certain other developments can take place which will involve, and be wholly funded by, the private sector. That is why there is a need for a mix of private and public sector involvement in advancing the economies of central and eastern Europe.
  Mr. Anthony Nelson: The organisation is termed a bank, yet it is apparent from the documents that a significant proportion of the moneys may be applied to equity investment. Can my right hon. Friend explain why it is necessary to devote funds for risk capital being put up by the nation states? I am wholly in favour of the concept of a bank and if I catch your eye, Mr. Deputy Speaker, I shall seek to argue for that. But I cannot quite see why the bank needs to be investing in risk capital and equity participation.
  Mrs. Chalker: If I may, I shall come to that point later.
  It is important to understand that the bank has a broad and demanding remit. It is not to act alone; it is to act as a catalyst. It will not substitute for or supplant private finance. However, it will have a major part to play in promoting, co-ordinating and encouraging the investment of private capital and expertise without which economic regeneration cannot be achieved.
  I draw the particular attention of the House to the new bank's stress on environmentally sustainable investment. As we all know, decades of under-investment have brought eastern Europe close to an environmental catastrophe that is not limited to the boundaries of central and eastern Europe. The west has learnt and is still learning from its own environmental experience. We have much to offer by way of industrial processes and expertise. We want the new bank to make a contribution from the very start to environmental regeneration.
  Britain is already helping eastern Europe through our know-how fund. British electricity utilities are co-operating with Poland on ways of conserving energy and reducing the environmental damage done by burning brown coal. Similar help is envisaged for Czechoslovakia, and a reconnaissance team from the Department of the Environment recently visited Czechoslovakia for those purposes.
  The priority now, then, is twofold. First, it is to establish the investment needs in eastern and central Europe; secondly, it is to get the new bank up and running as soon as possible, with a sound operational structure. As host nation and one of the principal shareholders, we undertake to play our full part. That has been our aim since we first became involved in the process.
  Of course, while reports confirm that, throughout central and eastern Europe, private entrepreneurs have responded to the challenge to meet newly released consumer demand, it would not be realistic to expect a fully functioning private sector to emerge overnight on the scale required, which is enormous.
  Mr. William Cash: My right hon. Friend referred to the scale of the resources required. Will the German Democratic Republic have access to these funds, having regard to the enormous cost of providing adequate finance for the nuclear reactors, which are of Chernobyl proportions? How much will that cost? To what extent will it absorb the funds that are available?
  Mrs. Chalker: According to the envisaged time scale, the German Democratic Republic is likely to be part of a unified Germany. If that happens, she will not have access to the funds of the European Bank for Reconstruction and Development. However, she will have access to the funds of the European Investment Bank. What my hon. Friend has described is highly unlikely to happen in the time in which that matter will have to be dealt with. There are many other aspects that will need to be dealt with, in conjuction with other eastern and central European countries. I am convinced that the bank will be able to play a full role and that it will leave the European Investment Bank, and possibly the German banks, to cope with the enormous problems that exist in the current German Democratic Republic.
  The bank will have to work hard to help its borrowers to reach the goal of emerging from the old regime into a new and fully-fledged market economy. Investment in the public infrastructure will be needed. That is why up to 40 per cent. of the bank's total committed loans, guarantees and equity investments will be available to the state sector for investment in the infrastructure that is necessary for the development of the private sector.
  The greatest promise has already been shown in the smaller recipients with a previous tradition of economic initiative. Hungary, Czechoslovakia and Yugoslavia in particular have already made significant progress, and Poland is already implementing a programme of structural adjustment.
  The needs of the Soviet Union are not yet clear, nor yet is the extent of its commitment to economic reform. I am glad to say that the Soviet Union itself acknowledges the potential problem. It has agreed for the first three years of the bank's operations to limit its access to bank resources to no more than the total amount of capital paid in by the Soviet Union. The arrangements thereafter will need to be decided by the governing board of the bank.
  The reform process in central and eastern Europe poses one of the great political challenges of our time. Political courage and fortitude from within and firmness of purpose from without have combined to end the political impasse of the cold war. The European Bank for Reconstruction and Development can now help to provide the economic prosperity necessary to underpin that political freedom. We are certain that it can help turn swords into ploughshares. I commend the two orders to the House as modest but essential components of the United Kingdom's contribution to this great positive change in Europe.
  10.35 pm
  Mrs. Ann Clwyd: I agree with my hon. Friend the Member for Newham, South (Mr. Spearing). As a former member of the Select Committee on European Legislation, of which he is Chairman, I know how frustrating it is to find so often that a full debate in the House is not possible and that decisions are taken without the Committee's decisions being discussed first.
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  As the Minister said, the EBRD was agreed in principle. The decision of the European Council was reported. It did not arrive until late, and the Minister has given the Committee an explanatory memorandum dated 21 June 1990. The Committee considered that on 21 July, but its report has not yet been published. Therefore, the House has not yet formally agreed the principle of the bank. The orders are before us tonight because it will be set up before October and the Government need these measures in order to be party to the bank. I hope that the Government will take note of my hon. Friend's comments, which he has made many times before.
  The amount of money involved is not that big compared with other international banks, but it could provide a useful focal point for expertise and coordination. As the Minister has admitted, many of the details are still quite vague—
  Mr. Budgen: Will the hon. Lady give way?
  Mrs. Clwyd: I should like to begin my speech before I give way. I have not completed one point yet.
  Many of the details are still vague, so this is a good opportunity for us to press for what we think is important. This debate on the United Kingdom's financial contribution is being counted as a debate on ratification, so it is our only chance to comment before the United Kingdom ratifies the bank agreement.
  The BERD—I use the French initials of the bank because I think that they will be more commonly used in future—will not be a major institution in the reconstruction of eastern Europe in purely financial terms, because its initial capital of $12 billion is small, less than half the estimated cost of cleaning up Poland's power industry alone.
  This is not an institution on the scale of the Marshall plan; its significance lies in the fact that it is a new and rapidly created bank with the specific purpose of promoting the reconstruction of eastern Europe. The speed at which it has been set up reflects the importance that both east and west attach to the task. As Mr. Attali described it in a recent interview,
  "BERD is the embryo of a confederation of Europe, as the European coal and steel community was the embryo of the Common Market in the fifties.".
  It is the political commitment, as much as the economic funding of BERD, that is significant. As M. Attali is well grounded in socialist principles, the next Labour Government will have no difficulty in working well with him.
  As the Minister said, BERD is the first multilateral bank to have environmental protection written into its articles of agreement, which is very important. However, it is vital that strong environmental conditions are written into the byelaws and manual of operations, which are still being negotiated. The United States Congress has passed implementing legislation which says that the Government can subscribe only if the strictest environmental standards are used. I suggest that the United Kingdom Government too should not ratify the bank's statutes until they are sure that strict environmental standards are to be upheld.
  The byelaws and operating manual must require environmental impact assessments of all projects before they are approved. Careful monitoring of projects will also be needed. This Government and others know full well that public participation and disclosure of information are essential for environmental concerns to be expressed and

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  to be taken into account. Yet there is no mention of that in the articles of agreement. Article 35 states that there will be an annual report on the environmental impact of BERD's activities, but it also states that copies of all reports, statements and publications made under that article shall be distributed to members. We know how secretive member Governments are about such reports once they have their own vested interests, so it must be agreed from the start that information about BERD's proposed projects will be publicly available, especially to those most affected by the proposals and to those best placed to provide information on their likely environmental impact.
  Mr. Cash: The hon. Lady is prattling on about the extent to which the bank will operate in future. Has she looked at article 14? Has she looked at the terms and conditions for loans and guarantees? That is the crucial point in relation to this proposal. The terms and conditions on loans and guarantees lay down and prescribe the basis on which loans are to be made. I have no doubt that the hon. Lady will know the basis on which the loans will be enjoyed by the recipient countries. Does she know what the basis of those loans and guarantees will be? I think that she is talking through her hat.
  Mrs. Clwyd: If there is any expert on prattling in this House, it is the hon. Member for Stafford (Mr. Cash). If he had allowed me to develop my speech, he would have had answers to his questions. However, I suspect that he does not want to stay to make his own contribution to the debate.
  In May, the Czechoslovak Government produced a report on the country's environment which made clear the devastating effect of decades of uncontrolled production. As the Minister knows, almost one third of that country is ecologically devastated, according to the report. More than 70 per cent. of pregnancies in northern Bohemia result in miscarriages. Water supplies are contaminated with radioactivity from land fills and with phosphates, with nitrates and with a host of other chemicals which make it unfit to drink.
  In Poland, 70 per cent. of the drinking water is polluted and an estimated 100 million trees have been destroyed, mainly by acid rain due to sulphur emissions from industry. Modern technology is desperately needed. Decades of third-rate technology have wreaked havoc on the health of the environment and on the people who live in it. We must ensure that that technology is replaced, but not with second-rate technology from the west which is sold cheaply to the east because it is too dirty for the west.
  Although the development of the private sector is clearly an essential part of the reform process in eastern Europe, BERD must recognise that this will take time. It may prove difficult to meet the condition that 60 per cent. of all loans go the private sector in the first year. The BERD must avoid over-emphasising the free market simply for ideology's sake, if the practical situation calls for continued state involvement. That is particularly true of achieving environmental aims.
  The private sector, based on western experience, does not deliver green, clean goods. Nor does the private sector worry much about social costs. As the Deutschebank stated in its special report on eastern Europe:
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  "Now that virtually all Eastern European countries are dismantling the system of planned economy, we need to ensure that the social costs accompanying such a major transition will not be aggravated by some of the less desirable features of market economies."
  It has taken a decade to learn the bitter lesson of developing countries, that economic adjustment must be combined with special attention being paid to the needs of the most vulnerable, and that ignoring investment in people carries long-term costs as well as short-term suffering. That lesson must be applied in our work in eastern Europe.
  In its publication "Economic Outlook," the OECD warns that eastern Europe risks being asset-stripped by western investors. In promoting private sector participation, we must ensure that ventures are truly joint ventures and not just a way of subsidising western countries into buying up the best assets of eastern countries.
  The bank's emphasis appears to be on large companies rather than on small firms, but the development of a range of small companies is equally important to their economic development, and I hope that we may have an assurance from the Government that small firms will not be ignored. In particular, we must be assured that when BERD assists in the development of capital markets, the capital needs of the smallest firms, as well as those of large companies, are taken into account.
  Hon. Members in all parts of the House will join me in hoping that the bank's location in London will encourage British firms to widen their horizons to eastern Europe. So far, the Germans, Italians and French are there, but where are the Brits? In his evidence to the Treasury Select Committee, Mr. Crockett of the Bank of England—an institution hardly known for its recklessness—stated:
  "British companies are erring too much on the side of caution in their approach to Eastern Europe."
  We know the markets are there, so where are the Brits?
  Mr. Cryer: Could a possible explanation be that the British know that we have a warmongering Prime Minister who is spending £10 billion on new nuclear weapons, and they are worried about the investment because they are not sure that she will keep her finger off the button?
  Mrs. Clwyd: I share my hon. Friend's sentiments on that. We should like to hear more from the Prime Minister, rather than from some of the Government's more obscure Ministers, about the likelihood of a peace dividend. We need that information quickly because when we are talking about additional aid for eastern Europe this year, we need assurances about aid in subsequent years. We want some of the savings resulting from the peace dividend to go to developing countries and eastern Europe.
  The leaders of the European Community, at their summit in Dublin recently, asked the Commission to see how the EC could help provide aid and credit to the Soviet Union to buy time for perestroika. At their summit in Houston, the leaders of the western world called on the IMF and the World bank to see how they could help. The leader of the Labour party outlined his plan at a meeting with President Bush to help the Soviet Union. We expect BERD to co-ordinate its efforts with the various institutions and, where possible, to provide expertise.
  Numerous agencies and banks are now setting up work in eastern Europe, and co-ordination is essential. The World bank is lending between $5 billion and $7 billion over the next few years. The bank's international financial

