Commons Sitting of 16 January 1991

Preamble
The House met at half-past Two o'clock

PRAYERS
[MR. SPEAKER in the Chair]
Mr. Speaker: Before we start Question Time, I draw the attention of the House to the fact that the digital clocks are not working and that hon. Members should therefore keep an eye on the clocks at each end of the Chamber—particularly when speeches are limited to 10 minutes.

Oral Answers to Questions
  FOREIGN AND COMMONWEALTH AFFAIRS

    Antarctica
    Mr. McMaster: To ask the Secretary of State for Foreign and Commonwealth Affairs if he has had any discussions with the Government of Australia on Antarctica.
    Mr. John P. Smith: To ask the Secretary of State for Foreign and Commonwealth Affairs whether he plans any discussions with the Australian Government on Antarctica.
    The Minister of State, Foreign and Commonwealth Office (Mr. Tristan Garel-Jones): We have had no formal discussions with the Government of Australia on Antarctica since 30 October 1990 and there are no plans at present for such discussions. Officials from the Foreign and Commonwealth Office and from other Departments informally discussed our respective Antarctica policies with their Australian counterparts in the margins of the recent 1 1 th special consultative meeting of Antarctica treaty parties in Vina del Mar, Chile.
    Mr. McMaster: Is the Minister aware that the Australian Foreign Minister is fast losing patience with the British Government's refusal to agree to a mining ban? Will he think again, talk to the Australian Government, and support their plans to stop exploitation of Antarctica's minerals?
    Mr. Garel-Jones: With respect to the hon. Gentleman, that is not an accurate reflection of the case. At the Vina del Mar meeting, only eight countries supported the Australian-New Zealand position in support of a total ban, whereas 18 did not. The British Government's policy is to deal first with the immediate threats to the environment and at the same time to seek a consensus among the treaty parties on a way to deal with the minerals issue.
    Mr. John P. Smith: The Minister and the House will be aware of the link between research in Antarctica and the excellent work of the National Environmental Research Council based in Barry Dock in my constituency. Are we
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    to assume that in the same way as the Government decided to close that centre of excellence, they intend to oppose a mining ban in Antarctica and to continue to allow the dishonourable situation in which Japan will be allowed to undermine any future compromise, such as a moratorium?
    Mr. Garel-Jones: The reverse is true. As I pointed out to the hon. Member for Paisley, South (Mr. McMaster), the majority of the parties to the treaty do not support a total ban and the British Government's objective is to find a compromise that will enable that issue to be dealt with at the same time as we confront the more immediate threats to the environment.
    Mr. Colvin: Is Australia party to the Antarctic treaty? I understood that under that system the consensus decisions reached over the past 30 years have led to Antarctica becoming the most environmentally protected continent in the world.
    Mr. Garel-Jones: My hon. Friend is absolutely right. Australia is party to the treaty and my hon. Friend is also right to suggest that one reason why the Government are so anxious to preserve the consensus basis of the treaty is that, as a result of it, Antarctica, which is already designated a special conservation area, is probably the most protected continent on earth. We intend to underscore that and to introduce even stronger environmental protection.
    Mr. Summerson: Does my hon. Friend agree that if the minerals convention is not ratified, that will put at risk the entire Antarctic treaty system? If that happens, the whole continent will be open to exploitation by all the countries of the world.
    Mr. Garel-Jones: We know of no company in Britain or anywhere else in the world that has any intention to explore for minerals or hydrocarbons in Antarctica. My hon. Friend is right to the extent that the convention on the regulation of Antarctic mineral resource activities, which was orignally agreed by consensus by all the parties to the treaty, is unlikely to be ratified because two of the claimant countries—Australia and France—have declined to do so. We therefore consider it a priority to find a compromise that will allow the minerals issue, even though it does not pose a current threat, to be dealt with at the same time as the more immediate threat to Antarctica's environment.
    Mr. Foulkes: Does the Minister recall that at the previous Question Time he said that if no consensus existed round CRAMRA now he would take the lead in trying to find another consensus? Will he see Senator Gareth Evans, the Australian Foreign Minister, when he is in the United Kingdom next week and talk to him about this matter? As the American delegation leader in Chile said that the minerals convention is now dead, will the British Government come to terms with that and, at Madrid in April, join the growing clamour to close the door on all mineral and oil prospecting in what is nature's last unspoilt wilderness?
    Mr. Garel-Jones: First, Antarctica can rightly claim to be an unspoilt wilderness because of the consensus that has existed among Antarctic treaty parties for the past 30 years. My right hon. Friend the Secretary of State will be seeing the Australian senator when he comes to the United Kingdom and I should certainly be prepared to do so if

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    asked. However, I stress again to the hon. Gentleman that the United Kingdom suggested the protocol, which involves protection against tourism, waste disposal, marine pollution and species and habitat protection—all moves to protect the threat that we know exists to Antarctica. Britain led the way by saying that by the time we agree on those matters in Bonn later this year we expect the minerals issue to be decided. As the hon. Gentleman suggests, and as I pointed out in a letter to him on 19 December, we are working to find a bridge between the two opposing views among Antarctic treaty parties.
    Mr. Dunn: Has any British company—or indeed any company—expressed an interest in exploring for minerals and hydrocarbons in Antarctica?
    Mr. Garel-Jones: I am grateful to my hon. Friend for that question. He has written to me on a number of occasions and has taken a close interest in the matter. The most important thing that we have to understand is that there is a range of threats to the environment in Antarctica and those threats are being dealt with on the basis of a British protocol. We have also set down a timetable to ensure that by the time we meet in Bonn a compromise is found to deal with the minerals issue. As my hon. Friend underlined, we know of no company, either in Britain or anywhere else, that has any plans at this moment to explore for minerals in Antarctica.

    Common European Defence
    Mr. Douglas: To ask the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement on discussions he has had with his European partners in relation to common defence.
    The Secretary of State for Foreign and Commonwealth Affairs (Mr. Douglas Hurd): The NATO ministerial meeting in December agreed that the European allies should take a greater role. For NATO, the Western European Union and the intergovernmental conference of the Twelve on political union, discussion of European defence will be a key task for this year.
    Mr. Douglas: Will the Secretary of State enlarge a little on that answer, especially in regard to our relations with the French? Have there been any discussions about the future role of the strategic deterrent, and sharing such a deterrent with the French, and about the role of naval power and its implications for bases in the United Kingdom? I know that that may be more a matter for the Secretary of State for Defence, but it has implications for bases in Scotland such as the Rosyth naval base and dockyard. Will the Secretary of State comment on these remarks?
    Mr. Hurd: As I understand it, there is steadily growing defence co-operation between ourselves and France and that is something which my right hon. Friend the Secretary of State for Defence welcomes and takes a hand in, but it does not take the form of proposals for a shared nuclear deterrent.
    Mr. Teddy Taylor: Has the Foreign Secretary sought guidance from the Belgian Government about the reported refusal to supply ammunition to Britain in case it might be used in the Gulf conflict? As that could put British lives at risk in a prolonged conflict, does he believe
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    that such issues should be clarified before he seeks to transfer our defence responsibility from NATO to some European organisation?
    Mr. Hurd: There are no plans to transfer our basic guarantees of security from NATO to anywhere else. I am sure that the request to Belgium for ammunition is still being discussed.

    The Gulf
    Mr. Winnick: To ask the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement on the latest position in the Gulf.
    Mr. Home Robertson: To ask the Secretary of State for Foreign and Commonwealth Affairs if he will make a further statement on progress towards the implementation of United Nations resolutions affecting the middle east.
    Mr. Hurd: Since Iraq's invasion of Kuwait on 2 August, we and many others have made sincere efforts to bring the Gulf crisis to a peaceful solution on the basis of the Security Council resolutions. Those efforts were redoubled in the last days, notably by Mr. Baker's meeting with Tariq Aziz on 9 January and by the United Nations Secretary-General's visit to Baghdad on 13 January. Iraq failed utterly to respond positively to any of these initiatives. We continue, as we did yesterday, to urge Iraq to choose the path of peace. But the deadline yesterday was a real one. If Iraq does not withdraw from Kuwait it will be forced to do so.
    Mr. Winnick: Is not it clear that the wholly negative response of the Iraqi regime to the French proposals of yesterday and even more so to the visit of the United Nations Secretary-General shows only too well that it is Saddam Hussein who wants war to keep Kuwait and that it is poisonous nonsense to suggest that it is the allies who are keen on war?
    Is not there a further lesson to be learnt by the democracies from this: that besides opposing appeasement, they should not arm dictatorships? Why is it that time and again dictatorships such as that in Iraq have been armed by the democracies? Admittedly, the Iraqis have not been armed by us in the past few years, but they have been by France, Germany and the Soviet Union. Do not we understand that these are the very arms that can be used against our own people?
    Mr. Hurd: I agree with the hon. Gentleman's first point; he put it well. As for his second, as he acknowledged, we have not been arming Iraq. We have been applying, at some cost to our manufacturers, an embargo against it since the beginning of the Iran-Iraq war. I agree that the whole issue of how arms are sent and how to prevent them from falling into the hands of possible aggressors needs to be discussed.
    Mr. Home Robertson: Only one thing is more depressing than the refusal of the British and Americans to co-operate with yesterday's French initiative, and that must be the failure of the Iraqis to respond to that initiative, which could have established a link between United Nations resolutions affecting Kuwait and those affecting Palestine. When, as now seems inevitable, my constituents in the Royal Scots have to play their part in liberating Kuwait, will the Foreign Secretary take urgent

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    action to ensure that they never again have to get involved in conflict in the middle east—by tackling the underlying instability of the area and ensuring concerted international action to resolve the Palestinians' legitimate rights?
    Mr. Hurd: Yes, certainly; when aggression against Kuwait is reversed we must all return with new vigour to look for a just solution to the Arab-Israel problem. But the hon. Gentleman has studied this matter for years and he cannot seriously believe that there would be any hope or advantage in an international conference, convoked in the context of the aggression against Kuwait, on the Arab-Israel problem. Which of the parties that he wants to be there would attend? That would not be a way of restarting the peace process on Arab-Israel.
    Mr. Churchill: Will my right hon. Friend explain to hon. Members who believe that sanctions should be given more time to work the risks attendant on such a policy for the British and allied forces in the Gulf? Is not it the case that beyond the middle or the end of March temperatures in excess of 100 deg. F would make the use of nuclear and chemical protection suits almost impossible, that that could put British forces at risk for about six months and that there is no guarantee that at the end of that period the Iraqi regime will not have developed nuclear weapons?
    Mr. Hurd: There is no guarantee that if the use of the military option were postponed for any length of time it would be as effective as it could be now. Without going into my hon. Friend's specific question, that is true. The will and the means exist now. In my view, it would be very rash to suppose that the two would come together again so well in the near future.
    Sir Dennis Walters: The British Government have rightly confronted with great vigour the indefensible aggression of Saddam Hussein against Kuwait. Can my right hon. Friend assure the House that equal vigour will be displayed as soon as possible to resolve the Palestinian issue and to deal with Israel's defiance of repeated United Nations resolutions and international law?
    Mr. Hurd: We have to apply equal vigour, but, as my hon. Friend suggests, the one must come after the other. In both cases we need to follow the Security Council's guidelines. First, the Security Council resolutions that we debated yesterday are very clear as regards Iraqi withdrawal from Kuwait. Secondly, as my hon. Friend knows better than I, resolutions 242 and 338 cover Israel and suggest what is in essence a compromise—what is sometimes called land for peace. We have to follow with vigour every possibility of achieving such a settlement.
    Sir David Steel: Does the Secretary of State accept that last week on both the west bank and in Gaza I found deep demoralisation and a sense of frustration among the Palestinians about the fact that the outside world has taken so long to deal with the very resolutions that he has just cited? That is why last night's statement by the Secretary-General of the United Nations was so important —promising that as soon as the Kuwait crisis was over there would be a middle east peace conference. That is something which I hope the Secretary-General will pursue in both the Security Council and the European Community, so that at last we may portray Saddam
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    Hussein properly—as an obstacle to the wider middle east peace and not as an assistance to it, as, unhappily, so many think that he is.
    Mr. Hurd: The latter two questions have been fairly put. That is exactly the position. Saddam Hussein has been an obstacle, not an effective advocate. However, the right hon. Gentleman knows that there is no magic about an international conference. It needs to be called in circumstances where it has a chance of success. That is why the vexed problem of Israel sitting down with representative Palestinians has to be tackled and solved first. It was that which James Baker and the Egyptians, with the Palestine Liberation Organisation, were trying to sort out before the Iraqi invasion of Kuwait. In one form or another, we shall have to return to that problem before there can be a successful conference.
    Sir Michael Marshall: Does my right hon. Friend accept that in the present situation the possibility of 11th hour initiatives, whether from Yemeni sources, France or elsewhere, and any possible future initiatives have to be viewed in the context of virtually every permutation having been tried, particularly by the Arab countries, with Saddam Hussein and all having foundered on his simple refusal to withdraw from Kuwait? Is not it the case, therefore, that we are in the position that the House endorsed yesterday and that further initiatives are unlikely to take us anywhere at this time?
    Mr. Hurd: That, sadly, was the view to which we came at the European Community Foreign Ministers meeting two days ago, and events have proved us right.
    Mr. Ernie Ross: Has the Foreign Secretary had time to reflect on the suggestion made to him last night that would effectively get us out of the problem of Saddam Hussein trying to link the two issues? Yesterday, Palestinians were shot by Israeli defence forces on the west bank. During the recess, 20 Palestinians were killed by the Israeli defence forces. These are grave breaches of international law. If we are to demonstrate to the Arab population in the middle east that we are determined to uphold the status of both international law and the United Nations resolutions, by means of parallel endeavours we could deal with these issues separately from the Iraq-Kuwait crisis.
    Mr. Hurd: We have not been silent on these events. As the hon. Gentleman will acknowledge, the Security Council dealt with and passed judgment on these events in the occupied territories all the way through last autumn and no doubt it will continue to do so. In real terms, a serious chance to tackle again with greater hopes of success the Arab-Israel problem will have to await the reversal of the aggression. However, I agree with the hon. Gentleman that we have to reject it. Everybody, including the Palestinians, will need to have fresh ideas if we are to do so with any success.
    Mr. Brazier: Does my right hon. Friend agree that it is sad that so few of our allies in Europe seem to be willing to recognise, in terms of providing assistance to the forces in the Gulf, that their interests as well as ours and those of the Americans are fully bound up in the Gulf crisis? Does he also agree that it is particularly sad that some of our neighbours who have sent albeit token forces to the Gulf are apparently now instructing them to take no part in any conflict that may take place?
    Mr. Hurd: Let us see what happens. I hope to attend a WEU meeting in Paris tomorrow which no doubt will pursue that. I welcome strongly the statement made today by the French President.
    Mr. Kaufman: Will the right hon. Gentleman bear in mind the fact that Security Council resolution 681 carried on 20 December with regard to the Arab-Israeli dispute does not refer simply to an international conference, essential though it is, but to human rights violations by Israel involving shootings, deportations and other arbitrary actions on the population under Israeli occupation? That being so—of course, the international conference will have to await the end of the Iraq-Kuwait crisis, which we continue to hope will be resolved peacefully—action can be taken now because of the violations of United Nations resolutions.
    Therefore, first, will the Government draw to the Israeli Government's attention their continued defiance of the United Nations? Secondly, if need be, will the Government raise these matters again urgently at the Security Council since, as my hon. Friend the Member for Dundee, West (Mr. Ross) points out, the shootings and deportations continue? Thirdly, will the right hon. Gentleman tell the Israelis that, although at present it is not possible to convene that conference, there will come a time when the world will turn its attention to this matter fully and a proper resolution involving self-determination for the Palestinians must result, so the Israelis would be well advised to start talking now?
    Mr. Hurd: As the right hon. Gentleman said, the Security Council and our representative on it have not been silent or held back from expressing a view and strong criticism of the acts of repression and, particularly, the deportions in the occupied terrorities. On the future tackling of the problem, on behalf of this country I have gone to some difficulty to make it clear that we do not accept the policy of the present Likud Government in Israel which rests the security of Israel on continued occupation. That is not acceptable and it is not safe for Israel in any longer-term view. We hope that the time will come when Israel will accept that and settle down to working with others for a more stable outcome.

    Nuclear Test Ban Treaty
    Mr. Kirkwood: To ask the Secretary of State for Foreign and Commonwealth Affairs what discussions he has had on the conclusions reached by the recent conference on the nuclear test ban treaty; and if he will make a statement.
    The Minister of State, Foreign and Commonwealth Office (Mr. Douglas Hogg): The partial test ban treaty amendment conference is due to end on 18 January. We have made it clear that we do not support the proposal to convert the treaty into a comprehensive test ban. Because our security will depend for the foreseeable future on deterrence based in part on the possession of nuclear weapons, we have a continuing need to test our nuclear weapons to ensure that they remain effective and up to date.
    Mr. Kirkwood: Does the Minister accept that that is a disappointing answer? Will he assure the House that he will listen to the discussions that will continue until 18 January, when a vote will be taken on replacing the 1963
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    partial test ban treaty with a comprehensive treaty? Does not he understand that there are now compelling reasons for moving towards a comprehensive test ban on nuclear weapons? Is he aware of the signals that would be sent if the United Kingdom Government voted against that and tried to veto any such decision? More important, does he understand the need to try to influence in a positive way the United States contribution to the conference, which may also be considering vetoing any such conclusion?
    Mr. Hogg: Of course we shall listen to all the arguments that are adduced at the conference. We have reached the conclusion that our security depends on the possession of nuclear weapons. To maintain effective and up-to-date nuclear weapons, we have concluded that we must retain the ability to test.
    Mr. Ian Bruce: Does my hon. and learned Friend agree that hon. Members are beginning to return to the consensus that as long as others have nuclear weapons we should have a credible deterrent? It is fallacious for the Opposition to suggest that we can have those weapons without testing them, because their safety and effectiveness cannot be proved unless they are tested in underground, safe conditions.
    Mr. Hogg: My hon. Friend put the argument extremely clearly and I agree with everything that he said.
    Mr. Robertson: Few people—I can think of no hon. Member—are not conscious, with some fear, of the prospect of the conflict in the Gult involving the use of nuclear weapons by countries such as Iraq. The Minister will therefore understand how depressing his answer was. This week, the Government have a chance to act rather than to agonise on the proliferation of nuclear weapons to countries such as Iraq. Converting the 1963 partial test ban treaty into a comprehensive test ban treaty would be an automatic method of stopping the dangerous expansion of nuclear weapons into the hands of other countries. Why, therefore, as the technology to verify nuclear tests is available and reliable, cannot the Government take a lead in ensuring that this small measure, which would make the world much safer, is taken?
    Mr. Hogg: Much as I should like to agree with the hon. Gentleman, I am afraid that I cannot follow him in his argument, not least for this reason: Iraq, the country which he mentioned, is a signatory to the non-proliferation treaty. Notwithstanding that fact, it is still seeking to develop a nuclear weapon.

    European Legislation
    Mr. Patrick Thompson: To ask the Secretary of State for Foreign and Commonwealth Affairs what progress is being made in the United Kingdom in implementing European legislation.
    Mr. Garel-Jones: The Commission's latest report on single market implementation shows that the United Kingdom has implemented 84 per cent. of measures requiring national implementation. Only Denmark, with 88 per cent. and Portugal—taking into account its derogations—with 85 per cent., had a better record than the United Kingdom.
    Mr. Thompson: I thank my hon. Friend for that reply. As this country has such a good record in the

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    implementation of European legislation, will he outline the steps that the Government are taking to ensure maximum compliance by the more laggardly members of the European Community?
    Mr. Garel-Jones: My hon. Friend is absolutely right. In this, as in so many other European endeavours, the United Kingdom has one of the best records in the Community. We intend to put forward ideas on implementation, enforcement and compliance at the intergovernmental conference, which we believe will strengthen the rule of law throughout the Community.
    Mr. John D. Taylor: In view of the perception of many members of the European Community that the United Kingdom is a bad member of that club, what efforts have the Government taken to publicise in those countries its first-class record in enacting legislation for 1992?
    Mr. Garel-Jones: I am grateful to the right hon. Gentleman. If we have been laggardly, I assure him that we are not being so now. Many of our partners are aware of our excellent record and are anxious to support our endeavours to strengthen the rule of law throughout the Community.
    Mr. Dykes: In view of the obvious importance of hon. Members being able to follow European legislation and to scrutinise it in advance, through contacts with Community institutions in Brussels, and as the Foreign and Commonwealth Office takes the lead on EC liaison, will my hon. Friend make a point of liaising with the office of the Leader of the House and the Services Committee on the proposal for dedicated telephone lines so that Members here can keep in regular contact with Community institutions and the Commission in Brussels, notwithstanding the obvious reality that a few nervous, hesitant Members think that it is dangerous to have regular contact with foreigners?
    Mr. Garel-Jones: I am not aware that many hon. Members, with the possible exception of the hon. Member for Bolsover (Mr. Skinner), are reluctant to have contact with foreigners or with foreign parts. This specific matter is one for discussion between the usual channels and between my right hon. Friend the Leader of the House and the shadow Leader of the House. We would certainly support them in any actions that would give hon. Members better and closer contact with events in the Community.
    Mr. Anderson: Is the Minister aware that the EC Commissioner for social affairs, Mrs. Papandreou, following her meeting on Monday with the Secretary of State for Employment, said that the completion of the internal market by 1992 was in jeopardy because of what she called the negative British attitude towards elements of the social action programme? Following the Thatcherite hostility to the EEC, has there been only a change of style, or is there really a change of substance? Are the Government prepared to move towards majority voting in the social action sphere?
    Mr. Garel-Jones: My right hon. and learned Friend the Secretary of State for Employment has already pointed out that the Government have the best record throughout the Community in implementing the directives that are
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    associated with social action. We are in no way being laggardly. We contend that in this matter, as in so many others, we are at the forefront.

    Israel
    Mr. Arbuthnot: To ask the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement on the state of relations between the United Kingdom and Israel.
    Mr. Douglas Hogg: Relations are correct and friendly, although important differences remain on the peace process and on Israeli policies in the occupied territories. My right hon. Friend had useful discussions in October when he visited Israel, as did my right hon. Friend the Prime Minister when the Israeli Prime Minister called on him on 17 December.
    Mr. Arbuthnot: Last week on a visit to Israel, I found that the Israeli Government were well aware of the dangers of becoming militarily involved in the Gulf crisis. Although Israel has, of course, every right to defend herself, will my right hon. and learned Friend urge the Government of Israel to continue to show the considerable restraint which she has so far shown? Will he confirm that, were Saddam Hussein to attack Israel, the consequences for him would be serious?
    Mr. Hogg: We have taken every opportunity to impress on the Government of Israel the need to exercise self-restraint. They have done so and deserve the gratitude of the House.
    Mrs. Dunwoody: When talking with the Israel Government, will the Minister make it clear that he has noticed the remarks by the Palestine Liberation Organisation leadership that it regarded the whole of the land of Israel as the Palestinians' birthright and that he will not be misled, confused or in any way diverted by those who try to excuse Saddam Hussein's inexcusable invasion by dragging in the issue of the Israeli settlements?
    Mr. Hogg: I can promise the hon. Lady that I shall not be confused or misled in any of the respects that she mentioned or, I hope, in any other.
    Mr. Adley: Is my hon. and learned Friend aware that, as the right hon. Member for Manchester, Gorton (Mr. Kaufman) said, because most of the world, particularly the Arab world, perceives double standards being employed by many countries towards illegal occupation of neighbouring territories, there is an increasing danger of public opinion in countries such as Egypt, Syria and Lebanon introducing an element of aggravation which is not apparent in the attitude of those Governments to the current conflict in the Gulf? Does my hon. and learned Friend agree that, if we are not careful, some of our allies in the present situation will be totally separated from public opinion in their countries?
    Will my hon. and learned Friend make the Government's position clear and say that if either Iraq or Israel invades or uses Jordanian territory, our attitude towards any such incursion will be the same as our attitude towards Iraq's incursion into Kuwait?
    Mr. Hogg: Our attitude towards Israeli policy in the occupied territories is wholly plain. I have taken the opportunity to stress our policy both to the Israeli

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    ambassador and Deputy Foreign Minister and they know well that we regard the Israelis' occupation of the territories as unlawful and believe that they should withdraw.
    Mr. Ron Brown: As members of the Iraqi national assembly wish to come here to brief this House about their country's intentions towards Israel and other parts of the middle east, should not formalities be waived, especially in view of the late hour and the serious possibility of war breaking out? Details of this matter have been known to the Prime Minister's office for some time and he has remained silent. Is not that an absolute disgrace? I hope that the Minister will reply today on the possibility of a peace mission from Baghdad coming to speak to hon. Members on both sides of the House. That is most important.
    Mr. Hogg: If members of the Iraqi assembly have any influence at all, I suggest that they impress upon Saddam Hussein the need to leave Kuwait immediately.
    Mr. Rhodes James: Is the Minister aware that, although the Friends of Israel has disagreements with the Israeli Government's policies, as far as we are concerned, the independence and freedom of the people and state of Israel are non-negotiable? Will he make that very clear not only to the Israelis but to our Arab friends?
    Mr. Hogg: My hon. Friend makes a vital point. Israel is entitled to a secure existence and the world community must seek to achieve that.

    Bangladesh
    Mr. Simon Hughes: To ask the Secretary of State for Foreign and Commonwealth Affairs what assessment his Department has made of the prospects for democratic government in Bangladesh; and if he will make a statement.
    The Parliamentary Under-Secretary of State for Foreign and Commonwealth Affairs (Mr. Mark Lennox-Boyd): The interim Government's main commitment is to hold free, fair and impartial parliamentary elections which have been set for 27 February. We hope that all concerned will co-operate towards realising that objective.
    Mr. Hughes: May we hear from the Government a welcome to the end of the military dictatorship of ex-President Ershad? Particularly because Bangladesh receives so much money from this country and our links are so strong—I welcome the presence of the Minister for Overseas Development on the Front Bench—may we have a clear statement of our unequivocal view which is that there must be democracy in the other countries of the world, such as Bangladesh, and that we will not countenance giving support or assistance to those who seek to reinstate military rule, now or in the future, in what was once a democratic country?
    Mr. Lennox-Boyd: I am happy to say that the prospects for democracy in Bangladesh are now much brighter. The interim Government of Mr. Justice Shahabuddin, in lifting the state of emergency and press censorship, are seeking to allow all parties acccss to the news media. They will be welcoming outside observers and restructuring the election commission. We are happy to welcome those developments.
    Sir George Gardiner: Further to my hon. Friend's reply, will he undertake that, when he and his colleagues give future consideration to applications for development aid from Bangladesh, proper account will be taken of the view enunciated by my right hon. Friend the Foreign Secretary to the Overseas Development Institute last June—that in deciding these matters, full account will be taken of whether the applicant country has proper, democratic institutions and, indeed, a pluralistic society?
    Mr. Lennox-Boyd: I am happy to say to my hon. Friend that opportunities have recently been taken by the high commissioner in Bangladesh to stress that very point. He made a speech in the presence of former President Ershad, stressing the importance that aid donors attach to the maintenance of good government. A Commonwealth Parliamentary Association delegation of British Members of Parliament recently made the same point to the former President.
    Mr. Madden: Will the Minister confirm whether the acting President of Bangladesh has made a formal request to the British Government, to the Commonwealth Secretariat and to other countries to provide representatives to monitor the elections due to be held in Bangladesh at the end of next month? If such a request has been made, will the Minister give an assurance that it will be treated with urgency and receive a positive response from this country and, I hope, the rest of the international community?
    Mr. Lennox-Boyd: As the hon. Gentleman knows, the Government have said that they will welcome independent observers and I understand that an approach has now been made to the Commonwealth Secretariat to provide monitors.

    Latin America
    Mr. Jacques Arnold: To ask the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement on the progress towards democracy in Latin America.
    Mr. Garel-Jones: Within the past year, democracy has been restored in Chile and Nicaragua and consolidated in Brazil, Colombia, Costa Rica, Guatemala, Honduras and Peru by peaceful transfer of power following free elections. Except in Cuba, democracy is now the norm in Latin America.
    Mr. Arnold: Is not it encouraging that, at a time of considerable turbulence around the world, Latin America has quietly got on with the job of reintroducing democracy and coping with its economic problems? Is not it a shame that we are not to see a clean sweep? It is high time that Fidel Castro and his socialist regime in Cuba stood down in favour of elections there.
    Mr. Garel-Jones: My hon. Friend is right. It is encouraging to see democracy taking root in that way in Latin America and to see liberal, social market economic policies being introduced alongside that. My hon. Friend is right. Perhaps the reason why the Cuban people still tragically labour under a communist/socialist regime is that those regimes, as we saw in Nicaragua, are rejected by the people when subjected to the democratic process.
    Mr. Corbyn: Does the Minister recall that just over a year ago a large number of American forces invaded Panama, have since occupied that country installing their own puppet Government and subsequently vetoed United Nations action to condemn that invasion? What pressure is the Minister putting on the United States to withdraw all its forces from Panama, to guarantee the 1977 treaty signed by President Carter and to ensure that the people of Panama can elect a Government of their wishes not that of the United States army?
    Mr. Garel-Jones: Perhaps the hon. Gentleman might care to recall that the Government in Panama were elected and the United States action, which was warmly supported at least on the Government Benches, was an action to restore a democratically elected Government to Panama.

    Soviet Union
    Mr. Anthony Coombs: To ask the Secretary of State for Foreign and Commonwealth Affairs what particular assistance the United Kingdom is giving to the Soviet Union to help feed its people.
    Mr. Hurd: The £20 million British know-how fund for the Soviet Union was announced in November last year. Its disbursement is under review in the light of recent developments in the Baltic states on which I shall be answering a private notice question shortly.
    Mr. Coombs: Does my right hon. Friend agree that the main reason why a country so vast and rich in resources as the Soviet Union cannot adequately feed its people lies in the inefficiency, inflexibility and corruption of the Communist regime—a regime which the Soviet Union now appears to want to impose by force on the Baltic republics? Does he agree that it is appropriate that all economic assistance and trade credits should be suspended forthwith until there is proof positive that the Soviet Union is prepared to act in a civilised way without the use of force against Lithuania, Latvia and Estonia in particular?
    Mr. Hurd: It is true that food shortages in the Soviet Union are the result not of low production but of a collapsed system of distribution and that is why we thought that that was a sensible way in which we could help. It is in our interests that the Soviet Union should get on with perestroika and glasnost, but we must make it clear both as a country and as members of the Community, that we cannot be expected to help if the Soviet Union is returning to repression in the Baltic states.
    Mrs. Margaret Ewing: While we welcome the money made available to the know-how fund, is not £500 million in aid also going to the Soviet Union through the European Community? Would not it have been helpful therefore, if, instead of answering a private notice question asked by several hon. Members, the Foreign Secretary had given us a clear statement of the British Government's view and that of the European Foreign Minsters in their discussion in Brussels, particularly in light of what the Foreign Secretary has said? Many of us believe that in 1991 we are witnessing a repeat of Hungary in 1956 and Czechoslovakia in 1968.
    Mr. Hurd: The worry is there—the hon. Lady is quite right—but I do not think that it is a confirmed worry yet. However, I shall make our position more clear in a few minutes.
    Mr. William Powell: Is my right hon. Friend aware that many people in this country are absolutely appalled by the murders that have taken place in Vilnius in the past few days and that they would find it very hard to understand if the British and other EEC Governments continued to provide economic support for the Soviet Union without a firm understanding that such behaviour will never be repeated?
    Mr. Hurd: I agree that acts of repression of that kind, for which the Soviet Government must take responsibility, whoever actually gave the orders that resulted in the deaths, are not compatible with the kind of co-operation and help that we, Europe and the United States have set in hand.
    Mr. Harry Ewing: The Foreign Secretary says that he is considering the £20 million fund and that he is listening to the plea from his own Back-Bench colleagues for him to reconsider economic aid to the Soviet Union. Does that mean that the Foreign Secretary is thinking about imposing sanctions that he is convinced will persuade the Soviet Union to change its course of action?
    Mr. Hurd: We decided recently to give certain limited help, both as a country and as part of the Community, to President Gorbachev's Government as a reforming Government. Were they to turn their back on reform and continue along the path of trying to repress opinion with tanks, obviously it would not be possible to continue our part in that effort.
    Mr. Cormack: Will my right hon. Friend seek a very early meeting with the Soviet ambassador and ask him to the Foreign Office? Will he tell him that there is enormous goodwill in this country towards the Soviet Union, but that the golden opinions that Mr. Gorbachev has brought over the past three or four years are now at risk and that, unless things are put right in the Baltic states, that goodwill will be quickly dissipated?
    Mr. Hurd: I did that in my own language with ambassador Zamyatin on 8 January.

    The Gulf (British Hostages)
    Mr. Beith: To ask the Secretary of State for Foreign and Commonwealth Affairs whether he will make a statement on the arrangements that were made to deal with United Kingdom hostages returning from the Gulf.
    Mr. Douglas Hogg: Within three days of the Iraqi decree of 9 December that westerners were free to leave, more than 700 British nationals were safely evacuated from Iraq and Kuwait. The British embassy in Baghdad helped to obtain exit visas and chartered a number of aircraft. It also obtained places on regular flights and planes chartered by other western countries. The embassy in Kuwait, with invaluable help from the wardens, organised the movement to Baghdad of those who had been in hiding. On their arrival in the United Kingdom, the hostages were met by representatives from the Foreign Office, the Department of Social Security and the Ministry of Defence, as well as a number of non-governmental

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    organisations, including the Gulf Support Group and the Red Cross. All immediate requests for assistance were dealt with on arrival so that nobody was without funds, accommodation, medical care or general advice.
    Mr. Beith: Is the Minister aware of the enormous relief of families that the hostages are at last home, some of them as recently as within the past few days? Will he convey the thanks of hon. Members and families to officials, particularly those in Baghdad and Kuwait, who worked under such great difficulty to help to bring that about? Will officials continue to be available to help hostages who have been through such a difficult and traumatic time? Will he also have a word with the Chancellor so that they will not face income tax bills because they were out of the country for less than the 12 months that they expected to be working away?
    Mr. Hogg: I am grateful to the hon. Gentleman for the three points that he has made. I am grateful also, on behalf of the Foreign Office, for his kind remarks. As regards future problems encountered by returning hostages, of course a number of agencies are available to help and are anxious to help. However, if there are any matters in which the Foreign Office can help in particular, the emergency unit is still available for that purpose. As regards the hon. Gentleman's point about income tax, it is an important point which the Treasury is considering at this moment.
    Mr. Ian Taylor: Will my hon. and learned Friend accept the best wishes from my constituents who were inconvenienced by being held hostage until the last minute in Kuwait? Will he also make public his belief that the Government will encourage private companies to do their best for people who were held hostage? It has come to my notice that, in one or two cases, when they have returned, hostages have not found the generosity of spirit which I am sure the Government would encourage private employers to offer.
    Mr. Hogg: My hon. Friend makes a very important point. I certainly underscore what he has said.
    Mr. Graham: Will the hon. and learned Gentleman do something about Customs officers who stopped a constituent of mine on arrival at Gatwick airport after he had escaped from Kuwait? He was incarcerated at the airport for over two hours and was fined £145 for possession of a video camera. I asked the Minister to intervene, which he did, and the fine was stopped. Nevertheless, will he ask Customs and Excise officers to act with sensitivity in future incidents? My constituent was treated deplorably and an apology was not good enough.
    Mr. Hogg: I had the advantage of being present when the three aircraft came back and I had the opportunity of seeing how the returning hostages were treated. In all the cases that I saw, the Customs and Excise officers behaved with great sensitivity. I did not see anything that would justify the criticism that the hon. Gentleman has made, but I am happy to accept that there may have been the occasional lapse, and I am sorry about it. In the generality of cases, people were treated with great sensitivity. I talked to the officers at the time and it was clear that that was their purpose.
    Mr. Hind: I hope that my hon. and learned Friend will accept thanks, particularly from people like me who had relatives amongst the hostages, for the efficient way in
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    which they were removed from Iraq. I was grateful for the discretion of my hon. and learned Friend's Department. Bearing in mind the sensitive work that many hostages were carrying out in Iraq, can he tell me whether his Department, as well as the Ministry of Defence, talked to hostages who could perhaps provide useful intelligence for the armed forces during the forthcoming war, should it take place?
    Mr. Hogg: As to the latter part of my hon. Friend's question, the answer is yes. The MOD had debriefing teams available and has discussed matters with many of the returning hostages. On the first part of my hon. Friend's question, I am grateful for his kind remarks, but may I say that many voluntary agencies played a distinguished part in helping the refugees? I mention particularly the Salvation Army, the Red Cross and the Gulf Support Group with whom my hon. Friend the Member for Kingswood (Mr. Hayward) was so closely associated.

    NATO
    Mr. Andrew Welsh: To ask the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement on his Department's policy on the future of NATO.
    Mr. Hurd: NATO will remain the cornerstone of our defence, resting on a collective military structure which includes north American forces based in Europe. NATO is adapting to the changed circumstances and the Europeans expect to take on a greater responsibility within the alliance.
    Mr. Welsh: Does the Minister foresee any out-of-area role for NATO, requiring changes in the original Brussels treaty? Will he state the implications for NATO of the current tragic position in Lithuania and the Baltic states?
    Mr. Hurd: I do not foresee any treaty change in regard to the point that the hon. Gentleman raised, but I believe that NATO will need to take greater account of possible threats to it from out of area, including the area to its south. We are coming back to the Baltic states in a moment. I do not see a particular responsibility for NATO there.