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  corporation is already promoting private sector investment along the lines planned for BERD. The IMF has set up stand-by agreements with Poland and Yugoslavia.
  All this makes it essential that there is close co-ordination between the banks. It also shows that BERD needs to be quite clear about its own role. Clearly, it will not be a massive new source of funds to overshadow all the others. Nevertheless, it could make a distinctive contribution by becoming the focal point for co-ordination among agencies and banks supporting eastern Europe and for providing expertise in the region. That will require strong leadership and commitment from BERD members.
  For the Soviet Union, which is not a member of the IMF or the World bank, BERD provides an important stepping stone into the international financial community. It was thanks to the insistence of the United States that the amount that the USSR can borrow is strictly limited and that a minimum of 60 per cent. must be lent to the private sector. What attempts did the Prime Minister make to oppose those limitations that were imposed by the United States? How can she tell Mr. Gorbachev that we all support his attempts at reform and that we are delighted that the Soviet Union is a founding member of BERD but that, because we do not trust him to use the money well, the Soviet Union cannot be a net borrower?
  Indeed, BERD must take care not to burden the east with eager loans. With a debt of $40 billion, Poland alone cannot afford to take out that new loan. Poland's ratio of debt to exports is overwhelming at over 500 per cent. Annual interest payments amount to nearly half a year's exports. Poland's biggest creditors are official—that means that it is Governments who now could and should give considerable debt relief.
  In evidence to the Select Committee on the Treasury and Civil Service, the report of which is published today, Mr. Crockett of the Bank of England said:
  "I think there is no question, however, but that normal services, that is to say, regular amortisation and interest payments on debt, is not possible given the size of Poland's debts."
  However, we have heard nothing from the Government about promoting debt relief. We all know that the Paris Club has rescheduled Poland's debt, but why not reduce it? Surely now is the time for a bit of imagination and initiative, if ever there was one.
  Do the Government accept the recommendation of the Select Committee on the Treasury and Civil Service, paragraph 74 of which states:
  "A sizeable chunk of Poland's debt should be written off"?
  As the east European countries still have a severe shortage of hard currency and their own currencies are not yet convertible, making loans in those conditions could present many problems.
  I support the call in a recent European Parliament resolution that it is extremely important in allocating funds that specific attention should be paid to effective monitoring of the projects funded and the capacity of the economies of central and eastern European countries to absorb the investment.
  I am sure that all hon. Members recognise that the development of market economies will take quite a long time. After all, it took 13 years for western Europe's major currencies to become convertible after the second world war. We cannot expect more of eastern Europe in the 1990s than we achieved in the 1940s and 1950s. As hon.
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  Members know, after the war, western Europe received a great deal of concessional assistance for our reconstruction. We must now give eastern Europe the same chance that we had.
  Of course, BERD is only a small part of the massive west-east effort that is necessary. We must not allow it to divert attention from the need for grant aid, technical aid, debt relief, a re-examination of EC trade policies and other vital assistance.
  There is obviously some confusion about BERD's terms of lending, and that is evidenced in the report of the Treasury and Civil Service Select Committee. Mr. Crockett of the Bank of England stated:
  "A good project would probably finance itself from the BERD with a lower spread than a merchant bank in England would be able to offer."
  Can the Minister confirm that it is intended that BERD will be profit-making, but that, thanks to Government backing and AAA-rating, it will offer slightly lower interest rates than commercial banks? Can she explain why the issue has not been fully resolved when it is obviously of great importance? Can she say what the Government are doing to ensure that sufficient concessional aid is provided? The Select Committee's report questions the lack of clarity in the lending criteria of BERD.
  Another grey area is the funding of Britain's contribution to BERD. On 15 June, the then Economic Secretary to the Treasury said in reply to a written question that the United Kingdom's contribution would be additional to the overseas aid budget until 1993–94, and that future contributions would be discussed in public expenditure surveys. Will the Government guarantee that not only will the initial cash instalment come from an additional line in the aid vote, but so will the encashment of promissory notes that the ODA's memorandum says will be met as they are incurred from sums voted for overseas aid?
  Will the Minister also guarantee that contributions will continue to come from additional money after 1993? In particular, do the Government accept the recommendation of the Foreign Affairs Committee that BERD contributions should come out of the eastern Europe line, and not from funds for multilateral institutions?
  In conclusion, I wish to say how much the Opposition welcome the setting up of the bank. I am pleased that it is to be in the United Kingdom, although I would have wished cities other than London to be considered. I hope that it means that the United Kingdom will play an important role in European Community development. That is what the public want. Alas, I fear that it is not what the Government intend—but it is certainly the role which the next Labour Government will adopt.
  10.57 pm
  Mr. Anthony Nelson: I welcome the statement of my right hon. Friend the Minister, and I wish to say a few words about the European Bank for Reconstruction and Development. It is proper to begin by declaring what might be considered to be an interest in the matter, as I am consultant to a company that has explored some opportunities in Bulgaria and the Soviet Union, and also the director of another company that has explored some investment opportunities in Hungary. I do not think that it would be revealing any secrets to say that I strongly

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  advised those companies not to make such investments. They have not done so—not because of that advice, but for other reasons.
  It is extremely difficult to make investments in some of those countries, as it is difficult to establish a title to corporate assets and to real estate. Quite frankly, it is difficult to envisage how one can get one's money out in hard currency. When investing private or corporate money or shareholders' funds as an entrepreneurial company, there is a duty to see light at the end of the tunnel and not just to invest on the wing of a hope. There must be a real prospect of a return. If there is not, other markets and other returns offer an immediate prospect for the funds deployed.
  I hope that I will not offend those who intrinsically may find the bank's very existence offensive if I ask: if communism has failed those countries, and if capitalism then fails them, where will they go? Those countries face enormous problems, and if we fail them there will be either a return to nationalism or a militant solution. If their best aspirations are repressed, there may be anarchy. We have not only an opportunity but a major and immediate responsibility.
  Although these loans may not compare with the best available on the international markets and with those in developed countries, they will undoubtedly offer a decent rate of return. The fact that an investment fund is devoted particularly to the eastern European countries will concentrate minds on investment and banking opportunities in those countries, because one is not having to compare investment in a chemical company or a loan to an agrochemicals company in Hungary with what it may make in other parts of the world. By setting up the bank, we are devoting it specifically to these countries as a sector, and as such it will make a contribution.
  There will undoubtedly be—this point was touched on by my right hon. Friend the Minister—a significant element of pump-priming. Given all the attendant uncertainties in these countries, it is comforting for a private company making a major investment to be lent money or offered equity participation—although later I shall argue against that—by a major international bank such as this. A certain amount of money will sponsor substantial amounts of private capital investment. In principle, and in politics, the bank is necessary and a good idea.
  However, I have two broad reservations about how the bank is being set up. First, I am concerned that 40 per cent. is being allocated to the public sector. If the idea behind the new bank is, as it says in the first sentences of the articles, to sponsor, encourage and lend money for entrepreneurial activities and free market processes in those countries, why allocate 40 per cent. of those enormous funds to the state sector? I have no interest in voting my limited taxpayers' money to propping up state-owned organisations in the eastern bloc.
  Secondly, I have misgivings, as my earlier intervention showed, about the equity activities of the bank. Banks are not allowed to invest. Investment is an entirely different activity from lending money. The prudential judgment that one makes about a loan is different from the judgment
  412
  one makes about a risk equity investment. The bank should not be involved in equity investments, because that is the role of the private sector.
  Mr. Wells: There are investment banks.
  Mr. Nelson: I know that there are investment banks and that sometimes they are forced—
  Mr. Wells: This is not a bank.
  Mr. Nelson: But it is called a bank and the understanding is that a substantial proportion of its resources will be deployed on a commercial basis. The criterion in article 14 is the commercial basis of its loans.
  If we want to give those countries money, let us have the intellectual and political honesty to say that we are giving them a loan. The hon. Member for Cynon Valley (Mrs. Clwyd) mentioned ecology, impure water and environmental aspects. As a business man or as an hon. Member voting my taxpayers' money for loans, I do not see how we will get a return. Setting up the bank may be a wonderful thing to do, but let us be honest and say, "We will not get a return on that investment." If we are giving the money or lending it only to write it off five years later in changed circumstances, let us recognise that reality from the beginning.
  If we fail to do so, we run the danger of doing exactly what we and the commercial sector have done with the United Nations and numerous other multilateral fund agencies—lending money only for everyone to say, "Write off their debts," without any understanding of what that means for future indebtedness. It has a major impact on the willingness of banks and multilateral agencies to lend money in the future. It simply increases the cost of any loan made to developing countries. We should be honest from the beginning: we should work out whether we are giving money away, lending money or investing risk capital.
  Mr. Budgen: That is particularly relevant to Poland. It would be ridiculous to pretend to be lending more money to an already grossly indebted Polish public sector: Poland would only say at some later stage that it wished to resile, and would find it extremely difficult to borrow money in the future.
  Mr. Nelson: My hon. Friend may be right; but the bank's potential activities extend well beyond a single loan to the state of Poland.
  It must be appreciated that much of the money will not find its way into the eastern European bloc. I do not know whether that is good or bad, but we must face the commercial reality: much of it will find its way into western commercial pockets, and rightly so. Investors seeking subsidy, a guarantee or, perhaps, foreign hard-currency collateral and support for their investment are interested in keeping that money outside the country. I suspect that a substantial portion of the funds will be recirculated within the investments of such countries.
  Nevertheless, we should consider where the money will go; some of tonight's intervention have been relevant to that. I am very concerned about long-term heavy infrastructural loans and investments to be made by the new organisation. If we are to spend money in the best possible way, I believe that it should be directed first towards trade credit and secondly towards management expertise.
  Mr. Budgen: The know-how.
  Mr. Nelson: Indeed: it should be directed towards the know-how that can assist developing countries with some of their logistical problems—for instance, the problem of transport to deliver their goods to the market.
  I do not believe that the bank should lend money directly to such countries; it should not do what states should be doing. We should make international, or national, political decisions to extend sovereign loans or, indeed, grant the countries money in the form of a gift. If we could be more honest about that from the outset, I believe that the bank would make a real contribution towards sponsorship of entrepreneurial activities in new countries. If we fail to do that, however, we shall be left with a deadweight of an international bank which, 10 years later, will be asking the House of Commons for more money to pay off the debts that it has incurred. Let us pursue the same principles as we apply to our country and our entrepreneurial companies.
  11.7 pm
  Sir David Steel: The hon. Member for Chichester (Mr. Nelson) made an interesting speech; I agreed with parts of it and disagreed with other parts. I hope that he agrees with me, however, that, when the House has only an hour and a half to discuss the orders, it is a bit unfair for the Front-Bench spokesmen between them to take up most of an hour, leaving the rest of us only half an hour between us. I shall try to be as brief as possible, in fairness to others.
  I think it right to give the measure a general welcome, and also to note the speed with which it has progressed from original promulgation to completion. I believe that President Mitterrand first suggested it in October last year; by May this year, the organisation was agreed on. This, surely, is a sign that the European Community is working with a sense of unity and urgency to tackle the serious problem of further aid for eastern European countries.
  The hon. Member for Chichester made a valid semantic point: I, too, do not regard the organisation as a bank. It is not what is meant by a bank in normal parlance. Speaking from my experience, and having read the articles, I would say that it is much more like the Scottish Development Agency than anything else. That agency, which survived under successive Governments until very lately, has some quasi-banking functions, but it is an agency of government—in this case, we are discussing an agency of Governments in the plural—set up to carry out a specific programme of assistance.
  Mr. Campbell-Savours: It has been very successful.
  Sir David Steel: It has been very successful indeed. The SDA has acted in mixture of ways to assist the private sector and to carry out some public sector investments. The new organisation is such a body, even though it is sailing under the banking flag.
  There are some valuable lessons to be learnt by pursuing the SDA analogy. Like the hon. Member for Cynon Valley (Mrs. Clwyd), I hope that this new, great organisation will set up within it a small firms unit—as the SDA did—thereby giving valuable assistance not only to the great elements in investment but to the small entrepreneurs who will wish to emerge in the new companies in eastern Europe. I hope that joint ventures will be encouraged. I was interested in the comments by
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  the hon. Member for Chichester, because I have seen, from my limited experience in travelling in eastern Europe, the great scope that exists for joint ventures.
  I take issue with the hon. Member for Chichester in that I believe that the private sector in these countries cannot be expected to thrive so long as elements of the public services are so woefully deficient—I think of telecommunications and transport facilities, both of which will require great improvement if private sector investment is to pay off. The hon. Gentleman talked about the return that some investments would get. Looking at the environmental perspective of the new bank—or agency, as I prefer to call it—I believe that the return will come not necessarily in financial percentage terms but in creating a healthier environment for the whole of Europe.
  A few months ago, I had an interesting conversation with a West German politican who pointed out that there would be a serious problem for the Exchequer in a united Germany. It could continue to spend a fixed amount of money on environmental improvement in what was the Federal Republic for, say, a 2 per cent. improvement in the environment, whereas the same investment in the former German Democratic Republic might produce a 6 per cent. improvement—so bad has been the legacy of those Governments.
  The hon. Member for Cynon Valley criticised the private sector record of lack of care for the environment, but she should have a care—the public sector in eastern Europe has the worst such record of any area. The problems of brown coal burning, pollution of the rivers—many of which flow from eastern Europe into western Europe and into our North sea—and the dangerous state of some nuclear power stations must be cleared up. I do not believe that that can be done on a straight commercial banking, percentage return basis. That is why, although the new organisation is called a bank, I support it. It will have a wider purpose in tackling these serious environmental issues.
  The Minister has almost answered my first query. I hope that this and other items of assistance to eastern Europe will not affect the general ODA budget for assistance to underdeveloped countries. It is important to assert that reassurance. As well as approving of this new organisation, it is important to make it clear that the obstacles to east-west trade will be eliminated so that the new economies can benefit from export-led growth.
  What have the Government done to get rid of COCOM? I do not see how the co-ordinating committee on multilateral export controls, as it is still called, with its restrictions on high-technology exports from west to east, can be justified when we are trying to persuade industries in the east to modernise. I hope that the Minister will comment.
  Like other hon. Members, I believe that it is important that the western economies should come clean on our proposal to deal with the writing off of established debt. I agree that there is no point in piling on a new organisation that is willing to lend money on top of debts that are going to be resiled on in future. Although the bank positively does not have within its remit the tackling of existing debt, that should be cleared up before the bank gets going at full steam.
  Two other points that have not been raised so far in the debate genuinely puzzle me. What will be the rates of interest and how are they to be determined? Are they to be determined by general European levels, or will they

  415
  operate in the London market? It is important that we know how the Governments imagine that the rates of interest will be determined.
  The first article of the bank states:
  "the purpose of the Bank shall be to foster the transition towards open market-oriented economies and to promote private and entrepreuneurial initiatives in the Central and Eastern European countries committed to and applying the principles of multiparty democracy, pluralism and market economics."
  Will priorities within the bank be determined by the European Governments or by all Governments contributing to it? Will it be made clear, for example, that Romania, so long as she continues to persecute leaders of opposition parties, will be low down the queue for assistance from the bank? How will article 1 be put into practice now?
  I just want to reinforce a point made fleetingly by the hon. Member for Cynon Valley. While I welcome the creation of this bank in the United Kingdom, there is another great financial centre, as opposed to London, in a city called Edinburgh. I hope that the Government will avoid the trap of implanting all European institutions here in the south-east when there is a great opportunity for organisations and the offices and the employment that they bring to be located outside the City.
  11.16 pm
  Mr. Bowen Wells: I want to make a few constitutional points. It is an outrage that an agenda-less European Council should take decisions to create a bank which has no reference to the European Parliament or to national Parliaments and for the constitution of the bank to be presented to the House tonight in an hour-and-a-half debate in which we are supposed to ratify the entire principle of its establishment. That leads on directly to the problem that we will encounter in future with the institution as I understand it at present. To whom is it accountable? How will it be called to account?
  The World bank and the regional development banks in other areas have proved disastrously unaccountable to the nations that established them, other than to a few civil servants in one or two ministries of finance or administrations for overseas development. For example, it is impossible to see the minutes or agenda of the World bank institutions in this country. To find out what it is discussing or what loans it has agreed or its policy, we have to go to the United States, which is the only country that deposits the agenda and the papers of the World bank in the trade development bank in that country. I suspect that this new institution will be equally secretive and unaccountable.
  As I understand the constitution of the new bank, it will be similar to that of the other regional development banks, in that it will have a committed capital only part of which will be drawn down. The rest of the money to be made available to the eastern European countries will be raised on the open market value. That answers the point of the right hon. Member for Tweeddale, Ettrick and Lauderdale (Sir D. Steel) about interest rates. Of course, there will have to be a difference between the rate at which it raises money and the rate at which it lends it and, as with the open market—possibly on a AAA basis as in the World bank—we can rest assured that the interest rates will be
  416
  about 2 or 3 per cent. above the London inter-bank offer sale. That is in order to make a return on the bank's capital and to ensure repayment.
  Mr. Budgen: It is all very well to say that, but, if this agency, as I prefer to call it, has the objectives that are being suggested—to support democracy and help environmental improvements—it is difficult to see how many of the projects can pay the interest rates that my hon. Friend suggests. It must mean that at least some of the profitable activities will have to subsidise some of the politically desirable activities. None of that is clear. It is all left in fairly socialist and interventionist vagueness.
  Mr. Wells: My hon. Friend gives a good illustration of why the thinking of this bank is extremely woolly and is the result of an enormous rush to establish it, about which we have been told tonight.
  If one is to borrow money at the rate of interest that I have suggested and then on-lend it, the question arises how one will make money out of promoting environmental issues, which I fully support. But one cannot be made to pay if one is borrowing money at high interest rates.
  Mr. Andrew Hargreaves: My hon. Friend makes a little too much of this. He should remember that the European Investment Bank will be one of the largest shareholders of the bank, and that for several years the European Investment Bank has been doing very much the same type of operation, with perhaps less environmental or political content, in a quite excellent fashion. It has entered the Euro-markets and has raised money. It has lent at very competitive rates and very successfully for some time. My hon. Friend could take that as a model of how the bank should work.
  Mr. Wells: That leads me to another point. This institution will duplicate the efforts that the European Investment Bank and the World bank were established to undertake. As I understand it, large portions of the personnel of the eastern European branches of the World bank and the European Investment Bank have applied to join the bank. We shall have international civil servants who are accustomed to such matters simply joining the bank, thereby triplicating the effort of those institutions. That is why the bank is unnecessary. It could have been arranged through the World bank quite easily, and probably better, with greater expertise and understanding and with a higher and more secure financial base. The European Investment Bank is probably one of the least development-oriented of all the institutions. It is conservative in the way in which it lends. It certainly has not lent for environmental purposes and in promoting democracy.
  The European Investment Bank's restraint in the light of the articles of association will be difficult to exact. In fact, I do not think that it will be able to do so in accordance with the articles of association. I envisage the bank losing a large amount of money. There is no way in which it can avoid doing so, given its objectives and the way in which it will be financed.
  I accept that there is a need to assist the development of private enterprise and environmental concerns to be supported and cleaned up in eastern Europe. I agree with that. However, I cannot agree that this is the right institution to do it. The thinking is muddled. I do not believe that it is accountable in any way. When it begins to