    The Gulf
    Sir Hal Miller: To ask the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement on the situation in the Gulf following the expiry of the period set by the United Nations Security Council for Iraq to withdraw from Kuwait.
    Mr. Harry Greenway: To ask the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement on the situation in the Gulf.
    Mr. Hurd: I refer my hon. Friends to the answer I gave earlier.
    Sir Hal Miller: Will my right hon. Friend make it plain that if there is a wish to preserve peace, to protect property and to prevent damage to the environment, all that can still be achieved if Saddam Hussein withdraws from Kuwait, and that we have no long-term intentions of remaining or exercising any colonial influence in the area?
    Mr. Hurd: My hon. Friend is entirely right. Our aim is simply to carry out the repeatedly restated aims of the United Nations and bring about the withdrawal of Iraq from Kuwait and the restoration of the Kuwaiti Government.
    Mr. Greenway: In evaluating the state of morale of the Iraqi forces, has my right hon. Friend taken account of press reports of large-scale desertions and low morale in those forces? What effect does he believe that that would have on the war, if it comes about?
    Mr. Hurd: Morale is certainly patchy. I noticed that after his recent visit to his forces in the Gulf, President Saddam Hussein found it necessary to give them all a considerable pay hike. I am not sure that that is a good sign of future morale.
    Mr. Galloway: When I was leafing through the list of the legitimate Government of Kuwait I discovered that 11 out of the 12 top Ministers and three out of the four provincial governors had the same surname—as-Sabah. That is not so much a one-party state, more a family business. I was wondering whether the Secretary of State had any plans, if—it is a big if—there is any Kuwait after the war which was declared in the House last night, to encourage a democracy in Kuwait which might be worth the lives of those who will die for it.
    Mr. Hurd: Before the hon. Gentleman thinks himself so pleased with that question, he should recognise that it is for not the British Government but the Kuwaitis to make such plans and that they have done so. If the hon. Gentleman knew about the subject, he would be aware of
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    the conference held in Jedda recently attended by Kuwaitis of many strands of opinion. The conference looked forward to the restoration of the 1962 constitution. Perhaps the hon. Gentleman will now turn his attention to the constitutional arrangements in Baghdad.
    Mr. Nellist: Leaving aside my total opposition to this war, will the Foreign Secretary make the following suggestion at the next meeting of the war Cabinet? As war is not only terrible but terribly profitable and many companies, especially arms and oil companies will make a great deal of money in the weeks ahead, could that money be put to public good—confiscated if necessary—so that hospital beds that have been closed can be reopened and so that there is not competition between civilian patients and casualties returning from the Gulf? That would show the hundreds or perhaps thousands who will be bereaved in the weeks or days ahead that their sacrifice is worth more than mere shareholders making rich pickings out of the next few weeks.
    Mr. Hurd: If the hon. Gentleman suggests that the purpose of the Government's policy, supported by the Opposition Front Bench to this time, has anything to do with the point that he makes, he is wrong.
    Mr. Nellist: I was referring to the effect, not the purpose.
    Mr. Hurd: The effects are substantial. The effects of any war are substantial and must be dealt with equitably. That does not affect the principle that the House debated and approved yesterday.

Lithuania
3.32 pm
Mr. Gerald Kaufman(by private notice): To ask the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement on recent events in Lithuania.
The Secretary of State for Foreign and Commonwealth Affairs (Mr. Douglas Hurd): The Government have condemned the use of force by the Soviet army against unarmed civilians in Lithuania, which led to many deaths and injuries on the night of 12 January. We strongly oppose the use of coercion against elected assemblies in the Baltic states. The European Community, after its meeting that I attended the day before yesterday in Brussels, has decided that its co-operation with the Soviet Union will be suspended if the situation prevailing in Lithuania is prolonged or extended to the other Baltic states.
As I have already said, we are reviewing our bilateral co-operation with the Soviet Union. We are also raising the rights of the Lithuanians at two CSCE meetings—one in Vienna and one at Valetta on the peaceful settlement of disputes. The Paris charter, which we agreed only at the CSCE summit last November, extends the scope of Soviet obligations to the Lithuanians.
I met the Lithuanian Foreign Minister this morning. I share his anxiety about the continuing threat of repression in Lithuania and the other republics. We believe, and have long said, that only free negotiation, based on democratic principles, can provide a lasting solution to the problems of the Baltic peoples and we urge the Soviet Government to follow that course.
Mr. Kaufman: We on this side totally condemn the killings, the use of state violence and all other repression by the Soviet Union in Lithuania. Does the right hon. Gentleman agree that, if President Gorbachev's statement that he did not order the violent action by Soviet troops is to be accepted, there must be a firm commitment that such measures will never be used again in future?
Is the right hon. Gentleman aware that we recognise the immense difficulties faced by President Gorbachev in dealing with the aspirations for national identity and self-determination in the Soviet Union in a way that will maintain stability and not lead to fragmentation of the USSR? We certainly believe that such claims must be responded to by negotiation, and that moderation should be exercised on both sides. At the same time, does the right hon. Gentleman agree that the whole future of glasnost and perestroika would be placed in jeopardy if there were to be any thought of a return to Stalinist methods?
Will the right hon. Gentleman advise the Soviet Government that those of us who most strongly advocated not just some form of economic aid but greatly increased economic aid to the Soviet Union would find it impossible to continue in that view if there were a repetition of the weekend's slaughter in Vilnius? Will he make it clear that those who are most dismayed at those events are those of us who have been the strongest supporters and admirers of President Gorbachev?
Mr. Hurd: The right hon. Gentleman expressed that well. As he said, President Gorbachev has denied responsibility for giving the orders that led to the deaths. That is not enough in a country like the Soviet Union.
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More needs to be said about who was responsible and what the view is of the action taken. The right hon. Gentleman expresses the view which I was trying to express just now. It is overwhelmingly in our interests to support President Gorbachev the reformer, perestroika and the changes in foreign policy, from which we have all benefited. However, if he relies to such an extent for support on people who want to reverse those reforms, he will start on a path down which we cannot follow him with the help and co-operation which otherwise we would have planned.
Sir Bernard Braine: Why are our memories so short? Is it not a fact that 50 years ago Lithuania, Latvia and Estonia were cruelly subjugated by the Soviet Union and vast numbers of their people were murdered and deported? Is it not a fact that there has been rejoicing all over the world at the freedom won by Poland, Czechoslovakia and Hungary in the past year? Why should the three Baltic states be deprived of the same? If that is the case, why are we in the business of giving any kind of aid until the freedom of these people has been assured?
Mr. Hurd: The Governments and peoples of the three Baltic states have had their hopes raised in the past year or so. After 50 years of occupation by Germans and Russians, they have had their hopes raised precisely by the loosening of the system in the Soviet Union. It is that loosening of the system inside Russia and between Russia and the republics which we have supported and encouraged. It is in our interests that that should not be put into reverse. Whether that will go into reverse now hangs in the balance. We must use all our influence and the prospect of help to encourage President Gorbachev to assert himself against those who may wish to turn the clock back and continue repression in the Baltic states.
Sir Russell Johnston: What, if any, representations did the Government make at the CSCE conference at the end of last year when the Baltic states sought to be present, but were denied that opportunity? What response have the Government made to the appeal made on behalf not only of President Landsbergis of Lithuania but of the chairmen of the councils of Latvia and Estonia and of Boris Yeltsin to the United Nations and the leaders of the countries of the west, including our own?
Mr. Hurd: The CSCE operates on a consensus basis and that was why it was not possible to press the point about observers. However, I recollect that there were representatives from the three Baltic republics at the summit, though not in the position they hoped for.
Because of the question of procedure, I believe that the CSCE, rather than the Security Council, is the right place to pursue this. The hon. Gentleman will have noticed from my original reply that we have proposed precisely that at the meetings in Vienna and Valetta because the Soviet Union undertook at the meeting to which he referred wider obligations than those in the original Helsinki Final Act towards its own subjects and, in particular, minorities within the Soviet Union.
Mr. David Howell: Will my right hon. Friend convey as quickly as possible to Mr. Gorbachev and the Soviet Government the fact that, although we understand their problems about constitutional reform in

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the Soviet Union, which should or should not include the Baltic republics in the future—probably not—the repressive measures that he is using are an outright affront to the spirit of the Helsinki process in the CSCE forum to which my right hon. Friend has just referred? If Mr. Gorbachev pursues such measures, whether in the Baltic states, whose position is, to say the very least, ambiguous, or in existing republics within the Soviet Union, he should be told that he will have no place in the future architecture of Europe or the common European home about which he talks so much.
Mr. Hurd: That is certainly the gist of the message that was given by the United States Administration and by the Community at our meeting two days ago. That message will be conveyed strongly to the Soviet Union.
I believe that there is a distinction in most of our minds between the three Baltic republics and the other republics of the Soviet Union, based on the fact that, as the Father of the House reminded us, the Baltic republics annexed in 1940 in a way that we have never recognised.
Mr. Ted Rowlands: Is not one of the worst tell-tale signs the creation of bogus committees of national safety in those territories, which is a Stalinist tactic? Does the right hon. Gentleman know whether President Gorbachev has promoted and developed that concept, as that would be an important tell-tale sign?
Mr. Hurd: That is certainly a bad sign, particularly in a country such as Lithuania, where Russians account for only 9 per cent. of the population. I went into this matter with the Lithuanian Foreign Minister this morning; he believes, and he has convinced me, that the committee, if it actually exists, is entirely bogus.
Mr. John Wilkinson: Will my right hon. Friend unambiguously reiterate Her Majesty's Government's position, which is that the United Kingdom does not recognise the present authority of the Soviet Union within the three Baltic states and that, de jure, the Soviet Union has no locus? Therefore would not it be better for the people of the three Baltic states if their right to self-determination were to be recognised forthwith?
Mr. Hurd: My hon. Friend states the legal position exactly. In practice, the future of the people of the three Baltic republics rests on two things—the recognition by the Soviet Union of their rights and negotiation on all the practical matters that flow from that. Anyone who has studied the economies of the Baltic states or is aware of the presence of large Russian minorities in Latvia and Estonia knows that that negotiation is essential. That is why, throughout this continuing drama, we have stressed both those points to the Soviet authorities and to the leaders of the three republics.
Mr. Merlyn Rees: Of course the Baltic states must become independent again, but, in order to achieve that, is it the case that the Baltic states are considered by the Russian military as vital to their air, sea and radar defences? Unless fears in that respect can be assuaged, there is little chance of political movement and every chance that Gorbachev will be brought down by the military.
Mr. Hurd: The Soviet military are notoriously reluctant to give up what they have. There have been signs of tension
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between the policies of the Soviet Government and the wishes of the military, for example, about the withdrawal of troops from eastern Europe and the wish of the military for those troops to stay put. It is crucial that the authority of the Soviet Government should be the authority of President Gorbachev while pursuing the policies of President Gorbachev and that it should not be relegated, pushed down again, into the hands of the military.
Mr. John Biffen: Will my right hon. Friend ensure that any moral indignation expressed by the Government is equally matched by the ability to deliver effective political and economic consequences? Even if my right hon. Friend does not give a lecture to the Soviets, will he at least invite them to take a lesson in history? What is now happening in respect of Soviet force in Lithuania is exactly equivalent to Tsarist Russia, whose land empire remains to remind us of the imperialism that once held sway over the whole of Europe. Will my right hon. Friend remind the Soviet authorities that the experience of every maritime empire in western Europe was that it had to give way to the forces of self-government, and that the same future inexorably and unavoidably awaits the Soviet Union—no less than it awaited the United Kingdom and other powers?
Mr. Hurd: My right hon. Friend is probably right. It is much harder to transform a former land empire than a sea empire, and it takes a good deal longer. Lenin tried to cloud the reality of that with a lot of new rhetoric, but that reality has returned. I do not know whether we could, as part of the know-how fund, fund some lecturers or advisers from the Commonwealth Secretariat.
Dr. Dafydd Elis Thomas: Will the Foreign Secretary now attempt to adopt a consistent attitude on behalf of the United Kingdom Government? We are about to go to war to ensure the liberation of Kuwait, so will the Foreign Secretary tell the House that he is committed to the liberation also of the Baltic states?
Mr. Hurd: These cases, of course, vary in their particulars. [Interruption.] Of course they do. On 1 August last year, Kuwait was an independent country and a member of the United Nations. Lithuania, Latvia and Estonia have effectively been under military occupation by the Soviet Union and by Nazi Germany for 50 years, so the circumstances are different—and therefore the remedies must be different. However, the objective must be the same and the hon. Member for Meirionnydd Nant Conwy (Dr. Thomas) is right to say that the people of the three Baltic states must be free to determine their own future—and we are working towards that end by the means that I described.
Mr. Robin Maxwell-Hyslop: Will my right hon. Friend see the analogy between the fact that occupied Kuwait has an ambassador at the Court of St. James who appears in the London diplomatic list, and ensure that once again accredited diplomatic representatives of the sovereign states of Lithuania, Latvia and Estonia appear in the diplomatic list, as they did until quite recently, when they were physically overtaken by death?
Mr. Hurd: That point was not raised by Lithuania's Foreign Minister when I met him this morning, but I was glad to see him—and I shall be glad, by the means that my

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hon. Friend suggests or in other ways, to maintain contact with the leaders of the Baltic states. I am sure that contact will now increase.
Mr. Giles Radice: In view of events in Lithuania, does the Foreign Secretary think that President Gorbachev is still in control of the Government of the Soviet Union?
Mr. Hurd: The answer is a limited yes. I believe that President Gorbachev is increasingly seeking support among people who do not support his reforms. That may create a danger for him and a situation in which what he wants to do is not done and that which he does not want to do is done. There is here a test of the authority of the Soviet Union and we will do everything that we can to influence that test in the right direction.
Sir Peter Blaker: Is it my right hon. Friend's assessment that the repression in Lithuania is only one aspect of a wider tendency to revert to autocratic rule in the Soviet Union, perhaps led by the military—whose budget has, according to reports, substantially increased when it should have been cut? Will my right hon. Friend make it clear to the new Soviet Foreign Minister that, if that is the trend, it will put at risk not only aid to the Soviet Union from the west but a much wider range of issues involving the Soviet Union on the one hand and United Kingdom, European Community and NATO on the other?
Mr. Hurd: I was certainly worried by what my former colleague, Eduard Shevardnadze, said when he resigned, because I had learned to respect his good sense, as well as his courage. There are worrying signs, but they are signs and not yet proofs. I believe that there is a struggle of ideas, and perhaps of interests, inside the Soviet Government, which is still concealed from us to some extent. It is very important that, within our influence, which I agree with my right hon. Friend the Member for Shropshire, North (Mr. Biffen) is limited, we should do what we can to enable perestroika to continue.
Mr. David Lambie: Will the Secretary of State ask the President of Lithuania and its Government to cool it and to continue negotiations with President Gorbachev and the Soviet Union? While not condoning the killing of unarmed civilians, the Secretary of State will recognise that even the British Army has killed unarmed civilians in Northern Ireland—[Interruption.]—and that every day the Israeli Government are killing unarmed civilians, mainly boys and girls, on the west bank and in the Gaza strip, without any opposition from Conservative Members. Will the Secretary of State—[Interruption.]
Mr. Speaker: Order. We often hear things here with which we do not agree. The hon. Member has a right to state his view.
Mr. Lambie: Thank you very much, Mr. Speaker. Does the Secretary of State agree that the future of President Gorbachev and of democracy in the Soviet Union is more important than the immediate future and the immediate independence of Lithuania and the other Baltic states?
Mr. Hurd: Surely the hon. Member will agree that what he calls the future of President Gorbachev and of democracy in the Soviet Union cannot be assured if the Soviet military are allowed to carry out those sort of killings in the streets of a city which the Soviet Union declares to be within its borders. The two things simply cannot run together.
Mr. Nicholas Winterton: What discussions did my right hon. Friend have with the Lithuanian Foreign Minister this morning about the Foreign Minister's publicly expressed view that there is a conspiracy between the Soviet Union and the administration in Iraq, and that, while the world's attention is concentrated on the Gulf, it gives the Soviet Union an opportunity to take a stranglehold upon the Baltic states yet again?
Mr. Hurd: The Minister did not speak of such a conspiracy to me, but I told him, because he was worried about the issue, that, as this discussion shows, we in this country and in the west have no intention of letting our concerns about the Gulf make us blind to or careless about what has been happening in the Baltic states.
Dr. David Owen: In addition to expressing our horror at the military clampdown, would it be a good idea to take President Gorbachev up on the words that he used in December 1989 in the United Nations about self-determination and accepting arbitration in the International Court of Justice? Since this country has never accepted that Estonia, Latvia and Lithuania are part of the USSR, is not it reasonable for us to propose, through the United Nations, that this issue should be put to the International Court of Justice?
Mr. Hurd: As the right hon. Gentleman knows, I do not think that the prospects of that getting through the Security Council would be very great, and it would not have effect unless it were done in that way. That is why I believe that the CSCE, at this stage, is the better forum. In regard to the right hon. Gentleman's first question, we have not confined ourselves to warnings and criticisms. I remind him of what I said about the decision on Monday to suspend the technical assistance programme agreed in December if this repression continues. I should have liked to go a little further, and others would have liked to do nothing at all except verbally, but the decision that the Community took was, in practice, quite substantial.
Several hon. Members rose—
Mr. Speaker: Order. I have to have regard to the subsequent business on the Order Paper and I hear that the ten-minute Bill is to be opposed, so I shall take three more questions from either side; then we must move on.
Mr. David Trimble: Do not the recent appalling events in the Baltic states underline the fact that the Government and the other European Governments made a serious misjudgment in trying to assist or support President Gorbachev in any way, bearing in mind also the fact that President Gorbachev was the KGB candidate for the leadership of the Soviet Union? Would not it be much better to give what support we wish to offer to those elements within the Russian empire that are clearly committed to democracy and to introducing a market economy?
Mr. Hurd: I hope that the hon. Member will recall that the prospects for self-determination and for an improvement in the Baltic republics stem absolutely from perestroika and the actions of President Gorbachev. All this process on which many hopes have been pinned would not have occurred without him. That is why it is necessary, not to give him the benefit of the doubt indefinitely, but to try to use our influence so that his reforming instincts and his wish for reform are sustained.
Mr. Ivan Lawrence: Apart from the lessons of Tsarist history and the de jure position to which my hon. Friends have already referred, does not the Soviet repression of Lithuania make a mockery of President Gorbachev's declared intention to convert the Soviet state into one founded upon the rule of law, elected parliaments and the consent of the people? Apart from suspending aid to and co-operation with the Soviets until such time as they desist, will my right hon. Friend make it absolutely clear that we have no intention of attending the human rights conference in Moscow later this year?
Mr. Hurd: The answer to my hon. and learned Friend's first question is yes, of course. These two things are incompatible. We hope that the repression in the Baltic states will turn out not to mark a turning point in Soviet constitutional history. Certainly, the future of the human rights meeting in Moscow must depend on developments in human rights between now and then.
Mr. Paul Flynn: Does the Foreign Secretary recall that the moment carefully selected by Stalin to annex the Baltic states was precisely the moment when the world was preoccupied with the takeover of Paris by the Germans? Is not it likely that the bogus conspiracies by the salvation fronts in these three countries will climax at a time to coincide with events in the Gulf war so that the Baltic states may well be the first casualties of the Gulf crisis?
Did the Foreign Minister of Lithuania tell the right hon. Gentleman this morning about the invitation that the Lithuanians have sent out to international observers to come to Vilnius now? Does not he think that, if that happens, there is a chance that it will act as a restraint on the red army? Is not it right that Members of the mother of parliaments should be in Tallinn, Riga and Vilnius in these days to stand side by side with our fellow democratically elected members of parliament at a time when they are likely to be crushed by the red army?
Mr. Hurd: No, the Foreign Minister did not raise that, but the hon. Gentleman's general point is right. The more contacts we have with people in the Baltic states, including with the authorities, and the more people who go there to bear witness to what happens, the better.
Sir David Price: Will my right hon. Friend agree that, if Russia is to become part of the European Community, as I understand she wants to, it is essential to get through to her that she must divest herself of her colonial empire and that she might make a start by divesting herself of the Baltic republics, which have never accepted their status as colonies of Moscow?
Mr. Hurd: Obviously, if the Soviet Union ever considered becoming a member of the European Community—with a capital C—she would have to transform a great many of her ways, including that one.
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But even at this moment she is a signatory of the Helsinki Final Act and now of the Paris charter and thus has obligations which entitle us to take up cases and pursue points that we would not be able to pursue with countries outside the CSCE. We shall take those opportunities to the full.
Mrs. Margaret Ewing: Will the Foreign Secretary accept that the pleas that have come from President Landsbergis and other representatives of the Baltic states for support and recognition are not new and have not just happened as a result of the Soviet aggression in past weeks? They have been continuing pleas and perhaps one of the reasons why the Soviet troops think that they can escape international condemnation has been the equivocal attitude of the western democracies to these three countries for some considerable time.
When the right hon. Gentleman met the Foreign Minister of Lithuania this morning, was he able to give a positive response to the request by President Landsbergis that a United Nations commission be established to enable foreign observers to go into the Baltic states to witness what is happening? The two countries that have done so thus far are Hungary and Czechoslovakia, so they know what is really happening.
Mr. Hurd: The realities of the situation make it unlikely, to me, that a United Nations commission would get off the ground. That is why I believe that the CSCE is the better bet. A watershed, in my own mind, is the killing of people in Vilnius. When people are killed in that way in a European city, something has changed and earlier arguments take on a different importance. That is why I pressed as hard on Monday that the Community should not rest solely on words but should begin to take action.
Mr. Bowen Wells: Surely the same principle should apply to the settlement of the disputes between the Soviet Union and the Baltic states as we are applying to the settlement of the dispute between Iraq and Kuwait. Those principles are enshrined in the United Nations charter, to which the Soviet Union and ourselves are signatories. Will my right hon. Friend urge on President Gorbachev the need for him to be consistent and for the Baltic states to negotiate with the Soviet Union to prevent such horrible violence in Vilnius?
Mr. Hurd: Yes, indeed. Those are precisely the two messages or the two kinds of advice that we are giving and which we shall continue to give.

BILL PRESENTED

  PORTS
  Mr. Secretary Rifkind, supported by Mr. Secretary Heseltine, Mr. Secretary Wakeham, Mr. John Gummer, Mr. Secretary Hunt, Mr. Secretary Lang, Mr. Francis Maude and Mr. Patrick McLoughlin, presented a Bill to provide for the transfer to companies of certain statutory port undertakings and for the disposal of securities of the companies; to provide for a levy on initial disposals of securities of any company receiving such a transfer or of rights to require the issue of such securities; to provide for a levy in respect of gains accruing to such a company on disposals of land which is the subject of such a transfer or of interests in such land or in land in which an interest transferred by such a transfer subsists; to provide for the transfer of certain property, rights, liabilities and functions

  859
  of the Port of London Authority to a company formed by that Authority and for the disposal of securities of the company; to amend the law with respect to lighthouses, buoys and beacons and the authorities responsible for them; 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 57.]

Hearing Aid Services (Contracting-Out)
4 pm
Mr. Tony Favell: I beg to move,
That leave be given to bring in a Bill to require health authorities, in certain circumstances, to contract-out the provision of hearing aids and services ancillary to such provision.
Many right hon. and hon. Members will have received complaints from constituents—
Mr. Speaker: Order. It is very difficult to hear at this end of the Chamber. Will the hon. Gentleman speak up a little?
Mr. Favell: I shall indeed, Mr. Speaker.
Many right hon. and hon. Members will have received complaints from constituents about the length of time that they are required to wait for a hearing aid. In its excellent publication "Hearing Aids: The Case for Change" the Royal National Institute for the Deaf pointed out that, in some parts of the country, a consumer may wait up to two years—I have come across even longer waiting periods —for a hearing aid. That is not good enough. People often wait until their hearing difficulty is far advanced before they go to see their general practitioner about the problem. To have to wait for up to two years for a hearing aid when one is elderly is a ridiculously long period. If a man needs a hearing aid, his wife complains bitterly that he has the television up too loud. If a woman needs a hearing aid, her husband complains that his wife does not hear what he says to her.
The Bill will help to reduce the waiting period. My proposal is that, unless a district health authority can within three months test and fit with a hearing aid a patient who is referred to it, the testing and fitting must be contracted out to the private sector. For the time being, the hearing aid would continue to be supplied by the national health service. My proposal is by no means a complete answer to a very complex problem. However, I believe that it is a start.
According to the RNID, 3·9 million adults in the United Kingdom with a hearing loss are likely to benefit from a hearing aid. It is important to explain how a hearing aid is obtained. The consumer has two choices. He can go to a private hearing aid dispenser. Unless the patient is in need of medical advice, the dispenser will sell him an aid that costs between £350 and £1,000. Alternatively, the consumer can go to his general practitioner with a view to obtaining a free national health service hearing aid on permanent loan. Not surprisingly, in view of the cost of the private hearing aid, four out of five people choose to go to the national health service.
If the general practitioner judges his patients suitable for a hearing aid, the patient is usually referred to an ear, nose and throat consultant. Surprisingly, that occurs whether or not the general practitioner believes that the consultant can do anything for the patient. In some parts of the country, general practitioners can refer patients not requiring medical or surgical treatment directly to hospital audiology departments. Clearly, that is preferable, because it is estimated that half the cost of fitting a hearing aid is taken up with seeing a consultant whose advice is not needed, and it takes them away from more important work and adds to the waiting list.

861
The RNID and my hon. Friend the Member for Torridge and Devon, West (Miss Nicholson), who has done a great deal of work in this sector and highlighted the problems of the existing system, have both been critical of unnecessary referrals. They often lead to long delays, In my constituency, there have been direct referrals for almost 15 years now, and Mr. Gerry Dunster, the chief technician there, tells me that there have been no problems during the 13 years that he has been chief technician. When my hon. Friend the Member for Kettering (Mr. Freeman) was at the Department of Health, he responded to the criticisms. He published a consultative paper in July 1989 and set up a working group and a pilot project to encourage direct referrals by general practitioners to hospital-based audiology departments. Furthermore, he encouraged health authorities to enter into contracts with the private sector for the provision of hearing tests and the fitting of hearing aids.
My Bill goes one step further than that. It obliges health authorities to employ the private sector whenever they are unable or unwilling to provide a speedy service. I believe that it is an important measure to reduce waiting lists. Even when general practitioners were permitted to refer directly to hospital audiology departments in my constituency, where, as I have said, there is a direct referral system, there was still a 12-month waiting list for testing and fitting hearing aids. It was only after I kicked up a rumpus that the management responded and contracted out work to the private sector. The waiting list has now been reduced substantially, to the delight of my constituents.
Similar results have been achieved at the Royal Liverpool hospital, where I have been, thanks to the work of Mr. Anthony McIver of Merseyside regional health authority, Mrs. Julie Pritchard of Dee Hearing Services, which is a private organisation, and the excellent co-operation of the national health service. There the waiting list was reduced from 15 weeks to three weeks. At St. Mary's hospital in Paddington, which I visited yesterday, there is no audiology department because of staffing difficulties. The service is now run by a private sector organisation—Siemens—which has reduced the waiting list from 14 months to four weeks. Only a few health authorities with long waiting lists are volunteering to involve the private sector. The laggards, in the interests of their patients, should be obliged to do so.
4.8 pm
Mr. Harry Ewing rose—
Mr. Speaker: Does the hon. Gentleman seek to oppose the Bill?
Mr. Ewing: Yes. I promise not to detain the House for long. I have had a request from my hon. Friend the Member for Livingston (Mr. Cook) to be brief, and I shall do a deal with him if he is prepared to speak as briefly as me.
Mr. David Winnick: And the Minister.
Mr. Ewing: Yes.
This is a serious issue. It is yet one more attempt by Conservative Members to break up the co-ordinated service that has been offered by the national health service under successive Labour Governments. The national health service was introduced by the late Nye Bevan on the
862
basis that it should be an integrated service, free at the point of use. Throughout the past 11 years, Conservative Members have sought to attack the national health service and this Bill is yet a further attack on that integrated service that has been such a jewel in the crown of health care in the United Kingdom. It is in the best interests of those who have hearing problems and who must attend clinics to obtain hearing aids and appliances to enable them to hear more easily, that this service remains with the national health service.
I shall make only those few brief comments, because the arguments against privatising other aspects of the national health service have been rehearsed. The hon. Member for Stockport (Mr. Favell) said that the Bill is not the complete answer to the problems of those who use deaf aids and hearing aids. I must tell him that it is no answer at all. It is compounding difficulty with further difficulty and I oppose it.
Question put, pursuant to Standing Order No. 19 (Motions for leave to bring in Bills and nomination of Select Committees at commencement of public business):—
The House divided: Ayes 80, Noes 182.

Division No.37]

[4.10 pm

AYES

Aitken, Jonathan

Macfarlane, Sir Neil

Alexander, Richard

Meyer, Sir Anthony

Arnold, Jacques (Gravesham)

Mills, Iain

Ashby, David

Mitchell, Sir David

Banks, Robert (Harrogate)

Montgomery, Sir Fergus

Beaumont-Dark, Anthony

Mudd, David

Bottomley, Peter

Nicholson, Emma (Devon West)

Bowden, A (Brighton K'pto'n)

Onslow, Rt Hon Cranley

Bowden, Gerald (Dulwich)

Page, Richard

Braine, Rt Hon Sir Bernard

Pawsey, James

Browne, John (Winchester)

Porter, David (Waveney)

Bruce, Ian (Dorset South)

Rhodes James, Robert

Buck, Sir Antony

Rost, Peter

Cash, William

Shaw, David (Dover)

Churchill, Mr

Shaw, Sir Michael (Scarb')

Clark, Rt Hon Sir W. (Crydn S)

Shelton, Sir William

Coombs, Simon (Swindon)

Shepherd, Colin (Hereford)

Critchley, Julian

Shepherd, Richard (Aldridge)

Day, Stephen

Shersby, Michael

Dicks, Terry

Stanbrook, Ivor

Dunn, Bob

Thompson, Patrick (Norwich N)

Durant, Sir Tony

Thornton, Malcolm

Favell, Tony

Thurnham, Peter

Franks, Cecil

Vaughan, Sir Gerard

French, Douglas

Viggers, Peter

Gale, Roger

Walker, Bill (T'side North)

Gardiner, Sir George

Waller, Gary

Gill, Christopher

Ward, John

Goodhart, Sir Philip

Warren, Kenneth

Greenway, Harry (Eating N)

Watts, John

Griffiths, Sir Eldon (Bury St E')

Wheeler, Sir John

Grylls, Michael

Wiggin, Jerry

Hayward, Robert

Wilkinson, John

Howell, Ralph (North Norfolk)

Wilshire, David

Janman, Tim

Winterton, Nicholas

Jessel, Toby

Wolfson, Mark

Jones, Gwilym (Cardiff N)

Woodcock, Dr. Mike

Jones, Robert B (Herts W)

Kellett-Bowman, Dame Elaine

Tellers for the Ayes:

Kilfedder, James

Mr. Richard Holt and

Knight, Dame Jill (Edgbaston)

Mr. David Harris.

Latham, Michael

Lawrence, Ivan

NOES

Adams, Mrs. Irene (Paisley, N.)

Ashton, Joe

Allen, Graham

Barnes, Harry (Derbyshire NE)

Armstrong, Hilary

Barron, Kevin

Ashdown, Rt Hon Paddy

Battle, John

Ashley, Rt Hon Jack

Beggs, Roy

863

Beith, A. J.

Ewing, Mrs Margaret (Moray)

Bell, Stuart

Fatchett, Derek

Benn, Rt Hon Tony

Field, Frank (Birkenhead)

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

Fisher, Mark

Benton, Joseph

Flynn, Paul

Bermingham, Gerald

Foot, Rt Hon Michael

Blair, Tony

Forsythe, Clifford (Antrim S)

Boateng, Paul

Foster, Derek

Bradley, Keith

Foulkes, George

Brown, Gordon (D'mline E)

Fyfe, Maria

Brown, Nicholas (Newcastle E)

Galloway, George

Brown, Ron (Edinburgh Leith)

Garrett, John (Norwich South)

Bruce, Malcolm (Gordon)

Godman, Dr Norman A.

Buckley, George J.

Golding, Mrs Llin

Callaghan, Jim

Gordon, Mildred

Campbell, Ron (Blyth Valley)

Graham, Thomas

Campbell-Savours, D. N.

Grant, Bernie (Tottenham)

Canavan, Dennis

Griffiths, Win (Bridgend)

Cartwright, John

Grocott, Bruce

Clarke, Tom (Monklands W)

Hardy, Peter

Clay, Bob

Harman, Ms Harriet

Clelland, David

Hattersley, Rt Hon Roy

Clwyd, Mrs Ann

Haynes, Frank

Cohen, Harry

Heal, Mrs Sylvia

Cook, Robin (Livingston)

Hinchliffe, David

Corbett, Robin

Home Robertson, John

Cousins, Jim

Hood, Jimmy

Crowther, Stan

Howarth, George (Knowsley N)

Cryer, Bob

Howells, Geraint

Cummings, John

Howells, Dr. Kim (Pontypridd)

Cunliffe, Lawrence

Hoyle, Doug

Cunningham, Dr John

Hughes, John (Coventry NE)

Dalyell, Tam

Hughes, Roy (Newport E)

Darling, Alistair

Hughes, Simon (Southwark)

Davies, Ron (Caerphilly)

Illsley, Eric

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

Janner, Greville

Dewar, Donald

Johnston, Sir Russell

Dixon, Don

Jones, Barry (Alyn & Deeside)

Doran, Frank

Jones, leuan (Ynys Môn)

Douglas, Dick

Jones, Martyn (Clwyd S W)

Dunnachie, Jimmy

Kaufman, Rt Hon Gerald

Eadie, Alexander

Kennedy, Charles

Eastham, Ken

Kinnock, Rt Hon Neil

Evans, John (St Helens N)

Lamond, James

Ewing, Harry (Falkirk E)

Leadbitter, Ted

864

Leighton, Ron

Rogers, Allan

Lestor, Joan (Eccles)

Rooker, Jeff

Lewis, Terry

Rooney, Terence

Litherland, Robert

Ross, Ernie (Dundee W)

Livingstone, Ken

Ross, William (Londonderry E)

Lloyd, Tony (Stretford)

Rowlands, Ted

Lofthouse, Geoffrey

Ruddock, Joan

Loyden, Eddie

Salmond, Alex

McAllion, John

Sedgemore, Brian

McAvoy, Thomas

Sheerman, Barry

McCartney, Ian

Sheldon, Rt Hon Robert

Macdonald, Calum A.

Shore, Rt Hon Peter

McKay, Allen (Barnsley West)

Short, Clare

McKelvey, William

Skinner, Dennis

McMaster, Gordon

Smith, Andrew (Oxford E)

Madden, Max

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

Mahon, Mrs Alice

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

Marek, Dr John

Smith, J. P. (Vale of Glam)

Martin, Michael J. (Springburn)

Steel, Rt Hon Sir David

Martlew, Eric

Steinberg, Gerry

Maxton, John

Stott, Roger

Meacher, Michael

Strang, Gavin

Meale, Alan

Straw, Jack

Michael, Alun

Taylor, Mrs Ann (Dewsbury)

Michie, Mrs Ray (Arg'l & Bute)

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

Morris, Rt Hon A. (W'shawe)

Thompson, Jack (Wansbeck)

Mowlam, Marjorie

Turner, Dennis

Mullin, Chris

Vaz, Keith

Nellist, Dave

Wallace, James

Oakes, Rt Hon Gordon

Wareing, Robert N.

O'Brien, William

Welsh, Andrew (Angus E)

O'Hara, Edward

Welsh, Michael (Doncaster N)

Parry, Robert

Wigley, Dafydd

Patchett, Terry

Wilson, Brian

Pike, Peter L.

Winnick, David

Powell, Ray (Ogmore)

Wise, Mrs Audrey

Primarolo, Dawn

Worthington, Tony

Quin, Ms Joyce

Wray, Jimmy

Redmond, Martin

Young, David (Bolton SE)

Rees, Rt Hon Merlyn

Reid, Dr John

Tellers for the Noes:

Richardson, Jo

Mr. David Lambie and

Robertson, George

Mr. Jeremy Corbyn.

Question accordingly negatived.

Privilege
4.21 pm
Mr. Kevin Barron: I am sponsored as a Member of Parliament by the National Union of Mineworkers. I wish to draw the attention of the Committee of Privileges to the guidelines for sponsored Members of Parliament first issued by the Yorkshire area of the NUM in 1975, which, at the time, the Committee of Privileges judged to be a serious contempt. The then president of the national NUM acceded to the Committee's request to nullify the decision. All those developments are spelt out in the second report of the Committee of Privileges, published in the 1974–75 Session.
The matter rested there until December 1990, when the general secretary of the Yorkshire area of the NUM reissued the guidelines in a letter to me. I have pointed out to the general secretary of the Yorkshire area the events of 1975 and asked him to withdraw the guidelines. He has declined to do so. I therefore believe that I have no alternative but to ask the House to refer the complaint to the Committee of Privileges.
I therefore beg to move,
That the matter of the complaint be referred to the Committee of Privileges.
Question put and agreed to.