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  make losses, presumably it will call on a guarantee of the country to which it has lent. It will lend money to an institution that it will think will be profitable. That institution may lose money or go bankrupt. The bank will then call upon the national Government to repay the unsound investment, and thereby add to the indebtedness of that country.
  Although I welcome the objectives that the concept is trying to put into effect, it is disastrous and ill-considered. It is the product of ill-thought-out, rushed consideration without any in-depth understanding of what is required in eastern Europe.
  11.24 pm
  Mr. Nigel Spearing: I shall concentrate on the procedural matters that face the House, rather than on any of the merits of the new institution unveiled before our eyes.
  It is necessary to consider the procedural matters, because, as the Minister said, the Select Committee on European Legislation has recommended a document produced by the Commission—a decision, 5962/90—for debate in the House. That document contains all the articles of the proposed bank.
  I must correct my hon. Friend the Member for Cynon Valley (Mrs. Clwyd) because, on 27 June, we recommended that that document should be debated at an early date. Unfortunately, that has not happened, partly due to the dates of sitting in the House and the fact that Her Majesty's Government are also a party to the treaty as the United Kingdom, as distinct from being a member of the European Community, which is also a party to the treaty. That means that the Government must bring the statutory instruments before us for ratification this evening. Without that, participation in the venture will not be possible.
  I will not venture too far into the reasons why we have got the orders before the debate, but we understand that, at this time of year with the long recess before us, difficulties arise. The report of the Select Committee on Statutory Instruments says that this is not a new situation. It states:
  "There is no technical reason for the House not to approve the draft".
  It said that there had been similar circumstances early in the year,
  "to which attention was drawn in the Select Committee's Sixth Report of this session. The House should merely be aware that it is acting, as before, on a ministerial undertaking."
  Mrs. Chalker indicated assent.
  Mr. Spearing: I note that the Minister is nodding. I understand that she will undertake that the orders will not be made until after the bank is established. I believe that that is the case, but if I am wrong, I hope that the Minister will intervene. If I have got it right, I hope that she will nod again, as that undertaking is of some constitutional significance.
  I am not sure that the Select Committee on European Legislation, of which I have the privilege to be Chairman, will regard the resolution of the House about debates before decisions as having been discharged by this debate. The House has heard enough from Conservative Members, especially from the hon. Member for Hertford and Stortford (Mr. Wells), to understand that the
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  constitution of the bank and the way in which it will operate—the political and economic objectives that it will set itself—are of enormous significance. I suspect that, in years to come, people will look back on this debate to discover from which acorn that particular oak, well developed or not, grew. They will realise that the speed with which matters developed on the continent and in the bank presented us with some difficulties.
  Reference has been made to the proposals for the bank that were made some time ago. A decision was taken in the Development Council or the Finance Council on 8 May to the effect that decision 5962/90, which includes 63 articles, should go ahead. That decision was sent to the Government on 8 May and on 21 June an explanatory memorandum was provided for the Select Committee on European Legislation. We reported on its contents on 27 June. The orders are now before us and no doubt they will be considered in due course.
  This is a most unfortunate state of affairs. Although it is a matter for the Committee and not for me, I think that at some date we may need to have a look at the articles themselves and at the EEC regulations, which have received comment but no close examination.
  11.29 pm
  Mrs. Chalker: With the leave of the House Mr. Deputy Speaker, I shall reply.
  It would be impossible in two minutes to reply to all the points made in the debate. However, I shall write to those hon. Members whose questions I cannot answer in the time available.
  I welcome the political commitment shown by the hon. Member for Cynon Valley (Mrs. Clwyd) to the establishment of the bank. It is right that we should show our commitment to the democratic processes that are now occurring in central and eastern Europe.
  The decisions that have been reached are a considerable improvement on the original proposals that came before the European Council at Strasbourg last December.
  When a Government have vested in them—as the Governments of member states have by the Acts that have been passed—the responsibility to discuss matters of this nature at Heads of Government level, it must be true that no work could proceed if every detail were brought back at every stage. My right hon. Friend the Prime Minister has reported to the House at every stage on what is going on and had my hon. Friend the Member for Wolverhampton, South-West (Mr. Budgen) had a major objection, I should have known about it then. But my hon. Friend did not express his views. He waited until tonight's debate to come forward with them.
  I have a good deal of sympathy with much of what the hon. Member for Newham, South (Mr. Spearing) said. Of course, it would always be better if we had more time to make decisions such as these. But we are not alone in reaching decisions. What we have to do is to ensure that the Council machinery is properly and thoroughly used. The debate has explored a number of the issues. We have made our position very clear and I hope that we shall be able to satisfy the needs of scrutiny—as the hon. Member for Newham, South knows full well I intend to do.
  We can work through the process but only under the laws that we have been given. Moreover, all the negotiations on the establishment of the European Bank

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  for Reconstruction and Development have been undertaken according to what was decided at the heads of Government meetings. The resulting banks, about which hon. Members are concerned—
  It being one and half hours after the commencement of proceedings on the motion, MR. DEPUTY SPEAKER put the Question, pursuant to Standing Order No. 14 [Exempted business].
  Question agreed to.
  Resolved,
  That the draft European Bank for Reconstruction and Development (Subscription to Capital Stock) Order 1990, which was laid before this House on 13 July, be approved.
  Resolved,
  That the draft European Bank for Reconstruction and Development (Immunities and Privileges) Order 1990, which was laid before this House on 13 July, be approved.—[Mrs. Chalker.]

EC Merger Control
Motion made, and question proposed,
That the draft EEC Merger Control (Consequential Provisions) Regulations 1990, which were laid before this House on 5th July, be approved.—[Mr. Redwood.]
Mr. Deputy Speaker (Mr. Harold Walker): The Question is—
11.33 pm
Mr. Alan Beith: On a point of order, Mr. Deputy Speaker. I am having some difficulty in knowing which motion we have reached.
Mr. Deputy Speaker: We have reached the motion on monopolies and mergers, which has just been moved formally.
Mr. Nigel Spearing: Further to the point of order, Mr. Deputy Speaker. The monopolies and mergers motion has been moved formally. Do I take it that that is because it is being taken in Committee? Is it not a debatable motion?
Mr. Deputy Speaker: It is not for me to answer that. If the Government choose to move a motion formally, it is their affair, but that does not prevent hon. Members from speaking on it.
The question is—
Mr. Teddy Taylor rose—
Mr. Deputy Speaker: Order.
Mr. Taylor rose—
Mr. Deputy Speaker: Order. The hon. Gentleman must resume his seat when I am on my feet.
Mr. Beith rose—
Mr. Deputy Speaker: Mr. Alan Beith.
Mr. Beith: It is very odd that the Government should seek to move formally a motion on a matter of such importance. I should not have ventured to speak first in the debate. I should have listened to what the Minister had to say on the matter.
The issues with which the regulations are concerned are of considerable importance for British industry and the British economy. I start from the assumption that it is desirable to have a European mergers policy—
Mr. Nelson: On a point of order, Mr. Deputy Speaker. I am sure that the hon. Member for Berwick-upon-Tweed (Mr. Beith) agrees that it would be better if the Minister introduced the regulations and explained what they are all about. Then, by leave of the House—
Mr. Deputy Speaker: Order. We have passed that point. The hon. Member for Berwick-upon-Tweed (Mr. Beith) is on his feet.
Mr. Nelson: But do you not recognise—
Mr. Deputy Speaker: Order. Mr. Beith.
Mr. Beith: I should have preferred that, Mr. Deputy Speaker, but were I to stop speaking to enable the Minister to explain the regulations, I should be unable to continue my own speech without the leave of the House. Having

421
started my speech, therefore, I hope that I shall be allowed to finish it and that thereafter the Minister will reply to the points that have been made.
Mr. Nelson: On a point of order, Mr. Deputy Speaker. May I suggest that we ought to proceed in a common-sense fashion?
Mr. Deputy Speaker: Order. The hon. Gentleman is addressing the House. I cannot stop him and then require someone else to speak.
Mr. Nelson rose—
Mr. Deputy Speaker: Order. The hon. Gentleman ignores the fact that I am on my feet. If the Minister subsequently seeks to catch my eye, he stands a chance of being called, but until then the hon. Member for Berwick-upon-Tweed has the Floor. I suggest that we should allow him to get on with his speech without bogus points of order.
Mr. Beith: There is no disagreement between me and the hon. Member for Chichester (Mr. Nelson), apart from the fact that I believe that we have now passed the point of no return. Like him, I would have wished the Minister to speak first, but I do not think that the Minister had the slightest intention of speaking first, or even at such an early stage in my speech. Were I to encourage him to do so, I should jeopardise my chances of completing the relatively few remarks that I wish to make. Therefore, we must hope that the Minister will intervene later in the debate and deal with the points that we seek to raise.
I was about to say that I believe that there should be an effective European mergers policy, not least because it is important that British industry should enjoy the same protection from hostile takeovers as may be available in other member states of the Community, and that it should be able to seek to make acquisitions on the same terms in other countries as acquisitions can be made in this country. That is the level playing field argument, which is of considerable importance to British industry.
All hon. Members have views about what should be the general thrust and character of a mergers policy. I begin with the prejudice that the preservation of competition and the discouragement of monopolies call for an aggressive policy on mergers that is likely to make hostile takeovers difficult if they would result in a considerable reduction in competition. There are many circumstances in which takeovers can stimulate efficiency. The absence of any takeover pressure can lead to slack management. I am not sure that takeovers are an ideal tool for the disciplining of management, but they are one of the mechanisms that have that effect. Therefore, I want the machinery for the referral of takeovers to be effective and to be triggered sooner than is at present the case in the United Kingdom.
However, when we seek to have a level playing field, we come across striking differences between present practice in this country and that in other member states of the European Community. The Coopers and Lybrand report produced for the Department of Trade and Industry showed that, in 1988—admittedly, a peak year for mergers —73 per cent. by value of mergers in the European Community took place in the United Kingdom and that 85 per cent. by number of mergers in the European Community took place here. The report also demonstrated that United Kingdom companies tended to acquire
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companies elsewhere in the European Community that were smaller than those which other member states' industries acquired in the United Kingdom.
That was dramatically demonstrated when French companies acquired the private water industry. Companies such as the Newcastle and Gateshead water company, Sunderland and the South Shields water company and many of the other South Shields water companies were sold to French companies. Characteristically, the previous Secretary of State for Trade and Industry slammed the stable door immediately after the horse had bolted by not referring the north-east takeovers to which I have referred and by not putting in place a procedure whereby such takeovers could be restrained until after French companies had acquired those companies. That is characteristic of what I might describe as the sleeping policeman role of the Secretary of State, who did not aggressively seek to promote competition.
Mr. William Cash: As is well known, the hon. Gentleman advocates economic and monetary union, political union and all the accompanying paraphernalia. Does he not accept that at the heart of his point is the fact that the figures show that it is German companies that are making the major United Kingdom acquisitions and that their investment in the United Kingdom has increased by 200 per cent. over the last nine or 10 months?
Does he not also accept, despite the strictures that he imposes on the previous Secretary of State for Trade and Industry by his remarks, that it was those very points which, whatever language he may have used, raise some important questions about the manner and extent to which his party, and others on the Opposition Benches, are actively encouraging a state of affairs in which Britain is subordinated to the dominance of that country?
Mr. Beith: I thought that that was what the hon. Gentleman wanted to intervene to say, but that is not what the former Secretary of State for Trade and Industry said. He did not criticise individual takeovers that had taken place while he had the power to prevent them: he criticised the success that Germany had enjoyed and the extent to which that placed Germany in a prominent position in the EC, and he did so in language that he was forced to withdraw, but in terms that were echoed in the Chequers seminar. But all that goes rather beyond the terms of the regulations, to which I shall return.
The effectiveness of the regulations and the European procedure is obviously undermined to some extent by differences which exist between practice in the United Kingdom and practice in other member countries. For example, there are differences in the level of information available in Britain and other member countries. Information about shareholdings and the financial state of companies is more readily available here than in a number of other member countries.
Major differences arise from the character of shareholding in Britain compared with other member countries, in many of which there is substantial shareholding by banks, families or the Government. In France, family ownership or Government ownership of substantial tranches of company shares make it much more difficult, and in many cases impossible, for acquisitions to take place on French soil of French companies. The structure of ownership in Germany, with

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the banks playing such a large part, presents a fairly major limitation to acquisitions in Germany by British companies. The two-tier company structure in Germany and the Netherlands also makes it more difficult.
There are arguments in favour of some of those restrictions, not least the two-tier board structure, but they mean that we must assess whether we are achieving a level playing field in competition policy. The Minister has addressed himself to some of those considerations in all the negotiations that have taken place, but we are not quite there yet. We are not at a level playing field, not are we at the point where we can say that the kind of merger policy that Europe will have will be a significant improvement on present British merger policy, which I would like to see.
In addition, there are practical problems about the measure before us which the Government have sought to reduce over the months of discussion, such as the complexity of the form which companies will have to complete and the possibility of insider dealing because of the processes that will be gone through. There are also anxieties about whether the European Commission directorate involved has the staff necessary to carry out the work.
It is in no sense the view of someone hostile to the existence of European merger policy to say that some of those things are not yet properly in place. Therefore, I address those concerns to the Minister from the standpoint of someone who wants an effective European mergers policy which in time, I hope, will become more effective even than the one that Britain has had so far. I hope that the Minister shares some of those objectives and will address some of the concerns that I have mentioned.
11.43 pm
Mr. Andrew Hargreaves: I declare an interest, having worked for some time for, and still being a consultant to, one of the banks that is most interested in and affected by merger policy in Britain and in Europe. I have worked on many mergers in France, Germany and other European countries.
I share with the hon. Member for Berwick-upon-Tweed (Mr. Beith) the concern that we should attach importance to the concept of the level playing field. I should not go as far as the hon. Gentleman in saying that my right hon. Friend the previous Secretary of State for Trade and Industry was a sleeping policeman. However, I emphasise that I share the hon. Gentleman's concern for the concept of a level playing field.
There is also room to look in the regulations for some evidence that we are also considering reciprocity. When we consider United Kingdom companies being acquired by foreign companies or being merged into foreign companies, we are struck by how difficult it is for United Kingdom companies to buy into, for example, Swiss or non-EC companies. French companies have also made that comment to me: it is equally difficult for United Kingdom companies to inquire into the finances of a French company.
I hope that my hon. Friend the Minister will take the opportunity to say a few words to us, because I am sure that people whose business it is to work on mergers would be instructed by his remarks.
11.45 pm
Mr. Nigel Spearing: I am not sure whether it is because it is the end of term, but I sense that the importance of the issues that the House is debating becomes greater as the night grows longer. I suppose that to any hon. Member, the prospect of a new underground railway in his constituency and the success in obtaining an instruction on the same are major events. That debate lasted three hours and many hon. Members voted. We then moved on to the European Bank for Reconstruction and Development, on which I am sure that we shall hear a great deal more. We now come to regulations which may, in the course of time, prove to be even more important than the previous debate on the bank.
I should explain the background to this debate, which has not yet been described. If I get it wrong, I am sure that the Minister will correct me in his winding-up speech. I want first to make a small suggestion on the future of draft statutory instruments. We know, of course, that draft statutory instruments have to be placed for approval before this House—and sometimes before the other place—under various Acts of Parliament. However, one of the disadvantages of chasing these bits of paper is that they do not have a number on them. A number is allocated to them only after the draft has been approved—as, no doubt, this order will be approved tonight.
My modest suggestion is that such drafts could be issued with a D in front of their number, which might not be the same number as they would eventually receive as statutory instruments. That would at least be a means of identification other than the date on which they were issued. Important instruments such as this one could therefore be found more easily.
The background to the order is that we have now undertaken, in various treaties, to cede the control of mergers from the Secretary of State for Trade and Industry to the Commission in Brussels. The irony is that Sir Leon Brittan, the relevant Commissioner in Brussels, is a former Secretary of State for Trade and Industry. I understand that these regulations are the bit of paper that passes that into British law. I am not sure that anyone would gain that impression through reading the statutory instrument. Unless he was expert in these matters, he would not understand what it was about at all.
I shall address my remarks to the explanatory note, and I think that that is in order. In my submission, the explanatory note does not explain the regulations. Over my years of membership of the House, I have pointed out this lacuna from time to time. Nothing seems to be done about it. In respect of the regulations, the Select Committee on European Legislation has had a part to play. I will sketch in the background and then make a constructive suggestion.
The Parliamentary Under-Secretary of State for Corporate Affairs (Mr. John Redwood): Perhaps I can help the hon. Gentleman. The proposal before the House does not implement the merger system agreed by the member states into British law. It is already in British law by the merger regulation itself, because it is a regulation, not a directive. This is a technical matter relating to our fair trading legislation, as the explanatory memorandum makes clear, designed to protect two modest powers in our

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merger control procedures, consequential on the imposition of the merger regulation system from Europe, and in addition to our normal legal system.
Mr. Spearing: I am grateful to the Minister for intervening. It seems that I was on the wrong track. Although I understand that this EC regulation, when it comes into force on 21 September, is the definitive instrument, even in British domestic law, it is a consequential statutory instrument which adjusts various provisions and may be helpful.
The main provision that seems important in that context is that which changes section 75 of the Fair Trading Act 1973. It says, in effect, that if a matter has a Community dimension, the Office of Fair Trading cannot look at it. Do I see the Minister shaking his head in dissent, meaning that I have got it wrong? I understood that matters with a Community dimension were excluded from his remit, at any rate up to 21 September.
Mr. Redwood: The idea is to give the director general power not to operate the pre-notification procedure, so that the time limits are not exceeded by the process in Europe, thus preserving the British jurisdiction.
Mr. Spearing: I am grateful to the Minister for that explanation. I had hoped that some of what we have discovered in this brief dialogue could have been included in the explanatory note. Although the note says that the regulations
"make provision consequent upon Council Regulation EEC 4064"
concerning the control of undertakings, it might have been useful for it to have gone on to say—this is my constructive suggestion—"But, of course, it has direct effect without further enactment." It could then even have spelled out the criteria, which I believe have been adjusted.
The Select Committee had Lord Young before it some time ago. He explained that Britain was trying to ensure that the threshold of reference to Brussels would be different from that in the original regulation. I understand that success was achieved on that, and we debated the matter some months ago. It might have been useful for the explanatory note, without being too definitive, to have explained that and the need for British law to be adjusted.
I am not sure whether the law is being adjusted to make it clear what the criteria are. Would somebody looking the matter up in the Library find that the law on merger control was being changed? Perhaps the Minister will explain the position. The note could have gone on to say, for the avoidance of doubt and in view of the time scale to which the Minister referred, that it was advantageous to have an additional piece of paper which changed British law in certain respects, and those changes could then have been described.
Perhaps even now, as what is before the House is but a draft, the explanatory note, which is also but a draft, could be expanded—there is plenty of space—so that an ignoramus such as I am not misled by an extraordinary note that is not as clear as it otherwise might be.
11.54 pm
Mr. Teddy Taylor: All that I should like to say briefly is that it would be helpful if we stopped talking about this altogether. This debate shows how absolutely ludicrous, pointless and wasteful is our consideration of such measures. First, it is now 11.54 pm;
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secondly, only a handful of hon. Members are present; thirdly, we are considering complex regulations affecting mergers. In addition, this is basically a small amendment to section 79B of the Fair Trading Act 1973. If an hon. Member went to the Vote Office to ask for the Fair Trading Act, he or she would be told that, sadly, the Vote Office does not have it. In fact, even if one did find the Act, it would be an utter waste of time because the section that we are discussing is not in the Fair Trading Act, but in the Companies Act 1989. If an hon. Member tries to see a copy of the Companies Act—
Mr. Tim Smith: They will get it.
Mr. Taylor: Yes, as my hon. Friend says, they will get it, but sadly, we cannot get the Fair Trading Act.
The provisions refer to a proposal as regards the Community undertaking in Council regulations 4064, which are the merger control regulations. Although, because of their busy lives, not all hon. Members will have had time to read those regulations, they will have seen that one of the principles of the merger control regulations is that, before the director-general or anyone else can take action, they are under an obligation to have full consultation with management, supervisory organs, and recognised worker representatives of the undertaking concerned, together with third parties shown to have legitimate interests. In my understanding, these are not the measures put forward by Her Majesty's Government.
I therefore suggest that we are bringing forward a consequential United Kingdom measure to a complex series of regulations, which are a load of rubbish, as we also know from the figures that have been published, which show that 84 per cent. of mergers that have been permitted within the Community over the past year have been in the United Kingdom. We also know that it is almost impossible to buy a public limited company in Germany, and difficult in France. Therefore, I ask you, Mr. Deputy Speaker, why on earth we are discussing this regulation on a minor technical point, on which the papers are not available, when major regulations are not being adhered to in the European Community.
Mr. Cash: Does my hon. Friend agree that there is a problem in relation to 1992, in that, if the Germans manage to acquire a sufficient number of our companies before the deadline of 1 January 1993, and we are not allowed in there, there will be substantial problems in relation to the single market thereafter, because they will have acquired the domination in advance and we shall never be able to catch up?
Mr. Taylor: It may indeed be a problem, but it could be an advantage, because if the Germans owned all the British companies, we might be able to get access to the German market for the products of those German-owned British companies and they would have more success than the Japanese-owned British car firms. I wonder whether we shall one day have an explanation of what deal is presently being negotiated for those firms that were assured that they would have open access to the Community when we know that a complex deal is now being undertaken that will ensure that we get rather more of their products going to the continent in exchange for a reduction in the Japanese quota. Nothing more bogus in terms of free trade could ever be envisaged.