Opposition Day
  3RD ALLOTTED DAY

    Hospital Service
    4.23 pm
    Mr. Speaker: I must announce to the House that I have selected the amendment in the name of the Prime Minister.
    Mr. Robin Cook rose—
    Mr. Harry Ewing: Move it formally.
    Mr. Cook: I am afraid that 1 must decline my hon. Friend's invitation to move the motion formally.
    I beg to move,
    That this House expresses concern at the effect on patient care of the closure of 4,000 hospital beds since the start of the financial year; records its alarm at the growing number of hospitals that have been forced by financial pressures to cancel admissions from their waiting lists for the remainder of the financial year; notes that health authorities have been compelled to take this unprecedented step because of Her Majesty's Government's damaging changes to the National Health Service which prevent them carrying forward a deficit; regrets the decision of the Government to impose self-governing trusts on 56 hospitals and other units despite the evidence provided by the consultation period of overwhelming opposition by public and by health staff, and deplores their decision not to submit this decision to debate in the House; and calls upon the Government to increase cash limits for the current year to enable hospitals to resume a full service to the public.
    It is almost exactly a year since the House debated the national health service in the first Opposition day debate following the Christmas and new year break. In that debate, the then Secretary of State for Health gave the following ringing promise to the House:
    "The winter of next year will not be dominated by cancelled operations, closed wards and cuts in services".— [Official Report, 11 January 1990; Vol. 164, c. 1123.]
    At the time, I did not believe the right hon. and learned Gentleman and now I know I was right not to believe him. We meet this January in a winter during which more wards have been closed and more operations cancelled than last year or in any previous year.
    Of course, we now have a new Secretary of State for Health and he comes to the job with clean hands. He is free, if he wishes, to criticise the mess that he has inherited from his predecessor, although he might be unwise to do that in this forum.
    In trying to establish common ground on which we can build in the debate, I hope that the new Secretary of State will at least acknowledge that the position is now unique. Never before have dozens of hospitals in the health service been obliged to close their doors to patients on their waiting lists because the money has run out. That situation is without precedent in the 40 years of the NHS.
    The nearest hospital to this place is Westminster hospital. In the second week of October, it closed its doors to all patients on its waiting list. Even now it is admitting fewer than half the patients for routine surgery that it would normally admit.
    Westminster hospital is a teaching hospital and we depend on it to train and teach the next generation of doctors. In December 1 sat down with some of the medical students attached to Westminster hospital for six months

    867
    and they told me that they were spending their six months without the experience of the routine surgery for which they had come there.
    The financial crisis does not just affect the teaching hospitals or London. Morpeth cottage hospital occupies a different position in the spectrum of NHS provision. I do not want to offend my hon. Friends from the north-east by suggesting that that cottage hospital occupies the opposite end of the spectrum of provision in relation to Westminster hospital, but it occupies a different part.
    Morpeth cottage hospital and Westminster hospital are linked by a common financial crisis. On 21 December, Morpeth cottage hospital closed a surgical ward and an operating theatre for the Christmas break. What makes the Christmas break unusual is that on this occasion neither the ward nor the operating theatre will open again until 1 April when we reach the new financial year.
    Last summer the No Turning Back group created something of a political stand by producing its manifesto for a fourth term of Conservative Government. Part of the electrifying notions in that manifesto related to the proposal that the NHS should be an emergency service only and that there should be compulsory private insurance for other routine, non-emergency operations. Right hon. and hon. Members on the Treasury Bench, with the exception of the Minister of State, Scottish Office, the hon. Member for Stirling (Mr. Forsyth), who is sitting there, ran to distance themselves from those proposals. I recall the former Secretary of State for Health stating clearly that he did not accept that as a vision for the health service. Only six months later the new Secretary of State presides over a health service which in many parts of England is an emergency service only and in which no routine operations are available.
    Mr. Max Madden: Will my hon. Friend give way?
    Mr. Cook: I will give way now, but I am conscious that this is a half-day debate which is in danger of becoming a quarter-day debate. If the House will forgive me, I will not give way on every occasion.
    Mr. Madden: I am most grateful to my hon. Friend.
    My hon. Friend knows that wards are being closed in Bradford as a direct result of deficits and the same is true in many other health authorities. What is my hon. Friend's estimate of the amount of money required to make good that deficit to ensure that beds and wards are kept open, particularly when health authorities are being asked to be ready to admit 7,500 casualties who are likely to come from the Gulf within a matter of days, if not weeks?
    Mr. Cook: I will refer to the Gulf later. However, with regard to my hon. Friend's question about the current deficit, the Government provided their estimate of the deficit in a written answer just before the House rose for the Christmas recess. The Under-Secretary of State for Health gave a figure of £40·5 million for the combined deficits across England. I rather suspect that that is on the low side, but even if it is doubled, we are still talking about a figure less than £100 million.
    One of the ironies—a grotesque feature—of the present crisis is that hospitals are obliged to make deep cuts in the service that they provide to save relatively modest sums of
    868
    their total budgets. We are inflicting cuts out of all proportion to the money involved. Of course, in many cases those cuts occur in hospitals that are particularly efficient. In his written answer the Under-Secretary of State explained those deficits as the result of "bad financial management". In his absence, I advise his colleagues in the Department of Health that I regard that approach as contemptible buck-passing. Many hospitals that have had to close their doors are among the most efficient in Britain.
    Watford general hospital is recognised by Conservative Members for its waiting list initiative. In five months last year, one ward of 19 beds in that hospital treated 1,000 patients. It must have been one of the most efficient wards in any NHS hospital. That same ward was closed in November and will not reopen until April because of the lack of money to keep it going. What sort of signal does the Secretary of State think that that closure is sending to the staff who work in the wards of our hospitals? It is impossible to understate how much it demoralises the staff who deal with patients in our wards to be told that they must reduce the number of patients with whom they deal.
    I have seen reports from Wrexham Park hospital in Slough which show that, in the past 18 months, it has cut its list by one third. Now, with appalling symmetry, that same hospital has been told to cut its operations by a third. The anaesthetist who worked on many cases when the hospital was clearing the waiting list said:
    "After working after-hours and at weekends … to get the lists down, we now have to sit and watch them climbing back up."
    What about the signal that we are sending to patients from those closures? There is one unavoidable result of the closed wards and cancelled operations of this winter: more patients will wait for their operations and more of them will wait longer. That is not a matter of speculation by me. Several health authorities have made precise calculations about what closure will mean for their areas. South Bedfordshire health authority has closed 126 beds at its general hospital. Those beds will not reopen before April. The same health authority has prepared its own estimate of what will happen to the waiting list by next April: it is that, by April, the number of patients waiting for operations for general surgery, for urology and for orthopaedics will double. The waiting time for hernia operations will increase from 13 weeks to 36 weeks. The waiting time for hip operations will increase from 24 weeks to 66 weeks. Clearly, doctors are requested to take impossible decisions on who gets treatment and who does not.
    Another hospital near to this place is St. Thomas's. In November, St. Thomas's imposed a ceiling on the number of abortions that it would carry out. That ceiling rests at nine cases per week. One local GP has been quoted as saying:
    "It seems to be a lottery each Monday morning. Once the nine places are full, people are turned away."
    How can any consultant decide which nine women get the treatment for which they have been referred and which nine—or 19—women are turned away? It is wholly unacceptable that a woman's chance of the treatment for which her GP has referred her should depend on whether she comes to the front of the queue at the moment when there is a vacancy in that week's ration.
    It is not only Opposition Members who are alarmed at the present situation. I do not imagine that Tory Members will speak up for what is happening in the hospitals in their

    869
    constituencies—it is not in the nature of Supply day debates to do so. But many of them know that what is happening is unacceptable in their constituencies and to their constituents.
    I am pleased to see the hon. Member for Harlow (Mr. Hayes) in his place, as he often is for health debates. He will know that I visited his constituency in December and the hospital that serves most of his constituents. It has one of the six longest waiting lists for general surgery anywhere in England. It would take one and a half years for the hospital to clear its waiting list, even at full working. While I was there, I saw a surgical ward being cleared of beds to be closed because the hospital will carry out only one third of the operations which it previously did. The hon. Member knows this well. Indeed, in the week after the Secretary of State was appointed, the hon. Member made a number of observations to the newspapers about the forthcoming crisis.
    Mr. Nicholas Soames: He is very good at that.
    Mr. Cook: I am glad to have the endorsement of the hon. Gentleman's colleague.
    The hon. Member for Harlow struck on a happy phrase which was calculated to provide the maximum chill to the spine of a Conservative Secretary of State for Health. The hon. Member warned him that he faced another "John Moore winter", by which I presume that he was reminding us of the experience of 1987–88 when hospital cuts forced the national health service to the top of the agenda. Of course, that was the winter which pushed the Government into setting up the NHS review. The Government have spent the three years since dreaming up a dogmatic package to put health care into the market place and ramming that package through the NHS—deaf to the opposition of the public who use the service and blind to the informed criticism of the people who work in it.
    Where are we after three years of near civil war in the health service? We are back exactly where we were when we started, with a winter of crisis in our hospitals. It is even worse than the crisis which began it all. The hon. Member for Harlow was, if anything, guilty of understatement.
    Dame Elaine Kellett-Bowman: Nonsense.
    Mr. Cook: I think that the hon. Member for Harlow can defend himself against that unworthy and unjustified criticism.
    Dame Elaine Kellett-Bowman: I was making the point not against my hon. Friend but because my hospital runs its finances extremely well. It has all the latest technology. Its performance bears no relation to the picture that hon. Member for Livingston (Mr. Cook) has been giving over the past half hour.
    Mr. Cook: No doubt the hon. Lady's constituents will be delighted that she is satisfied with the state of the health service that serves them. I have to say to her that the figures tell another story. In the whole year, including the winter, of 1987–88, a total of 3,500 beds were closed because of financial pressure. Already in the financial year 1991 over 4,000 beds have been closed because of financial pressure.
    As the whole House will know, it is a cruel irony of history that during one of the deepest crises in the hospital service the national health service may be called upon to
    870
    make the greatest effort to cope with the casualties of the crisis in the Gulf. The Secretary of State has given a guarantee, as have other Ministers, that the NHS will cope with all the casualties of the Gulf and with all emergency cases from the civilian population. Of course, it will not be the Secretary of State who will be called upon to honour that commitment. The people who will have to deliver on his guarantee will be the doctors and nurses who staff our accident and emergency units—the nurses who tend patients who may wait for hours on trolleys for beds and the registrars who spend those hours ringing round perhaps 20 hospitals looking for beds. I have no doubt that those nurses and doctors will move mountains to deliver the guarantee given by the Secretary of State.
    But neither the Secretary of State nor the House has the right to require that effort of our health staff if we simply respond to the Gulf crisis by taking out of the present number of wards 7,000 beds which the military says that it might need. The Secretary of State must assure us—I hope that he will take the opportunity of this debate to do so —that as many as possible of those 7,000 beds will be provided by bringing back into service some of the 10,000 beds that have been taken out of service during the past three years.
    Mr. Jerry Hayes: Will the hon. Gentleman be absolutely fair and straightforward about the 4,000 bed closures to which he referred? I am sure that he has read the report of the National Association of Health Authorities, which said that last year 3,500 beds were closed but most of those closures occurred for medical or health policy reasons such as new treatments which require shorter stays. That came from not the Department of Health but from a body as influential and authoritative as the National Association of Health Authorities.
    Mr. Cook: I read that report with the greatest interest. I congratulate the National Association of Health Authorities on putting the best possible gloss on the data that it found. I was particularly struck with the paragraph in which it said that four out of 10 health authorities managed to get through the first six months of this year without closing beds because of financial pressures. Logically that leads one to the conclusion that six out of 10 health authorities have closed beds because of financial pressures.
    Nor is that association the only witness. The survey carried out over several days by The Independent came to precisely the conclusion that I have quoted to the House. Over 4,000 beds have been taken out of service, either temporarily or permanently, at least partly as a result of financial pressures on health authorities.
    There is another way in which the present crisis is more grim than that of 1987–88—the crisis which gave birth to the NHS review and led to the changes which are coming in April. We can be more dismal than we were three years ago because Ministers have dropped any pretence that the changes coming in April will solve the problem. In that, the Secretary of State is a sad declension from his predecessor. The right hon. and learned Member for Rushcliffe (Mr. Clarke) was always refreshing in his irrepressible optimism. He was a born-again reformer. He continually assured us that, once in place, the changes in the national health service would transform it and wipe away waiting lists. We may not have been convinced by his assurances, but at least we were entertained by him.

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    The right hon. Member for Bristol, West (Mr. Waldegrave) is much more cautious in his language. He will recall that he and I took part in a radio debate following the decision of Tunbridge Wells hospital that it, too, would close its doors to everyone but emergencies. When pressed by the interviewer on whether the new system in April would avoid such cuts, the Secretary of State was unable to overcome his natural honesty. His reply was that, under the new system, cuts would be smoothed over the year as a whole. In other words, in the new system we shall have service reductions every month of the year, not only the winter months.
    Mr. John Marshall: Can the hon. Gentleman explain to the House how the abolition of prescription, eye test and dental charges and of competitive tendering which would cost the health service £500 million in total would do anything to solve the problems that he has described?
    Mr. Cook: The hon. Gentleman asked three separate questions. I shall deal with two of the three. As he offered me a multiple choice question, that is not an unreasonable attempt. We have had ample evidence of what happens when competitive tendering is introduced. We get dirtier hospitals and patients are more poorly fed. We are not prepared to accept that in a public service.
    I make a prediction to the hon. Gentleman—[Interruption.] If hon. Members will allow me to proceed with my speech, I shall make a prediction. All the companies that poured into the hospital sector three or five years ago thinking that they had found a honeypot are discovering that it is anything but. They are discovering time and again that they cannot provide the service required in the NHS and make a profit. I predict that if such companies continue providing services under tender for another three or five years prices will quickly be ratcheted up. That will wipe out the alleged savings, but we shall be left with a worse service.
    The hon. Gentleman's other point was about the charge for eye tests. I make no apology to the House for repeating once again our clear commitment, as a matter of priority, to abolish the charge for eye tests and restore the free eye test. We shall do so because the charge is ruining an essential screening service. If only a fraction of the 3 million people who are not coming forward for eye tests develop serious and irreversible conditions of the eye and lose their sight, it will more than wipe out the alleged savings from that short-sighted measure.
    Mr. Dennis Skinner: The hon. Member for Birmingham, Edgbaston (Dame Jill Knight) will support us on that one.
    Mr. Cook: The reference to short-sightedness is one which I should perhaps seek to change in Hansard when I have the opportunity to read my speech.
    Before the hon. Gentleman interrupted, I was making the point that the changes in April will not rescue us from the present position. I hope that in the coming debate we shall be spared any Conservative Members telling us that we must have the changes in April to deal with the crisis in the national health service. The truth is the precise reversal of that. One of the reasons why we have the crisis this winter is the changes that are to take place in April.
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    The new system does not allow deficits. It was only because they could roll forward deficits from one year to another that many health authorities got through the past three years. Now even that freedom for manoeuvre has been removed. Conservative Members closed off the one turning space in which financial managers had some room for manoeuvre. Those financial managers are now exposing the underfunding of the service because they have lost the flexibility with which they used to conceal it.
    Mr. Simon Burns: Will the hon. Gentleman give way?
    Mr. Cook: I shall give way on this occasion, but it will be the last.
    Mr. Burns: The hon. Gentleman is aware that the hon. Member for Derby, South (Mrs. Beckett) has said that the only spending priorities of a future Labour Government will be pensions and child benefit. The national health service would not be a priority. Does the hon. Gentleman agree with his hon. Friend, or can I tempt him to defy her in the House today and tell us what figure he would guarantee during the first year of a Labour Government for extra spending on the health service?
    Mr. Cook: The decision which both I and my hon. Friend the Member for Derby, South (Mrs. Beckett) have taken is clearly spelt out in the record. It has been printed on several occasions, the most recent being last December. The spending commitments of the Labour party are perfectly clear. We shall fully fund pay awards in the health service. We shall make sure that year on year the health service is fully funded to meet demographic pressures, and during the lifetime of the next Government we shall restore the health service to the extent to which the Government have underfunded it. I shall be able to give the precise figure when the Government are willing to admit the degree to which they have underfunded the health service.
    The present crisis and the troubles that are coming in April cannot be detected in the amendment tabled by the Secretary of State and his colleagues. The amendment before the House is of obtuse complacency. It recognises no problems and sees only successes. One series of statistics provides a measure of the health service in the 10 years of the Government's stewardship. They were not collected by the Government's statistical service. If they were, they would by now have been doctored.
    The London emergency bed service has supplied figures on the number of times that it has had to go through the appeal mechanism to force hospitals to accept a patient for a bed. In 1980 and even in 1983 the emergency bed service had to trigger that procedure in only 7 per cent. of cases, but by 1988 it was triggering the appeal mechanism in 16 per cent. of cases and by last year in 29·5 per cent. of cases. In December last year the appeal mechanism was triggered in 41 per cent. of cases and in the first seven days of January the service was obliged to go through the appeal mechanism in 46 per cent. of all emergency cases with which it dealt. That is the reality behind the massive increases in resources to which the Government amendment refers. The reality is a fourfold increase in the number of emergency patients who must lie in pain and distress while an emergency service goes through an appeal system to squeeze an extra bed from the hospital sector.

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    Even when a patient gets into hospital, that does not guarantee him a bed. In the past financial year King's College hospital in Camberwell closed 120 beds. On 13 December the community health council counted 17 patients lying on trolleys in the accident and emergency department for whom there were no available beds. One patient who went through that procedure was Mrs. Julia Branch, who was admitted with kidney failure and who remained in acute pain for seven hours on a trolley in the accident and emergency department. At midnight she was transferred by ambulance to Dulwich hospital where a bed had been found. Her troubles did not end there. The bed that had been found for her was in a ward which was scheduled to be closed. Two days later she and the other patients in that ward were transferred to another ward at the other end of Dulwich hospital where she died the next day. She was 79. She belonged to a generation who voted for the national health service and who, through their working lives, paid to set it up. She deserved better from the NHS in her last three days than to be shuttled round in search of a bed that was not yet closed.
    We are told that we now have a more human Government and that we have a gentler Secretary of State for Health. There is one obvious test of how much more caring and gentle they are. Three years ago the health service faced a similar crisis in our hospitals and that less caring, less gentle Government came up with extra money to stop the cuts. Will this new regime do the same, or is all the prattle about a more compassionate responsive Government so much cant?
    There is another even more powerful precedent for financial help. The present crisis is provoked by the major restructuring of NHS finances in April. The cuts in our hospitals are a result of Ministers telling health authorities that it is for them to eliminate their deficit to make way for the financial restructuring. There is an obvious contrast with the entirely different way in which Ministers of the same Government have treated every public industry which they have privatised. Nearly every privatised industry has left the public sector with the generous parting gift of having its debts written off. British Steel had £4,500 million written off and the water industry £5,000 million. How is it that a Government can find more than £9,000 million to float two industries into the private sector, but cannot find £100 million to write off the deficit of the health authorities before the changes in April? Why is it sensible tactics to wipe the balance sheet clean because an industry is being privatised, but the wrong signal to management to give the same fresh start to a public service? Only this Government's double standards can explain why those questions are given different answers.
    Tonight we shall give Ministers an opportunity to demonstrate their new caring credentials by putting to the vote our demand for the extra funds which the NHS plainly needs. We shall put it to the vote in the full knowledge that the Lobby will not demonstrate the new caring image. It will expose the same old double standards.
    4.54 pm
    The Secretary of State for Health (Mr. William Waldegrave): I beg to move, to leave out from "House" to the end of the Question, and to add instead thereof,
    "welcomes the substantial increase under this Government in the number of patients treated by the National Health Service and in the availability of new and better forms of treatment; notes that this has been made possible by massive extra
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    resources provided by the Government, combined with more effective use of those resources; welcomes the further record increase in resources planned for the National Health Service in 1991–92; congratulates those hospitals and other units which have sought and obtained approval to manage their own affairs as self-governing National Health Service trusts; looks forward to the setting up of the new general practitioner fundholding practices; and supports the Government's reforms which will continue to put patients first by further improving the quality, quantity and cost-effectiveness of health services.".
    The background to this debate is sombre. We speak as a significant part of our armed forces is deployed ready for a battle which may be imminent. The admiration and pride of this House for them has been expressed eloquently from all sides. Let us today in this debate pay a special tribute to all the doctors and nurses out there with them who face many of the same dangers. Here at home our national health service, with all its immense capabilities, stands ready to provide the necessary support for the armed forces' medical teams.
    Mr. Harry Cohen rose—
    Mr. Waldegrave: The House will forgive me if I use this opportunity to give an assurance that the management executive of the health service, in close co-ordination with the Minister of Defence, has made contingency plans which are well founded.
    Mr. Cohen: What about private hospitals?
    Mr. Waldegrave: I believe that there is little more that could be done and that the health service is ready.
    It is right for the House to know how the Government intend to handle the financial impact on the NHS of what may happen. The situation is straightforward. We will provide the extra money to meet the full cost of any Gulf casualties. I have told the health authorities to let the hospitals know that they should spend what is necessary, and we are giving them guidance on how to account for and reclaim Gulf costs.
    Mr. Cohen: What about private hospitals?
    Mr. Waldegrave: If it is necessary for the resources of private hospitals to be bought with the money available, it is up to the regions to do so. I have told the health authorities—[Interruption.]
    Madam Deputy Speaker (Miss Betty Boothroyd): Order. The Secretary of State's opening remarks must be heard.
    Mr. Waldegrave: Health authorities will be able to continue to use all the money in their normal allocations for patient care.
    Mr. Cohen: What about private care?
    Mr. Waldegrave: I have been assured that there will be no break in non-Gulf related emergency work, but people may have to wait a little longer in the short term for non-emergency treatment.
    Mr. Cohen: Why should not private beds be available?
    Mr. Waldegrave: People will understand that, even if the hon. Gentleman does not understand how NHS finances work.
    Mr. Bob Cryer: It is profit before people.
    Mr. Waldegrave: The hon. Gentleman's yah-boo behaviour is embarrassing the Opposition Front Bench as much as it is irritating the public.
    With the extra money for casualties, the commitment to which I have announced today, health authorities should soon be able to catch up. At this stage, it is for me to pay tribute to the service and the management executive for the efficiency with which they have undertaken the task of putting the NHS on a war footing. If it comes to fighting, the House and the country will once again have reason to marvel at the resources or commitment and skill which the direst emergencies call forth from everyone in the NHS.
    The ability of the NHS to respond to emergencies depends on there being a clear chain of command and a clear division of responsibility among the professionals who work in this enormous service.
    Mrs. Alice Mahon: Jim Dyers of the Edinburgh Royal infirmary said that the 30 burns units in this country would be overwhelmed within days. What contingency plans does the Secretary of State have in mind for those victims?
    Mr. Waldegrave: The hon. Lady is right that there will be great pressure on burns units if fighting occurs. I am assured by the NHS management executive that it can handle the situation. We have put contingency plans in place. [Interruption.] Perhaps I may be allowed to answer the hon. Lady, or perhaps she is not interested in the answer. I am advised that it is unlikely that we shall be unable to supply all that we need, but if that is the case, the resources of neighbouring European countries will be made available to us.
    The ability of the NHS to respond depends on its management chain and management skills. This is not a matter simply of management theory. We need a service which knows where it is going, which is patient centred, which has clear targets to work towards and which is accountable. It is in that context that I want to place our health reforms.
    Mr. Cryer: Will the Secretary of State give way?
    Mr. Waldegrave: I do not know whether Back Benchers wish to speak in the debate. If not, the two Front Benches can fill the entire time with the hon. Gentleman's help. I shall give way to him and then perhaps I can proceed.
    Mr. Cryer: Rather than seeking treatment in other European countries, would it not be simpler, better and more efficient to requisition beds in private hospitals rather than strain the NHS beyond endurance to deal with any casualties? Surely that would demonstrate that the Government are not putting profit before people.
    Mr. Waldegrave: The hon. Gentleman displays less knowledge about the NHS than his Front Bench colleagues. The type of facilities that would be needed are simply not available in our private sector. The huge, skilled centres for burns units are to be found in the NHS only.
    First, the philosophy behind our reforms is that there should be a separation of responsibility for the planning of health services from responsibility for the provision of health care—what we call the purchaser-provider split. This division is fundamental to our reforms. It is the key which makes it possible, for the first time, for us to have a national strategy for health that can actually be implemented. It enables us to define more clearly the
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    proper responsibilities and functions of everyone who is involved in the health service. The distinct role of health authorities will be to assess the needs of their populations and decide how best they can be met. They will set local priorities and will contract with health providers to provide the best quality care at the best value for money.
    Recently one general manager in the NHS described the new role of health authorities very well when he said:
    "What the reforms will bring is a framework whereby what is being commissioned or purchased is an explicit statement of what we are doing to meet the health needs of the population."
    I must say that I have been heartened in recent weeks by indications that the Labour party agrees with this fundamental distinction, though I understand that its policy document prefers to talk of "performance agreements" rather than contracts. There seems to be an emerging consensus around the fundamental principles of how to manage the NHS which I welcome, whatever the difference in terminology.
    Secondly, the clearer definition of needs and contracting to secure the right kind and quality of services will strengthen accountability. It will strengthen the accountability of the provider to its patients and it will strengthen the accountability of the purchaser upwards towards this Parliament. As the Secretary of State, I am responsible for developing health services that will lead to improvements in the health of the people. In the past, holders of my office of both parties—read the memoirs —have found that there were precious few levers available to them to secure the priorities upon which Parliament might decide.
    The reforms initiated by my predecessor will give me, and my successors, a far better chance to develop policies and priorities that will secure improvements through the objectives set for the purchasers. That leads us on to the fact that in the arguments about organisational reform, as well as in the perennial argument about resources, we have had too little discussion of those true health policy issues in Parliament. I now want to place them firmly on the record.
    Recent reports, for example, have shown the persistent existence of health inequalities in our country. That is a long-standing issue that has challenged and defeated previous Governments and continues to defeat Governments even in the smallest and richest countries that spend most on health.
    I want to remind the House that the requirement in the reforms that health authorities assess the health needs of their populations will, for the first time, provide a mechanism for truly addressing those issues. If a future Government were to discard that mechanism, those who care about the public health would not thank them for it. We have therefore decided to work towards developing a national strategy for health with some hope at last that the health service's part in achieving that may be properly co-ordinated. The strategy will give the NHS a clear set of goals against which to measure success and to set its priorities. I recognise that that will not be an easy task. We will consult widely and I shall shortly be publishing a consultative document setting out our ideas. We shall use that to invite the views of all those concerned with a view to publishing a definitive strategy document towards the end of the year.
    The third principle behind our reforms is that the new arrangements will ensure a closer dialogue between the

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    hospital service and general practitioners. Under our proposals, hospitals must take fuller account of the wishes and contributions of GPs who are, in the normal run, the closest representatives of the medical interest of most patients. It is an inevitable concomitant of the contracting principle that consultations between GPs, districts and hospitals will have to become closer. I have already seen it happening. What is more, for the first time, GP fundholding will give GPs a route to direct financial empowerment if they feel that consultation is not enough to secure the services which they judge to be necessary for their patients. I regret sincerely that it is the present policy of the Labour party to throw away those aspects of the reforms and, in so doing, deny patients the benefits that will accrue. However, I have some hope that thoughtful Labour party sympathisers are questioning this present aspect of their party's policy.
    Let me quote the views of Professor Le Grand, who, I am told, was a founder of the Socialist Philosophy Group no less, who said in a recent television interview:
    "There is nothing in the new Labour proposals that will do anything about the power of patients or the power of GPs with respect to the power of consultants … Indeed, they are proposing actually to abolish the GP fundholding practice which is the one instrument that we have got"—
    so he says—
    "at the moment for actually trying to control that power."
    I hope that we shall come together on this as, as far as I can see, that should not be in any way inimical to Labour's beliefs.
    Fourthly, our reforms will return responsibility for managing hospitals to the hospitals themselves. Those who work in hospitals do so because they regard that as a way of providing help and support to other people. I want to give those employees the opportunity to manage for themselves the resources for which they are responsible and to be able to respond to need without constant referral to higher authorities.
    Mr. William Cash: Trusts have been established in Stafford in advance of the arrangements that my right hon. Friend has described. The St. Christopher's trust works well and the hospice trust will work extremely well. I have visited the patients and it is clear that they and the employees benefit enormously from such trust arrangements. The existing practice in Stafford already shows that we are moving in the right direction with the current proposals.
    Mr. Waldegrave: I agree with my hon. Friend. I have seen similar examples elsewhere.
    If managements in hospitals are to be properly devolved, they need certain basic information about what things cost and the value of the assets that they are using. The reforms, with their emphasis on resource management and new technology, will ensure that that information becomes available. It will enable professionals and managers at all levels to make more informed decisions than have been possible in the past. Without it, talk of accountability, of setting priorities, of steering the service this way or that, is almost wholly empty. One cannot make rational choices if one does not know how much things cost.
    Fifthly, the reforms will make available a more rational and explicit system for allocating scarce resources. The contracting system will introduce more flexibility and incentives for a more patient-centred service for hospitals and other units.
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    Hospitals will be funded according to the contracts they attract, which in turn will reflect the priorities set by DHAs and GPs when considering the health needs of their residents. This is far better than the present system of annual fixed-cash budgets for hospitals which so often seems to penalise efficient hospitals that treat more patients and indeed provide very little capacity to judge whether a hospital is efficient or not, leaving decisions to be made incremently just on the basis of what has happened before.
    The Opposition motion refers to bed closures about which the hon. Member for Livingston (Mr. Cook) spoke justifiably. One aspect of this is surely now well understood. The number of hospital beds is not a good indicator of health service activity. The trend in bed numbers has been downward for very many years. Modern medicine is often less traumatic for the patient. Hospital stays are becoming shorter and for many conditions are being dispensed with altogether. The NHS is treating more patients than ever before. All the evidence supports that: in 1989–90 the NHS in England treated nearly 8·5 million in-patient or day-case episodes—an increase in activity of nearly 3·5 per cent. The number of day cases has doubled to 1 million during the past 10 years, so the NHS has been able to treat more patients using fewer hospital beds. I know that the hon. Member for Livingston is well aware of that trend. I have a quote from him recorded in Tribune, which I shall not bother to read out, which makes it clear that he shares the objective of getting people out of hospital beds if that is the right course of medical treatment.
    I do not deny that there are cases when hospital budgets have not been properly controlled, usually in the first half of the year, leading to acute difficulties in the second half. No financial system whatever—this is the point I was seeking to make on the radio and which the hon. Member for Livingston did not accurately quote—is foolproof against that. The House should not expect us to reward bad management by diverting inevitably limited money from those who manage better. For that reason a motion that proposes so cavalierly that health authorities should simply go on carrying forward deficits is not one that the Government can support. I am well aware, however, that we will not eliminate all deficits this year.
    I genuinely fear that the proposals in the Labour party document to give extra money to hospitals that exceed their "activity targets" would only increase the likelihood of mid-year crises and bed closures. Every hospital would race for the prize money in a system that—as Labour agrees on every page of the document—must be cash-limited. Not everyone can be a winner. It would be a recipe for year-end confusion and disappointment and much worse than the present system—bad though it is—from which we want to escape.
    Next year, the health service will receive a real terms increase of more than 4·5 per cent. and a cash increase of £3 billion. We have increased National Health Service funding in real terms by more than 50 per cent. since 1979. That financial and political commitment has undoubtedly been a key factor in enabling the service to treat more patients and to make more widely available new advances in medicine. The world of 1978–79, when defence received more than health, seems a long time ago.
    Mr. Robin Cook: Will the Minister allow me to intervene?
    Mr. Waldegrave: I did not interrupt the hon. Gentleman, but I will allow him to interrupt me.
    Mr. Cook: I intervene because I should not want that statement, which has been uttered by the Minister's predecessors on many occasions, to go on to the record unchallenged. In 1978–79, the health budget was higher than that for defence, as it was in every year since 1969 until 1980. It was the present Government who started spending more on defence than on health for the first time in 15 years, and they can hardly pride themselves on reversing the priority that they set.
    Mr. Waldegrave: It is clear that Labour's spending priorities for the future do not give room for any confidence that it can do better than we are doing in the provision of resources. I shall justify that statement shortly.
    I will make one more party point in the everlasting debate about who would do better in the provision of resources. Last year, the hon. Member for Livingston said that Labour would increase NHS funding by £3 billion over the life of a Parliament. We are doing that in one year. Wisely, the hon. Gentleman now refuses to put a figure on his commitment, partly because he has been silenced by the right hon. and learned Member for Monklands, East (Mr. Smith), and partly because he fears that we might achieve his new figure the year after. The hon. Gentleman's commitment has become subject, quite rightly, to the overriding qualification that he would be allowed to spend only what the economy could afford.
    Speaking to Shearson Lehman, an American finance house, the right hon. and learned Gentleman went on record as saying that Labour would maintain
    "a responsible fiscal policy, with prudent control over public finance, spending only as resources allow and as the economy can afford."
    That is all very sensible, but the unfortunate hon. Member for Livingston is consequently not only unwilling to say how much Labour would spend on the NHS but is unable to stipulate where health stands in Labour's set of priorities. According to the hon. Member for Copeland (Dr. Cunningham), education is Labour's top priority. I have heard that there are serveral other top priorities, which means that the spending pledges made by the hon. Member for Livinston will have to go in the queue with all the other topics that Labour Members have earmarked as so-called top priorities.
    I apologise to the House for briefly delving into the past, but it is as well to remind ourselves that the one and only time in the whole history of the NHS when funding ceased to grow in real terms was in 1977–78, under Labour. It is true that Labour achieved a 1·5 per cent. real increase for health when in government, but we have doubled that figure. They were half as good as us, because we have achieved a 3 per cent. increase.
    Mr. Robin Cook: Will the Minister give way?
    Mr. Waldegrave: The hon. Gentleman might have an opportunity to make further points later but I shall give way to him for the last time.
    Mr. Cook: The Minister's figures are totally incorrect, and are the same as those used by the Parliamentary Under-Secretary of State in last December's debate, which I checked at the time. Those figures left out of the reckoning the year 1974–75, and assumed that a Labour
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    Government began in 1975–76. If one starts instead in 1973–74—as I got the Library to do for me—one finds that under the last Labour Government, health service expenditure increased by an average of 3·3 per cent., whereas under the present Government it has shown an increase of 2·9 per cent. Even that improvement is based on the massive rise during the Clegg years. If one takes the last 10 years, which is long enough to provide a proper comparison, the average increase under this Conservative Government has been 2·3 per cent. In the last five years of the previous Labour Government, the increase in health spending was 40 per cent. higher than during the last 10 years of the present Government.
    Mr. Waldegrave: The hon. Gentleman would have done his reputation more good if he had not made that extra-long wriggle. I remember, because I was working in Downing street at the time, that there was a Conservative Government during all but the last month of 1973.
    We have been given another example of Labour's increasing equivocation, and the hon. Gentleman's credibility in respect of resources is wearing pretty thin. That is being increasingly admitted by honest Labour supporters. I quote Professor Le Grand:
    "The Conservative Government has promised an extra £3 billion for the next financial year … It's difficult to imagine that Labour could do much better given the other demands that Labour will undoubtedly face on taking office."
    I would substitute "would" for "will". Otherwise, every Labour Member knows—outside these knockabout Wednesday debates—that whatever party loyalty demands that he say, the professor is right.
    At least there is now some consensus between us that resources will always be finite and that no system can absolutely guarantee that health authorities or hospitals will not spend more than their budgets, because Labour is committed to cash limits. That is one beneficial aspect of the support of Opposition Members for a party that agrees to cash limits. However, poor budget management means crisis management, which harms patient care—and that message is getting through.
    In 1989–90, well over 100 districts showed a deficit. This year, 51 districts are currently predicting deficits, and all but a handful will have sorted themselves out by the end of the year.
    Mr. Thomas Graham: Will the Minister give way?
    Mr. Waldegrave: I have allowed several interventions, but in the interests of Back Benchers, I do not think that I ought to give way again. No doubt the hon. Gentleman will catch your eye, Madam Deputy Speaker, for he is a substantial figure.
    Only a very few districts expect to have to take further action next year. The House will agree that that is an encouraging picture, but it has not been achieved without difficulty. In some places, it has contributed to waits for treatment which are too long. We are determined to continue the attack on that problem, and I am pleased to be able to tell the House that the Government are making available an extra £35 million to enable health authorities to tackle waiting lists in 1991–92. Of that, £25·5 million will be allocated direct to health authorities in quarterly instalments, linked to reductions in waiting times that have been agreed with the management executive.
    For the first time, we are also asking regions to match those allocations pound for pound from their own