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I apologise sincerely to the Minister for taking up time in what I know is a busy day, especially when we were hoping to get away early, but I honestly suggest that this discussion has shown the utter pointlessness of the so-called supervision of EEC documents and of United Kingdom documents such as this, which are related to Community documents.
Finally, the regulations are being made under the powers of section 2(2) of the European Communities Act 1972, a copy of which I have with me. I ask the Minister and the clever Clerks whether they can find any way in which this could be placed within section 2(2) which relates to Community obligations or to things related to Community obligations; that is not the case.
We are wasting our time. We are insulting the British public by giving the impression that we are playing a meaningful role in this. We should admit that, on such issues, the House is completely wasting its time in trying to pretend that we control anything at all.
11.59 pm
Mr. Anthony Nelson: With due deference to my hon. Friend the Member for Southend, East (Mr. Taylor), there is a substantive point of issue—not a major constitutional point, but nevertheless important. The regulations amend a provision in the Fair Trading Act 1973. Those of us who took part in the proceedings on the Companies Act 1989 will recall the importance attached to the pre-notification procedure. The whole idea behind those provisions was to expedite or enable certain takeovers to go ahead without having to go through all the paraphernalia of references where pre-notification was given.
To the extent that any amendment to the law prevents those takeovers from going ahead or denies the shareholders or owners of an asset the right to determine the future of that asset, it is proper that the House should consider it. We should be reluctant to endorse any restriction on the rights of shareholders or owners of an asset to decide how best to dispose of that.
The regulations will enable the director-general to dismiss or reject a merger notice if it appears that there is a concentration with a Community dimension. I make no complaint about that, but we should not let it go through on the nod. We should pass it on the basis that we are satisfied with the procedures under European law, both for time and for scrutiny of such matters. Employees of companies will be affected, as will shareholders, debtors and so on.
When the House and the Committee considered the Companies Bill, it was on the basis that the pre-notification procedure would expedite matters. If there is a good case for change, the House should endorse it. I am sure that my hon. Friend the Minister will make that case, albeit at the end rather than at the beginning of the debate.
12.1 am
Mr. Alun Michael: I apologise for the unavoidable absence of my hon. Friend the Member for Redcar (Ms. Mowlam), who had to leave the House because of illness. I am sure that we all hope that it is not serious. I know that she would want me to
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apologise for any embarrassment caused to the Minister, who moved the motion formally in her absence. His courtesy is appreciated and he should not be embarrassed.
My hon. Friend the Member for Newham, South (Mr. Spearing) seeks the truth and wants the Minister to explain why the issue is being approached in this way. I am sure that my hon. Friend would have welcomed the opportunity to discuss the matter in its wider sense, but it is a technical measure relating to the policy agreed for safeguarding the position in British law.
Hon. Members who said that the matter was important were correct. The significant point about inequalities between different countries and the need for a level playing field is very important, and is especially important when British law applies. There is a British regional dimension. Those in Wales and the north of England have experienced head offices, often in the manufacturing industry, moving away from their regional base, where they have been greatly valued, because of mergers or takeovers.
I ask the Minister to recognise that there are occasions when the European merger policy allows Britain to take into account a number of factors, such as the research and development being carried out by a company and the way in which the regional dimension is affected. There is a question about how much that policy is implemented to the full.
Will the Minister explain to the House not only the technical nature of the statutory instrument but how it falls within Government policy on mergers and how they intend it to operate within the system? What view do the Government take of mergers, both in the European context and under British law? Following GEC, Ferranti and the takeover of ICL, what is the Government's policy?
I am sure that the Minister and you, Mr. Deputy Speaker, will appreciate the short notice that I had of this debate, but I understand that this statutory instrument and British law become relevant to mergers and takeovers involving less than £5 billion. Those mergers are particularly relevant and important to British regional policy.
Will the Minister do more than simply say that there are technical regulations implementing minor measures that have already been agreed? As questions have been asked by several hon. Members, will he explain the context in which the statutory instrument is being enacted, the practical policies that the Government intend to follow and the use to which they will put the statutory instrument?
12.6 am
The Parliamentary Under-Secretary of State for Corporate Affairs (Mr. John Redwood): I am grateful to the hon. Member for Cardiff, South and Penarth (Mr. Michael) for stepping in to give the Opposition's view. As he said, I felt that, as the hon. Member for Redcar (Ms. Mowlam) was ill and had to go home, and as this is a technical matter, it was reasonable to move it formally. I told Opposition Front-Bench spokesmen that it is the right of hon. Members to make points and that I would reply to them because I strongly believe in Members' scrutiny of legislation.
The statutory instrument is technical and is designed to produce two cases where the United Kingdom can continue to use its jurisdiction in mergers. It was thought

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that there was European jurisdiction, but process discovered that it does not apply and we wish therefore to preserve our jurisdiction.
The general context of the statutory instrument is the merger regulation, which was debated in Europe over many months. My predecessors and I made available explanatory memoranda. The scrutiny process was undertaken and a debate was held so that the House could express its views in good time before the final Government negotiating position was arrived at and before we finally agreed with our partners.
As my hon. Friend the Member for Southend, East (Mr. Taylor) implied, the time has long since passed when the House can make a useful contribution to the debate on the merger regulation. That was discussed and we negotiated it in good faith, taking into account the feelings of the House. We agreed it with our partners and it is now good law in this country, which will come into effect on 21 September.
Mr. Teddy Taylor: It is bad law.
Mr. Redwood: I can tell my hon. Friend that it is good law because it is effective law, whatever he may think of it.
Mr. Tim Smith: One or two of my hon. Friends seem to think that it is bad law, but there was a satisfactory consultation process involving a debate in the House. Points were made on the content of the statutory instrument and as a result the outcome is quite satisfactory for the United Kingdom.
Mr. Redwood: Indeed.
The United Kingdom had four principal negotiating objectives. The first was to ensure that if we reached agreement there was clarity on whether EC jurisdiction or United Kingdom jurisdiction applied, and we have achieved that.
The second objective was that the system should be driven with competition as the criterion. The aim should be to create competitive marketplaces in Europe and to protect them from predatory mergers that might damage them. Again, that was accepted by our partners, and it is written into the mergers regulation.
The third goal was that the merger regulation should introduce a system that was timely and fair. We have certainly got the timeliness into the system, in that a maximum of five months can be taken up by the European Commission in settling its views on a particular merger, and in most cases it would take one month for the Commission to decide that there is no case to be answered.
Fourthly, we wished, along with several other member states, to have certain national interests protected, in that there could be a reversion to national jurisdiction in important cases involving defence, public scrutiny, prudential control of financial institutions and the media. Again, they are written into the merger regulation.
By any standard, this was a successful negotiation with our partners, and our thinking and the views of the House are well reflected in the final text of the regulation which was adopted some time ago.
The hon. Member for Cardiff, South and Penarth asked me about the regional dimension. He suggested that that was important in terms of the statutory instrument because it involves the smaller mergers. I fear that it is the other way round. The regulations are concerned with larger mergers which were thought to have European
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dimensions: those with aggregate turnovers of more than 5 billion ecu and with—this is the other criterion on EC turnover—at least two of the merging parties having more than 250 million ecu turnover within the EC. Therefore, the hon. Gentleman's point is not quite fair.
We have frequently stated our general attitude to mergers in documents and in debates in the House. The position remains the same. We believe in pursuing a vigorous competition policy. The main criterion that we use when receiving advice from the Director General of Fair Trading and deciding on merger references is competition. Reference policy in recent years demonstrates that well.
My hon. Friend the Member for Chichester (Mr. Nelson) made a relevant point when he asked whether it is right to modify the pre-notification procedure in the Fair Trading Act 1973, as laid down in the Companies Act 1989, in the way that we suggest. I urge the House to accept this modification because it is the only way that, in those circumstances, we can work as intended. I can see no other way of doing it. That is the reason for it.
My hon. Friend the Member for Southend, East thinks that a larger issue is important—whether we can buy companies in Germany, France or other European states. That question was asked by the hon. Member for Berwick-upon-Tweed (Mr. Beith). The Government believe that this is important. That is why, over the past year, my colleagues and I have persistently raised it at Council meetings in the European Community. We have made it clear that, if our markets are to remain open and other European companies take advantage of that, we expect reciprocation in market-opening measures in those other European member states. [HON. MEMBERS: "Hear, hear."]
I shall tell my hon. Friend the Member for Southend, East what progress we have made and how he can help us to make further progress. We raised the issue and obtained a Commission statement that it was important. We then got a Commission statement that there should be a work programme. Action is being taken to put suitable provisions into the draft fifth and 13th company law directives to address some of the legal problems that were identified in the Coopers and Lybrand report, which the Government commissioned and took to our partners in Europe to show the seriousness of the problem.
Mr. Cash: Given the importance of these matters and knowing that I would make a helpful intervention, would it be possible for my hon. Friend to encourage enforcement proceedings to ensure that our friends and colleagues in Germany and elsewhere in the EC realise that we are not making a negative, obstructionist point, but that there is not much point in having a European Community if there is no level playing field? Could they not take that on board?
Mr. Redwood: When we meet our opposite numbers in Europe, my colleagues and I make the point that we need market-opening measures of all kinds, including measures relating to the market for company control. Our companies often enlarge their businesses by acquisition, and it is important that they should be able to grow them in European Community countries as well as in the United States. In the past four years, it has been very noticeable that United Kingdom companies have engaged in a massive programme of corporate acquisition and

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expansion in the United States: they have found it easier to buy companies there than in France and Germany, where the markets have been less open. That is why we take our work so seriously.
We are making progress with our partners on the legal issues. There are, however, many other barriers—cultural barriers, for instance—which the study has identified. This is where hon. Members on both sides of the House can help, as can businesses and other opinion formers.
We believe that a more open market for corporate control will benefit our European partners. There are already signs that in France, for instance, business interests want a more active takeover market in their country and are beginning to support the British position. Any help that hon. Members can give by arguing the case, both in this country and with our partners in Europe, will be very helpful. We are trying to change the climate of opinion in Europe—to direct it towards the nature of the takeover market, and the way in which companies can grow and increase their business.
Mr. Teddy Taylor: Will the Minister tell my hon. Friends and me what real progress has been made by all these massive steps forward, and all these commissioned reports? If he could find time to tell us how many German plcs have been acquired by British companies—say, over the past year—that would give us some idea. Even if he gave us the figure for two years ago, that would be a great help.
Mr. Redwood: My hon. Friend did not listen quite carefully enough. I said that we were making progress in forming the directives that were needed to change the law; we have not yet completed the process. More progress is required, which means more pressure and more debate with our partners. Such things work by gathering momentum: the more the House expresses its view, and the more others throughout the Community do the same, the more likely we are to make progress in securing the new instruments that will surmount the legal barriers.
The hon. Member for Berwick-upon-Tweed mentioned not only the level playing field—which I have just addressed—but the structure of the procedures that will be entered into by British companies and others when the new EC regulation comes into effect on 21 September this year. He is right that the British Government have been worried about the length and complexity of the form to be sent to merging parties; we have made some progress with the Commission, which has welcomed our suggested amendments intended to simplify it.
The hon. Gentleman also asked about staffing. We and other member states are seconding staff with expertise in competition and merger policy to the Commission, to give it the assistance and strengthened staff resources that it will definitely need when it has sole responsibility for very large mergers.
I must stress, however, that there is another side to the merger regulation itself, which hon. Members have not taken fully on board tonight. Although the regulation clearly gives sole main powers to the European Community for the small handful of very large mergers with cross-border business involved, it also suspends regulation 17—the regulation that enforces articles 85 and 86 of the treaty of Rome on all other mergers. That means
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that, in the case of all the smaller and medium-sized mergers, there is no longer doubt about whether United Kingdom jurisdiction could be exercised wholly and solely, or whether the Commission also had jurisdiction under those two treaty articles.
It is not possible to give an entirely accurate forecast, but our calculations at the time of the negotiation suggested that, of about 300 potentially referrable mergers in this country in any given year, perhaps 10 or 12 would fall to be decided solely by the European Commission. The other 280-odd would fall outside that, and would therefore be entirely within the jurisdiction of the United Kingdom.
Our negotiations on the merger regulation took place against the background of the Commission's statement that, if member states did not agree to the division of jurisdiction under the new merger regulation, it would become more interventionist in its use of treaty articles 85 and 86—which it seemed to be entirely entitled to do, according to the legal advice available to us.
My hon. Friend the Member for Birmingham, Hall Green (Mr. Hargreaves) asked about reciprocity for those in countries outside the Community. He will find that article 24 of the merger regulations sets out a procedure on reciprocity which gives the Commission some modest rights and duties when member states believe that states outside the Community are not reciprocating and opening their markets in the way in which we would like and in the way in which we are opening ours in the Community.
The hon. Member for Newham, South (Mr. Spearing) was right to stress the need for a clear explanatory note. I sympathise with him. The explanatory note could be clearer and I will draw the hon. Gentleman's points to the attention of those who write explanatory memoranda to see whether in future we can have more helpful ones. This one has foxed some of us at this late hour.
Perhaps the explanatory memorandum should have made it clearer that the proposal has nothing to do with implementing the merger regulation itself into United Kingdom law. That would be a major item were that the way we proceeded, and it would have warranted a major debate. As I have tried to suggest—I hope that I have satisfied hon. Members about this—the regulations are a minor matter concerned with our powers under the fair trading legislation.
Question put and agreed to.
Resolved,
That the draft EEC Merger Control (Consequential Provisions) Regulations 1990, which were laid before this House on 5th July, be approved.

EUROPEAN COMMUNITY DOCUMENTS
Motion made, and Question put forthwith pursuant to Standing Order No. 102(5) (Standing Committee on European Community documents).

MUNICIPAL WASTE WATER TREATMENT
That this House takes note of European Community Document No. 10139/89, relating to municipal waste water treatment; and supports the Government's efforts to secure appropriate treatment standards for all significant discharges of sewage.—[Mr. Wood.]
Question agreed to.

STATUTORY INSTRUMENTS, &c.
Motion made, and Question put forthwith pursuant to Standing Order No. 101(5) (Standing Committee on Statutory Instruments, &c.).
STATUTORY INSTRUMENTS, &c.

  MEAT AND LIVESTOCK COMMISSION
  That the draft Meat and Livestock Commission Levy (Variation) Scheme (Confirmation) Order 1990, which was laid before this House on 21st June, be approved.—[Mr. Wood.]
  Question agreed to.
  Motion made, and Question put forthwith pursuant to Standing Order No. 101(5) (Standing Committee on Statutory Instruments, &c.).

  MERCHANT SEAMEN (REDUNDANCY)
  That the draft Redundancy Payments (Merchants Seamen Exclusion) Order 1973 (Revocation) Order 1990, which was laid before this House on 14th June be approved.—[Mr. Wood.]
  Question agreed to.
  Motion made, and Question put forthwith pursuant to Standing Order No. 101(5) (Standing Committee on Statutory Instruments, &c.).

  DEPARTMENT OF TRADE AND INDUSTRY (FEES)
  That the draft Department of Trade and Industry (Fees) (Amendment) Order 1990, which was laid before this House on 2nd July, be approved.[Mr. Wood.]
  Question agreed to.

  Newbattle Abbey College, Dalkeith
  Motion made, and Question proposed, That this House do now adjourn.—[Mr. Wood.]
  12.21 am
  Mr. Alexander Eadie: This is the second Adjournment debate that I have had on Newbattle Abbey college. The first was in March 1989. One thread will run through this second debate that I am inaugurating in these small hours of the morning, and that is the appalling discourtesy of the Secretary of State for Scotland.
  The Secretary of State for Scotland announced the withdrawal of funding without consulting the college, the governors or the trustees from the ancient Scottish universities. As I outlined in the first debate, there was a comedy of errors as to how I was informed, as the hon. Member representing the constituency in which the college is located.
  I regret having to spend valuable time in this Adjournment debate with this introduction. However, we are nearly back to square one. The Secretary of State has refused to meet the governors or the Convention of Scottish Local Authorities to discuss the academic plan that has been submitted and so allow the governors the opportunity to put their case. The Secretary of State has refused to meet me and my hon. Friend the Member for Clydebank and Milngavie (Mr. Worthington) to discuss the matter. My hon. Friend is the Opposition shadow spokesman on education in Scotland.
  I am approaching 25 years' membership of this House. In that time, I have had dealings with many Secretaries of State for Scotland, Ministers and parliamentary colleagues. I have never had any problems if I have asked to meet them to discuss matters affecting my constituency. I was always treated with great courtesy as a fellow parliamentarian. During my five years as a Minister, I never refused to meet a fellow parliamentarian if he requested a meeting to discuss matters affecting his constituency.
  I deeply regret having to say that, for some peculiar reason, the present Secretary of State for Scotland refuses to uphold the traditions set by his predecessors. He refuses to meet me. It is not my first such experience with his Department.
  I must quote what the Secretary of State said in his letter of March 1989, when he officially made it known that he would withdraw funding from the college, and setting out his reservations. He said:
  "I have all along made it clear publicly that a prerequisite to continued Government funding of Newbattle would be that the education authorities and higher education institutions in Scotland were themselves convinced that the College could form an integral part of their own efforts to widen access. My Private Secretary's letter of 25th July therefore advised the Governors that before I could consider continued funding of the College, I would want firm and specific undertakings from authorities and institutions backed up by appropriate financial support to use Newbattle in support of the Government's commitment to widening access to higher education. I emphasised, when we met, that my concern was not primarily financial—but rather to be satisfied that the education world at large regarded Newbattle as being an important part of efforts to widen access, despite the changing circumstances since it was founded before the war."
  Because of the pressure of time, perhaps it is not appropriate that I relate the history, which is cherished in some parts of Scotland, of how and when the college was formed.

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  The college's case is that the Secretary of State's prerequisites have been fully met and that the case for a resumption of grant aid has been met. That view is supported by the advisory group, which included university representatives, local authority representatives, residential college representatives, the Workers Educational Association, and by the ancient universities, which have given encouraging support for the proposals to give accelerated entry to those who successfully complete a Newbattle diploma course. The local authority contribution to the college will have exceeded £250,000 by the end of the 1990–91 fiscal year.
  Parliament must be informed that, after spending six months drawing up the proposals, having first sought the agreement of the Scottish Education Department, the only responses to the detailed proposals are two brief letters. The first was sent on behalf of the Secretary of State and is dated 29 May this year. It stated that, after careful consideration, he had concluded that the plan did not provide a basis for reconsidering his decision to terminate direct funding support to the college.
  The second letter came directly from the Secretary of State in a reply to a request from the chairman of the board of governors for a meeting to discuss the matter. He stated that he did not consider that there had been any significant change in the factors that had led him to reaffirm in March last year his decision that the current funding of the college should cease. He therefore saw no advantage in having the requested meeting. As I have already explained, the right hon. and learned Gentleman also refused to meet me and my hon. Friend the Member for Clydebank and Milngavie.
  Although the changes proposed in the academic plan are extremely significant, no formal meeting to discuss the submission has been held and no formal statement has been made by, or on behalf of, the Secretary of State. That is more than a sad state of affairs: it is deplorable. That is one reason why the college and the rest of the educational world feel that its treatment has been discourteous and offhand.
  In respect of public accountability, statements have been made to the effect that the grant aid previously given has now been reallocated to SWAP—the Scottish wider access programme. Given the limited resources at his disposal, it is maintained that the Secretary of State believes that that reallocation gives better "value for money".
  In Scotland, it seems, we are to have either Newbattle as the country's sole adult residential college—Scotland's equivalent to Ruskin college—or SWAP. I hope that I have the opportunity to argue that there is room and finance for both.
  Newbattle is now an integral part of SWAP provision. More than 250 students from SWAP west—Strathclyde Consortium—have attended short residential courses at the college since October 1989. The college has been prevented from adding to that number by the curtailment of grant.
  For the record, I must state that the amount of grant requested is £361,000 per year for a full range of activities for unqualified adults. That would include access courses for those that the education world know as "returners", as well as long courses. That required sum represents one
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  quarter of 1 per cent. of the Scottish education budget for higher and further education. SWAP has its own separate budget.
  I must remind the House what the Secretary of State said in the letter that I quoted earlier. He said that his concern in relation to Newbattle was "not primarily financial". Whatever reasons the Secretary of State has for his decision on Newbattle, we are entitled to hear them, and the people of Scotland are entitled to hear them. That is why it is pertinent to ask why the Secretary of State advocates for those from Scotland who attend Newbattle's sister college in Wales and the six colleges in England while denying the people of Scotland the opportunity for a similar facility to operate in Scotland, where there is a clear need. More than 80 unqualified adults have expressed their intention to attend Newbattle.
  I believe that I have made a restrained speech this evening, although I have found it difficult to quell my dismay and some anger at the way in which the Secretary of State has handled this whole affair. Let me briefly explain why. I do not intend to be too personal about it.
  My full-time education ended when I was 14 years of age. I started work in the coal mines in 1934. All my adult life, I have been extremely conscious of the need for, and value of, education, although my own full-time education was limited. I have been very conscious of the fact that many people in life need second chances—another opportunity to try to gain qualifications or to profit from education. One of the most exciting and rewarding experiences of my life was when I was appointed chairman of my county education committee. Before I came to Parliament, I played a leading role in the furtherance of education in many national committees in Scotland. I am a former governor of Moray House teachers' training college, and was one of the very few laymen appointed to the committee in Scotland dealing with research into education. So my interest and activities in education are of long standing.
  My experience has taught me the value of education not only to the individual but to the nation as a whole. To let Newbattle Abbey college wither as an adult education college would be nothing short of educational vandalism. It is for some of those reasons that I have inaugurated the debate. I appeal to the Secretary of State to reconsider the matter. At least let us meet him and discuss it; in my view, those who drew up the document deserve no less. I hope that I shall get a favourable response to my request when the Minister comes to reply.
  12.37 am
  The Minister of State, Scottish Office (Mr. Ian Lang): I congratulate the hon. Member for Midlothian (Mr. Eadie) on his success in securing this debate on the subject of Newbattle Abbey college.
  The hon. Gentleman started his speech with a criticism of my right hon. and learned Friend the Secretary of State on the grounds of discourtesy. May I at once address that charge and wholly reject it on behalf of my right hon. and learned Friend. During the 21 months since this issue first came into the public domain—between the announcement of the decision in December 1987 to cease recurrent funding and its coming into effect in 1989—the views of all those who had expressed an interest in the future of Newbattle were considered. My right hon. and learned