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    resources. They have agreed, which means that, overall, a total of £51 million will be available in the next financial year for schemes to reduce long waits.
    As I demonstrated, we invested record sums of money in the NHS during the 1980s, but that in itself is not enough. No system can afford to stand still and let the world change around it. The task for the 1990s is to build on and to better that record.
    It is generally recognised that as wider ranges of treatment are developed, and patients' expectations are raised, the cost of providing health services goes on increasing. Some commentators have pointed out that by extrapolating trends in straight lines, we could theoretically end up using more than 90 per cent. of the national budget on health care. That cannot happen, and it will not happen, because we will all the time have to be taking difficult decisions about priorities and relentlessly addressing issues of efficiency.
    Mr. Graham rose—
    Madam Deputy Speaker: Order. The Minister has made it abundantly clear that he will not give way again, and hon. Members should not persist in trying to intervene further.
    Mr. Waldegrave: We need to examine more closely the right balance between prevention and treatment. We must make health the true indicator of the effectiveness of the NHS. The service has brought about steady improvements in the nation's health. Life expectancy for men and women has gradually increased, and, at the other end of the spectrum, infant and perinatal mortality rates are now the lowest ever recorded. However, there is still a long way to go—for example, in getting at heart disease by encouraging better diet and more healthy lifestyles.
    We have already taken steps to bring about a better balance. The new contract for GPs, which emphasises their role in promoting the health of their patients, is bringing benefits. Many patients can now attend health promotion clinics to get practical help and advice on staying healthy. Helped by the introduction of payments to GPs for reaching immunisation targets, we achieved 90 per cent. uptake rates for diphtheria immunisations last year. We have had similar success with the new combined mumps, measles and rubella immunisation. Against this background, I hope that I am wrong in thinking that the Labour party is still committed to repealing the GPs' contract. Could it really wish for a falling-back in immunisation rates to the old level? Surely not.
    Mr. Charles Kennedy rose—
    Mr. Waldegrave: I have explained that I must press on and I am nearing the end of my speech.
    These achievements by GPs are really remarkable, particularly in light of the fact that expert commentators had doubted whether the targets could be achieved. If I may quote one:
    "The targets … are so heroic, so far beyond the present figures for most practices, … that many doctors will give up trying".
    As the hon. Member for Livingston knows, that was the hon. Member for Livingston's view in words that he used in the House in July 1989. I am happy to report, as I am sure he is, that GPs took not the slightest notice of him,
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    and I am sure that he now joins with me in congratulating them on what they have done and welcoming the great benefits to patients arising from those higher targets.
    Our policies for NHS hospitals—both trusts and directly-managed units—and for the NHS as a whole are, we believe, policies which deserve the support of those who work within the NHS and of this House.
    Of course, within the huge resource increase of the last year and of next year, we will not, by some magic, be free of pressure on resources or arguments about resources. They are inherent in a politically accountable health service, which I believe had its first funding crisis two years after it was founded. But what we will have, at last, is a far more powerful system for securing even better value for the patients from those increased resources. Simply listing present problems—a technique of debate to which I could reply by listing all the problems that there were under Labour from the winter of discontent upwards or downwards—does not address the real issues. What the Labour party needs to do today is to convince the House that it has any ideas which merit our consideration about how better to manage the service so as to secure further improvements in our nation's health. I do not believe we have heard them, nor do I believe that we will hear them. Therefore, I wholeheartedly commend the amendment standing in the name of my right hon. Friends and myself to the House.
    5.21 pm
    Mr. David Hinchliffe: I apologise to those on the Front Benches for the fact that I will be absent from the Chamber for the winding-up speeches. As some of my hon. Friends are aware, I hold an important post in this Palace as joint secretary of the all-party Rugby League group; we are to have an important meeting with the Minister for Sport at 6 o'clock, so I have to be present.
    Having listened carefully to the Secretary of State for Health, what worries me is that the Government appear to view this crisis as purely and simply an academic book-keeping exercise. The Secretary of State made no mention of the implications for patients of the present cuts. I want to concentrate on the important human consequences of what is happening in the national health service, with the present beds crisis. Two cases in Wakefield, which I shall mention, typify many of the problems facing individuals who need health care because of the Government's policies.
    I make no apology for being parochial, because the health authority in Wakefield has an excellent track record of being first in the field to make massive cuts, bed closures and even hospital closures. That was repeated in November, when there was an announcement of the closure of nearly 100 beds in two hospitals treating my constituents in Wakefield. At Pinderfields hospital, which serves most of my constituents, and is in the constituency of my hon. Friend the Member for Normanton (Mr. O'Brien), 22 beds were closed on S ward, a general surgery and neurology ward; 22 beds on H ward, an orthopaedic ward; five beds on ward 2, a neurology ward; 17 beds on ward 5, a general medical ward; and 16 beds on C ward, the plastic surgery and dental ward. At Clayton hospital, in my constituency, 13 beds were closed on Queen Victoria, the gynaecology ward.
    In addition, short-term contracts for people employed by the health authority have been terminated, and there

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    has been a freeze on all vacant posts, including nursing posts. Those policies, and the implications of the cuts, have an important bearing on the range of treatments available to my constituents, and there have been dire consequences. I am learning of these daily, as people approach me to tell me of their circumstances.
    For example, I am aware that two sessions of ophthalmic operations per week have been lost, which directly affects large numbers of elderly people suffering from such worrying conditions as cataracts. In Wakefield, we are fortunate in having a good ophthalmic service. I know the consultant, who has effectively treated a member of my family, and has done a first-class job of trying to reduce waiting lists. His efforts are set back by this policy.
    Patients are having to be admitted to wards in which they would not normally be placed. Nursing staff have expressed their anxiety to me about the fact that patients with special needs are in wards where the medical equipment required for their conditions is not available.
    I pay sincere tribute to the medical, nursing and ancillary staff in the Wakefield hospitals for the way that they have been trying to continue to provide a service, despite the effects of the Government cuts. For example, I have been told that doctors on S ward at Pinderfields continued to admit patients after the bed closures decree was announced by management. To prevent them from admitting patients to that ward, the management locked the doors. It is worth pointing out that complaints have been made to the fire prevention officer and to the Health and Safety Executive, because padlocks have been fitted to fire doors on that ward to prevent the admission of patients.
    Mr. John Battle: Incredible.
    Mr. Hinchliffe: As my hon. Friend says, we have reached an incredible situation because of the Government's policies. One ward sister, Christine Robinson, whom I happen to know and who works at Pinderfields hospital, said to me yesterday: "You can lock ward doors but you can't stop strangulated hernias and acute appendicitis." That sums up the position within the NHS at the moment because of Government cuts.
    The implications for constituents are clear. What saddens me about the Secretary of State's contribution to the debate is that he made no reference to the human consequences of Government policies.
    I shall cite two cases in my constituency. The first concerns a lady whom I shall not name. I have a letter from her in my hand, and the Secretary of State and the Minister are welcome to see her comments. This lady, a pensioner, had physiotherapy and x-rays for a painful hip condition. In June last year, she was told that the only treatment that would help was a hip replacement operation. In her letter, she writes:
    "My doctor got in touch with Pinderfields for an appointment, which after a long wait duly came for the 14th November nearly 6 months later. To overcome this I went to see the orthopaedic specialist privately at the end of August and paid £50, which is very much against my principles but for my own peace of mind I paid the consultant's fee. Quite a sum when you are on a pension, of £50·34. However, I felt it was money well spent and was anticipating having the operation in October/November. However, the day I thought I would be going into hospital they decided to close the female orthopaedic ward. The only consolation I have was that 25
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    other women were suffering from something similar to me. Obviously, apart from being disappointed, I am gradually getting worse. Now, it could be March before I hear anything. I am very fortunate in that I have caring and loving neighbours and friends from church who are willing to give me transport. I have virtually been a prisoner in my own home since July."
    That was one of a number of cases of constituents who have been affected by the cuts in the NHS—
    Mr. Cryer: Will my hon. Friend give way?
    Mr. Hinchliffe: With respect to my hon. Friend, I must leave the Chamber soon, so I have to make a hurried contribution.
    My hon. Friend the Member for Livingston (Mr. Cook) mentioned a constituent who had unfortunately died, and my constituent, too, has contributed to the NHS since its inception—yet when she desperately needed help, when she was suffering discomfort and pain, she received this sort of response from the NHS under this Government.
    My constituent's circumstances are a direct consequence of Government policy. That policy is deliberately designed to contract state health care. We have often heard hostility to it expressed by Conservative Members, a hostility that has existed among them since the NHS began in the 1940s. Government policy is actively to encourage charitable fund raising. One cannot move in certain supermarkets in my constituency these days for people rattling tins—decent people who care that others are suffering because of lack of investment in the NHS, and raising money for diabetic provision, for spinal injuries, for breast screening and for terminal care, all of which should be funded by the NHS. But we are down to rattling tins, as we were before the NHS came into being.
    Government policy is also about forcing people into private health care, with the sort of dire consequences that befell a constituent of mine—a pensioner who had to pay her entire week's pension to get a private consultation which she should have been granted on the NHS, for which she has paid all her life. Her name was Mrs. Margaret Hardacre, a lady who has unfortunately succumbed to certain problems in the private health care sector. She told me almost a year ago about the difficulty that arose when she was given a bill for £6,665 for the removal of bunions at Methley Park private hospital near Leeds. She had used her husband's medical insurance policy, provided as a perk through his job, with an organisation known as Western Provident Association. Faced with this enormous bill, my constituent found that Western Provident Association was not prepared to meet it, because it claimed that her problem related to an arthritic condition that she had had before she applied to join the association's scheme.
    Professor Wright, professor of rheumatology at Leeds general infirmary—one of Yorkshire's experts on this condition—and the surgeon who treated my constituent for her condition, a Dr. Ghali, who is based in Wakefield, both certified that the foot trouble for which she had claimed benefit was not caused by or related to osteoarthritis. So clear medical evidence presented to the company was rejected—
    Mr. Hayes rose—
    Mr. Hinchliffe: I have already told my hon. Friends that I am not prepared to give way. Usually, as the hon. Gentleman knows, I would.

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    This lady suffered hell for two years, harassed by debt collectors and threatened, in a series of letters from debt collecting agencies, with court action because she had not paid the £6,665. Finally, it was only letters from me and, I suspect, the fear of Western Provident Association that I might raise the matter in the House which led the company to make an ex gratia payment to cover the costs of treatment. But now my constituent is faced with legal bills of £620 arising out of her need to defend herself against court action taken because of her alleged debt. Western Provident also refused to pay for the completion of the course of treatment on which she had started some time before. I believe that WPA is obliged not just to pay for the completion of the treatment but to meet the legal fees that this woman has incurred.
    This is but one example of someone facing difficulties with private health care—the sort of system towards which the Government want to move. The logical outcome of what is proposed, with effect from 1 April, is that people will face this sort of appalling debt and the kind of hell through which my constituent went for more than two years.
    I have heard it said that the Gulf war is taking the public eye off other Government domestic policies—on the NHS, education, community care and the economy—but I am sad to have to say that it will be the Gulf above all which will expose once and for all what the Government have done to the NHS.
    5.35 pm
    Dame Jill Knight: I often think that it is the small courtesies of this House which oil the wheels, and it is a courtesy, when a new Minister comes to the Dispatch Box for the first time, for his colleagues to wish him well. I am pleased but surprised that I should be the third speaker in the debate and yet be the first to welcome my right hon. Friend most warmly to his new job.
    I assure the hon. Member for Wakefield (Mr. Hinchliffe), without the need for the slightest consultation with my colleagues or the Prime Minister, that the Conservative party did not encourage Saddam Hussein to invade Kuwait to get the Conservative Government off the hook.
    What a shabby little motion the Opposition are having us debate tonight—heavy with emotion but light on facts, redolent with implication but divorced from reality. First, the motion mentions the closure of hospital beds. My hon. Friend the Member for Harlow (Mr. Haynes) rightly drew the attention of the House to the fact that, once again, the hon. Member for Livingston (Mr. Cook) had his facts wrong. The National Association of Health Authorities, in no way in the pocket of the Conservative party, says that 3,500 beds have been closed this year, not the 4,000 mentioned in the motion. The NAHA also draws attention to the fact that this therefore concerns 2 or 3 per cent. of all beds in the country. It drew the conclusion, moreover, that most of those closures occurred for medical or health policy reasons, such as new treatments requiring shorter stays.
    The motion conveys, as it is intended to, an horrific picture of 4,000 sick people bodily thrown out of hospital beds or callously not put in them, but the important thing is not whether beds are closed but whether patients are treated. During many hospital visits, some to constituents, some to friends and some official, I have seen empty or
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    near-empty wards while there has been plenty of capacity in the wards next door. If it is a matter of keeping such wards heated, lit, clean and staffed just for the look of it, I am against such a waste of health service resources. I cannot condone waste of resources, although I recognise that the Labour party can, and does.
    Mr. Hayes: Will my hon. Friend give way?
    Dame Jill Knight: I am trying to make a short speech, but I shall allow one intervention.
    Mr. Hayes: I am grateful to my hon. Friend. She referred to the Labour party. However, the Opposition do not seem to care too much about health, because not a single Opposition Back Bencher is here for their own debate.
    Dame Jill Knight: At least let us be thankful that the two Front-Bench spokesmen are still here and sticking to their posts.
    Mr. Hayes: But chatting between themselves.
    Dame Jill Knight: Yes.
    The motion does not claim that 4,000 people are desperate because they are not getting the care they need—even the Opposition know that such a claim is untrue—but that is the clear implication of the motion. It is important, therefore, to highlight the fact that more patients are being treated than ever before. About 25 per cent. more in-patients and about 50 per cent. more day or out-patients are being treated a year. One cannot complain about the closure of beds and imply that people are not being treated, while at the same time ignoring the fact that so many more people are being treated by means of far more complicated, and therefore much more expensive, operations and drugs than ever before.
    The motion refers to the cancellation of hospital admissions from waiting lists. As new operations and better treatments come on stream, with the result that many people can be cured or can have their condition alleviated, which would have been impossible only a few years ago, the demand for treatment by these new means becomes heavier and heavier. As the capacity of the NHS to cure people increases, waiting lists also increase. A sum of money has been allocated for the specific purpose of reducing waiting lists; it amounts to £119 million over four years. It has enabled 500,000 additional patients to be treated, and waiting lists in many hospitals have been greatly reduced.
    Dame Elaine Kellett-Bowman: And extra money is given to those hospitals.
    Dame Jill Knight: Of course. It seems as though extra money is made available nearly every week.
    Dame Elaine Kellett-Bowman: Yes, it is.
    Dame Jill Knight: When it comes to bed closures, it is easy to over-simplify the waiting list issue. Many waiting lists are false. When hospital administrators want to get people into hospital for their operations, they often find either that those people had their operations some months ago in another hospital or that they no longer need the operation. The waiting lists in many hospitals are known to be false, because those who were waiting to go into hospital do not always let the hospital know that they no longer need the bed.

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    It is also easy to over-simplify in another way. A 70-year-old who is waiting for a hip operation cannot be put into a maternity hospital bed, and a person who is waiting for a kidney transplant cannot be treated in an ear, nose and throat ward. It is useless to tie waiting lists to the allegation that people are denied the treatment they need. All hon. Members know of people in their constituencies who need hospital care. I am sure that they all do, as I do. When I find that treatment is urgently required, I get on to the doctor and ask why that person has not been admitted to hospital. I have never yet failed to get someone into hospital when that person genuinely needed to be admitted as an urgent case.
    The motion raises its grubby little hands in horror at the very idea that any cash deficit should be other than written off; then it has the colossal cheek to demand a cash increase. We were asked why deficits can be written off if a hospital intends to go private but cannot be written off if it intends to remain within the national health service. Nothing would more greatly ensure the continuation of deficits than continually writing them off. If any hospital goes private, debts incurred after privatisation will no longer be the responsibility of the national health service. To suggest that all deficits in NHS hospitals should be written off would be to ask for trouble.
    The Opposition had a colossal cheek in tabling this motion. First, they want more money to be spent on the NHS. However, they consistently refuse, as the hon. Member for Livingston (Mr. Cook) has done again today, to say how much money they would make available to the NHS. We say that we must make X, Y or Z amounts of money available, but the Opposition will never say how much they would make available. Let them shut up until they can answer that question.
    Secondly, the Opposition conveniently ignore the enormous amount of additional money that the Government have poured into the NHS. If the allegations made by some Opposition Members—that the Government want the NHS to wither away—were true, I do not believe that we should have poured money into the NHS, as we have done so magnificently, over so many years. We have done that every year since we came to power.
    Opposition Members may not like it, but I must remind them that, when they left office, only about £8 billion each year was being spent on the NHS. That figure has risen to over £30 billion a year. How, in heaven's name, that can be described as a cut, I do not know. Even after taking inflation into account, NHS funding has increased by about 50 per cent. I do not know how the Opposition can have the brass neck to demand that the Government ought to provide more money for the NHS. The increase in NHS resources that has been provided by the Government has been described as peanuts. To my mind, £22 billion is a pretty hefty peanut.
    Thirdly, it is a cheek for the Opposition to couch their motion in these words, because they spent infinitely less on the NHS when they were in office. I wonder what would have happened to those people whose cases have been described by Opposition Members if a Labour Government had been in power. For the first time, cuts were made under a Labour Administration. What about the lady whose sad case was described by the hon. Member
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    for Livingston? We were all shocked to hear it, but how would she have got on? The case of another lady aged 79, suffering from kidney disease, was described to us and the implication was that it was this wicked Government who had caused her death. I am very sorry that the lady died, but I cannot think that the blame can all be placed at the Government's door when a 79-year-old lady with severe kidney problems dies. I believe that she would have had infinitely less chance of survival had she had the misfortune to be sick under a Labour Administration.
    The fourth reason why it is a cheek to ask the Government to increase the amount of cash for the NHS is that the Opposition consistently oppose all our efforts to end waste of cash by the NHS. Time and again I have attended these debates and listened to the reasons why amendments and different arrangements are being introduced in order to stop the waste that everybody connected with the health service knows has gone on for years. We have tried to stop that waste and have been very successful. However, every time we have tried in any way, shape or form, the Labour party has fought us tooth and nail.
    The motion refers to "imposing" self-governing trusts, but hospitals have to apply to become self-governing. How can one have something imposed on one if it has to be applied for and if certain stringent conditions have to be met? Again, the motion is inaccurate. There can be no imposition of self-governing trusts when the management have to demonstrate what skills they have, what benefits would accrue to patients, and other things. I can well understand that the Confederation of Health Service Employees does not like it, because it might curb the wings of the militants and, Lord knows, there are enough militants in COHSE.
    To say in the motion that the public are against self-governing trusts is quite wrong. They are strongly in favour of hospitals becoming local entities again and they love the idea of hospitals choosing what they want to do and perhaps having a matron again if they so wish. That pleases many people, but the Labour party does not wish to know that. [Interruption.] If the hon. Member for Coventry, North-East (Mr. Hughes) does not know anything about hospitals, he should try to learn before attending a debate. As you are aware, Madam Deputy Speaker, one of the most successful hospitals in Birmingham has a matron. The public know that, approve of it and would like to see more matrons.
    I want to refer to the new burdens that will be imposed on the health service as a result of the Gulf war. That is a more up-to-date topic than this tired old rubbishy motion, and it touches on the comments in our amendment about putting patients first, and on what my right hon. Friend the Secretary of State said in his speech. Some constituents are worried about the effect of the Gulf war on patient care in this country and possible casualties taking hospital beds. We made a decision in the House yesterday with an overwhelming majority—one of the largest majorities I can remember in recent years—to follow the United Nations line, and that may mean that casualties will have to come here. However, there are base hospitals in the Gulf and, as I understand it, there are six or eight service hospitals in this country ready and waiting to receive service personnel who may be injured.
    Let us be frank: soldiers, airmen or service women who are injured in the Gulf have every right to expect to be treated in British hospitals. They have as much right as

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    motorway accident victims or any other victim. We must recognise that. We do not know what will happen, but we must face the fact that if there were, heaven forfend, large numbers of casualties from the Gulf, there could be an effect on non-emergency cases here. I must stress that it will affect only non-emergency cases. I believe that my right hon. Friend said that it does not alter the position of emergency cases in this country, and he referred to the fact that extra money is being made available to cope with the problem.
    No one on either side of the House is complacent or entirely satisfied with every aspect of the health service. We care just as much as Opposition Members when people need medical care and cannot immediately obtain it. Let us have that out of the way.
    Let us also have out of the way the accusation that we are trying to get rid of the health service. Far from it. We are as dedicated to the principle as any Opposition Member. I believe that Britain has a health service second to none for its expertise, easy availability and effectiveness. The Opposition constantly seek to belittle or misrepresent it but their ill-judged attacks cannot overcome the solid experience of those who have sampled health service care. The hon. Member for Livingston has only condemnation, but patients have appreciation, gratitude and understanding. It is the motion that should be condemned, not the Government.
    5.55 pm
    Mr. Charles Kennedy: I shall be brief, and I shall not pursue all the points raised by the hon. Member for Birmingham, Edgbaston (Dame J. Knight). She backed up some of her points with argument, and she justified some with facts, but by no means all. In opening the debate today, the new Secretary of State struck a different tone from his predecessor and seems, rather like the new Prime Minister, to be opting consciously for a quieter tone, if not a quieter approach. As far as it went, that is welcome to those of us who have been used to the at times dismissive attitude of his predecessor. However, essentially his song remains the same, albeit dressed up in rather more theoretical packaging than we have been used to from his more street-fighting predecessor when he was at the Dispatch Box.
    The Secretary of State addressed the points raised by the hon. Member for Livingston (Mr. Cook) about bed closures. The hon. Member for Edgbaston went on to defend the Government's position as she saw it, and criticised the figures in the motion and the arguments behind them. The hon. Member for Edgbaston criticised the Labour party's motion, because it specified a figure of 4,000 beds lost. She told us that the true figure was 3,500, as if that was a vindication of the Government's position. —[Interruption.] I accept that that figure is from the report of the National Association of Health Authorities and Trusts. The House will understand that the hon. Member for Livingston does not consult me when he drafts his motions, but I think that the figure of 4,000 was from The Independent newspaper survey published in the same week as the report.
    As the hon. Member for Edgbaston said, whether the number of beds lost is 3,000 or 4,000, it represents 2 per cent. or 3 per cent. of all acute beds in the country. How can any of us be sanguine about that when we all know of
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    the waiting lists about which our constituents write to us and about the operations that they are waiting for and the countinuing physical discomfort, pain and sense of frustration that they feel when they encounter such a position? It is a pretty weak case for the hon. Member for Edgbaston to say that it represents "only" 2 per cent. or 3 per cent. of acute beds and that it is "only" 3,500 as opposed to 4,000.
    It is worth putting that in the context of the Government's record since 1979. On that basis, over 70,000 beds have been lost from the 1979 United Kingdom total. That represents over 16 per cent. of all NHS beds, and it is an alarming figure. Upwards of one fifth of our NHS bed provision has gone during the lifetime of this Government.
    As well as the facts themselves, there is an aspect of the interpretation of the facts with which I wish to take issue with the hon. Member for Edgbaston. She said that we must look at numbers treated. I agree with her to a large extent, and the hon. Member for Livingston acknowledged that too. However, we must not allow the numbers treated to disguise the fact that, all too often, other pressures or considerations are creating the larger numbers being treated, making it look as if there is an improvement when it might be something else.
    I give the hon. Gentleman two examples. First, we must judge the quality of care that is being provided, not just its rapidity. At times, those two concepts cannot, by definition, work together. A rush to get people out of available post-operative beds so that other people in the queue can use them may mean elderly people having to return to homes that have less than satisfactory standards of care.
    The quality of care is important, but, secondly, if that quality of care and post-hospital care is not sufficient, all too often it leads to the revolving-door syndrome, when the same person is readmitted for further treatment or because of additional complications or a recurrence of the original problem. The readmittance of that patient counts as a further treatment statistic, which is then trumpeted by the Minister as further evidence of the success of the Government's health policy. In many cases, the readmittance of that patient represents a failure of health care, hut he has clocked up a further treatment point for NHS statistics. Those two major caveats weaken the case of the hon. Member for Edgbaston.
    The figures on underfunding provided by NAHA—there has been no question of trying to discredit that organisation in previous debates—are alarming. I shall not cite all the statistics for the cumulative period of the past decade, but it estimates underfunding of the health service at about £3·25 billion. That is a substantial amount of money, and I notice that the hon. Member for Macclesfield (Mr. Winterton) is nodding in agreement. He is a long-standing member of the Select Committee on Social Services. Some years ago, I served on that Committee with him, and we undertook an analysis of real-terms growth expenditure in health care, as set against perceived need. We arrived at a distressing shortfall in aspiration and in what was being delivered. That earlier experience, taken with the up-to-date figures, shows that there is far more of a problem than the hon. Member for Edgbaston was willing to acknowledge.
    Hon. Members have mentioned the dreadful circumstances in the Gulf. I wish to raise an item that was not dealt with satisfactorily—off-stage noises were being made

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    by several hon. Members who are no longer present—concerning the role of the private sector, about which I wrote to the Secretary of State last week. Tragically, we are now on a national war footing, and it appears that we shall be involved in military conflict sooner rather than later.
    It is right—I voted with the majority last night—that the best provision should be made for service personnel who return home injured and in need of treatment. If any of our troops are injured in carrying out their instructions with courage and skill, the whole country, irrespective of the divisions on the rights or wrongs of them being sent to the Gulf, will want the best possible standards of care to be made available to them. There can be no serious debate or argument about that.
    The Secretary of State said that he has taken steps to encourage the provision of national health service beds and that, contractually, it is for health authorities to take decisions on available private sector provision in their areas; but that is not good enough. I do not say that from an ideological standpoint of being anti-private sector, but if the Government are being consistent and are saying, as they do in so many cases, that there should be more mutual understanding, cross-exchange of information and co-operation between the private medical sector and the public sector, on an issue as fundamental as military conflict, with injured troops returning home, the private sector should subscribe to that aspect of Government policy and should co-operate.
    If the Government can requisition boats, buildings and other private-sector installations, there is no logical reason why, similarly, ministerial action cannot be taken to requisition, where appropriate or relevant, private sector health facilities. The private sector in health care would do its public reputation some good if, rather than awaiting calls in Parliament for it to be seen to be involved or for the Minister to require it to be involved, it volunteered some of its facilities. However, we should leave the ideological sparring match between public and private health provision to one side and agree that all medical facilities should be regarded as legitimate for use in the war effort.
    My understanding of the instructions that have been sent to general managers is that, as and when injured personnel return home from the Gulf, hospitals in London, in the major southern cities and military hospitals in the south will be used first and that provision will slowly spread north to Glasgow, Edinburgh and Inverness—I welcome Inverness's contribution in that respect. Given that geographical spread and the strain which the Secretary of State has acknowledged will be put on health service facilities, surely it would make sense to spread that burden as equally and fairly as possible.
    Sir David Steel: I understand that general practitioners who are called up for service in the Gulf receive simply their Army emoluments, and must provide a locum in their practice from their own pockets. It is wrong that medical practitioners who disrupt their careers to serve their country should be financially out of pocket. The Minister should comment on that.
    Mr. Kennedy: I am grateful to my right hon. Friend. Hon. Members will have received direct representations or anecdotal evidence on that from their constituents. That
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    follows the earlier points that I was making about some aspects of the dreadful problem in the Gulf. I hope that the Minister will take a few minutes to reply to that point, because the Secretary of State did not deal with it to a great extent. I share the sentiment that my right hon. Friend expressed.
    There is no doubt that the treatment of casualties from the Gulf will place strain on the NHS. The Secretary of State has said that he will probably need to secure extra funding from the Treasury, and he will receive full all-party support for that. However, health authorities will have to take day-to-day decisions now without knowing what funding will be required, and the pressure on them will be greater because of that.
    Will the Minister for Health comment on the suggestion that health authorities have been told to plan on the basis that, on average, Gulf casualties will need to be hospitalised for 12 days? I should be grateful if she would tell me whether the Department of Health has given those instructions and that advice to health managers. If so, it is widely optimistic, given the nature of some of the injuries that could be sustained, not least from burns. I hope that the Department of Health will keep that aspect closely under review.
    I have concentrated on the Gulf in my remarks, apart from my opening comments on the general level of underfunding and the general problems caused by bed losses in the hospital service. Although we heard more of a theoretical framework from the Secretary of State, there is unambiguous evidence that we still need much more in terms of practical delivery so that the hospital sector can begin to come up to the standard which the country needs and which, according to every available test of public opinion, the country clearly wants but does not believe it is getting from the Conservative Administration.
    6.10 pm
    Mr. Nicholas Winterton: I congratulate the hon. Member for Ross, Cromarty and Skye (Mr. Kennedy) on his constructive and measured contribution. I hope that my hon. Friend the Minister for Health will respond as much as she can to his somewhat detailed but relevant questions to the House and to the Treasury Bench.
    My right hon. Friend the Secretary of State referred to the sombre occasion of the debate, and we would all agree with him. As the Member for Macclesfield, I wish to pay tribute to those members of the Territorial Army division of the Royal Army Medical Corps in my constituency who volunteered to go to the Gulf and are serving there. I know from my regular contact with them that they are courageous, able and highly skilled and will do a wonderful job should casualties occur.
    My district general hospital has been asked to accept a number of casualties. I know from my discussions with the local health authority chairman that they will be well looked after and will receive the best possible treatment. They will be welcomed to Macclesfield, where there is quite a military tradition.
    This is a sombre debate. Whatever statistics and facts are bandied about by both sides of the House, problems face the national health service. It is incumbent on all hon. Members to reflect those problems as accurately as possible. My right hon. Friend the Secretary of State did not deal with the deficits for the current financial year

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    faced by health authorities before the new system comes into operation on 1 April. I am sure that my hon. Friend the Minister is aware that many of those deficits arose because of the clawback of resources to meet the capital requirements resulting from the health authorities' failure to sell land which they had intended to sell prior to the capital contract beginning or because the price drop caused by the current economic situation meant that the money expected from the sale of land did not materialise. The Government must look at the deficits of some health authorities and take action so that they do not go forward from 1 April with millstones around their necks.
    Some closures of hospital wards and beds have occurred because of improvements in medical techniques. For some operations people do not now have to stay overnight in hospital. There was some substance in the criticism by the hon. Member for Livingston (Mr. Cook) about the number of beds that have been closed. I wish to refer not to the statistics from the National Association of Health Authorities but to Macclesfield district general hospital, where 50 beds have been closed but there is a waiting list for urgent surgery. Because the beds have been closed, people cannot have the operations that would give them a more meaningful life or reduce their suffering and pain.
    As I said during Health questions, it is a false economy to build a wonderful new district general hospital—I pay credit to the Government for providing the wherewithal —only to have to close beds because of its success and because of the skill and expertise of the consultants who carried out many more operations than was originally budgeted for. Success should be rewarded, as I am sure my hon. Friend the Member for Birmingham, Edgbaston (Dame J. Knight) agrees. It cannot be satisfactory, financially or medically, to have 50 empty beds in a hospital when people are waiting for operations, theatres are available and consultants are ready to carry them out. It is a false economy and a terrible waste of capital expenditure to provide those beds in the first place.
    I do not often pay tribute to the chairman of the Mersey regional health authority, Sir Donald Wilson, but I must this time. He has achieved the greatest reduction in waiting lists in any region, and Macclesfield health authority has achieved the biggest reduction in waiting lists in the Mersey region. I pay tribute to the management, consultants, nurses, paramedics and other staff in Macclesfield who achieved that splendid result.
    Parkside hospital, which is close to my heart, deals with mental illness. I have often pleaded in the House for a moratorium on the closure of beds or of mental illness hospitals until adequate resources, facilities and qualified personnel are available to deal with those discharged into the community from those and other hospitals.
    The hon. Member for Ross, Cromarty and Skye mentioned my service on the then Social Services Select Committee which highlighted in several reports the ongoing underfunding of the national health service. I shall not go into the substantial underfunding that occurred under the last Labour Government, but I shall refer to underfunding between 1981 and 1985 under the present Government. I do not believe that it was intentional Government policy; it occurred because the Treasury and the then Department of Health and Social Services underestimated demographic changes and advances in medical techniques and medical science, which meant that much more expensive, sophisticated operations
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    could take place, and did not budget for them. There was a huge advance in the use of magnetic resonance scanners and computerised tomography scanners, for example, which can do so much not only in tracing illness but in enabling surgeons and consultants to carry out successful surgery.
    I should like to refer to self-governing trust status, about which much has been said by the Opposition and a little by Conservative Members. Nursing morale in my constituency is low and consultants are worried because of the problems facing the health service and bed closures and because they know that they could put people into beds and carry out operations but no money is available to do so because of the number of recent changes in the health service and the speed with which changes have occurred.
    From the representations made to me by consultants, nurses, members of the public and general practitioners, I am led to believe that there is general support in my area for the principle of self-governing trust status. But those to whom I have spoken want self-governing status for the district as a whole.
    The chairman of the regional health authority, Sir Donald Wilson, always appears to want to have his own way. We have various levels of health government—the Mersey region, and Macclesfield health authority—and I thought that the decision to go for trust status would lie with the management at district level, with the people served by the district general hospital and with the nurses, consultants, general practitioners and others involved with the provision of health care locally. Oh no; it appears that the region is demanding not only that there should be the acute unit seeking self-governing trust status but that the community and mental health services should form a second self-governing trust. I strongly oppose that. I am already in communication with the Secretary of State. I do not know whether my right hon. Friend or my hon. Friend the Minister for Health will be prepared to see me but I have formally asked my hon. Friends on the Front Bench to discuss the matter with me because a substantial majority of those involved in health care in my constituency believe that patient care and the best interests of those who want to use the health service in my area would benefit from a single self-governing trust covering the district health authority as a whole. I look forward to meeting the Minister or the Secretary of State.
    I am advised that, in my area, there is some problem in dealing with nurses who have taken advantage of the new structure to upgrade themselves from state enrolled nurses to state registered nurses. In all the cases that have been drawn to my attention, nurses were promised that they would be given positions when they obtained the new qualifications. Unfortunately, no such positions are now being offered to them. Some have been offered redundancy but the redundancy payments for which they qualify do not take account of their new qualifications. Bearing in mind the promises that were made when the new system came into being—many hon. Members on both sides of the House warmly welcomed it—I hope that, in her winding-up speech, or perhaps by letter, my hon. Friend the Minister will be able to give me information and assurances that I can pass to my constituents, who are deeply concerned.
    The health service is close and dear to the hearts of all the people of this country. The health service and health care must never become the preserve and privilege of the

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    wealthy. They must be available for all the people of this country. I, as a Conservative Member, must express my concern about the implications and possible results of some of the changes that we are introducing. I believe that we are going towards the North American system at the very time when the Americans are turning away from their system and looking to us with some envy.
    Miss Emma Nicholson: Rubbish.
    Mr. Winterton: My hon. Friend may say, "Rubbish." I shall not give way to her because she has not been present for the whole debate. I have served on the Select Committee on Social Services for 16 years without a break. I have met a great many people who take advantage of, and are interested in, health care. As a member of that Committee, I have had the privilege of travelling widely throughout the world. Having travelled throughout Europe and North America, I can only say that the United Kingdom national health service is the best and most comprehensive health care service in the world, and provides the very best value for money, despite the problems that it faces. It is in that spirit that I address my remarks to my right hon. and hon. Friends on the Front Bench.
    6.24 pm
    Mr. John Hughes: It is appropriate that this debate on the national health service —in particular, that part of the service known as the hospital and community health service—should take place now. The possibility of war in the Gulf should not be allowed to overshadow what is happening to the NHS. Hon. Members on both sides of the House, those in the media and members of the public at large would be well advised to take special note of what is said, because the hospital and community health service has never been less well prepared than it is now to cater for the additional demands that war will place on it. When I say that it is less well prepared, I do not mean that our doctors do not have the necessary ability, our nurses the necessary skills or our health workers the necessary compassion. I mean simply that the NHS does not have the money.
    The Minister may be surprised at that remark. After all, he has not been the incumbent of his present post for very long, and, being less dependent on the NHS than many of my constituents, particularly many elderly people, he has not perhaps had time to realise the dreadful state to which the health service may have been reduced. Given the many distractions of the past few months—for example, the considerable Christmas cheer brought to many by the unseating of the previous Prime Minister, who was the jockey principally responsible for riding the NHS into the ground—it is not surprising that the right hon. Gentleman has not yet been able to discern what is happening to the service for which he is responsible. He has not perhaps discerned that the service is collapsing.
    Even before Christmas, a newspaper reported that 4,500 beds—equal to 3 per cent. of acute beds—had been closed in an attempt to make ends meet. But that is only the tip of the iceberg. As the end of the year approached, more desperate measures were taken. Over the Christmas period, we heard of extensive ward closures, with hospitals
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    reduced to emergency-only treatment. The closures were often described as extended breaks, but the truth is that every week during which a ward is closed represents a 2 per cent. cut in the annual service provided by that ward. For many hospitals, a three-week Christmas interval replaced a one-week interval. That meant a 4 per cent. reduction in non-urgent activity. That was still not enough.
    A recent Audit Commission report highlighted the importance of day surgery work, arguing strongly that day surgery meant that more cases could be handled by the NHS at a lower unit cost. It is certainly true that medical developments have enabled certain types of patient to be treated in greater numbers. Contrary to the view that the Government have attempted to foster, the ability to treat people effectively on a day basis has been the result of scientific and medical advance and improvements in medical procedures. It has not come about through the intervention of accountants, much less politicians. The credit for the developments in day surgery—and the reductions in the average length of in-patient stays resulting from improvements to treatments—lies with the NHS staff and medical researchers. They have come about in spite of—not because of—the Government's policies.
    No better illustration of that point exists than the fact that the day surgery unit at Coventry and Warwickshire hospital in my own city has had to be closed for the remaining three months of the year. The authority has run out of cash. As a result, it is expected to be able to complete only 990 operations this year—only slightly more than half of what was achieved in former years.
    The cumulative effect of thousands of crises such as that—some of which reach the public eye and some of which are buried in the private part of the health authority agenda—is likely to take the NHS waiting list over the 1 million mark for the first time in the history of the service, and that is before we take account of the impact of war in the Gulf.
    Like the Government, I have been guilty of concentrating on the acute side of the health service coin —the operations and waiting lists. We should not forget the far more devastating effect on the services for the less privileged in our society, including those whose health is in one way or another permanently impaired and whose dependence on the NHS is not intermittent. In that group, I include large numbers of chronically ill elderly patients, the mentally ill and the mentally handicapped and the physically disabled. The number of beds available to those patients has fallen dramatically over the past 10 years. According to the Government's only published figures, the number of non-acute beds has fallen from 213,000 in 1979 to 149,000 today, a fall of 64,000.
    Ironically, a patient discharged from one of those beds—perhaps prematurely and possibly in need of constant care rather than intervention—could be readmitted later, as the condition may have deteriorated. That patient will duly increase the Government's figure of the number of in-patients treated.
    The prospects for that kind of patient are now bleaker. April 1991 will see the establishment of the first trusts, and the prospects are clearly so horrendous that the Government have chosen to throw a cloak of secrecy over the whole business. Whole chunks of what the Government claim will still be part of the NHS are subject to the rules of commercial confidentiality. As a

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    consequence, the elected representatives of constituents cannot see a report commissioned by the Government about the financial plans for the trusts.
    We have to be content with rumours that the report suggested that the financial plans were, to say the least, inadequate. It is rumoured that some of the more sensible civil servants may have advised the Secretary of State that the majority of trust applicants were unfit to run a whelk stall. Sadly, we cannot undertake our own analysis of the financial plans, because the trust applicants were forbidden to publish them. That in turn means that the Government expressly sanctioned a consultation exercise in which not only were staff ballots forbidden and community views discounted, but the communities were even forbidden to know what they were being consulted over, and they are not to be told now of the outcome. Having learned nothing, the farce is being repeated for another wave of misguided applicants. There is no sign, as all hon. Members are aware, of how the system will work in reality.
    There has been much talk in recent years about improving the management of the health service. It is clear that the people responsible for the NHS White Paper are not managers: they are solicitors skilled in drawing up that which no one can understand and which never does what it is supposed to do. Its strategy would be to the detriment of my constituents.
    6.33 pm
    Mr. Jerry Hayes: It is a poor day for the Labour party when we have a Supply day debate on a major aspect of Government policy—the health service —and at one stage only the shadow Secretary of State for Health, the hon. Member for Livingston (Mr. Cook), represented the Labour party in the Chamber. No Opposition Back-Benchers were present. The Labour Whips had to trawl round the streets, the bars and tearooms to drag in Opposition Members to say something and to show how desperately caring is the Labour party. That has been exposed—mercifully we have television and people outside will be able to see what happened.
    I do not pretend for a moment that all is rosy in the national health service. Of course it is not. My right hon. and hon. Friends are aware of the terrible difficulties in my health authority in west Essex and I hope that those problems are being addressed at the moment.
    However, this is a Supply day and as such we have a right to know what the Opposition are going to do. After all, the Opposition's health policy has been published for a year and a month, but we are none the wiser and we are not better informed.
    Mr. Gerry Steinberg: That is because the hon. Gentleman cannot read.
    Mr. Hayes: I have read Labour's health policy, but we did not hear anything about it today. We have heard about cumulative underfunding and how the health service needs more money. Unfortunately, the hon. Member for Livingston did not tell us how much is needed, either because he does not know or because he is frightened of the hon. Member for Derby, South (Mrs. Beckett). I do not know what it is that ladies from Derbyshire do to hon. Members, but the hon. Member for Derby, South seems to
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    frighten the hon. Member for Livingston. He would not tell us how much he was going to spend or where he was going to spend it.
    However, the hon. Member for Livingston was marvellous when he referred to history. He did for the history of the funding of the health service what King Herod did for babysitting. The hon. Gentleman told us that the Conservative Government have a habit of spending more on defence than on the health service. The Library was kind enough to provide me with the figures. In 1970–71 and 1971–72, defence spending was higher than health spending. At that time a Conservative Government was taking over from a Labour Government. From 1972–73 to 1975–76 health spending was higher than defence spending. In 1976–77, 1977–78 and 1978–79, defence spending was higher. From 1986 onwards this Government have been spending more on health than on defence. The hon. Member for Livingston did not tell the House about the massive cuts made in health spending by the last Labour Government. They cut 3 per cent. from the budget in real terms.
    The hon. Gentleman did not tell us about the unions. He was right to tell us that the debate is about money and I know where he would have to spend the money that the hon. Member for Derby, South might just give him. He would have to spend it on his friends in the Confederation of Health Service Employees and in the National Union of Public Employees.
    The hon. Member for Livingston should read the debates on health that took place during the dying days of the previous Labour Government. Those debates were not about patient care; they were about the disasters that were occurring in the system when the dead were unburied and hospital waiting lists made our present problems look like a teddy bears' picnic. If the hon. Member for Livingston reads those debates, he will see that they referred to formulas and face-savers to help NUPE and COHSE in an attempt to get those people to see reason.
    However, I was encouraged in some respects by the speech of the hon. Member for Livingston. There are signs of good sense in the Opposition's motion. The hon. Member for Livingston did not refer to opting out and that is very encouraging. I imagine that he now accepts that there is no such thing as an opting-out hospital. He referred to self-governing trusts and that is a step in the right direction. He did not talk about hidden agendas, which was very good, and he did not talk about privatisation. He did not talk about money either.
    Mr. Robert N. Wareing: What is the hon. Gentleman talking about? [Laughter.]
    Mr. Hayes: I will give that one to the hon. Gentleman on points.
    There have been some exciting reforms which have been overwhelmingly—80 per cent.—accepted by the medical and caring professions. The NHS has been lurching from crisis to crisis since it began in the 1940s because of the antiquated and ridiculous methods of funding. This Government have the courage to change that.
    The hon. Member for Livingston referred to the efficiency trap. The efficiency trap will stop when money travels with the patient. The present problem is to help the health authorities with particular difficulties to balance their budgets before April. That is a problem that my right hon. and hon. Friends must address.