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  Friend met the chairman and representatives of the governing body on 24 February 1989 in the course of considering the matter further.
  The hon. Gentleman has told the House that Newbattle Abbey college is a residential adult education college whose main purpose is to prepare mature students for entry to higher education. In the past that was achieved by a two-year diploma course that was accepted by the Scottish universities for entry purposes. That course, however, ceased a year ago. Perhaps I may begin by summarising the main events relating to Newbattle and wider access to higher education in Scotland.
  In December 1987, my right hon. and learned Friend the Secretary of State announced his intention to withdraw recurrent grant from Newbattle. This followed consideration of funding of the college as part of a normal review of Government expenditure. He felt that he could no longer justify spending taxpayers' money on the college as the best way of implementing the Government's policy of wider access to higher education. To meet this objective more effectively, we launched in April 1988 the Scottish wider access programme—SWAP, as it is usually known. SWAP is aimed at increasing significantly the number of mature entrants to higher education in Scotland.
  In July 1988, the governors of Newbattle were given an opportunity until the end of that year to demonstrate a specific commitment from education authorities and higher education institutions to support the college as an integral part of the Scottish education system and of their own efforts in wider access. My right hon. and learned Friend met the governors in March 1989 to consider what commitments they had secured and to hear their case for him to reconsider his decision to withdraw grant. The governors were able to show only limited commitments from other bodies and to hold out rather distant hopes of raising funds by the disposal of assets at Newbattle. That did not persuade my right hon. Friend to change his decision, and recurrent grant ceased at the end of September 1989.
  In March 1990, the governors submitted to us an academic plan as a basis for possible renewal of grant. I should emphasise that this was done at the governors' own initiative and not at our invitation. This plan showed a modest increase in external support, but the college would still have been reliant mainly on Government funding to produce a relatively small number of entrants to higher education. The governors were told that the plan did not provide a basis for reopening our decision. Meanwhile, SWAP had been very successful in improving opportunities for mature entrants to higher education, so in May we announced that its funding would be extended until 1994.
  I respect the hon. Gentleman's commitment to the importance of adult education opportunities. We share that priority. However, I believe that our initiatives during the last two or three years have been enormously successful in opening up such further education opportunities to adults.
  Mr. Eadie: It is all very well for the Minister to say that he respects my lifetime commitment to adult education. However, he has not addressed the question why the Secretary of State has been so discourteous in refusing to meet not only me but also my hon. Friend the Member for Clydebank and Milngavie, who is the shadow spokesman on education. That is unheard of.
  Mr. Lang: I have already answered the charge of discourtesy. In the rest of my speech, I shall address the other points that the hon. Gentleman made.
  The decision was originally made known to the college on 10 December 1987 and confirmed on 9 March 1989. It was further confirmed on 29 May 1990. Therefore, some two and a half years have elapsed, during which that decision was consistently confirmed, although further consideration of it took place during that time. To seek further to develop the argument only creates uncertainty and does not serve the interests of adult education.
  In considering whether continued funding of Newbattle was justified, we had to have regard to the other avenues which now exist for those seeking a "second chance" to enter higher education. We had to consider whether, in educational terms, Newbattle had the same role to play in Scottish education in 1990 as it had when it was founded before the second world war. We recognised the achievements of Newbattle in the years following its foundation in 1937. We acknowledge the foresight and generosity of the 11th Marquess of Lothian in leaving the estate in trust for use as a residential adult education college, but we also looked at the considerable changes which have occurred since Newbattle's foundation.
  In 1937, there were four universities in Scotland; now there are eight, together with the Open university, the central institutions and colleges of education. Those institutions do not simply provide places for students who have just left school with three highers. They cater willingly, indeed they compete increasingly fiercely, for entrants of all types, regardless of school achievements or age. In 1988, there were nearly 7,500 mature entrants to full-time higher education in Scotland—more than a quarter of the total—plus nearly 2,000 new entrants to part-time degree courses in the Open university. There are also throughout Scotland about 50 further education colleges, catering for around 200,000 students up to diploma level.
  In the light of that wide range of opportunities for mature students in further and higher education, we concluded that expenditure on Newbattle to provide about 50 out of more than 25,000 Scots entrants to higher education each year was not justifiable.
  The Government's policy is to increase opportunities for entry to higher education, especially for adults without the conventional entry qualifications. It is also our policy to ensure that public funds are used most effectively; indeed, it is our duty to do so. It appeared that annual expenditure of more than £450,000 on Newbattle was not the best way of using those resources to improve opportunities for entry to higher education. In announcing withdrawal of grant from Newbattle, we emphasised our view that the college's job had largely been done and that funds released from Newbattle would be devoted to encouraging wider access in ways more relevant to current. needs. That we set out to do.
  We were aware of initiatives in the west of Scotland, involving Strathclyde regional council and higher education institutions, whereby mature students would be guaranteed places in higher education on successful completion of an access course at a further education college. We considered that those initiatives were worthy of imitation throughout the country in the interests of both employers and students.
  In April 1988, the Scottish wider access programme was launched. Since then, four wider access consortia have

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  been established, involving all education authorities and higher education institutions, and covering the whole of Scotland. In 1989, the consortia attracted to access courses almost 750 potential entrants to higher education, and that number is expected to rise by half as much again in 1990.
  I understand that success rates on access courses have been high and we expect several hundred new students to enter higher education in 1990 as a result of SWAP. The resources for SWAP are being used for exactly the same purpose as they were at Newbattle—preparing mature students for entry to higher education—and I believe that it is clear which offers better value for money.
  But SWAP is not only about student numbers. The consortia are aiming to ensure that wider access will become an intrinsic part of our education system—another aspect of Scottish education which we believe will be worthy of imitation elsewhere. This is why we recently renewed our commitment to fund SWAP.
  We are constantly reminded of three particular themes in support of Newbattle. First, it is said that a long residential course is necessary for many students. But how do our critics know that? As I have just said, there were nearly 7,500 mature entrants to full-time higher education in 1988. On the basis that the college provided each year no more than about 50 entrants to higher education, it can hardly be claimed to have demonstrated that long residential courses are an essential prerequisite of entry to higher education for mature students.
  It has been argued that Newbattle is a national facility serving the whole of Scotland. But the domicile of its students in recent years does not provide much support for that argument. Around 30 per cent. of Newbattle students have come from outside Scotland. Of the students from Scotland, half or more have come from Edinburgh and the Lothians. That suggests that Newbattle has been a regional rather than a national facility, and it is doubtful whether residential provision is essential for all those students.
  There have been very few students at Newbattle from the remoter parts of Scotland, from areas where other educational facilities may be limited and residential provision might be regarded as a more important requirement. I acknowledge that short residential sessions at Newbattle have been a successful element of some SWAP courses, but Newbattle is by no means the only facility in Scotland where such sessions can be provided.
  Secondly, it has been suggested that because there are residential adult education colleges in England and Wales to which the Government contribute in funding, there must be similar provision in Scotland. Opposition Members sometimes criticise us for imitating the English education system, but in this case, they are insisting that
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  we should do so. We will plan our provision in the Scottish education system on the basis of what we consider to be most effective for Scotland.
  Thirdly, it has been suggested that we are opposed to Newbattle because of the non-vocational education which it has traditionally provided. But there are now far more opportunities than when Newbattle opened for adults who wish to improve their education for its own sake. The Open university, other universities' extra-mural departments, further education colleges and, indeed, many schools provide facilities for adults who wish to do this.
  The hon. Gentleman reminded the House of the commitment made to Newbattle by local authorities in the academic plan submitted to the Scottish Education Department in March. Great emphasis has been given to the amounts involved—over £100,000—but these sums amount to only 15 per cent. of the college's projected income. The amount sought from the Government is about £500,000 including student maintenance, or 70 per cent. of total income. These figures do not suggest to us that there was an overwhelming commitment to Newbattle from outside bodies.
  In the years immediately following Newbattle's foundation, the Government were not the major shareholder, but only one of a number of benefactors contributing to the college's income. But, over the years, the support from those other bodies gradually declined, until the Government were the only significant funder of the college. Many of those who are now loudly criticising the Government for withdrawing support for Newbattle are those who had pulled their own money out of the venture long before the Government did. Under the governors' plan, the main emphasis of provision at Newbattle would have continued to be on a two-year course producing no more than 50 entrants to higher education each year. I should like to make it clear to the House that at no time has the board of governors been led to believe that there was a significant prospect of renewed funding on the basis of their latest plan. The plan was submitted at the governors' own initiative, so it would have been discourteous not to have given it consideration. We considered the plan very carefully and we acknowledged the efforts which had gone into its preparation, but we concluded that renewed expenditure on Newbattle, approximately equal to what we have committed to SWAP, could not be justified. My right hon. and learned Friend's decision taken over two and a half years ago stands.
  Recurrent grant was withdrawn from Newbattle after we had heard the views of all those involved and after a meeting with the governors. We see little value in further meetings or discussions at this stage. The future of the college is now in the hands of its board of governors and of its trustees.
  Question put and agreed to.
  Adjourned accordingly at nine minutes to one o'clock.