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    We were all delighted and reassured to hear that money will be given to hospitals such as my own in west Essex and Harlow for beds to be allocated to Gulf casualties. However, several health authorities, including my own, will not be able to balance their budgets in April. There is a great danger that some of them might do things that would be quite unconscionable and wrong and add to waiting lists to balance their budgets. That matter must be discussed.
    I am not asking for vast sums to be poured into the regions. Usually, a region messes up the money in the first place. The Government provide enormous resources—something for which the hon. Gentleman should have given my right hon. Friend the Secretary of State credit. The hon. Gentleman did not talk about the extra £3 billion. He did not talk about the real-terms increase of 5·3 per cent. across the board. That is a great deal of money. He will say that it is not enough, and so will some of my constituents. It will never be enough. It is a significant, sizeable chunk of taxpayers' money. He did not talk about the £1·9 billion—a 6 per cent. increase in the hospital budget.
    Mr. Dennis Turner: Will the hon. Gentleman give way?
    Mr. Hayes: I should love to give way, but the winding-up speeches are a minute away. I am terribly sorry, but it would not be fair to those who are to wind up the debate.
    There is much that I should like to say about my district, but I do not have time to do so. All that I am trying to put across to the House is that at least the Government have the courage to put forward policies which, in the long term, will make the future of the health service much more rosy. The Government will help with waiting lists. The hon. Member for Livingston and my right hon. Friend the Secretary of State must address a matter that my hon. Friend the Member for Macclesfield (Mr. Winterton) mentioned—the terrible problem of capital projects. For one reason or another, capital projects from land sales fell by about 50 per cent. in the past year. That will cause tremendous revenue problems, particularly in the Thames region and certain areas of the north. There is no reason whatever why the Treasury cannot appraise some of the schemes that have revenue consequences, and sort out some form of mortgage arrangement so that the taxpayer, the patient and the health authority do not lose out. That is a perfectly sensible financial arrangement, and it should be considered.
    The debate has been about money—money that will be spent on NUPE and COHSE—and has had nothing to do with patient care. It is rather sad that the hon. Member for Livingston said much about the producer and people being paid. He said nothing about more patients being treated with the money that he wants to give the health service.
    6.42 pm
    Ms. Harriet Harman: The two most striking aspects of the debate have been, first, the extent of the pain and suffering that people must undergo because they cannot get the treatment they need because of the hospital crisis and, secondly, the absolute refusal of the
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    Government and the new Secretary of State to acknowledge that pain and suffering. The message is clear—the Government are pretending that the hospital crisis does not exist, because they are not prepared to act to end the crisis on our hospitals. The pain, anxiety and suffering are only too real.
    For example, baby Sarah Goodings needs a kidney operation, yet, for the third time last week, her operation at Guy's hospital was cancelled. Without an operation, she must constantly be on antibiotics or risk permanent damage to her kidneys. Her doctor has been told that he is able to operate only one afternoon a week, to help Guy's hospital save money.
    Miss Emma Nicholson: Will the hon. Lady give way?
    Ms. Harman: I shall not give way, because I must be brief. The hon. Lady has not been present during the debate to which I am trying to respond; she has only just arrived.
    It is not only waiting lists that are being hit by the crisis. Even emergency patients are being hit by the crisis. Doctors are having to struggle to get even emergency patients into hospital, because ambulances are being diverted from hospital to hospital as more and more hospitals go on red alert.
    The Secretary of State talked about bad management in the health service. Does he know what health service managers are doing? They are not managing the health service; they are managing a crisis. They are sitting at their desks with two piles of letters in their out-trays. One pile contains standard letters to patients saying, "Don't come in for your operation. Don't come in for your long-awaited out-patient visit. The operation is cancelled. The out-patient clinic is cancelled because of lack of funds." The other pile contains letters to GPs saying, "Don't send in any patients; we are short of funds. Cancel your out-patients' clinics and reduce your operating lists."
    Tens of thousands of patients are receiving standard printed letters from district health authorities telling them that their out-patient appointments or their operations have been cancelled. Each time one of those letters arrives on the mat, there is more misery and disappointment for individuals and their families. It is extraordinary what fortitude and resilience some people show when waiting for their operations. Why should they have to suffer 24-hour pain and suffering? Why should there be stresses and strains on their families? Why should their jobs be threatened or put at risk when they need to be admitted to hospital to have an operation that could sort them out? Why should people have to lead their lives overshadowed by pain? It is because the Government are telling health authorities to balance their books so that they can operate like businesses.
    Such cuts are not only cruel but stupid and a false economy. The longer a patient waits for a hip replacement —my hon. Friend the Member for Wakefield (Mr. Hinchliffe) referred to just such a case—the bigger the operation is and the lower the chances of making a complete recovery. It does not make financial or medical sense to make patients wait. The longer a heart patient waits for an operation, the less likely he or she is to survive.
    According to an article in The Daily Telegraph, Mr. Tony Lees Jones, aged 59, has a leaky aortic valve. The results are fluid build-up in the lungs, breathlessness and increasing strain on an enlarged heart, and the longer the

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    condition continues without an operation the greater the risk of permanent damage. The longer someone has to wait, the lower the chances of success. We should be concerned about the outcome of health care, rather than simply act like accountants and look at the balance sheet in the short term.
    The Secretary of State talked about a new agenda for a health care strategy. He mentioned preventive health care. The menopause clinic in Dulwich hospital treats menopausal women who suffer from osteoporosis. It treats them with hormone replacement therapy and therefore reduces the chances of broken bones. That clinic has been cut. As a result, more women will suffer from osteoporosis, break their bones and end up in an already overcrowded hospital as emergency patients.
    What about the family planning service—an obvious preventive service? Family planning services are cut, and as a result there is an alarming rise in the number of unplanned teenage pregnancies. My hon. Friend the Member for Renfrew, West and Inverclyde (Mr. Graham) asked me to draw to the attention of the House the fact that, in his area, the school eye service—a preventive service if ever there was one—has been cut because of a shortage of money. Does the Secretary of State know that preventive services have been cut? Does he defend cuts in preventive services? Does he even know that cuts in preventive services are happening?
    It is crisis management in the national health service, and it is making the national health service less efficient. Health service managers cannot plan from year to year —they cannot even plan from month to month. In some districts, they cannot even plan from day to day, as they try to manage the crisis, and that makes the health service less efficient.
    The Secretary of State has said that there has been bad management, but does he know what his Department is asking managers to do? I have a copy of a circular from the district general manager of Bromley, David Milner, addressed to geriatricians about marketing geriatric services. It says that they must look to understanding and assessing the markets, determining pricing policies—that is what managers are doing—and understanding customers and their behaviour.
    Of course, by "customers" he does not mean geriatric patients but the purchasing authorities who will be trying to beat the price down. He talks about communication with customers and advertising and promotion policies. That is what managers in the National Health Service are doing. They are not trying to improve preventive services or to reduce waiting lists; they are trying to cut the deficits and commercialise the national health service.
    I am disappointed that the Secretary of State has been peddling the same old myth of his predecessor that somehow we agree with the Government about their attempts to dismantle the health service and to introduce an internal market. We do not agree with them. We do not want to see hospitals competing on cost. We do not want patients to be denied choice as they are sent to the hospital where the cheapest contract has been placed by the district health authority. We are against that. If he is an honest man, I hope that the Secretary of State will stop peddling that myth.
    Yes, as the Secretary of State said, there is a consensus between the Labour party and the public, and the Government are outside it. Despite the fact that there has been a change of face on the Government Front Bench, it
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    is a pity that there seems to have been no change of heart on the health service. People want to hear that the Government recognise the problem, that they accept their responsibility and that they are determined to solve the problem that is causing pain and suffering to so many people. We have not heard that from the Government.
    6.51 pm
    The Minister for Health (Mrs. Virginia Bottomley): We have heard again tonight the traditional rant of doom and gloom from the Labour party—scaremongering, lowering morale and uttering irrelevance. Before the main part of my reply I refer the Opposition to a recent New Statesman article which said that it is time to realise that
    "the real agenda for health policy … must be about making better, more informed decisions about what it is worth buying with the £30 billion we are already spending each year. So the absence of a really convincing means for moving resources out of their historical grooves amounts to a serious flaw in Labour's proposals … To continue with a system where service providers determine spending priorities is unacceptable. Until Labour can be more convincing about shifting the balance of power it will have failed to address the central challenge for health policy."
    We agree with the New Statesman.
    Many of my hon. Friends have ably and articulately identified the reforms that we are trying to make in the health service. We are proud of the record investment of resources; £30 billion next year is a remarkable achievement. But we do not think that money is the only way to success. Better health for the nation is the outcome which we want to achieve.
    My right hon. Friend the Secretary of State outlined his strategy for health, on which we should all agree. It is irrelevant and ridiculous of the Labour party to try to pursue old hares rather than co-operate and collaborate on the real challenges and opportunities which we face. The hon. Member for Wakefield (Mr. Hinchliffe) talked about cataracts. In 10 years, the number of cataract operations has increased from 40,000 to 92,000. There has been an increase in the number of hip replacement operations and in the number of coronary artery by-pass operations. Above all, we have seen an increase in the number of people who work for the health service. We have seen a dramatic increase in the number of hospital doctors and general practitioners, so that each GP's list has come down.
    Dame Elaine Kellett-Bowman: And nurses.
    Mrs. Bottomley: Yes. My hon. Friend, who always supports matron, will be pleased about the increase in nurses. Not only are there more but they are much better paid. Their basic pay has gone up by over 41 per cent. Hon. Members should compare that with what happened under the Labour Government when it fell by 5 per cent.
    We want to invest in our staff, not only through pay but through training and qualifications. That is why I was so pleased last week to announce an extra £71 million for Project 2000, which will make it possible to start 14 new schemes for nurses. The total of approved colleges of nursing will be 44, and half of our new nurses will have Project 2000 qualifications.
    Hon. Members should note not only the professional but the vocational qualifications that we are bringing in for people who work and serve in the health service. They should note, too, the progress we are making with junior hospital doctors. We want to be a good employer. We

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    want to serve patients, and we want to work with and for our staff. Bringing down the unacceptable, onerous rotas that generations of doctors had to live with under the Labour Government will be a major breakthrough. An extra 200 consultants and 50 more staff grade posts will help urgently to tackle that problem.
    We are investing in research because, in our great health service, research and development are fundamental. The recent appointment of Professor Michael Peckham as the director of research and development is a great step forward. Only this week, we announced an extra £5·8 million to increase postgraduate training and education. About £1·5 billion is spent each year on health research in the United Kingdom. We want to get the best benefit from that. We want to improve quality. That is why we are spending £30 million on clinical audit. That shows that we are not just looking for the turnover of beds. We want quality and better patient care. That is the way forward.
    We have to accept the problem of waiting lists, to which many of my hon. Friends referred. We are pleased that the number waiting for more than a year has been reduced by 7 per cent. this year. That is important. My right hon. Friend the Secretary of State announced a £35 million initiative, building on the work that John Yates has done and that we have been doing to tackle the problem of people who have to wait an unnacceptable length of time.
    There is an important distinction. Half the patients are admitted immediately. People are admitted on the basis of clinical priority. Of those who are taken off waiting lists, half wait five weeks. Some wait an unacceptable length of time. How pleased I am that Macclesfield is leading the way in coping with the problem. The chairman of Mersey region has shown an admirable example by deciding not to put up with long waiting lists. We fully endorse the move to deal with people who have to wait an unacceptable length of time.
    I want also to address the subject of beds. Listening to the hon. Member for Livingston (Mr. Cook), one would think that he was trying to be a shadow Minister of beds and warehousing, because of his preoccupation with beds in the health service. We have over 200,000 non-psychiatric beds. We have recently been censured by the Audit Commission for not moving to more day work. The introduction of endoscopes, laproscopes and all sorts of diagnostic techniques, which mean that we do not have to admit patients, has doubled bed occupancy in recent years. We have to do more. Certainly, at times, beds have closed because of financial pressure, but it is naive to think that that is the only reason for bed closures. Health authorities which have treated bed closure as an easy option when under financial pressure need to plan more carefully to balance their activity and their resources. That is the secret of the reforms that we are establishing in the health service, so that we can be rid of the perverse form of funding where, although a good hospital attracts more patients, the funding does not come with them. The reforms which we are seeking will ensure that resources are used to the best possible effect.
    Following my right hon. Friend the Secretary of State's comments about this being a sober occasion, several hon. Members referred to the plans for the NHS response to casualties from possible fighting in the Gulf. Very careful, detailed planning has been taking place. All the regions are
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    prepared to receive casualties. Casualties will go to each region in turn, as suggested by hon. Members. We are confident that all possible steps have been taken. Although our plans are not predictions, much care and thought have gone into them. I know that hon. Members welcomed the statement by my right hon. Friend that we will receive additional funding for that purpose.
    A great deal is achieved by our excellent health service. It is a service to be proud of. I did not realise that I could ever agree so strongly with my hon. Friend the Member for Macclesfield (Mr. Winterton): we have the best health service in the world, and we want to continue to improve and develop it. It is not in crisis. It is in change. This is a time of opportunity. We have a proud record, and we want to do more with the professionals and for the patients to develop, build and strengthen our national health service.
    Question put, That the original words stand part of the Question:—
    The House divided: Ayes 238, Noes 309.

    Division No. 38]

    [7.00 pm

    AYES

    Adams, Mrs. Irene (Paisley, N.)

    Dalyell, Tam

    Allen, Graham

    Darling, Alistair

    Alton, David

    Davies, Rt Hon Denzil (Llanelli)

    Anderson, Donald

    Davies, Ron (Caerphilly)

    Armstrong, Hilary

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

    Ashdown, Rt Hon Paddy

    Dewar, Donald

    Ashley, Rt Hon Jack

    Dixon, Don

    Ashton, Joe

    Dobson, Frank

    Barnes, Harry (Derbyshire NE)

    Doran, Frank

    Barnes, Mrs Rosie (Greenwich)

    Douglas, Dick

    Barron, Kevin

    Dunnachie, Jimmy

    Battle, John

    Dunwoody, Hon Mrs Gwyneth

    Beckett, Margaret

    Eadie, Alexander

    Beggs, Roy

    Eastham, Ken

    Beith, A. J.

    Evans, John (St Helens N)

    Bell, Stuart

    Ewing, Harry (Falkirk E)

    Bellotti, David

    Ewing, Mrs Margaret (Moray)

    Benn, Rt Hon Tony

    Fatchett, Derek

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

    Faulds, Andrew

    Benton, Joseph

    Fearn, Ronald

    Bermingham, Gerald

    Field, Frank (Birkenhead)

    Bidwell, Sydney

    Fisher, Mark

    Blair, Tony

    Flynn, Paul

    Blunkett, David

    Foot, Rt Hon Michael

    Boateng, Paul

    Forsythe, Clifford (Antrim S)

    Boyes, Roland

    Foster, Derek

    Bradley, Keith

    Foulkes, George

    Bray, Dr Jeremy

    Fraser, John

    Brown, Gordon (D'mline E)

    Fyfe, Maria

    Brown, Nicholas (Newcastle E)

    Galloway, George

    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

    Canavan, Dennis

    Graham, Thomas

    Carlile, Alex (Mont'g)

    Grant, Bernie (Tottenham)

    Cartwright, John

    Griffiths, Nigel (Edinburgh S)

    Clarke, Tom (Monklands W)

    Griffiths, Win (Bridgend)

    Clay, Bob

    Grocott, Bruce

    Clelland, David

    Hardy, Peter

    Clwyd, Mrs Ann

    Harman, Ms Harriet

    Cohen, Harry

    Hattersley, Rt Hon Roy

    Cook, Robin (Livingston)

    Heal, Mrs Sylvia

    Corbett, Robin

    Healey, Rt Hon Denis

    Corbyn, Jeremy

    Henderson, Doug

    Cousins, Jim

    Hinchliffe, David

    Cryer, Bob

    Hoey, Ms Kate (Vauxhall)

    Cummings, John

    Hogg, N. (C'nauld & Kilsyth)

    Cunliffe, Lawrence

    Home Robertson, John

    Cunningham, Dr John

    Hood, Jimmy

    905

    Howarth, George (Knowsley N)

    Owen, Rt Hon Dr David

    Howells, Geraint

    Paisley, Rev Ian

    Howells, Dr. Kim (Pontypridd)

    Parry, Robert

    Hoyle, Doug

    Patchett, Terry

    Hughes, John (Coventry NE)

    Pike, Peter L.

    Hughes, Robert (Aberdeen N)

    Powell, Ray (Ogmore)

    Hughes, Roy (Newport E)

    Prescott, John

    Hughes, Simon (Southwark)

    Primarolo, Dawn

    Illsley, Eric

    Quin, Ms Joyce

    Ingram, Adam

    Radice, Giles

    Janner, Greville

    Randall, Stuart

    Johnston, Sir Russell

    Redmond, Martin

    Jones, Barry (Alyn & Deeside)

    Rees, Rt Hon Merlyn

    Jones, leuan (Ynys Môn)

    Reid, Dr John

    Kaufman, Rt Hon Gerald

    Richardson, Jo

    Kennedy, Charles

    Robertson, George

    Kilfedder, James

    Rogers, Allan

    Kinnock, Rt Hon Neil

    Rooker, Jeff

    Kirkwood, Archy

    Rooney, Terence

    Lamond, James

    Ross, Ernie (Dundee W)

    Leighton, Ron

    Rowlands, Ted

    Lestor, Joan (Eccles)

    Ruddock, Joan

    Lewis, Terry

    Salmond, Alex

    Litherland, Robert

    Sedgemore, Brian

    Livingstone, Ken

    Sheerman, Barry

    Livsey, Richard

    Sheldon, Rt Hon Robert

    Lloyd, Tony (Stretford)

    Shore, Rt Hon Peter

    Lofthouse, Geoffrey

    Short, Clare

    Loyden, Eddie

    Skinner, Dennis

    McAllion, John

    Smith, Andrew (Oxford E)

    McAvoy, Thomas

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

    McCartney, Ian

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

    Macdonald, Calum A.

    Smith, J. P. (Vale of Glam)

    McFall, John

    Snape, Peter

    McKay, Allen (Barnsley West)

    Soley, Clive

    McKelvey, William

    Spearing, Nigel

    McLeish, Henry

    Steel, Rt Hon Sir David

    Maclennan, Robert

    Steinberg, Gerry

    McMaster, Gordon

    Stott, Roger

    McWilliam, John

    Strang, Gavin

    Madden, Max

    Straw, Jack

    Mahon, Mrs Alice

    Taylor, Mrs Ann (Dewsbury)

    Marek, Dr John

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

    Marshall, David (Shettleston)

    Taylor, Matthew (Truro)

    Marshall, Jim (Leicester S)

    Thomas, Dr Dafydd Elis

    Martin, Michael J. (Springburn)

    Thompson, Jack (Wansbeck)

    Martlew, Eric

    Turner, Dennis

    Maxton, John

    Vaz, Keith

    Meacher, Michael

    Wallace, James

    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)

    Moonie, Dr Lewis

    Welsh, Andrew (Angus E)

    Morgan, Rhodri

    Welsh, Michael (Doncaster N)

    Morley, Elliot

    Wigley, Dafydd

    Morris, Rt Hon A. (W'shawe)

    Williams, Rt Hon Alan

    Morris, Rt Hon J. (Aberavon)

    Williams, Alan W. (Carm'then)

    Mowlam, Marjorie

    Winnick, David

    Mullin, Chris

    Wise, Mrs Audrey

    Murphy, Paul

    Worthington, Tony

    Nellist, Dave

    Wray, Jimmy

    Oakes, Rt Hon Gordon

    Young, David (Bolton SE)

    O'Brien, William

    O'Hara, Edward

    Tellers for the Ayes:

    O'Neill, Martin

    Mr. Frank Haynes and

    Orme, Rt Hon Stanley

    Mr. Martyn Jones.

    NOES

    Adley, Robert

    Ashby, David

    Aitken, Jonathan

    Aspinwall, Jack

    Alexander, Richard

    Atkins, Robert

    Alison, Rt Hon Michael

    Baker, Rt Hon K. (Mole Valley)

    Allason, Rupert

    Baldry, Tony

    Amery, Rt Hon Julian

    Banks, Robert (Harrogate)

    Amess, David

    Batiste, Spencer

    Amos, Alan

    Beaumont-Dark, Anthony

    Arbuthnot, James

    Bellingham, Henry

    Arnold, Jacques (Gravesham)

    Bendall, Vivian

    Arnold, Sir Thomas

    Bennett, Nicholas (Pembroke)

    906

    Benyon, W.

    Garel-Jones, Tristan

    Bevan, David Gilroy

    Gill, Christopher

    Biffen, Rt Hon John

    Gilmour, Rt Hon Sir Ian

    Blackburn, Dr John G.

    Glyn, Dr Sir Alan

    Blaker, Rt Hon Sir Peter

    Goodhart, Sir Philip

    Body, Sir Richard

    Goodlad, Alastair

    Bonsor, Sir Nicholas

    Gorman, Mrs Teresa

    Boscawen, Hon Robert

    Grant, Sir Anthony (CambsSW)

    Boswell, Tim

    Greenway, Harry (Ealing N)

    Bottomley, Peter

    Greenway, John (Ryedale)

    Bottomley, Mrs Virginia

    Gregory, Conal

    Bowden, A (Brighton K'pto'n)

    Griffiths, Sir Eldon (Bury St E')

    Bowden, Gerald (Dulwich)

    Griffiths, Peter (Portsmouth N)

    Bowis, John

    Grist, Ian

    Boyson, Rt Hon Dr Sir Rhodes

    Ground, Patrick

    Braine, Rt Hon Sir Bernard

    Grylls, Michael

    Brandon-Bravo, Martin

    Gummer, Rt Hon John Selwyn

    Brazier, Julian

    Hague, William

    Bright, Graham

    Hamilton, Hon Archie (Epsom)

    Brooke, Rt Hon Peter

    Hamilton, Neil (Tatton)

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

    Hampson, Dr Keith

    Browne, John (Winchester)

    Hanley, Jeremy

    Bruce, Ian (Dorset South)

    Hannam, John

    Buchanan-Smith, Rt Hon Alick

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

    Buck, Sir Antony

    Hargreaves, Ken (Hyndburn)

    Budgen, Nicholas

    Harris, David

    Burns, Simon

    Haselhurst, Alan

    Burt, Alistair

    Hawkins, Christopher

    Butler, Chris

    Hayes, Jerry

    Butterfill, John

    Hayhoe, Rt Hon Sir Barney

    Carlisle, John, (Luton N)

    Hayward, Robert

    Carrington, Matthew

    Heathcoat-Amory, David

    Carttiss, Michael

    Heseltine, Rt Hon Michael

    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

    Hogg, Hon Douglas (Gr'th'm)

    Churchill, Mr

    Hordern, Sir Peter

    Clark, Rt Hon Alan (Plymouth)

    Howard, Rt Hon Michael

    Clark, Dr Michael (Rochford)

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

    Clark, Rt Hon Sir W. (Croydn S)

    Howarth, G. (Cannock & B'wd)

    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, Rt Hon David (Wirral W)

    Coombs, Simon (Swindon)

    Hunt, Sir John (Ravensbourne)

    Cope, Rt Hon John

    Irvine, Michael

    Cormack, Patrick

    Irving, Sir Charles

    Cran, James

    Jack, Michael

    Critchley, Julian

    Jackson, Robert

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

    Janman, Tim

    Davis, David (Boothferry)

    Jessel, Toby

    Day, Stephen

    Johnson Smith, Sir Geoffrey

    Devlin, Tim

    Jones, Gwilym (Cardiff N)

    Dicks, Terry

    Jones, Robert B (Herts W)

    Douglas-Hamilton, Lord James

    Jopling, Rt Hon Michael

    Dover, Den

    Kellett-Bowman, Dame Elaine

    Dunn, Bob

    Key, Robert

    Durant, Sir Tony

    King, Roger (B'ham N'thfield)

    Dykes, Hugh

    King, Rt Hon Tom (Bridgwater)

    Eggar, Tim

    Kirkhope, Timothy

    Emery, Sir Peter

    Knapman, Roger

    Evans, David (Welwyn Hatf'd)

    Knight, Greg (Derby North)

    Evennett, David

    Knight, Dame Jill (Edgbaston)

    Fallon, Michael

    Knowles, Michael

    Favell, Tony

    Knox, David

    Fenner, Dame Peggy

    Latham, Michael

    Field, Barry (Isle of Wight)

    Lawrence, Ivan

    Finsberg, Sir Geoffrey

    Lee, John (Pendle)

    Fishburn, John Dudley

    Lester, Jim (Broxtowe)

    Fookes, Dame Janet

    Lloyd, Sir Ian (Havant)

    Forman, Nigel

    Lloyd, Peter (Fareham)

    Forsyth, Michael (Stirling)

    Lord, Michael

    Forth, Eric

    McCrindle, Sir Robert

    Fowler, Rt Hon Sir Norman

    MacGregor, Rt Hon John

    Franks, Cecil

    MacKay, Andrew (E Berkshire)

    French, Douglas

    McLoughlin, Patrick

    Gale, Roger

    Madel, David

    Gardiner, Sir George

    Mans, Keith

    907

    Marlow, Tony

    Ridley, Rt Hon Nicholas

    Marshall, John (Hendon S)

    Ridsdale, Sir Julian

    Martin, David (Portsmouth S)

    Roberts, Sir Wyn (Conwy)

    Maude, Hon Francis

    Roe, Mrs Marion

    Maxwell-Hyslop, Robin

    Rossi, Sir Hugh

    Meyer, Sir Anthony

    Rost, Peter

    Miller, Sir Hal

    Rumbold, Rt Hon Mrs Angela

    Mills, Iain

    Ryder, Richard

    Miscampbell, Norman

    Sackville, Hon Tom

    Mitchell, Andrew (Gedling)

    Sayeed, Jonathan

    Mitchell, Sir David

    Shaw, David (Dover)

    Moate, Roger

    Shaw, Sir Giles (Pudsey)

    Monro, Sir Hector

    Shaw, Sir Michael (Scarb')

    Montgomery, Sir Fergus

    Shelton, Sir William

    Morrison, Sir Charles

    Shephard, Mrs G. (Norfolk SW)

    Morrison, Rt Hon Sir Peter

    Shepherd, Colin (Hereford)

    Moss, Malcolm

    Shepherd, Richard (Aldridge)

    Moynihan, Hon Colin

    Shersby, Michael

    Mudd, David

    Sims, Roger

    Neale, Sir Gerrard

    Smith, Sir Dudley (Warwick)

    Nelson, Anthony

    Smith, Tim (Beaconsfield)

    Neubert, Sir Michael

    Soames, Hon Nicholas

    Newton, Rt Hon Tony

    Speed, Keith

    Nicholls, Patrick

    Speller, Tony

    Nicholson, David (Taunton)

    Spicer, Sir Jim (Dorset W)

    Nicholson, Emma (Devon West)

    Spicer, Michael (S Worcs)

    Onslow, Rt Hon Cranley

    Squire, Robin

    Oppenheim, Phillip

    Stanbrook, Ivor

    Page, Richard

    Stanley, Rt Hon Sir John

    Paice, James

    Steen, Anthony

    Patnick, Irvine

    Stern, Michael

    Patten, Rt Hon Chris (Bath)

    Stevens, Lewis

    Patten, Rt Hon John

    Stewart, Allan (Eastwood)

    Pattie, Rt Hon Sir Geoffrey

    Stewart, Andy (Sherwood)

    Pawsey, James

    Stewart, Rt Hon Ian (Herts N)

    Peacock, Mrs Elizabeth

    Stokes, Sir John

    Porter, Barry (Wirral S)

    Sumberg, David

    Porter, David (Waveney)

    Summerson, Hugo

    Portillo, Michael

    Tapsell, Sir Peter

    Powell, William (Corby)

    Taylor, Ian (Esher)

    Price, Sir David

    Taylor, John M (Solihull)

    Raison, Rt Hon Sir Timothy

    Taylor, Teddy (S'end E)

    Redwood, John

    Temple-Morris, Peter

    Renton, Rt Hon Tim

    Thompson, D. (Calder Valley)

    Rhodes James, Robert

    Thompson, Patrick (Norwich N)

    Riddick, Graham

    Thorne, Neil

    908

    Thornton, Malcolm

    Watts, John

    Thurnham, Peter

    Wells, Bowen

    Townend, John (Bridlington)

    Wheeler, Sir John

    Townsend, Cyril D. (B'heath)

    Whitney, Ray

    Tracey, Richard

    Widdecombe, Ann

    Tredinnick, David

    Wiggin, Jerry

    Trippier, David

    Wilkinson, John

    Trotter, Neville

    Wilshire, David

    Twinn, Dr Ian

    Winterton, Mrs Ann

    Vaughan, Sir Gerard

    Winterton, Nicholas

    Viggers, Peter

    Wolfson, Mark

    Wakeham, Rt Hon John

    Woodcock, Dr. Mike

    Waldegrave, Rt Hon William

    Yeo, Tim

    Walker, Bill (T'side North)

    Young, Sir George (Acton)

    Walker, Rt Hon P. (W'cester)

    Younger, Rt Hon George

    Waller, Gary

    Walters, Sir Dennis

    Tellers for the Noes:

    Ward, John

    Mr. Nicholas Baker and

    Wardle, Charles (Bexhill)

    Mr. Timothy Wood.

    Warren. Kenneth

    Question accordingly negatived.
    Mr. Speaker forthwith declared the main Question, as amended, to be agreed to.
    Resolved,
    That this House welcomes the substantial increase under this Government in the number of patients treated by the National Health Service and in the availability of new and better forms of treatment; notes that this has been made possible by massive extra resources provided by the Government, combined with more effective use of those resources; welcomes the further record increase in resources planned for the National Health Service in 1991–92; congratulates those hospitals and other units which have sought and obtained approval to manage their own affairs as self-governing National Health Service trusts; looks forward to the setting up of the new general practitioner fundholding practices; and supports the Government's reforms which will continue to put patients first by further improving the quality, quantity and cost-effectiveness of health services.

Electricity Privatisation
Mr. Speaker: I must announce to the House that I have selected the amendment in the name of the Prime Minister.
7.14 pm
Mr. Frank Dobson: I beg to move,
That this House deplores the ill-advised privatisation of the electricity supply industry, which is already proving costly to the taxpayer, to electricity consumers and to the balance of trade, which will further set back efforts to protect the environment because of its promotion of energy sales instead of energy saving, and which will increase the country's dependence on fuel imports.
I also commend to the House that it rejects the Government's amendment, which appears to have been drafted by Dr. Pangloss himself, as it clearly suggests that "all is for the best in the best of possible worlds."
It reads rather like the City pages used in their reports about the Secretary of State for Energy in the months leading up to the privatisation of the distribution companies. Unfortunately, his fan club turned rather sour once it discovered what was really happening.
I have some quotes here which do not come from left-wing papers. Today's Financial Times states that the "privatisation of the generators is becoming farcical."
The Times described privatisation as "a recipe for chaos". In the days before the sale of the distribution companies the Financial Times stated:
"Even before dealings in the new electricity shares have started, the voice of aggrieved punters is being heard in the land."
That bastion of Tory party rectitude, The Daily Telegraph, stated:
"The biggest privatisation of all … has fallen at the last hurdle … If this is the Government's idea of popular capitalism, then it is the life and pensions salesmen who should be breaking out the champagne."
In case The Daily Telegraph has gone over the wall and turned into a collection of lefties, The Times in its genteel way described the right hon. Gentleman's view that the number of people buying electricity shares proved the popularity of privatisation as "genteel rot". It continued:
"This has nothing to do with people's capitalism, only with the way they price 'em."
I shall come to that in a few minutes. The Independent, which is certainly not of a left-wing persuasion, described the privatisation for most small investors as, not a huge success, but
"a huge waste of time."
I can continue quoting the allegedly more serious newspapers. The Daily Mail is a serious newspaper which has seldom been accused of supporting the Labour party. It stated that the situation
"reflects the yawning gulf between starry-eyed official talk about a share-owning democracy, and the grubbier reality in which the system is slanted to favour the fat cats while the small shareholder gets shoved aside."
If I had said that, I should have been denounced as an extremist. Indeed, I said it before the Daily Mail which was almost quoting me. It endorsed what I said. As everybody recognises, the Financial Times is the most serious newspaper on these matters. It described the companies as being sold on a "dodgy prospectus". That comes from all those people who used to form the principal part of the chorus of the right hon. Gentleman's fan club.
The electricity industry needs to be treated more seriously than it is being treated by the Government. It is
910
of crucial importance to everybody—to people in their homes, to transport, to industry and to commerce. In this country as in every other, it forms the basic sinews of a modern, technological society. I regret to say that it is treated like a plaything by the Government.
The industry's well-trained and dedicated staff are being treated like chattels. They open their newspapers one day to discover that they will be sold to one company, but the next day the papers contain a denial of such a plan. They do not know what they are doing or where they are going. Those people, who have dedicated their lives to securing a supply of electricity to their fellow citizens, are being treated like dirt.
Anyone who has seen the ludicrous Frank N. Stein advertisements or the more recent Star Trek advertisements with a touch of "Hi-de-Hi" will know that the industry has become the plaything of Tory ideologues and Tory advertisers. I say that deliberately because a leading member and supporter of the Tory party and a former parliamentary candidate who stood against my hon. Friend the Labour Chief Whip masterminded and created those wondrous advertisements. It is a Tory racket and anyone studying the advertisements will know that they have been produced and promoted by people who do not take the electricity industry seriously.
No one is looking after the consumer or the interests of the taxpayer and the environment. The Government want a quick sale and the City want a quick buck—they are both after as much as they can get.
Before the Government set about it, the electricity supply industry of England and Wales had net assets of £37,000 million—that is what the right hon. Member for Hertsmere (Mr. Parkinson) told the Tory conference in 1988 when he was Secretary of State for Energy. He also said that it was
"an industry on which all of us rely, and in whose successful future we all have an interest."
It is worth considering the basis on which the right hon. Gentleman arrived at the value of £37 billion—presuming, of course, that people try to tell the truth from the platform at the Tory conference. The distribution companies, plus the grid companies, were worth £16 billion according to the audited accounts signed by City auditors. The Government sold them for about £5 billion. If one adds in the £3 billion debt that those companies must repay to the Government, it means that the Government sold off £16 billion of public assets for half their proper price. We warned about that repeatedly and raised it in debate and during Question Time. I also wrote several letters to the present Secretary of State for Energy to say that he was selling the taxpayer short. He ignored what we said and denied our claims.
Last week I had to listen to the right hon. Gentleman on "Today" on Radio 4—I had to do so because the BBC did not want a countervailing view. He said that
"no one, but no one"
had said before the event that he had underpriced the shares. I understand that I am no one, but I am the no one who warned him. Several other of my hon. Friends also rank among the no persons who warned him.
The Secretary of State said all along that he would not accept the value from the audited accounts. Basically, his response was that the shares would be worth what they fetched on the open market. Judged by the right hon.

911
Gentleman's own criteria, on the first day of dealings those shares fetched 60 per cent. more than he asked for them. By his own standards he was wildly wrong.
Never mind about the right hon. Gentleman's criteria. We believe that we are right in believing that he lost £8 billion on that transaction. That taxpayers' money would have repaired all our ill-repaired schools and hospitals—to which reference was made in our previous debate. That money would pay for building 30,000 homes for our homeless. It would still leave enough to knock £100 off every poll tax bill. That is the type of money that the right hon. Gentleman blew by getting it wrong and underpricing the shares.
The right hon. Gentleman has wasted an enormous amount of taxpayers' money—our money. He is now proposing to sell National Power and PowerGen. According to the lies and leaks that have been peddled by his PR advisers, he is proposing to sell them for about £3 billion. Again, the audited accounts show that the assets which he is prepared to sell for £3 billion are worth £13 billion. If he does not like us referring to the audited accounts—as an accountant he obviously knows what value one can put on those accounts—we can use some other comparisons.
PowerGen has 18,000 MW of plant which is to be sold for £1·5 billion. Let us compare that with Sizewell B nuclear power station, which represents 1,200 MW of plant. It, too, will cost £1·5 billion. Obviously there is a new principle in operation: when the taxpayer is selling, £1·5 billion gets 18,000 MW; when the taxpayer is buying, £1·5 billion gets 1,200 MW. There is something wrong there—no one is interested in protecting the taxpayer.
The Secretary of State may say that nuclear power is rather expensive. Normally he says that it is not, but for these purposes he may deploy the opposite argument. I should be the last to deny how expensive nuclear power has been and will prove to be. However, even in my most fervent enmity towards nuclear power I would not claim that a discrepancy in values between 18,000 MW and 1,200 MW was quite correct. The right hon. Gentleman has a lot of talking to do to justify that.
Let us assume that one nuclear power station which no one needs and to which most sensible people are opposed is not a relevant consideration. Let us consider the plans for National Power. It says that, by the end of the century, it intends to acquire 4,000 MW of gas-fired generating plant. Estimates produced by Siemens, which has already been awarded some of the contracts for that plant and is one of Europe's major producers, show that one can obtain 4,000 MW of gas-fired plant for the magic figure of about £1·5 billion. So £1·5 billion gets us 4,000 MW, but the right hon. Gentleman plans to sell 18,000 MW of plant for the same amount. He is underselling again.
We have deliberately described the privatisation as "ill-advised" because the right hon. Gentleman employs more than £50 million worth of advisers who give him such poor advice on valuation. If people believe it is shocking that the right hon. Gentleman is getting 50 million quid worth of duff advice, the electricity industry companies are, between them, getting another £100 million quid worth of duff advice. They are buying it all from the City at the expense of the taxpayer and the electricity consumer.
Mr. Conal Gregory: I am listening with interest to the hon. Gentleman. Perhaps he can account for why 98 per cent. of employees in the electricity industry applied successfully for shares? In the most unlikely event of a Labour Government ever coming to power again, will the hon. Gentleman assure the House that, should they renationalise the industry, they will continue to pay dividends to those who have invested much of their savings in that great industry?
Mr. Dobson: I might be accused of making almost any remark in respect of electricity privatisation, but the last thing that I would say is that buying shares is a bad bargain—and if one is working in the industry, they are an even better bargain than for others. It is perfectly reasonable for people to buy shares that are being sold not just at a rock bottom price, but at a price that goes through the bottom and comes out the other side. I will explain shortly what a Labour Government will do after the next general election.
The city firms have been giving the Secretary of State lousy advice and bad value for money—and have guaranteed that he gets poor value for money for the taxpayer. The leading companies involved are Kleinwort Benson, James Capel, Herbert Smith, Peat Marwick, Price Waterhouse and Ernst and Young. I ask my right hon. and hon. Friends whether they can think of anything that those companies have in common besides having substantial amounts of money bunged at them by the Government for giving duff advice.
Mr. Ronnie Campbell: They are all giving money to the Tories.
Mr. Dobson: That may be true, but they also have in common the fact that they were all criticised by Department of Trade and Industry inspectors for falling down on the job in respect of their involvement in other companies. The DTI report on Ramor Investments criticised Price Waterhouse, and that on Orbit Holdings criticised Peat Marwick. Ernst and Young came under criticism in the DTI report on Orbit Holdings.
Perhaps the most famous DTI report of recent times concerned the scandal involving Harrods and the House of Fraser. The company which came in for criticism in that case was Kleinwort Benson—the Government's leading adviser for the electricity privatisation. The report makes it clear that Kleinwort fell down on the job and failed to check the assets of the Fayed brothers, and asserted wrongly that their assets were worth several billion dollars. So Kleinwort certainly were not too good at valuation in that instance. The firm made other statements about the background of the Fayeds that persuaded people to attach credence to statements about them, having failed to undertake the necessary investigations—so that what Kleinwort asserted to be true proved to be false. Not only that, but Kleinwort persuaded its clients to retain public relations advisers to peddle the false information that the Fayeds and Kleinwort were producing.
Herbert Smith, the Government's legal adviser, was also criticised by the DTI in connection with the House of Fraser. The inspectors described both companies as complementing each other's efforts in an unco-ordinated way. They were surprised that
"Kleinwort and Herbert Smith appeared able to accept as credible the value of at least $1 billion which the Fayeds attributed to their assets."

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Whatever Kleinwort and Herbert Smith were good at, clearly they were not too good at valuing and checking assets.
The Government's lead broker, James Capel, features in the DTI's report on Consolidated Gold Fields, which states:
"We consider that Capels hindered the Company's attempts to obtain information about the interest in its shares".
The report describes an important letter sent by Capel as inadequate.
The Government have just announced that Smith New Court has been called in to add a bit of weight and professionalism to the sale of the generating companies because such a mess was made of the distribution companies. Lo and behold, on the page facing the DTI's remarks about Consolidated Gold Fields, there is a comment—I freely confess that I discovered it only by accident—about the very people who have been brought in to add more weight and professionalism to the Secretary of State's activities:
"We consider that Smith New Court seriously hindered the Company's attempt to pursue its right under section 212 with a view to identifying who had been buying a substantial number of its shares."
My hon. Friend the Member for Cardiff, West (Mr. Morgan) will shortly tell the House who was buying and selling those shares, and who the hell Smith New Court was working for in the sale of South Wales Electricity shares on the first day of their issue, because that matter still needs to be cleared up.
The DTI inspectors also said of Smith New Court:
"Moreover we consider that Smith New Court did not understand their responsibilities under the Act, and that they did not make any serious attempt to seek proper legal advice."
That is the quality of advisers that the Secretary of State is employing these days. Are they the kind of people who should be on the Government's payroll? One can understand why the Secretary of State got things so wrong. One can understand those firms liking such lucrative contracts, but the taxpayers will want to know whether they are getting anything in return. The Secretary of State for Energy, the Secretary of State for Trade and Industry and the Chancellor of the Exchequer were all involved in making the appointments, but I still have not been told whether those advisers were vetted beforehand. If their records were checked, one wonders what those companies have to do to be struck off. If such activities do not qualify them for exclusion from the Government's list, I do not know what would.
That was not the only City racket involved in the sale of the generating companies. The Secretary of State paid out no less than £49 million of taxpayers' money in underwriters' fees. He agreed to underwrite the only risk, which was that the Gulf crisis might smash the market in the middle of the flotation. The Secretary of State paid £49 million to City companies to underwrite assets being sold at half their proper value—and everyone in the City knew that. That leads to the riddle of when is an underwriter not an underwriter. These days, and when the Government are involved, the answer is, when they have to take a risk. If the underwriters have to take a risk, the Government underwrite the underwriters. That is a charmed circle beyond belief, but neither you, Mr. Deputy Speaker, nor I can break into it. We are not ancient, established City firms. We are not part of that charmed circle whose members regularly get money for old rope. Given all the
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livery companies that exist, such as the Goldsmiths Company and the Cordwainers Company, perhaps there should be a Money-For-Old-Rope Makers company, whose motto could be, "All that is safely gathered in."
It is even more of a closed and charmed circle than some people realise. The lead underwriters had a hand in determining the value of the generating companies' shares. It is a safe bet that they did not advise the Government to make them too pricey. If the advisers acted rationally—and anyone who gets paid £49 million for doing nothing must be fairly rational—they probably advised the Secretary of State to keep the price of the shares pretty low, so that there would be no risk. The advisers kept the price low, and then told the Secretary of State, "You had better protect us against any risk over the Gulf." The Secretary of State removed the risk, kept down the price of the shares, and then bunged the underwriters £49 million.
Since then he has apparently learnt his lesson. His friends have been telling all the City pages, "We have learnt our lesson and we probably will not give them any underwriting fees for the generating companies". It is a bit late because in some of the City pages they are saying that the Secretary of State need not have given them such fees for the distributing companies; and by God he need not have done because their shares shot up by 60 per cent. in the first hour of trading.
I shall leave the squalor of all that money and return to the subject of what the Government said that they were about. The industry was sold using the slogan of the right hon. Member for Hertsmere—"Power to the people." That is not usually a prominent slogan at Conservative party conferences—at least not the British Conservative party. However, what the right hon. Gentleman did not mention, even at the Conservative party conference, was that a considerable number—15 per cent.—of the people in question would be in Wall street and Tokyo, because that is where 15 per cent. of the distribution companies' shares have gone. We are told that the Secretary of State is so scared that he will not be able to sell the generating companies that he is contemplating an even bigger proportion being sold abroad.
To be fair to the right hon. Member for Hertsmere, when he set out on the grand project of selling the electricity industry it may not have been his intention to sell it to foreigners. Little else that he said he intended to do at the outset has come about. Since he came up with the original structure, the Government have withdrawn the Magnox reactors from the sale. A little later the present Secretary of State withdrew the advanced gas-cooled reactors from the sale, which forced the Government to set up two nuclear electric companies, one in England and Wales and one in Scotland, to keep the nuclear part of the industry in public ownership.
Perhaps I should explain to some of my colleagues that the right hon. Member for Hertsmere had obviously thought of some of the problems connected with nuclear power because, when addressing a meeting of the Adam Smith Institute—one has to be a bit anti-Government ownership to address the Adam Smith Institute—he said:
"It is not in the gift of this or any Government to attempt to legislate the proportion of nuclear well into the next century."
He did not do too badly because he set up an arrangement whereby, by law, when any nuclear power station is running, its output will be used, even though stations capable of producing electricity at half the cost will stand

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idle. He introduced a nuclear levy to pay for that. Like the state in Marxist theory, the nuclear levy was supposed to wither away and, like the state in Marxist practice, the levy has increased. Contrary to all the promises, the nuclear levy is increasing this year and has not been reduced—as the Secretary of State will confirm, it has gone up again.
So the deepest wishes of the right, hon. Member for Hertsmere were not fulfilled. When he spoke to the Adam Smith Institute he promised an end to Government interference in the electricity industry. Grecian 2000's answer to Citizen Smith, "Power to the people" Hertsmere said:
"We are devolving to Lord Marshall, to Bob Malpas … accountability for the industry. And we are devolving to them the power to run their businesses without … interference."
I do not know whether you have ever been interfered with by the right hon. Member for Hertsmere, Mr. Deputy Speaker, but if as a result of his interference one ceases to be the chairman of a major industry, or if one ceases to be the chairman as a result of the acquiescence of his successor, as was the case with Bob Malpas, I think one would interpret it as interference. When they lose their jobs, most people regard it as interference of the worst type. Lord Marshall and Bob Malpas have gone.
As a result of all this ideological lunacy from the Government the electricity industry is in a mess. I do not usually claim many things for myself, but earlier this summer, as a result of leaks to me, we discovered that the Secretary of State was proposing to sell PowerGen by private treaty to Hanson Trust. I believe that I came to this Dispatch Box to give the reason why the Secretary of State had to abandon that. I and several of my colleagues pointed out that if Hanson Trust bought PowerGen it would cost the taxpayer in excess of £700 million in tax savings for Hanson Trust. The right hon. Gentleman dismissed our arguments. However, when the proposed sale to Hanson Trust was eventually abandoned, at least one of the Government leakers—perhaps it was not in the Department of Energy but one of the then Chancellor of the Exchequer's leakers—made it clear that the sale had been abandoned because the Chancellor, who is now the Prime Minister, had said, "We are not going to let you do it. If you sell the industry for that small amount we want it to be clear profit and we will not see the profit wiped out like that."
There is another aspect of that matter. Smith New Court were involved in that attempted sale to Hanson because Richardson of Smith New Court was acting as the go-between. Will the Secretary of State tell us whether it is because he wants Richardson to act as a go-between in some trade sales for parts of the generating companies that he has been invited back?
People in the industry and running it do not know whether they are coming or going. Today it is not clear whether the Secretary of State will sell all of National Power and PowerGen. The latest information from the Secretary of State on television and radio last week was that he was going to sell 60 per cent. and retain 40 per cent. of the shares for two years, until after the next general election. However, within one day the City pages were beset by people ringing up to say that they might sell some, or all, of the 40 per cent. and might not wait for two years to do so.
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Tonight, the Secretary of State has the opportunity to tell us whether he is sticking by what he said last week or whether there will be a further revision of the many revisions that have taken place. Will the Secretary of State lurch into yet another expedient in his efforts to get rid of this industry? Also he owes it to the people of Scotland, and those who work for the Scottish companies, to tell us what is intended for them. Are they to be disposed of with a 100 per cent. sale, or will some of their assets be retained until after the next general election?
The Government amendment refers to successful restructuring of the industry and its virtual passage into private ownership. As the nuclear part of the industry has not been sold, and if he does not sell 40 per cent. of the generating companies, when the next Labour Government bring the company back into public ownership, 52 per cent. of the assets of the industry will be back in public ownership. After all the farcical nonsense to which the people in the industry have been subjected, the right hon. Gentleman and his predecessor will have managed to get rid of 48 per cent. of the industry's assets to their friends in the private sector.
I now come to the issue mentioned by the hon. Member for York (Mr. Gregory). On being told that the Government might retain 40 per cent.—
Dr. Michael Clark: The hon. Gentleman said that the Labour Government would bring the grid company back into national ownership. Can we deduce from that that the Labour Government will not be bringing the generating and distribution companies back into national ownership?
Mr. Dobson: We have made it as clear as it is possible to make it—by writing it down, by printing it, by holding press conferences, by issuing documents about it, by talking on television and radio about it, and by talking about it here—that all along our strategic intention has been to bring the grid company back into public ownership. I know that this House is a sort of secret society, but it is going too far when an hon. Member who was present the last time we discussed this appears to have forgotten what our policy is.
We believe it crucial to do that for the sake of everyone in the country and for its industrial future, and we shall do it. It will remain our primary objective. What we shall do about the rest of the industry—about the 40 per cent. shares, if there are 40 per cent. shares—we shall determine when we are in government and when we know what the position is. Our basic objective all along has been the grid company back in public ownership. We shall restore the obligation of the electricity industry to supply people with electricity, and we shall place that obligation on the grid company. We shall shift the emphasis from energy sales to energy saving, and place that obligation on all parts of the industry. Likewise, we shall place all the following obligations on all parts of the industry: we shall protect the environment; we shall husband our indigenous fuel resources; we shall seek to protect the balance of trade; and we shall seek to reduce our country's growing dependence on imported fuels.
We believe that these are sound policies and we shall impose all those obligations on the industry—and bring the grid company back into public ownership to further our policies. How the industry will be organised and whether we shall sell the part that the Government have

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not sold will be decided when we come to office. In short, we shall ensure that this industry pursues the interests of the consumers and ceases to he the ridiculous plaything of a lot of yuppies, rogues and grafters in the City.
7.51 pm
The Secretary of State for Energy (Mr. John Wakeham): I beg to move, to leave out from "House" to the end of the Question, and to add instead thereof,
"congratulates the Government on the restructuring of the electricity supply industry in England and Wales, the highly successful flotation of the regional electricity companies and its plans for floating National Power and PowerGen; and welcomes the many benefits this privatisation will bring to consumers, employees and the taxpayer."
I find it somewhat surprising that the Opposition should choose to hold this debate at this time The persistently colourful if consistently unfounded rhetoric about write-offs, sell-offs and rip-offs that we heard today from the hon. Member for Holborn and St. Pancras (Mr. Dobson) has become an increasingly familiar refrain in recent months—and this occasion, I suppose, would not be complete without the sound of him barking up all the wrong trees again.
So let me return the attention of the House to what this privatisation is all about. From the outset, the aim of the sale has been to introduce competition to the industry, to maximise benefits for customers and for the taxpayer and to give the industry's employees a stake in their own businesses. All these objectives have now been demon-strably achieved.
First, we have a market in electricity in England and Wales where none existed before. That represents a fundamental change. The generators bidding to put power on the grid now have to look not only at their own costs but at the prices charged by their competitors. That should increasingly benefit all customers in the long run, and from the earliest stages of the vesting of the new industry structure there was already plenty of evidence of strong competition in supply to industrial customers with more than one megawatt of demand.
Secondly, the legislation, as we promised, has given significant new rights and protections to customers. The Electricity Act 1989 provides for an enhanced right of supply for customers and for the standards of service to be set and monitored. It also creates the office of the Director General of Electricity Supply as a powerful guardian of the customers' interests.
It is worth pointing out too that the non-fossil fuel obligation has also had the effect of giving an unprecedented boost to a large number of new and renewable generating projects in this country. Under the Renewables Order 1990 the 12 regional electricity companies have contracted with 75 projects with installed capacity of 170 MW. More than two-thirds of this capacity is entirely new and it will nearly double the amount of renewable capacity in England and Wales.
Thirdly, the first stage of the privatisation, the sale of the RECs, has now been accomplished and has proved a major success for the taxpayer. We believe that it has been the most successful privatisation yet—the latest success in more than a decade of privatisation successes under this Government.
Mr. Malcolm Bruce: Would it not be appropriate for the Secretary of State to explain in some detail what criteria he used to determine success? Was it
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the mark-up that occurred immediately after flotation and hence the under-pricing? Was it the take-up; or was it the degree of risk taken by the City? On all counts the policy has failed.
Mr. Wakeham: If the hon. Gentleman will contain himself, I shall do my best to explain, later in my speech, why I believe privatisation has been a great success. The Opposition long claimed that it could not be done and that the sale would have to be abandoned—[HON. MEMBERS: "No."] The predecessor of the hon. Member for Holborn and St. Pancras specifically said that the sale would have to be abandoned. I would never accuse the hon. Member for Holborn and St. Pancras of dealing seriously with the privatisation of the industry, and I dismiss his remarks, but his predecessor made it abundantly clear that he thought that the sale would have to be abandoned.
Mr. Dobson: Did not my hon. Friend the Member for Sedgefield (Mr. Blair) say that the Government would not be able to privatise the nuclear part of the electricity industry, and was he not proved absolutely right?
Mr. Wakeham: I am sure that the hon. Gentleman did say something like that, but his predecessor made it absolutely clear that the privatisation would have to be abandoned.
In the event, the Opposition could not have been proved more wrong. The overwhelming response to the offer showed that a huge number of people remain ready to back the Government's privatisation programme. Some City experts predicted that we would be unable to raise more than £4 billion from the offer. In the event, we are raising more than £5 billion from the sale of the shares and we shall raise almost £3 billion of further proceeds from the injection of debt, arriving at a total return to the tax payer of nearly £8 billion—
Ms. Marjorie Mowlam: What about the original price of £20 billion quoted by the Government?
Mr. Wakeham: I shall come to that.
In the process we have also attracted more investors than ever before. More than 5 million applicants made over 12 million applications, and the regional electricity companies tell me that the majority of the investors have stayed on their registers. Contrary to the Opposition's argument, that is not because shareholders do not believe that their allocation is worth selling. One quarter of all applications were for only 100 shares, and 10 million of the 12·75 million applications were for 500 shares or less. So, with the shares having been allocated to about three quarters of all who applied and with virtually all REC customers receiving an allocation, we believe that we have satisfied the majority of applicants.
There has been a massive response from the industry's own employees. Almost 98 per cent. of eligible employees took part in the regional electricity companies' offers. In total, nearly 84,000 employees and almost 21,000 pensioners applied for and received shares under the various employee and pensioner offers for the 12 regional electricity companies. Between them, they were allocated some 160 million shares. Collectively, they now own over 7 per cent. of their own companies.
In all these important respects the privatisation has been totally vindicated but, characteristically, none of this has prevented the Opposition from trying to have it both ways. First, they said that it could not be done. Now they

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claim, with an Alice-in-Wonderland logic, that a public offer which was 10 times oversubscribed was a failure. That, presumably, can be only on the basis of comparing the proceeds of the sale with the replacement cost of the companies' assets. But that is an utterly meaningless exercise. Companies are sold on their expected earnings and dividends, not on the theoretical replacement cost of assets. If the assets had been sold at that price, the hon. Gentleman would have had to ask himself what price electricity would have to reach if a reasonable return were to be made on those very inflated figures.
Mr. Dobson: Does not the Secretary of State accept that if the Government were trying to protect the consumer and taxpayer there was a fundamental contradiction in their plans? He says that if the industry had been sold at its proper value, private shareholders would have held the consumers to ransom.
Mr. Wakeham: No, the hon. Gentleman has misunderstood me. The hon. Gentleman would have wished the industry to be sold at the ridiculous valuation that he put upon it. That would have been the current cost accounting valuation. That is not a value that the business would fetch in the market place. In that case, his proposition as to what to charge for electricity would have been irreconcilable. Using our basis, we were able to strike a reasonable balance between the price of electricity and a return for shareholders. The price of the business was commensurate with the profits and dividends that they were earning.
In all the hon. Gentleman's extravagant speeches he has said that he believes that the businesses should be valued on the current cost accounting basis, but very few people agree with him. According to the hon. Gentleman's terminology, the issue was a give-away, due to the subsequent rise in price, with a stock market under the shadow of war. The hon. Gentleman's remarks have not improved his employment prospects. If, however, his foresight matches his hindsight, he should have a great future ahead of him in the City, though I would advise prospective employers against rushing to him at once.
Mr. Dobson: Occasionally, like other people, I indulge in flights of fancy. However, on every occasion that we have questioned the valuation of this industry's assets, we have quoted from the audited accounts of the companies, signed by allegedly reputable City auditors. If the right hon. Gentleman believes that current cost accounting valuations are irrelevant at this point, why was it that when the assets of the national grid were calculated for the purpose of dividing them between the distribution companies the current cost net assets were divided up? When that division was made, was not each distribution company's share decided on the basis of each distribution company's current net assets, using the current cost accounting convention? If the money was divided up and allocated between the distribution companies on that basis, why is it irrelevant for this sale?
Mr. Wakeham: It is perfectly reasonable to use the current cost accounting valuation method in order to compare like with like. A current cost accounting valuation is a perfectly proper accountancy basis, but that is not the basis upon which businesses can be sold. They
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are sold on the basis of a return on investment. If one seeks to obtain current cost accounting valuations of an investment, one is bound to end up with the industry remaining in the hands of the state. The hon. Gentleman obviously wants the industry to remain in the hands of the state. I understand, therefore, why he wants the current cost accounting valuation formula to be employed. On that basis it is impossible to privatise the industry.
The hon. Gentleman referred to the value of the assets in current cost accounting terms, and what he said was correct, but the point to be made about the premium is simple. The value of the stock market moved significantly between the day we settled the price and the price at which dealing started. The nearest comparison with electricity shares must be the water company shares. We find that 34p of the premium was due entirely to the movement in the stock market at that time. The market moved during a period of nearly three weeks. When this transaction took place there was a degree of uncertainty about the war in the Gulf and the market moved. The decision that we made at the time was right. [Interruption.] If the hon. Member for Holborn and St. Pancras ceased to laugh for a minute and listened to what I am saying, he would learn something. If he does not intend to do so, I might just as well continue with my speech. At the time that we made the decision, every City commentator said that we had priced the issue on an extremely tight basis. Many said that the yield should be around 9 per cent. It was 8·4 per cent. It is easy to be wise after the event, but we priced it on what was a proper and fair basis at that time. Then the market moved. That accounted for the premium.
The hon. Member for Holborn and St. Pancras referred to the Government's decision to sell only 60 per cent. of the shares in National Power and PowerGen as a mess-up. I suppose that that somewhat milder term than the ones he has used on previous occasions must be welcomed. However, that does not make his assertion any the less wrong. The generators have markedly different characteristics and a different position in the market from the 12 regional electricity companies. In those circumstances, we are selling only 60 per cent. now, for precisely the reason that the hon. Gentleman was arguing for—to maximise the return to the taxpayer. Surely he should welcome that—[Interruption.] The hon. Member for Holborn and St. Pancras is too quick to comment and too slow to listen. The point of my remark was to show the radically different nature of the generating companies from the regional electricity companies. What we did for the regional electricity companies was right for them and what we are doing for the generators is right for them. We are correct in both judgments.—[Interruption.] The hon. Member for Cardiff, West (Mr. Morgan) and the hon. Member for Holborn and St. Pancras are wrong on both instances and are at least consistent. Except for the hon. Member for Cardiff, West, everybody learns something, but that does not make what we have done wrong. They are different cases and have to be dealt with differently. We believe that we are acting in the best way to maximise the return.
Let me make clear our position on retaining the remaining 40 per cent. of National Power and PowerGen. For those who, unlike the hon. Member for Holborn and St. Pancras, did not hear me on the radio the other morning I shall repeat our views. First, the Government will commit themselves to retain those shares until 31 March 1993—three years from vesting date. That will give the senior managers of the company, many of whom

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worked with distinction for the CEGB, a substantial period of time in which to bring about any necessary changes. Until that date I shall neither float the shares nor be prepared to entertain offers from trade buyers.
Secondly, I should make it clear that I am not committing the Government to dispose of their holdings on or immediately after I April 1993. They may sell the shares in 1993, 1994, 1995 or at a later date. That will properly depend upon market conditions and opportunities. The Government will consult the directors of the company before making any decision on a sale.
Thirdly, all other things being equal, the Government would prefer to sell the shares in a way that contributes to wider share ownership. However, I have a duty to the taxpayer to maximise the proceeds from the sale of these important national assets. To that end I must have the option of selling the shares to one or more trade buyers. It is not possible to say what will happen in two years' time or later and I therefore propose to make it clear in the prospectus that some time after two years I have the option of selling the shares in either company through a flotation, a trade sale to one or more companies or through a private placement. The Labour party also threatened that if it were to win power at the next election, it would use the Government's 40 per cent. retained stake in the industry as a means of renationalising the national grid.
Mr. Dobson: We have not said that. All we said is that we would use the powers available to a major minority shareholder with 40 per cent. All the other things will have to be considered once we get into office.
Mr. Wakeham: Perhaps the hon. Gentleman suffers from leaks as well, but I am happy to accept what he says. Of course, the renationalising of the national grid is clear. That is a matter for the Labour party, but I scarcely think that further threats of renationalisation are likely to appeal to the shareholders in the industry or to boost Labour's electoral prospects.
Mr. Peter Hardy: The Minister emphasised the point that workers in the industry would own 7 per cent. of the distribution companies. Does he anticipate that any different position will apply for the generating companies and does he accept that it would be wrong and anomalous for a different arrangement to apply within different parts of the electricity supply industry? Will he assure the House that he recognises that, although employees in the industry may own 7 per cent. of the equity of the distribution companies, that is probably only a third and certainly less than half the shareholding of people who are not resident in this country and that many in the industry and outside it find that deplorable?
Mr. Wakeham: We want to encourage employees in the generating companies to take up their entitlement of employee shares. It is not absolutely possible for the arrangements for employees in the generating business to be on exactly the same basis because, for example, we have some obligations to the employees of Nuclear Electric who were at one time to be employees of National Power. As far as I know—I shall check the details—the terms are the same or comparable, but if I am wrong I shall write to the hon. Gentleman.
On the question of privatisation generally, Opposition Members face an awkward political dilemma.
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Privatisation was pioneered in this country and has now been taken up by countries all over the world. It is manifestly popular and successful. However, it has not prevented the reluctant converts to the market economy sitting on the Opposition Benches from voting against every privatisation measure that we have brought before the House. The Opposition voted against the privatisation of British Telecom, British Gas, British Airways, the British Airports Authority, water and now electricity. At least that has the virtue of consistency, which seems to have been a theme of this debate, but it does not reflect —
Mr. Alexander Eadie: I get the feeling that the right hon. Gentleman is reaching the end of his remarks. I hope that he will comment on the direct question posed by my hon. Friend the Member for Holborn and St. Pancras (Mr. Dobson) about what will happen to the electricity industry in Scotland.
Mr. Wakeham: I do not have direct responsibility for the industry in Scotland. In all privatisations it is not the practice to announce the percentage of shares to be sold until a relatively short time before the privatisation. Therefore, I would not have expected my right hon. Friend the Secretary of State for Scotland to have yet stated his position on that. The reasons I have used as the basis for my decision to sell only 60 per cent. of the generating companies are not the same as those applying in Scotland because Scottish companies are integrated and are not generating companies operating in the same way in a new market. That was at the heart of the reason why I thought it right for the taxpayer to retain 40 per cent. of the shares. I cannot give a direct answer, but I can say that, as far as I know, no decision has yet been made—I would not have expected one—and the arguments used for the decision in England and Wales are not the same as those applying in Scotland.
I was referring to the Labour party's dilemma— their opposition to privatisation in practice and their acceptance of market forces to a greater extent than in the past.
Mr. Harry Barnes: Was it not the case that market forces were seriously interfered with at the time of the share flotation because there was an electricity supply crisis caused by the severe weather conditions that especially hit the east midlands? The Minister did not make a statement about that severe crisis, no offer of Government help was made and there was no declaration of an emergency because it would have seriously affected the market and the sale of East Midlands electricity shares. Some hon. Members from the east midlands have not been able to have the meeting with the Minister that he promised in order to discuss these matters.
Mr. Wakeham: The hon. Gentleman can have a meeting with me if he wants, but he should recall that there was a debate in the House which he could not attend—
Mr. Barnes: I did; it was my debate.
Mr. Wakeham: Let me finish. There was a debate, and it was perfectly appropriate for my hon. Friend the Under-Secretary to give a full account of the position.
In the western world, and increasingly in the communist world, the argument about whether market

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mechanisms represent the most efficient way of allocating resources and meeting human needs appears to have been decisively won. I thought that we had all become believers in the market economy, but Opposition Members still hesitate about the creation of a market in electricity and a sale which produces a clear and welcome separation between the objects of regulation and those of ownership.
I invite the House to reject the Opposition's motion. They have demonstrated confusion, both in principle and practice. By contrast, we have taken a state monopoly and set it on the path to full competition. We have ensured a better deal for consumers, we have achieved an excellent return for the taxpayer, and we have given more than 80,000 employees a stake in the future of their industry. I commend the amendment to the House.
8.21 pm
Mr. John McAllion: We heard much from the Secretary of State about the successful sale of the distribution companies in England and Wales. I think that he said that the sale had been totally vindicated, that it had been a major success and that it was the latest and biggest in the line of privatisation successes for the Government.
There was never any danger of the sale not being successfully concluded by the Government. If the price is pitched low enough, buyers will always be prepared to make a quick profit, which is exactly what happened with the sale of the distribution companies. The substantial premiums enjoyed in post-privatisation trading proved that the sale was nothing less than a wanton giveaway at the taxpayers' expense, by a Government who are now so profligate with public assets that they do not realise when they have been ripped off by their own supporters. We should be grateful that, unlike British Aerospace, the Government did not pay someone to take the distribution companies off their hands.
My hon. Friend the Member for Holborn and St. Pancras (Mr. Dobson) raised the issue of whether the Scottish companies will be given the same treatment that National Power and PowerGen received in the past week. I know that the Secretary of State said that he was not directly responsible, but a Scottish Office Minister is on the Front Bench who should be able to pass information to the Minister who will reply to the debate.
I have three specific questions to which not only I but the people of Scotland have a right to hear an answer. First, will less than 100 per cent. of the equity in the two Scottish power companies be sold in the first instance? Secondly, will shares be offered in a linked package that can be split only when dealings commence? Will Scottish Hydro-Electric and Scottish Power be sold together in one flotation? Critically, will the Government consider a minority trade buyer for the remaining blocks at any point after 1993?
The answers to those questions are vital, not only for the Scottish electric supply industry but the whole Scottish economy, which is so tightly integrated that, if the Government intervene or interfere with power generation, they interfere with the prospects for the Scottish coal industry, they call into question the viability of Scotland's railway network and they affect the prospects of the
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Scottish power engineering industry. The whole Scottish economy can be affected by the outcome of those decisions.
I can well understand why the Government are anxious about the flotation prospects of the power companies. Their huge debt burdens and capital investment requirements could make prospective buyers nervous about the prospect of investing in them. I understand why the Government are offering only 60 per cent. of the equity in the first instance: they fear an almighty flop if they do otherwise and that the market will not respond to a 100 per cent. flotation.
I understand, too, why the Government are considering allowing a trade buyer to take up the remaining blocks in two or three years' time: they know not only that any such trade buyer would thereby acquire a block of shares that would serve as a tremendous platform for the takeover of the company, but that stock exchange rules would require anyone with that number of shares to make a bid for the whole company.
The Government well understand that such a scenario will foster hopes among potential small investors of windfall takeover profits in two or three years' time, when they can sell their shares to the person who bids for the entire company. By holding out such a scenario, the Government hope to make a success of the sale of the power companies.
If the answers to my questions are, yes, less than 100 per cent. equity will be put on sale in the summer, yes, the companies will be sold in a linked package and, yes, trade buyers will be offered the remaining blocks in the future, a series of other questions arise. First, what are we to make of the Minister's claim that there will be the maximum benefit to customers if the electricity companies fall under the monopoly control of a single person or company? He said, for example, that he expects enhanced rights of supply and improved standards of performance to benefit customers.
Earlier tonight, I spoke to my hon. Friend the Member for Paisley, South (Mr. McMaster), who drew to my attention what is happening under Scottish Power in the run-up to privatisation, never mind what might happen in its aftermath. He told me that one of his constituents, a 74-year-old pensioner who struggles to get by on an income of only £48·50 a week, had a budget account with Scottish Power, which it mismanaged to the extent that she suddenly found that she had arrears of £190. It contacted her and said that it expected her to repay the arrears at about £14·10 a week from an income of £48·50.
My hon. Friend intervened and asked Scottish Power to send an engineer to check the electricity supply to ensure that the figures were correct. Once the engineer had called and checked, the pensioner received a bill of £20 for his visit. Is that what the Minister means by enhanced rights of supply and improved standard of performance for customers in the aftermath of privatisation? The reality for customers is that standards and performance will be much worse and more costly than under the public sector.
How will the decisions that are being taken about the privatisation of the Scottish power companies affect current negotiations between the Scottish Office and Scottish power companies about the debt burden which the privatised companies will inherit? If, as is entirely possible under the Government's current strategy, Scottish Power and Scottish Hydro-Electric end up in the control of someone such as Lord Hanson, the question arises, why

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should the taxpayer write off accumulated debts incurred by the Scottish power companies when the main beneficiary will be the majority shareholders in the companies? Surely, if the likes of Lord Hanson want the power, they should accept the responsibility of the debt that goes with it. We are talking about big sums, because Scottish Power's most recent balance sheet shows about £509 million in long-term borrowing. Taxpayers and voters will want to know why they are expected to pay for someone else's profits in that way.
Another important question is, who will make the important decisions about the future capital investment programmes with which these power companies are faced? The European Commission's large combustion plants directive will have to be applied by the Government. That means that flue gas desulphurisation equipment will have to be retrofitted to the coal-fired power stations at Longannet and Cockenzie. We know that retrofitting at Drax in Yorkshire is costing £650 million, so whoever takes control of the Scottish power companies will have to make an early decision on the immense and urgent capital projects facing the Scottish electricity industry.
That is not the only investment decision in the pipeline; there are also plans to upgrade the Scottish interconnector with the south. Almost the only argument that the Government put forward to justify the sale of the Scottish power companies was that it would facilitate the sale of surplus Scottish electricity to the English market. However, the investment required—about £100 million —to upgrade the interconnector would have to compete with the investment that is required to retrofit FGD equipment at Longannet and Cockenzie.
Which of these investment projects will come first? Which will have the higher priority accorded to it? Who will make the decisions? Even if the decisions are both positive, and retrofitting and upgrading of the interconnector go ahead, what will be the impact of those investment decisions on the competitive pricing of Scottish electricity? It certainly will not make it any cheaper in the short or the long run.
Two years ago, the former Secretary of State for Scotland said:
"England is short of electricity and for a few years it will have to purchase it either from the Scottish industry or through the French industry or through building extra capacity."
The right hon. and learned Gentleman pointed out:
"the 5,000 megawatts of spare Scottish capacity might prove the cheapest option for the English power industry"
in the long run. But it might not prove the cheapest option if major capital investments must be made by the Scottish power industry and if, as a result, the price of Scottish coal goes up. Remember, it is a privatised English industry, which will look not to the interests of Scotland, or indeed of England and Wales, but solely to the interests of its shareholders who will make those decisions. The sanguine view held by the former Secretary of State for the prospects for the future of the Scottish industry can be called into question.
In the years ahead, much cheaper coal will be available to the English power companies. It is now being brought in from all around the world. Associated British Ports is planning a big coal importing facility close to Immingham, which will be able to accommodate the largest ships for carrying coal—Cape size ships. They enable the United Kingdom to benefit from direct shipments from South
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Africa, Colombia, the United States and Australia. Scottish coal will have to compete with all that cheap coal. This is a serious matter.
Certainly, the interests of the electricity users and the interests of the Scottish people and the Scottish economy will not even arise in the calculations of a privately owned electricity industry. Those who doubt that should look to the example that has been set by a privatised British Steel, as it slowly strangles the Scottish steel industry and in the process shows nothing but contempt for a Scottish Office that is powerless to do anything about British Steel. The irony is that, having created one Frankenstein's monster which they cannot control, the Government are creating a new family of Frankenstein's monsters which they will not be able to control. It is difficult to overestimate the folly of the Government's drive towards privatising the electricity industry.
Vital national issues are at stake in this industry. We could be on the eve of a Gulf war which will send the price of oil spiralling. Many experts predict that gas prices will double over the next 10 years. The future of the nuclear industry is grim, to say the least. More than ever, we need a Government in charge of energy policy and directing it towards an integrated energy policy; yet the Government are selling off our electricity industry and leaving the key decisions on investment and strategy to private sector companies rather than taking responsibility themselves. It is sheer madness.
Workers in the power engineering industry, such as those at Babcock in Renfrewshire, have technology and expertise which is unrivalled anywhere in the world, but they must face the fact that key decisions about their home market will be made not by the Government but by the private sector interests which will take over control of the electricity industry.
Coal, a vital national resource, depends upon key investment decisions which will be taken by the electricity supply industry. That, too, has been surrendered by the Government to those who have no concern for national interests, national security or anything else. Indeed, there is even talk of winding up the Department of Energy and doing away with the role of the Secretary of State for Energy—which, given the present incumbent, some people may think is not a bad idea. The answer is not to do away with the Department of Energy or the role of the Secretary of State but to change them, and the people of Britain will do that at the next general election.
8.35 pm
Mr. Alick Buchanan-Smith: As ever, the House was entertained by the hon. Member for Holborn and St. Pancras (Mr. Dobson). I certainly was, but I should have regarded his speech as slightly more credible if he had gone wider than the issue of flotation, which he made the centre of his speech. Flotation is obviously an important issue, but the hon. Gentleman's comments might have been more credible if, on the general issue of flotation, the Labour party did not always try to have it both ways. I refer the hon. Gentleman and other Labour Members to their comments on the recent flotation of BP shares, when the Government were equally heavily criticised for having set the price too high. The hon. Gentleman described the flotation as a failure. My right hon. Friend the Secretary of State exposed the hon. Gentleman's failure to appreciate how assets are valued

927
and particularly how markets can change between the fixing of a price and flotation. The hon. Gentleman's speech was also incredible because it did not deal with the wider issue. He chose to ignore the many benefits that electricity privatisation has brought, on which I should like to dwell.
A surprising benefit of electricity privatisation, but perhaps one of the most significant, has been the number of direct contracts that are springing up between North sea producers of gas and onshore generators of electricity. In taking together privatisation of the gas industry and privatisation of the electricity industry, we have clear evidence before our eyes of the way in which the market has opened up and the fact that new competition exists. This can be seen in the proposals to pipe gas from the North sea into the east end of London and generate it into electricity, where the main consumption takes place. This opening up of the market was brought about only by the privatisation of those two industries. No one can deny that it opened up competition in a major way.
Mr. Dobson: In referring to proposals for a gas-fired power station in the east end of London, is the right hon. Gentleman referring to Thames Power's proposals? Does he agree that it might have been wise to point out to the House that that company intends to import gas from abroad, not to use British gas?
Mr. Buchanan-Smith: No; I was referring to the proposals by Conoco, which is involved in a consortium. That is direct evidence. There is a great deal of other evidence of contracts under discussion involving projects along the east coast of England where gas may be piped ashore to generate electricity.
That underlines two other points. The first, which again stems from Government legislation, is the importance, on the gas side, of the role of the regulator, which is making possible the common use of the British Gas pipeline. The positive role of the regulator, James Mackinnon, is another example of the way in which Government policies are leading to success. Secondly, we have witnessed not only the opening-up of competition but the more efficient use of energy—something that the hon. Member for Holborn and St. Pancras passed over very quickly in his opening speech. The generation of electricity from gas is leading to much efficient conversion, through combined cycle generation, and I hope that a number of proposals on combined heat and power will also shortly come into effect. That is another example that the privatisation of the gas and electricity industries together is leading not only to more competition but to a much more efficient use of energy than we have had in the past—certainly much more efficient than was apparent under the nationalised industries.
There is also a major widening of competition in the contracts between generators and industrial users. The hon. Member for Dundee, East (Mr. McAllion) referred specifically to what is happening in the Scottish industry, so let me take an example from the Scottish industry. What was one of the first contracts between a generating company and a major industrial user? To many people's surprise, one of the smaller generating companies, Scottish Hydro Electric, obtained a contract with British Oxygen for that company's activities throughout the United
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Kingdom. If direct contracts between generators and major industrial users do not open up competition, I do not know what does. Moreover, the privatised structure has allowed not only more competition but more enterprise on the part of a relatively small company in obtaining a United Kingdom-wide contract, giving it the opportunity to develop a far larger market and to enjoy new-found vitality.
I hope that, when Scottish Hydro Electric is floated, it will be on the basis of a complete sale. Through its enterprise, the company has shown itself to be highly attractive to investors—particularly small investors. I speak as a consumer of the power generated by Scottish Hydro Electric. Like many others, I shall be delighted to invest in the company that generates the electricity that I use, which, in the short period since privatisation, has shown itself to be a company that is prepared to go out and win markets throughout the rest of the United Kingdom.
Dr. Kim Howells: Does the right hon. Gentleman agree that, when a contract runs out, a large industrial company may be able to shop around for alternative sources of supply, but that the ordinary domestic consumer will not only be unable to shop around but will have to make up for the earnings that the district regional company will lose when such a large industrial concern changes its source of electricity?
Mr. Buchanan-Smith: The hon. Gentleman used the critical words "shop around". When the contract ends, industrial users of electricity can shop around. That will impose on the generating companies the disciplines of the market which will make them more efficient. Given the role of the regulator, there will also be a far greater certainty of the domestic consumer benefiting from the rigours of the market.
I have one further point to make about Scottish Hydro Electric. Despite pressures from those of us who represent constituencies in the north of Scotland, who pointed out that it was somewhat anomalous that the company—albeit for historical reasons—should have its headquarters in Edinburgh, outwith its area of operation, nothing was done. It is significant that in the past few days—after the privatisation of the company—it has miraculously chosen to move its headquarters to Perth, in the area in which it operates. We pressed such a move on the Government and on Ministers for many years, but only when the company was privatised did it choose of its own volition to respond to the consumers in its area and move its headquarters. I welcome that decision and commend the management on it.
I find it difficult to understand some of what Opposition Members have said about nuclear power. One of the things that the privatisation process has done is to expose the nuclear industry to the high costs involved. That did not happen when the whole industry, including the nuclear industry, was nationalised. There was a change in the Government's policy on privatisation, which I welcomed, but that end was nevertheless achieved as a result of the privatisation process. As a result, the nuclear industry, which—in my judgment, correctly—has been kept in the public sector, has been given a new market discipline. I should have thought that Opposition Members would welcome that.
I hope that the industry will respond; I believe that it will. In terms of production costs, Scottish Nuclear Fuels

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has a very good record relative to nuclear companies elsewhere in Britain and in the world. I hope that the Government will continue to support the nuclear industry. It is important that we should maintain a proportion of our electricity supplies from that source to ensure variety of supply, security of supply—which will obviously be necessary from time to time—and the development of new technologies.
I believe that, so far from proving the case that privatisation has not worked, by ignoring the wider issues —the real benefit of competition, for example—the hon. Member for Holborn and St. Pancras has condemned his own case. I hope that the House, too, will condemn it tonight.
8.46 pm
Mr. Malcolm Bruce: The right hon. Member for Kincardine and Deeside (Mr. Buchanan-Smith) made a good fist of justifying a policy whose limited benefits and interesting consequences were certainly not forecast or foreseen by the Government when they embarked on the privatisation of the electricity industry. The privatisation strategy has changed almost daily under different Ministers and in different circumstances. The right hon. Gentleman is entitled to point out the consequences, but he is not entitled to claim credit on behalf of the Government and praise the far-sightedness of Ministers who launched the projects.
Part of the problem with the whole exercise is that it has been undertaken fundamentally for ideological purposes, with no real thought about how to serve the interests of the industry or the consumer. That is why it is flawed. The Liberal Democrats made it clear that we accepted the need for changes in the structure of the industry. Throughout the proceedings on the Electricity Bill, we tabled amendments in an attempt to achieve such changes. We were proved right in a number of cases—not the least of which concerned the withdrawal of nuclear power from the flotation. When we first suggested that, we were ridiculed by the then Secretary of State. He said that our suggestion was absurd and that nuclear power was a wonderfully profitable operation which would command support once its profitability had been clearly demonstrated to the market. When it did not command that support, the Secretary of State claimed that it was terribly clever of him to have identified the fact that nuclear power was such a loss-maker and to have withdrawn it from the flotation. That argument was touched on by the right hon. Member for Kincardine and Deeside.
It is fair to say that the Government's electricity privatisation plans were not only ideologically motivated, but were ill thought-out and shambolic. Privatisation has also been a cheapskate exercise in terms of what has been achieved on behalf of both taxpayers and those who have sought to purchase shares, many of whom failed to be allocated any shares at all.
The Secretary of State said tonight that he thought that the total yield from the sale of the electricity industry would be about £8 billion. That is a far cry from the £20 billion that the Government originally thought would be the likely yield from the industry. That suggests that the price was pitched very low indeed.
When the Minister replies, I hope that he will tell me whether my calculations are correct. The money resolution to the Electricity Bill amounted to more than £6 billion for
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contingencies, debt write-offs and related costs of the flotation and that is before we consider advertising, underwriting and other consequential costs. On that basis, it appears that the net return to the Government from the sale of the entire industry is under £2 billion. That is a very poor return for an industry of such crucial importance. Regardless of the debate on whether we are talking about current cost accounting or replacement cost accounting, that figure is a tiny fraction of the worth of the industry to the United Kingdom economy by any measure that we care to use—current, capital or any other kind of accounting.
The hon. Member for Dundee, East (Mr. McAllion) referred to the rather anomalous situation in Scotland which has developed in an extraordinary way. Originally, the Scottish companies thought that they were going to be substantially disadvantaged by being placed at the end of the queue. However, ironically, the chaos and confusion that has reigned in England and Wales compared with the relative consistency of approach in Scotland has given the Scottish companies an opportunity which, as the right hon. Member for Kincardine and Deeside pointed out, they have not been slow to exploit.
If you, Mr. Speaker, were to drive to Aberdeen airport, as I frequently do, going north out of Aberdeen you would pass a very large poster just short of the turning for the airport. That poster is an advert for Hydro Electric and it states:
"We charge over the border at every opportunity."
That is a sign of that company's success in selling our electricity to English consumers and good luck to the management operating in those circumstances. It shows that there is a market for that power, but it does not give a clear tilt to the idea that there is a coherent, consistent United Kingdom-wide market operating in any predictable direction.
We have a problem and the Minister should respond to the questions posed by the hon. Member for Dundee, East and tell us whether the flotation of the Scottish companies is likely to take place in about May. Will there be a full flotation and what would happen to the 40 per cent. if there was not? Presumably that percentage would be held by the Secretary of State for Scotland and that would have the advantage of helping to anchor those companies within Scotland.
Many of us are worried that the industry in Scotland may be floated as two independent companies based in Scotland in the short term, but those companies may merge or be taken over by interests from outside Scotland. That might not be in the long-term interests of the Scottish economy or the Scottish consumer.
There is a further concern in that Scotland offers one of the best potentials for developing renewable energies in Europe, but it is still not clear whether the regime that is being established will help or hinder that development. There is no evidence to suggest that the development will be brought forward at the pace that many of us would like.
Ironically, the Government have been so embarrassed by the under-pricing of the flotation of the regional companies in England that after some convolutions they have decided to float only 60 per cent. of the generating companies when the industry comes to market. The Government have created an uncertainty to which the Secretary of State for Energy alluded earlier. The Government have created the nucleus for the renationalisation of the industry if that is the wish of a future

931
Government. That is an odd position for them to have adopted given that, in general, they have tried to create a privatisation regime which would make re-nationalisation difficult and would not create the sort of football uncertainty in which industries have been kicked backwards and forwards in the past.
The issues that were raised during consideration of the electricity privatisation legislation have not been settled. We do not have a regime that is likely to encourage greater energy efficiency or conservation or the development of renewables and the reduction of our dependence on imports. Given the windfall accruing to the new companies, the suggestion mooted by myself and my hon. Friend the Member for Berwick-upon-Tweed (Mr. Beith) during consideration of the Electricity Bill, that all consumers not currently connected to the national grid should be connected and that that should be part of the terms of the privatisation, could now be afforded. The electricity industry's public relations have been substantially damaged by the mismanagement of the flotation. In rural areas, connection to the national grid might be a way of rebuilding confidence and demonstrating that privatisation does not mean that people in remote areas who require connection for socially desirable purposes should remain cut off because the market is no longer interested in them. The market can afford now to provide that connection and it should do so. People in rural areas are entitled to expect that.
If we have, as I believe as a nation we should have, an objective for electricity, it should be to promote conservation and the efficient use of our resources to ensure the rapid, efficient development of renewable alternatives to existing sources and to encourage diversity and reduce our dependence on imports. The Government are not entitled to claim that their privatisation is likely to achieve any of those things.
The Government have created a market, but one which they did not predict and one that has produced results which they could not have forecast and which has no coherent sense of direction. It may end up almost anywhere and result in a quite different set of speeches in a debate on the electricity industry in two, three, four or five years' time. If the right hon. Member for Kincardine and Deeside is honest, he will be forced to acknowledge that.
It is time that the Government came clean about what they believe the future of the electricity industry should be in the national interest in practical terms. Frankly, the rhetoric as to whether it should be a nationalised industry or a privatised one, or whether the market should solve the problem, is irrelevant. If the industry does not meet our national interests, our economy will suffer extreme consequences. The Government have manifestly failed to demonstrate that the privatisation of electricity will meet the national interests which we believe are necessary and which I have defined. In a few years' time, I believe that they will be found wanting.
8.57 pm
Dr. Michael Clark: You will have noticed during this debate, Mr. Deputy Speaker, that there have been references to doubts about the continuity of electricity supplies when the generators are privatised. Are
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you aware that, while clockwork clocks are working in the Chamber, we do not have a continuity of supply to our electric clocks even before the electricity generators are privatised?
Some people wonder why we should want privatisation of the electricity industry. I have heard people in the street ask, "Why should we have privatisation when so many nationalised assets belong to the people already? They are our assets and they belong to us. Why should they be privatised and transferred to us in other ways?" I heard that said also about the privatisation of the water industry in particular and, to some extent, about the privatisation of the electricity industry. Even sceptics would agree that road transport performs far better when privatised, that British Telecom offers more choice, has better technology and is giving a far better service to the public in private ownership than it did in public ownership, and that the steel industry has changed from a loss maker to a profit maker as it has gone into private hands.
If proof is wanted of a new attitude that is brought about by privatisation, let us consider the privatisation of council houses—one of the greatest reforms of the Thatcher years, second only, probably, to handing the unions back to union members. Nobody believed that we, the people, owned council houses. Certainly the occupiers of council houses did not believe that they owned them, and those who did not live in council houses did not believe that they owned them, any more than Russian peasants believed that they owned the collective land that they were reluctant to farm. When council houses were owned by councils and occupied by tenants, no one bothered to paint their front doors bright colours, build extensions, or tidy their gardens as they do when they own their own property. When one really owns something, one invests in it, cares about it and has control over it, and that applies whether that is individual or collective ownership, or whether ownership is through using one's own money and savings or through a mortgage or borrowed money. So it is with nationalised industries. It is only when nationalised industries are privatised and are truly owned by individuals that people begin to care about them.
British Telecom shareholders are now quite rightly in uproar about the proposal to spend £50 million—some even say £100 million—on changing BT's logo and repainting all its vans and assets. I share their concern, particularly as the proposed logo seems to be nothing more than Mercury blowing his own trumpet.
As my right hon. Friend the Secretary of State has said, there is no doubt that the electricity privatisation is an outstanding success. The Jeremiahs said that the shares would not be sold, that there would be no demand for them and that privatisation would not work. In particular, the employees said that privatisation would not work. I attended meetings in Essex and elsewhere in this country, and hundreds of employees said that privatisation would not work, that the electricity industry would crumble, that we would not have continuity of supply, and that we would press light switches and nothing would happen. The directors of the Central Electricity Generating Board said that it would not work, and that we could not have proper control of a grid system if generators were outside public ownership.
However, when the electricity industry was offered to the public it was a record privatisation. There were 13 million applications, and 98 per cent. of eligible employees applied. They were not all Tories—many of them must

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have been Labour voters. I wonder who the 2 per cent. who did not buy shares were. Could it be that the 2 per cent. of employees who did not buy shares were the managers and directors who doubted whether the privatisation would work? I do not think so, for two reasons. First, under nationalisation, the number of managers and directors in the electricity industry was far greater than 2 per cent. of the employees. Secondly, those same managers and directors are now busy organising consortia to build new power stations, coming up with schemes and projects to put up new plants, and arranging management buy-outs if they possibly can.
There has been a total reversal of the pessimistic views of the managers and directors. There is now realism. They are wholeheartedly entering into the privatisation process and bringing in more plant, capacity and equipment to help to create the competition that privatisation is all about.
Also, 97 per cent. of valid customers applied for shares, and 70 per cent. of all those who applied were able to get share allocations, all except the greedy who applied for far too many and were rightly ruled out perhaps because of their greed.
The hon. Member for Holborn and St. Pancras (Mr. Dobson) said that far too little money was raised on privatisation, that another £8 billion could have been raised and that it would have paid for repairing all schools in the country and taken £100 off everyone's community charge. That may be so—£8 billion may do that; the hon. Gentleman did the calculation; I did not. However, I suspect that, if the price of electricity shares had been doubled to attempt to raise that extra £8 billion, no extra money would have been raised. On the contrary, far less would have been raised because I for one would not have bought my shares at twice the present price, and most people would think exactly the same.
I now refer to electricity prices. Relative to the recent past, electricity prices in this country are quite good. The Government have an excellent record. Over the past four years electricity prices fell by 4 per cent. in real terms. That is equivalent to about I per cent. in real terms each year. Under the Labour Government electricity prices rose, not by 1 per cent. per year but by 2 per cent. every six weeks. Therefore, our record is excellent in keeping price increases down. In the last year alone the price rise for electricity was 4 per cent. below inflation. The safeguards that have been brought in for the early years of privatisation mean that there should not be an increase above inflation until at least March 1993.
Although United Kingdom electricity prices are satisfactory relative to the recent past, we have to consider how they compare with prices outside the country. I do not think that they compare well with prices abroad. Yesterday I had a meeting with two main board directors of ICI who were talking to me about the chlorine industry which is a heavy user of electricity. They pointed out to me that the price of electricity to industry here is 2·9p per kWh, in Germany 2·4p per kWh, in the Netherlands 1·9p per kWh and in Italy, France and the United States 1·5p per kWh—almost half what British industry pays. Granted, the chlorine industry in this country is a beneficiary of the so-called large industrial consumer scheme which brings the price of electricity down to 2·4p per kWh; that enables the industry to compete with Germany at least if not with France and the United States.
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The chlorine industry, which also produces alkali as a by-product, is a cornerstone of British industry. It is a globally competitive business. It is an important element of the United Kingdom economy, contributing £800 million a year to exports. It employs 18,000 directly and 54,000 indirectly. Yet the large industrial user scheme will be withdrawn as a result of privatisation and ICI will find that its chlorine industry can no longer compete with France and the United States. If the Secretary of State were here, he would know that the transitional arrangements for electricity privatisation last for eight years for the nuclear industry, eight years for renewables, five years for private generators, three years for British Coal, but only one year for large industrial consumers.
What are large companies like ICI to do? They are very worried about the loss of cheap electricity; they will have to pay many millions extra for electricity. They may stop investment in chlorine and alkali plant. Even worse, they may take their investment abroad. That would be much worse because it would never come back to this country, whereas, if they stop investment here, there is always an opportunity later for them to renew the investment and build here.
Ironically, the solution comes from the same source as the problem itself, namely, privatisation. If privatisation, by removing subsidies, puts up electricity prices to large users, privatisation would also enable them to build their own power stations and bring prices down again. It is the ICIs of the world that will build their own gas-fired generators and bring prices down by entering into consortia with the oil companies, the generators or the regional electricity companies.
There is another solution to high electricity prices. The high prices are to a large extent based on the fact that our coal prices are high. I give credit to the British coal industry. It has increased productivity, introduced high technology and brought prices down 40 per cent. in the last five years. But the fact remains that British coal is considerably more expensive than coal brought in from abroad.
So if we are to continue to use British coal we must bring prices down even further. British Coal said recently in response to threats from National Power that it will bring in at least half of its coal for electricity generation from abroad:
"We are confident that when talks with National Power start we can put forward a competitive package. We think we can offer them a deal."
That was reported in the Financial Times on 15 January. I hope that British Coal can offer National Power a good deal because it is important that our coal industry should survive. It must survive not only for the sake of employment in Britain which is important, or social reasons, which are significant, but because British coal is a form of indigenous energy which we cannot afford to ignore.
A case could possibly be made for abandoning coal for electricity generation in favour of home-produced gas or oil from United Kingdom continental shale. But we cannot make the case for abandoning our coal in favour of foreign coal. There seems to be a scheme to abandon our coal in favour of either 100 per cent. foreign coal—which does not make much sense—or 50 per cent. foreign coal which does not make much more sense.
The case for maintaining a British coal industry is particularly relevant at times such as this when the world

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may go into conflict. The Gulf crisis and other crises like it could affect international shipping as well as oil supplies. Yet to continue to maintain the high price of electricity for domestic or industrial use, particularly in export-led industries, makes no sense either. We must have internationally competitive electricity prices. That means that we must have internationally competitive prices for domestically produced coal.
The privatisation of the electricity industry is forcing down the cost of generating and distributing electricity. I am convinced that privatisation of the mining industry will bring down the price of coal, to the benefit of both the coal mining industry and the electricity industry and, indeed, our whole economy. Electricity privatisation has been a great success. I am sure that in due course privatisation of the coal industry will also be a great success, not least for those who work in it.
9.12 pm
Mr. Geoffrey Lofthouse: I am grateful to the hon. Member for Rochford (Dr. Clark) for some of his remarks, particularly as he holds the position of Chairman of the Energy Select Committee. He has expressed his anxiety about the coal industry on previous occasions.
I shall be brief because I know that other hon. Members wish to speak. The House will not be surprised if I direct my remarks to the effect that privatisation of the electricity industry has had on the coal industry. I am pleased that the Minister with responsibility for the coal industry is in his place.
Mr. Dobson: At present.
Mr. Lofthouse: At present, as my hon. Friend the Member for Holborn and St. Pancras (Mr. Dobson) says. In his opening remarks, my hon. Friend referred to the duff advice that the Secretary of State has received from all these highly paid advisers. The previous Secretary of State, the right hon. Member for Hertsmere (Mr. Parkinson), about whom we do not hear much these days, was in receipt of some first class advice in the Energy Select Committee report on the privatisation of electricity. The Committee sat for a long time and listened to much expert evidence. It came to a unanimous conclusion in its report. It advised the Government that they were in danger of receiving ill-conceived and misjudged advice. That proved to be the case. We heard this evening from my hon. Friend that the advice that the Government received from City advisers and others was later found to be wholly incorrect. If that right hon. Gentleman had taken the advice and delayed the privatisation of electricity until he had had time to think the matter out, he would not have got himself into such a mess and had to be replaced by the present Secretary of State to salvage something from it.
We are always expressing concern about the effect of electricity privatisation on the coal industry. We are aware that, since the miners' strike in 1984, the coal industry has come under attack from the Government. They have been hell-bent on running it down. From time to time, we have pointed out in this Chamber and in Select Committee reports that to run down the industry to the extent that the Government intend borders on the criminal. We have pointed out that, if we close so many mines that we cannot
936
meet demand, we shall put ourselves in the hands of foreign competitors. We have been told all the time that that will not happen, because British Coal will eventually be able to compete. I have never accepted that, and I do not accept it now.
The Private Bill Committee, of which the hon. Member for Rochford was Chairman, took evidence and produced a special report on the application of the Associated British Ports to extend the ports at Immingham. Although the Committee accepted the case for the port, it made it clear that the decision was based on certain provisos. What were they? Paragraph 22 states:
"Before the Committee came to make a formal decision on, first, the amendment proposed by the British Coal Corporation, and, secondly, the Preamble itself, we agreed that if the bill were allowed to proceed, this would be subject to conditions set out in paragraphs 25 and 26."
Paragraph 26 states:
"In our view it is the Government's duty to take whatever steps are necessary, in the overall national interest, to protect the indigenous coal-mining industry."
That was finally accepted by the House, but none of the Committee's provisos about the coal industry has been honoured by the Government.
What do we see now? The sponsors of the Bill, Associated British Ports, are not to be the major shareholders in a company which is to be formed. Who are to be the major shareholders? We must believe recent reports. The Financial Times of 15 January tells us that National Power and PowerGen are to form a company along with Associated British Ports, but that the two power companies are to have 80 per cent. control of Associated British Ports. I do not know whether that was known during the passage of the Bill. It will be a cosy little arrangement.
We now see the reason for Mr. John Baker's speech yesterday, which was reported today in the Yorkshire Post and other newspapers. He is supposed to have made the speech at a privatisation briefing to regional newspaper editors. I think that that was the speech to which the hon. Member for Rochford referred. Mr. Baker said that, as far as he was concerned, 50 per cent. of the coal required by National Power and PowerGen would come from imports.
Dr. Michael Clark: Perhaps I can help the hon. Gentleman by telling him that there was no knowledge in the Committee at that time of any other owner of the establishment or the new jetty. At that time, the Committee had every reason to believe that the people who were applying for permission to extend the jetty would own it for some considerable time. In Committee, we asked about the possibility of sale, but there was no suggestion of that. A Bill parallel to that relating to Immingham, which contained a clause that required the company to have the ability to sell at any time it wanted, was thrown out, not least because it also contained a clause to enable it to sell the installation.
Mr. Lofthouse: I accept that explanation from the hon. Gentleman. Nevertheless, on 15 January it was reported that National Power and PowerGen would take an 80 per cent. stake in Associated British Ports. We then had another report from Mr. Baker, about plans to import 50 per cent. of the fuel necessary to generate electricity. National Power and PowerGen will take over the port that will receive that 50 per cent. of imported coal.
The hon. Member for Romford will be well aware that, just three weeks ago, the Secretary of State told the Select

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Committee on Energy that the only fuel that will be provided for electricity generation in the next decade will be gas. If that is so, the Minister must realise that there will be no future for the coal industry, especially if the ports start to receive imported coal.
A few months ago, I told the House that I foresaw a coal industry of 10,000 men by the late 1990s. I was told that I was scaremongering, but I believe that we shall be left with a coal industry that employs 10,000 men at between 10 and 12 pits. I should like that confirmed or denied.
No wonder some of the hierarchy at British Coal—I have a big question mark against their names—were reported on 8 January as saying that British Coal must be privatised. That is what the commercial director of British Coal, Malcolm Edwards, said. I wonder how much effort has been made by some of that hierarchy in the past few years to enable our coal industry to compete with foreign competition. How keen have they been to meet that competition? The same Malcolm Edwards told the Select Committee that he could not wait for the day of privatisation of British Coal. He will have to look sharp, however, because there will be little left of British Coal to privatise.
Once again, I must remind the Minister and his Department of their responsibility to the mining communities. They must prepare the way for other jobs to enable those young men who have previously found employment in the mining industry to be given alternative work. They cannot be left on the scrap heap, as has happened hitherto.
9.23 pm
Mr. Malcolm Moss: Time is running out, so I shall be brief.
If one were inclined to believe the Opposition, one would think that the only important thing about the privatisation process is the amount of money that one gets from the sale of the assets. Nothing could be further from the truth. The proceeds from the sale are obviously important for the Treasury, the taxpayer and public spending, but there are many more important consequences.
The hon. Member for Holborn and St. Pancras (Mr. Dobson) kept going on about a half-price sale. He does not seem to understand that, whether one adopts current cost accounting or historical cost accounting, ultimately people will only pay what they think the assets are worth. They are only important to the lender who is lending money against those assets, or to the purchaser who believes that they will generate income or profit. The price to earnings ratio and the price per share are critical in that calculation.
One might argue about the price at which the assets of the electrical supply industry were sold, but in future the taxpayer will not be required to spend one penny on replacing plant and generating capacity. The case was made for a site on the Humber estuary at a cost of £1·5 billion, which was discussed on Monday in connection with the Killingholme Generating Stations (Ancillary Powers) Bill. That investment is being made by PowerGen and National Power, and not a penny is coming from the taxpayer. The whole of this country's generating capacity will eventually be replaced by privatised companies investing their profits and reserves.
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Earlier, I tried to assist my right hon. Friend the Secretary of State when he tried to quote a Labour Front Bench spokesman. I believe that he was referring to the remark made by the hon. Member for Kingston upon Hull, East (Mr. Prescott) in a press release dated 31 October 1987:
"I make this prediction: this Government will not succeed in privatising electricity before the next election. It is a non-runner."
Labour has said on a number of occasions that privatisation could never occur, yet it has been successful. There is highly motivated management in all 12 electricity companies, and in the two major generating companies.
The president of the New York power authority recently visited Britain, when I had an opportunity to meet him. As the head of one of America's leading power utilities, he came here to see what Britain was doing, and he concluded that we are now the front runners in the world in respect of the new way forward for the electricity supply industry.
Above all, privatisation has introduced competition. Major new projects are planned, involving not only combined cycled gas but combined heat and power projects. That has given a tremendous boost to the renewables industry, such as waste disposal. That would not have been possible without the new structure and the non-fossil fuel obligation.
As to price, industrial consumers have enjoyed fairly substantial decreases, with reductions of 15 per cent. not unheard of. Privatisation has been much attacked, maligned and misrepresented. Most of that has been a knee-jerk reaction to the historically accepted wisdom of the unions and of the coal lobby. Contrary to the predictions of Labour Members, privatisation has proved to be, and will continue to be, a great success for the taxpayer, the industry, its work force, shareholders, and the consumer.
9.27 pm
Dr. Kim Howells: It is not for me to suggest to the Government how they should privatise their industries, but I have never seen much sense in creating two massive generating companies where there was one before. Many opportunities existed for fragmenting the generating sector to create real competition, but that did not happen. Instead, we have privatisation proposals that are not so much unimaginative as desperate. That is understandable, given the litany of disaster that has plagued the privatisation process since the Government's plans were first drawn up.
Britain's nuclear capacity was hived off because the City panicked in the belief that it could not be sold. The old Central Electricity Generating Board supremo and long-time champion of nuclear energy, Lord Marshall, could not stomach that piece of political revisionism, and he took off for less machiavellian pastures. Mr. Bob Malpas, brought in from that citadel of political acumen, British Petroleum, stayed long enough with PowerGen to take part in the Hanson option travesty, before heading for the hills peppered with arrows from Mr. Ed Wallis's bow.
The Secretary of State is a business man of some repute who, it has been reported, has insisted on staying at his post to see this business through to the bitter end. Few can doubt his capacity for taking punishment. After all, he has had to rescue the privatisation of the electricity

939
distributing companies from the shambles that he inherited from his predecessor, the right hon. Member for Hertsmere (Mr. Parkinson). He may be capable of absorbing further punishment—coming from all sides judging by what I have read in the newspapers—as the privatisation of the generators proceeds.
I have no doubt that the right hon. Gentleman has the staying power to see that one through, too. He may see it through, but, by any standards, it would be the most curious flotation. Why does the Secretary of State believe that any investor should put money in one of the generating companies rather than the other? When the privatisation was mooted National Power, with its nuclear sector, looked promisingly dominant—there was always the lure that perhaps the rules might be bent in future to allow National Power to acquire substantial chunks of its smaller competitor—but I do not think that that is any longer the case. Both generating companies are now much of a muchness. Where is the lure for the potential investor, and especially for pension fund managers, the big banks and other large institutional investors, none of whom are renowned these days for their adventurism?
Recently a writer in the journal, Power in Europe commented:
"That phantom of the early Thatcher years, 'the new generation of shareholders', still floats around, but has never taken on much substance despite the vast amounts of public money thrown at it.
Buy them both, then the Government may say, spread the risk, even if you're not spreading it very far. This, however, makes the competitive ideals of privatisation into so much hot air. Two companies with the same shareholder profile, fighting each other like the two cats of Kilkenny, is not an idea which carries a great deal of conviction."
The sale of the regional electricity companies had a good press. In the Daily Mail on 4 November Michael Walters wrote:
"Get greedy. There is still time to clamber aboard the electricity privatisation gravy train if you have already had one go and fear you may not get enough."
The Sun put it even more simply, saying:
"The shares are priced at £2·40, so how come I'm only paying £1?"
Obviously hon. Members may provide their own answer to that question. It is not a silly contradiction in terms.
I have no doubt that a similar press reaction may greet the sale of the generators, as the Secretary of State strains every nerve and muscle, cuts every corner and offers every conceivable incentive to offload them. If he is successful in overcoming the difficulties, the right hon. Gentleman will have succeeded not only in reducing the future responsibilities of his Department to the management of the rumps of the nuclear and coal industries, but in sounding the death knells of those industries.
If the generators are to be believed, in 1993 there will be a great increase in coal importation and an unprecedented increase in the amount of natural gas burnt for power generation. I am afraid that the spectre of short-term considerations will displace the best of national energy strategies, such as they were.
To overcome statutes governing emissions into the atmosphere from power stations, premium low-sulphur coal will be imported and that premium fuel, natural gas, will be burnt in increasing quantities.
I fear that the new fiscal requirements will promote less rather than more research and development into systems
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of clean energy burn and into the application of the so-called fifth fuel—better building design, better insulation and greater efficiency of energy use. There will be an incentive for the chairmen of the companies to press for more use of electricity, for higher sales and higher profits.
I should like to know where this tendency stands in relation to the Government's much-heralded enthusiasm for a reduction in carbon dioxide and waste emissions into the environment, and to know what is to become of the great expertise and skills enshrined in our coal and nuclear industries.
I do not believe that this is the way to conduct the affairs of a business at the core of our economy. The generation and supply of electricity must be more, in policy terms, than the object of speculation by people seeking to make a fast buck. I have no doubt that the dedication and excellence of many of the staff at National Power and PowerGen will ensure that the lights continue to burn in this country, but I bitterly regret the missed opportunities in the break-up of a state monopoly for which I had no great love.
The Government could at the very least have ensured a degree of real competition which might have benefited consumers; real diversification of ownership and technology; incentives to seek and explore newer, more benign generating technologies; and the opportunity for sources of raw energy materials such as coal to have played a real part in the development and use of those technologies.
Instead, we are left with a barely separated pair of siamese twins which are more likely to caress each other than compete against each other. I fear that sooner rather than later those caresses will turn to price fixes and we shall be confronted by corporations of awesome power which will repay their creator, the Government—and the electorate whom they purport to represent—with the slaps of monopoly abuse, not the kisses of a dutiful child.
9.36 pm
Mr. Rhodri Morgan: Tonight we have been discussing what has gone wrong with this privatisation. Why has the Secretary of State lost so much of his reputation for financial canniness, why is this privatisation described as farcical in the Financial Times today, and why are relations between the management of National Power and PowerGen and the Department of Energy described as being "at rock bottom" in today's Evening Standard?
To find out what has gone wrong we must look at the three great untruths of the late 20th century, which hon. Members will have heard before. The first is, "The cheque is in the post;" the second, "Of course I will still want to privatise you in the morning, or at least 60 per cent. of you;" and the third, "This flotation has been excellent value for the British taxpayer."
The next stage in this privatisation is the issuing of the pathfinder prospectus on 1 February. The Secretary of State is hopeful about that procedure because the path that he will be hoping to find is the one that he has lost in the past few weeks—it could not have been more aptly named. The trail has gone cold for him and it has been a useful exercise in this Supply day debate to work out exactly what has gone wrong.

941
Three things seem to have gone wrong. First, the right hon. Gentleman has now decided to agree with us that, in respect of the distributors' flotation, he was tucked up by the City. He was advised by people whose ability to look after the interests of the taxpayer was not of the first calibre. He took their advice and sold the shares a: what must be judged—the briefing given to the press by the Department of Energy agrees with this judgment—to have been a gross undervaluation of the assets that were got rid of. The Secretary of State would like to make that up by means of the generator sales. He believes that by using an entirely different technique he will cut out the lead underwriters. He intends to sell only 60 per cent. so that if the shares subsequently shoot up in value he will still have 40 per cent. left to sell at the higher price.
The Secretary of State missed that opportunity when the distributing companies were floated. He did not listen to our advice or to that of independent commentators in universities or City firms who were not directly involved in the flotation. Furthermore, he did not listen to the advice of those involved in the industry at both management and union level. If the Secretary of State made a mistake when he floated the distribution companies he should not try to cover his tracks when floating the generating companies to get himself back into the good books of the Public Accounts Committee when in a year or so it considers the privatisation of the electricity supply industry. If a mistake was made and the distribution companies were undervalued, it would be better if the Secretary of State came to the House of Commons to plead for forgiveness and said, "Yes, I made a mistake. I had lousy advisers. I did it in a rush. I did not consider the best interests of the taxpayer. I tried to sell the industry as quickly and as cheaply as I could in order to get it out of the way and I hoped that the Government's public relations ma chine would be able to deal with all the problems that might arise", rather than attempt to correct his mistakes by using an entirely different technique to sell the generating companies.
The Secretary of State has appointed new advisers to assist with the sale of the generating companies. He hopes that they will be able to overcome some of the problems that arose when the distribution companies were sold, due to the embarrassing rise on the first day to a 60p premium in some cases and to the even greater embarrassment of finding that one company that had been privatised only the year before—Welsh Water—immediately leapt in and bought a 10 per cent. predatory stake in South Wales Electricity, a distribution company that had been floated only the day before.
Welsh Water used the same advisers as the Government used for the flotation of the electricity distribution companies. How could it be right for Kleinwort Benson, which had advised the Secretary of State for Energy on the sale of the electricity distribution companies, to advise Welsh Water at the same time on how to acquire a 10 per cent. stake in a company that was being privatised by the Department of Energy? How can it be right for Smith New Court, the Secretary of State's new advisers on the stockbroking side, which has, as a non-executive director, a previous Secretary of State for Energy, to have advised Welsh Water on how to acquire a 10 per cent. stake in South Wales Electricity when it was also the client stockbroker for South Wales Electricity? That is working on both sides of the fence in a way that John le Carre would not dare to put into a spy novel about double
942
crossing. That, however, is what is happening and that is the calibre of the people who are used by the Secretary of State.
Another reason why privatisation has gone seriously wrong is that people are beginning to appreciate more and more how chaotic is the structure of the industry that has been devised. By 1994, and completely by 1998, generating companies will be able to supply us with electricity as well as to generate it. Distributors of electricity will also be generating it.
That will be unique throughout the civilised world. There will be a dual supply electricity function. We shall not know exactly from whom we should obtain our electricity and we shall not know whose primary function it is to supply electricity. There will not be the simple three-way structure that most people understand— generating companies, a transmission monopoly and distribution companies. There will be double generating companies and double distribution companies. Any company will be able to supply a new housing estate with electricity. Supplies will be obtained from any company or from a middleman and there will be stock market trading. Such a chaotic dual structure is beginning to frighten people. They believe that that is not a sensible structure for what has already been described as the backbone of any civilised industrial and domestic society.
Another reason why I think that the Secretary of State will perhaps get only half the number of non-executive directorships when he resigns as it looked as if he might get a year ago—it will only be about 50 now—is that he has lost any idea as to what the privatisation of electricity supply is for. He has tried today to give some of the original reasons for it. He said that it is to promote competition. We know that if he intended to promote competition, he should have been breaking the generating side into far more than two. He should have been selling off power stations to their employees or creating a minimum of four of five companies. The two companies will create a registered duopoly that will cause trouble for time immemorial. That is not the way to promote competition.
The Secretary of State said that it would promote wider share ownership, but we know that even with the distribution companies, contrary to what the hon. Member for Rochford (Dr. Clark) said—I may have misheard him—it looks as if 95 per cent. of British consumers did not apply for shares. Wider share ownership is hardly being achieved by an ojective of reaching 5 per cent. of the British public. I realise that the hon. Member for Rochford said that he bought shares and perhaps his wife and children did too. However, as far as one can tell, roughly 95 per cent. of consuming families did not apply or obtain shares in their local distribution company. I shall be happy if the Under-Secretary of State corrects those figures when he replies.
Conservation is extremely important and the contribution being made by the new structure to the conservation of energy is zero. At the time of yet another major crisis in the middle east that must be at the forefront of our minds.
Mr. Harry Barnes: I want to use this intervention to put the record straight. Earlier the Secretary of State, in replying to an intervention, said that I was not present during a debate on east midlands electricity. In fact, it was my debate during proceedings on the Consolidated Fund.

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I spoke for 34 minutes and my hon. Friend the Member for Cardiff, West (Mr. Morgan) spoke for 22 minutes and it was the Secretary of State who was not present.
Mr. Morgan: Nobody who was there at 5.30 in the morning will forget that debate. I do not think that I have yet fully recovered from it.
Having established the problems that the Secretary of State has with his credibility following the deterioration in the view that is now being taken of whether this is a feasible exercise, we come to the question of what he should do now. What we are getting is vast doses of creative accountancy. Most of the Conservative contributors to the debate have tried in the patronising way of insurance brokers and accountants—with which the Conservative party is richly stocked—to talk down to Opposition Members as if we know nothing about economics. We are opposed not to economics but to creative accountancy. In explaining why £35 billion worth of assets, as advertised in the prospectus given some years ago to the Conservative party conference by the right hon. Member for Hertsmere (Mr. Parkinson), will raise no more than £10 billion they are saying that that is what the market will bear and that we should understand that. In fact, it shows the fraud of the privatisation process. The Secretary of State is telling us that one is buying not a company, the management or the assets but an artificially created Government-rigged income stream and if that is the income stream, the City advisers will say what should be paid for it. If that is privatisation, it is a fraud on the taxpayer and the purchasers because they are not buying a private company but a form of rigged national savings from the Government.
Mr. Hugo Summerson: Will the hon. Gentleman give way?
Mr. Morgan: That would be unwise given the instructions of the Government Front Bench.
The Secretary of State and I had a conversation on the night on which the previous Prime Minister resigned. He had been the campaign manager for the previous Prime Minister for all of eight hours. I said to him, "If you can do for electric privatisation what you did for the campaign of the right hon. Member for Finchley (Mrs. Thatcher), I do not think that privatisation of the electricity supply industry will go very far." I did not realise that he would take me at my word.
In a previous life, the Secretary of State was a practitioner in insolvency. He called in the receiver for the campaign of the previous Prime Minister. I suggest that he now calls in the receiver for the privatisation of the electricity supply industry.
9.49 pm
The Parliamentary Under-Secretary of State for Energy (Mr. David Heathcoat-Amory): We have been debating the success of creating a modern and competitive electric supply industry. The flotation of the regional electricity companies last December received massive public endorsement. Quite naturally, that success has left the Opposition in some confusion, because, with millions more small shareholders and millions of new shareholders, millions fewer people will be prepared to tolerate a return
944
to centralised, state-owned industries. That is why they said that it would not work and that the sale would not take place.
That was denied by the hon. Member for Holborn and St. Pancras (Mr. Dobson), who has become rather forgetful. In October 1987, his predecessor—perhaps this is why he is his predecessor—the hon. Member for Kingston upon Hull, East (Mr. Prescott), said:
"The Government's privatisation programme is in tatters ‖ I make this prediction: this Government will not succeed in privatising electricity before the next election."
Privatisation is taking place, and it does work. It takes the Labour party to describe more than 12 million applications for shares as a failure.
If Labour Members are bad forecasters, they are even worse accountants. The hon. Member for Holborn and St. Pancras and his hon. Friends persist in comparing the proceeds of the public sale of the regional electric companies with the replacement cost of the assets sold. There is no excuse for that, because they have been given several accountancy lessons by my right hon. Friend the Secretary of State. By now, they should know that that is not a fair or valid comparison, but I shall try to illustrate it in language that the hon. Member for Holborn and St. Pancras can understand.
Has the hon. Gentleman ever tried to sell his car at replacement cost? If he tried to sell his car outside his home at the price of a new car, he would not have much luck, but he is inviting the Government to put a replacement-cost price tag on the shares for sale. It is a wholly misleading and bogus comparison, but perhaps it gives us a glimpse of what a mess the national accounts would be if the Labour party took office again.
As my right hon. Friend the Member for Kincardine and Deeside (Mr. Buchanan-Smith) said, we heard a lot of the wisdom of hindsight from Opposition Members. We were in no position to know that the market would rise after the price was set, and we were not to know what a popular success the flotation would be. We therefore had to devise a way of reducing—
Mr. Morgan rose—
Mr. Heathcoat-Amory: Will the hon. Gentleman forgive me? He pushed me right up against the clock; and I have some other remarks to make.
We therefore had to find a way of reducing the allocation to institutions and overseas investors, which we did, while continuing to give preference to registered customers, in so far as the rules of the stock exchange allowed. Ninety-seven per cent. of customer applications received shares, and a quarter of all applications were met in full. We have taken another giant step forward in wider share ownership, and Conservative Members take pride in that.
I hope that we will proceed to the flotation of the generating companies over the next two months. The competitive and market positions of those two companies are, of course, very different from those of the 12 regional companies, and there are therefore corresponding differences in the offer structure.
My right hon. Friend the Secretary of State described why we will retain, for the time being, 40 per cent. of the shares. This will still ensure that the companies are placed firmly in the private sector, and the Government will be able to participate in any future increase in the value of the

945
generating companies. It is therefore a mark of confidence in the future of the companies, and in no way a retreat from our belief in private sector ownership and operation.
The hon. Members for Dundee, East (Mr. McAllion) and for Gordon (Mr. Bruce) mentioned Scotland. The flotation of the Scottish companies is planned for May or June. The details will be decided by my right hon. Friend the Secretary of State for Scotland in the light of market conditions at that time. The Under-Secretary of State for Scotland—my hon. Friend the Member for Eastwood (Mr. Stewart)—has listened to hon. Members' detailed points.
The programme of privatisation upon which we have embarked is already achieving a double benefit—substantial proceeds for the taxpayer and wider share ownership, particularly a high degree of employee share ownership. My hon. Friend the Member for Rochford (Dr. Clark) reminded the House that some 98 per cent. of eligible employees have taken up shares in the regional companies.
The hon. Member for Cardiff, West (Mr. Morgan) was dismissive about the number of shareholders that these companies now have, but we know that it is a far more genuine form of public ownership than having one monolithic state corporation controlled by a handful of politicians and civil servants in Whitehall.
Mr. Morgan rose—
Mr. Heathcoat-Amory: I am answering the hon. Gentleman's points. He also referred to two generating companies, which he described as a duopoly. I remind him that there are three in England alone. The hon. Gentleman perhaps forgot Nuclear Electric plc, as well as the Scottish companies and the growing number of independent generators.
The hon. Member for Pontefract and Castleford (Mr. Lofthouse) mentioned coal. I respect his comments, as I respect him. The electricity market puts all fuel suppliers under pressure, but I believe that British Coal will continue to win a substantial share of the market if it maintains the productivity improvements that have occurred in recent years.
Energy efficiency was mentioned and forms part of the Opposition's critical motion. It is alleged that energy efficiency is somehow put at risk by the new electricity structure which we have created. The reverse is the case. Instead of electricity costs being buried in state monopolies, we have created a system of open competitive pricing, so that the customer can choose the most price-efficient, most energy-efficient, supply. Exactly the right price signals are now sent to those who are in a position to take energy-saving measures.
So it is with the generators—instead of simply passing through all their costs on the old cost-plus basis, we have now created a structure whereby they will make more money by being more fuel efficient. The clearest possible incentive for energy efficiency is now built into the system.
We have developed a successful formula of public regulation and private operation. This has guided our reforms in the Water Act 1989, the Environmental Protection Act 1990 and the Electricity Act 1989.
The Opposition's reaction to these developments is to go back to nationalisation, state control and political
946
interference, putting ownership, regulation and control back in the same hands. That is a recipe for stagnation and inefficiency.
Mr. Don Dixon rose in his place and claimed to move, That the Question be now put.
Question, That the Question be now put, put and agreed to.
Question put accordingly, That the original words stand part of the Question:—
The House divided: Ayes 226, Noes 297.

Division No. 39]

[10.00 pm

AYES

Adams, Mrs. Irene (Paisley, N.)

Ewing, Harry (Falkirk E)

Allen, Graham

Ewing, Mrs Margaret (Moray)

Alton, David

Fatchett, Derek

Anderson, Donald

Faulds, Andrew

Armstrong, Hilary

Fearn, Ronald

Ashton, Joe

Fisher, Mark

Banks, Tony (Newham NW)

Flynn, Paul

Barnes, Harry (Derbyshire NE)

Foot, Rt Hon Michael

Barron, Kevin

Forsythe, Clifford (Antrim S)

Battle, John

Foster, Derek

Beckett, Margaret

Foulkes, George

Beggs, Roy

Fraser, John

Beith, A. J.

Fyfe, Maria

Bell, Stuart

Galloway, George

Bellotti, David

Garrett, John (Norwich South)

Benn, Rt Hon Tony

Garrett, Ted (Wallsend)

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

George, Bruce

Benton, Joseph

Gilbert, Rt Hon Dr John

Bermingham, Gerald

Godman, Dr Norman A.

Bidwell, Sydney

Golding, Mrs Llin

Blair, Tony

Gordon, Mildred

Blunkett, David

Graham, Thomas

Boateng, Paul

Grant, Bernie (Tottenham)

Boyes, Roland

Griffiths, Nigel (Edinburgh S)

Bradley, Keith

Griffiths, Win (Bridgend)

Bray, Dr Jeremy

Grocott, Bruce

Brown, Gordon (D'mline E)

Hardy, Peter

Brown, Nicholas (Newcastle E)

Harman, Ms Harriet

Brown, Ron (Edinburgh Leith)

Hattersley, Rt Hon Roy

Bruce, Malcolm (Gordon)

Haynes, Frank

Buckley, George J.

Heal, Mrs Sylvia

Caborn, Richard

Henderson, Doug

Callaghan, Jim

Hinchliffe, David

Campbell, Menzies (Fife NE)

Hoey, Ms Kate (Vauxhall)

Campbell, Ron (Blyth Valley)

Hogg, N. (C'nauld & Kilsyth)

Campbell-Savours, D. N.

Home Robertson, John

Canavan, Dennis

Hood, Jimmy

Carlile, Alex (Mont'g)

Howarth, George (Knowsley N)

Clarke, Tom (Monklands W)

Howells, Geraint

Clay, Bob

Howells, Dr. Kim (Pontypridd)

Clelland, David

Hoyle, Doug

Clwyd, Mrs Ann

Hughes, John (Coventry NE)

Cohen, Harry

Hughes, Robert (Aberdeen N)

Cook, Robin (Livingston)

Hughes, Roy (Newport E)

Corbett, Robin

Hughes, Simon (Southwark)

Cousins, Jim

Illsley, Eric

Cox, Tom

Ingram, Adam

Cryer, Bob

Janner, Greville

Cummings, John

Johnston, Sir Russell

Cunliffe, Lawrence

Jones, Barry (Alyn & Deeside)

Dalyell, Tam

Jones, Ieuan (Ynys Môn)

Darling, Alistair

Jones, Martyn (Clwyd S W)

Davies, Rt Hon Denzil (Llanelli)

Kaufman, Rt Hon Gerald

Davies, Ron (Caerphilly)

Kennedy, Charles

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

Kilfedder, James

Dewar, Donald

Kirkwood, Archy

Dixon, Don

Lamond, James

Dobson, Frank

Leadbitter, Ted

Doran, Frank

Leighton, Ron

Douglas, Dick

Lestor, Joan (Eccles)

Dunnachie, Jimmy

Lewis, Terry

Dunwoody, Hon Mrs Gwyneth

Litherland, Robert

Eadie, Alexander

Livingstone, Ken

Evans, John (St Helens N)

Livsey, Richard

947

Lloyd, Tony (Stretford)

Robertson, George

Lofthouse, Geoffrey

Robinson, Geoffrey

Loyden, Eddie

Rogers, Allan

McAllion, John

Rooker, Jeff

McCartney, Ian

Rooney, Terence

Macdonald, Calum A.

Ross, Ernie (Dundee W)

McFall, John

Ross, William (Londonderry E)

McKay, Allen (Barnsley West)

Rowlands, Ted

McKelvey, William

Ruddock, Joan

McLeish, Henry

Salmond, Alex

McMaster, Gordon

Sedgemore, Brian

McWilliam, John

Sheerman, Barry

Madden, Max

Sheldon, Rt Hon Robert

Mahon, Mrs Alice

Shore, Rt Hon Peter

Marek, Dr John

Short, Clare

Marshall, David (Shettleston)

Skinner, Dennis

Marshall, Jim (Leicester S)

Smith, Andrew (Oxford E)

Martin, Michael J. (Springburn)

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

Martlew, Eric

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

Maxton, John

Smith, J. P. (Vale of Glam)

Meacher, Michael

Snape, Peter

Meale, Alan

Soley, Clive

Michael, Alun

Spearing, Nigel

Michie, Bill (Sheffield Heeley)

Steinberg, Gerry

Michie, Mrs Ray (Arg'l & Bute)

Stott, Roger

Moonie, Dr Lewis

Strang, Gavin

Morgan, Rhodri

Straw, Jack

Morley, Elliot

Taylor, Mrs Ann (Dewsbury)

Morris, Rt Hon A. (W'shawe)

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

Morris, Rt Hon J. (Aberavon)

Taylor, Matthew (Truro)

Mowlam, Marjorie

Thompson, Jack (Wansbeck)

Mullin, Chris

Turner, Dennis

Murphy, Paul

Vaz, Keith

Nellist, Dave

Wallace, James

Oakes, Rt Hon Gordon

Walley, Joan

O'Brien, William

Wardell, Gareth (Gower)

O'Hara, Edward

Wareing, Robert N.

O'Neill, Martin

Watson, Mike (Glasgow, C)

Orme, Rt Hon Stanley

Welsh, Andrew (Angus E)

Parry, Robert

Welsh, Michael (Doncaster N)

Patchett, Terry

Williams, Rt Hon Alan

Pike, Peter L.

Williams, Alan W. (Carm'then)

Powell, Ray (Ogmore)

Winnick, David

Prescott, John

Wise, Mrs Audrey

Primarolo, Dawn

Worthington, Tony

Quin, Ms Joyce

Wray, Jimmy

Randall, Stuart

Young, David (Bolton SE)

Redmond, Martin

Rees, Rt Hon Merlyn

Tellers for the Ayes:

Reid, Dr John

Mr. Ken Eastham and

Richardson, Jo

Mr. Thomas McAvoy.

NOES

Adley, Robert

Bonsor, Sir Nicholas

Aitken, Jonathan

Boscawen, Hon Robert

Alexander, Richard

Boswell, Tim

Alison, Rt Hon Michael

Bottomley, Peter

Allason, Rupert

Bottomley, Mrs Virginia

Amess, David

Bowden, A (Brighton K'pto'n)

Amos, Alan

Bowden, Gerald (Dulwich)

Arbuthnot, James

Bowis, John

Arnold, Jacques (Gravesham)

Boyson, Rt Hon Dr Sir Rhodes

Arnold, Sir Thomas

Brandon-Bravo, Martin

Ashby, David

Brazier, Julian

Aspinwall, Jack

Bright, Graham

Atkins, Robert

Brooke, Rt Hon Peter

Baker, Rt Hon K. (Mole Valley)

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

Baldry, Tony

Browne, John (Winchester)

Banks, Robert (Harrogate)

Bruce, Ian (Dorset South)

Batiste, Spencer

Buchanan-Smith, Rt Hon Alick

Beaumont-Dark, Anthony

Buck, Sir Antony

Bellingham, Henry

Budgen, Nicholas

Bendall, Vivian

Burns, Simon

Bennett, Nicholas (Pembroke)

Burt, Alistair

Benyon, W.

Butler, Chris

Bevan, David Gilroy

Butterfill, John

Biffen, Rt Hon John

Carlisle, John, (Luton N)

Blackburn, Dr John G.

Carrington, Matthew

Blaker, Rt Hon Sir Peter

Carttiss, Michael

Body, Sir Richard

Cash, William

948

Chalker, Rt Hon Mrs Lynda

Hicks, Robert (Cornwall SE)

Channon, Rt Hon Paul

Higgins, Rt Hon Terence L.

Chapman, Sydney

Hill, James

Chope, Christopher

Hind, Kenneth

Churchill, Mr

Hogg, Hon Douglas (Gr'th'm)

Clark, Rt Hon Alan (Plymouth)

Hordern, Sir Peter

Clark, Dr Michael (Rochford)

Howard, Rt Hon Michael

Clark, Sir W. (Croydon S)

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

Colvin, Michael

Howarth, G. (Cannock & B'wd)

Conway, Derek

Howell, Rt Hon David (G'dford)

Coombs, Anthony (Wyre F'rest)

Howell, Ralph (North Norfolk)

Coombs, Simon (Swindon)

Hughes, Robert G. (Harrow W)

Cope, Rt Hon John

Hunt, David (Wirral W)

Cormack, Patrick

Hunt, Sir John (Ravensbourne)

Couchman, James

Irvine, Michael

Cran, James

Irving, Sir Charles

Critchley, Julian

Jack, Michael

Currie, Mrs Edwina

Jackson, Robert

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

Janman, Tim

Davis, David (Boothferry)

Jessel, Toby

Day, Stephen

Johnson Smith, Sir Geoffrey

Devlin, Tim

Jones, Gwilym (Cardiff N)

Dicks, Terry

Jones, Robert B (Herts W)

Douglas-Hamilton, Lord James

Jopling, Rt Hon Michael

Dover, Den

Kellett-Bowman, Dame Elaine

Dunn, Bob

Key, Robert

Durant, Sir Tony

King, Roger (B'ham N'thfield)

Dykes, Hugh

King, Rt Hon Tom (Bridgwater)

Emery, Sir Peter

Kirkhope, Timothy

Evans, David (Welwyn Hatf'd)

Knapman, Roger

Evennett, David

Knight, Greg (Derby North)

Fairbairn, Sir Nicholas

Knowles, Michael

Favell, Tony

Knox, David

Fenner, Dame Peggy

Lamont, Rt Hon Norman

Field, Barry (Isle of Wight)

Latham, Michael

Finsberg, Sir Geoffrey

Lawson, Rt Hon Nigel

Fishburn, John Dudley

Lee, John (Pendle)

Fookes, Dame Janet

Lloyd, Sir Ian (Havant)

Forman, Nigel

Lloyd, Peter (Fareham)

Forsyth, Michael (Stirling)

McCrindle, Sir Robert

Forth, Eric

MacGregor, Rt Hon John

Fowler, Rt Hon Sir Norman

MacKay, Andrew (E Berkshire)

Franks, Cecil

McLoughlin, Patrick

Freeman, Roger

Madel, David

French, Douglas

Marshall, Sir Michael (Arundel)

Gale, Roger

Martin, David (Portsmouth S)

Gardiner, Sir George

Maude, Hon Francis

Garel-Jones, Tristan

Maxwell-Hyslop, Robin

Gill, Christopher

Meyer, Sir Anthony

Gilmour, Rt Hon Sir Ian

Miller, Sir Hal

Glyn, Dr Sir Alan

Mills, Iain

Goodhart, Sir Philip

Miscampbell, Norman

Goodlad, Alastair

Mitchell, Andrew (Gedling)

Gorman, Mrs Teresa

Mitchell, Sir David

Grant, Sir Anthony (CambsSW)

Moate, Roger

Greenway, Harry (Ealing N)

Monro, Sir Hector

Greenway, John (Ryedale)

Montgomery, Sir Fergus

Gregory, Conal

Morris, M (N'hampton S)

Griffiths, Sir Eldon (Bury St E')

Morrison, Sir Charles

Griffiths, Peter (Portsmouth N)

Moss, Malcolm

Grist, Ian

Moynihan, Hon Colin

Ground, Patrick

Mudd, David

Grylls, Michael

Neale, Sir Gerrard

Hague, William

Nelson, Anthony

Hamilton, Hon Archie (Epsom)

Neubert, Sir Michael

Hamilton, Neil (Tatton)

Nicholls, Patrick

Hampson, Dr Keith

Nicholson, David (Taunton)

Hanley, Jeremy

Nicholson, Emma (Devon West)

Hannam, John

Onslow, Rt Hon Cranley

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

Oppenheim, Phillip

Hargreaves, Ken (Hyndburn)

Page, Richard

Harris, David

Paice, James

Haselhurst, Alan

Patten, Rt Hon Chris (Bath)

Hawkins, Christopher

Patten, Rt Hon John

Hayes, Jerry

Pattie, Rt Hon Sir Geoffrey

Hayhoe, Rt Hon Sir Barney

Pawsey, James

Hayward, Robert

Peacock, Mrs Elizabeth

Heathcoat-Amory, David

Porter, Barry (Wirral S)

Heseltine, Rt Hon Michael

Porter, David (Waveney)

Hicks, Mrs Maureen (Wolv' NE)

Portillo, Michael

949

Powell, William (Corby)

Taylor, Ian (Esher)

Price, Sir David

Taylor, John M (Solihull)

Raison, Rt Hon Sir Timothy

Taylor, Teddy (S'end E)

Rathbone, Tim

Tebbit, Rt Hon Norman

Redwood, John

Temple-Morris, Peter

Riddick, Graham

Thompson, D. (Calder Valley)

Ridley, Rt Hon Nicholas

Thompson, Patrick (Norwich N)

Ridsdale, Sir Julian

Thornton, Malcolm

Rifkind, Rt Hon Malcolm

Thurnham, Peter

Roberts, Sir Wyn (Conwy)

Townend, John (Bridlington)

Roe, Mrs Marion

Tracey, Richard

Rossi, Sir Hugh

Tredinnick, David

Rost, Peter

Trippier, David

Rumbold, Rt Hon Mrs Angela

Trotter, Neville

Ryder, Richard

Twinn, Dr Ian

Sackville, Hon Tom

Vaughan, Sir Gerard

Sayeed, Jonathan

Viggers, Peter

Shaw, David (Dover)

Wakeham, Rt Hon John

Shaw, Sir Giles (Pudsey)

Walker, Bill (T'side North)

Shaw, Sir Michael (Scarb')

Walker, Rt Hon P. (W'cester)

Shelton, Sir William

Waller, Gary

Shephard, Mrs G. (Norfolk SW)

Ward, John

Shepherd, Colin (Hereford)

Wardle, Charles (Bexhill)

Shepherd, Richard (Aldridge)

Warren, Kenneth

Shersby, Michael

Watts, John

Smith, Sir Dudley (Warwick)

Wells, Bowen

Smith, Tim (Beaconsfield)

Wheeler, Sir John

Soames, Hon Nicholas

Whitney, Ray

Speed, Keith

Widdecombe, Ann

Speller, Tony

Wilkinson, John

Spicer, Sir Jim (Dorset W)

Wilshire, David

Spicer, Michael (S Worcs)

Winterton, Mrs Ann

Squire, Robin

Winterton, Nicholas

Stanbrook, Ivor

Wolfson, Mark

Stanley, Rt Hon Sir John

Wood, Timothy

Steen, Anthony

Woodcock, Dr. Mike

Stern, Michael

Yeo, Tim

Stevens, Lewis

Young, Sir George (Acton)

Stewart, Allan (Eastwood)

Younger, Rt Hon George

Stewart, Andy (Sherwood)

Stokes, Sir John

Tellers for the Noes:

Sumberg, David

Mr. Nicholas Baker and

Summerson, Hugo

Mr. Irvine Patnick.

Tapsell, Sir Peter

Question accordingly negatived.
Question, That the proposed words be there added, put forthwith pursuant to Standing Order No. 30 (Questions on amendments), and agreed to.
MR. SPEAKER forthwith declared the main Question, as amended, to be agreed to.
Resolved,
That this House congratulates the Government on the restructuring of the electricity supply industry in England and Wales, the highly successful flotation of the regional electricity companies and its plans for floating National Power and PowerGen; and welcomes the many benefits this privatisation will bring to consumers, employees arid the taxpayer.

Orders of the Day

  OVERSEA SUPERANNUATION BILL
  Order for Second Reading read.
  Motion made, and Question put forthwith, pursuant to Standing Order No. 90 (Second Reading Committees), That the Bill be now read a Second time.
  Question agreed to.
  Bill accordingly read a Second time.
  Ordered,
  That the Bill be committed to a Select Committee of Seven Members, Four to be nominated by the House and Three by the Committee of Selection;
  That there shall stand referred to the Select Committee—

  (a) any Petition against the Bill presented by being deposited in the Private Bill Office at any time not later than the fourteenth day after this day; and

  (b) any Petition which has been presented by being deposited in the Private Bill Office and in which the Petitioners complain of any amendment as proposed in the filled-up Bill or of any matter which has arisen during the progress of the Bill before the said Committee,

  being a Petition in which the Petitioners pray to be heard by themselves, their Counsel or Agents;
  That if no such Petition as is mentioned in sub-paragraph (a) above is presented, or if all such Petitions are withdrawn before the meeting of the Committee, the order for the committal of the Bill to a Select Committee shall be discharged and the Bill shall be committed to a Standing Committee;
  That any Petitioner whose Petition stands referred to the Select Committee shall, subject to the Rules and Orders of the House and to the Prayer of his Petition, be entitled to be heard by himself, his Counsel or Agents upon his Petition provided that it is prepared and signed in conformity with the Rules and Orders of the House, and the Member in charge of the Bill shall be entitled to be heard by his Counsel or Agents in favour of the Bill against the Petition;
  That the Committee have power to report from day to day the Minutes of the Evidence taken before it;
  That Three be the Quorum of the Committee.—[Mr. Sackville.]

  REPRESENTATION OF THE PEOPLE BILL
  Order for Second Reading read.
  Motion made, and Question put forthwith, pursuant to Standing Order No. 90 (Second Reading Committees), That the Bill be now read a Second time.
  Question agreed to.
  Bill accordingly read a Second time, and committed to a Standing Committee.—[Mr. Sackville.]

  BROADCASTING, &c.
  Ordered,
  That Mr. Graham Bright be discharged from the Select Committee on Broadcasting, &c., and that Mr. Humfrey Malins be added to the Committee.—[Mr. Sackville.]

East Lancashire Training and Enterprise Council
Motion made, and Question proposed, That this House do now adjourn.—[Mr. Sackville.]
10.16 pm
Mr. Ken Hargreaves: I am grateful for the opportunity for the debate. I welcome the presence of my hon. Friend the Member for Pendle (Mr. Lee) and the hon. Member for Burnley (Mr. Pike).
Over the past few years a great deal has been written and said on the subject of training. I welcome that, as I welcome the recognition by the Government that improvement in training is one of the keys to Britain's future prosperity. The Government's training programme is probably one of the most ambitious and successful that the country has ever seen. In deciding last year to spend £2·5 billion on training, two and a half times as much in real terms as in 1979, the Government were acting wisely. We must ensure that young people and the long-term unemployed can hold down jobs by equipping them with the modern skills which employers demand and need to have in a competitive world.
Training benefits employee and employer alike. The employee who has undergone training is more likely to get a job, to keep it and to earn a reasonable wage. The employer benefits from his work force's greater skills and efficiency which will allow him to be more competitive.
To be successful, any training scheme must have the enthusiastic support of employers. I believe that training and enterprise councils have that support. They have it because the councils are employer-led, making use of local people who have proved their success in industry and in commerce. Local people are the best to deal with training and enterprise because they know the needs of the area. I welcome the setting up of the 82 training and enterprise councils and wish to comment especially on East Lancashire TEC.
I am confident that ELTEC will succeed in ensuring high-quality training in east Lancashire. Having known Mark Price when he was managing director of a local subsidiary of GEC, I believe that we are fortunate to have him as the chief executive, as we are to have Peter Hornby as deputy chief executive and Tony Cann as ELTEC's enthusiastic chairman.
In addition to industrialists, ELTEC has on its board an ethnic director, a trade unionist, the leader of Lancashire county council, the local chief education officer and the manager of a local area hospital group. While half the management team is seconded from the Training Agency, the other half is, somewhat unusually, from areas outside the Training Agency. The board and staff at ELTEC are dedicated to their mission to improve the economy of east Lancashire. There used to be a saying that Britain's bread hangs by Lancashire's thread. Sadly, with the decline of Lancashire's textile industry, that is no longer true. Nevertheless, manufacturing is still of vital importance to the economy of not only east Lancashire but the United Kingdom as a whole.
ELTEC is the TEC in which the proportion of the work force in manufacturing is highest—some 49 per cent. in Hyndburn compared with 24 per cent. in the United Kingdom as a whole. Not surprisingly, therefore, I regard
952
East Lancashire TEC as the most important one. Its success or failure is of vital importance to the local community and the country.
Mark Price and his team are well equipped to ensure that people go on training courses which are appropriate to their needs and the needs of potential employers, thus ensuring that the training provided leads directly to employment. They are well qualified to ensure that the many small and growing businesses that we have in east Lancashire receive the necessary support and advice to enable them to prosper. As TECs are employer-led, they are well qualified to ensure that there is an increased commitment to training by local employers. So often in the past, that commitment was not there totally, and when necessary cost-cutting exercises had to be undertaken, training always suffered.
In a recession such as we are experiencing it is not easy to persuade companies to invest in people, not because they do not believe that it is right to do so, but because they face serious short-term financial difficulties. By identifying and promoting the benefits of training, to not only the local community and individuals but local companies and their long-term needs, ELTEC seeks to change previous attitudes towards training and raise the priority of investment in skills.
ELTEC has arranged a major conference on 22 January to promote the training ethic in east Lancashire, and provide company membership of ELTEC. Some 500 people are expected to attend. The theme of the conference will be "training is the future". It certainly is the future for my constituency and for east Lancashire if we are to prevent the decline of the area and persuade our young people to stay there, work there and eventually invest there and not, as so many have done, to migrate to the south-east.
Young people need to have ready access to good information about local education and training opportunities, the qualifications to which they lead, and the educational, training and employment possibilities that lie beyond. They need good counselling and a clear statement of their entitlement to future education and training.
In Hyndburn there are four providers of youth training. Business Support Unit Ltd. is ELTEC's third largest YT provider and currently offers training to 398 young people. North Lancs Training Group is one of the few group training schemes operating in the furniture and timber industries. The scheme caters for approximately 180 young people at present, across a range of craft occupations which include cabinet-making, carpentry, joinery and wood machinery. Lucas Body Systems, Rists, part of the Lucas group, has set up a purposely equipped training centre near its Accrington works, where 42 young people are currently undergoing training in a variety of production and assembly skills, while Hyndburn Community Services Project, affiliated to the excellent Accrington and Rossendale college, is a facility of which the primary function is the development of young people with special needs. It seeks to prepare its 71 young people with the skills and motivation to succeed in open employment. Those four schemes account for £1·17 million of ELTEC's YT budget and all four do excellent work.
In addition to those schemes, others in east Lancashire offer specialist training, such as Training 2000 which is the major provider of engineering craft and technician

953
training, while the construction industry training board, via the local college, offers construction craft training in a variety of occupations.
We know what we have to do to ensure a bright future for east Lancashire. By setting up the TECs the Government have increased the opportunity to do it. ELTEC has already demonstrated that it is equal to the task.
Mr. Peter L. Pike: The hon. Gentleman has emphasised the importance of training and ELTEC in north-east Lancashire, which includes my constituency. Does he recognise that training is important not only in the areas which he mentioned but for management? If industry and business are to survive, we also need trained, experienced, expert management.
Mr. Hargreaves: Yes, I agree with that and I am grateful to the hon. Gentleman for being here to make that point. We must ensure that nothing prevents ELTEC from achieving its aims.
In creating the TECs the Government clearly recognised that the traditional programmes were not producing the results required. I hope that the Minister will tell us whether he believes that that was in some way due to the programmes themselves. If so, will he give an assurance that the Government are prepared to listen to what TECs, which are close to the problems, see as necessary? If TECs are to be successful, it is important that the views of those with responsibility for making them so are not only listened to, but acted on. Equally, it is vital that TECs consult widely local interests and local expertise in education and training, and act upon that information.
I welcome the fact that employers' investment in training has risen to record levels. I hope that that will encourage the Minister to ensure that TECs do not fail to do the job that they have been given to do through a lack of resources. It is a matter of some concern that in real terms the budget for 1991–92 is about 30 per cent. below expenditure incurred in 1989–90 when TECs were first created—£16 million last year compared with £13·4 million in 1991–92. It would be a tragedy if underfunding meant that ELTEC could not succeed as effectively as it might otherwise do.
All of us would want the Minister to assure us that the reduction in expenditure has taken full account of the skills gap between ourselves and our international and European competitors. Have we taken account of recent developments in training in other countries·for example, in Italy, France and Germany? Bearing in mind the effect of those developments by our competitors, will our training budget, not least that of TECs, be kept under constant review? We must not give TECs too many tasks and too few resources. The main task is to put the money available to good use.
In the past four years the Government, to their credit, have increased spending on training by 60 per cent. at a time when unemployment fell by half. It does not seem unreasonable, therefore, to expect more resources for training now that unemployment is, unfortunately, increasing.
TECs were created to deal with local circumstances. I believe that they will succeed, but the chances of success will be greatly increased if TECs are allowed to get on with the task that they have been given and if bureaucracy or interference is kept to an absolute minimum, once the
954
Government are satisfied that TECs are consulting locally and, therefore, can act in the best interests of the area which they serve.
It is vital for the future of our country that we succeed in changing attitudes to training, so that the skills of our people compare favourably with those of our competitors. Yesterday someone talking on a completely different subject said to me that if something is worth exhortation, it is worth legislation. I hope that attitudes can be changed by education and exhortation, but the issue is so important that neither legislation nor fiscal steps should be ruled out if education and exhortation fail.
10.28 pm
Mr. John Lee: I am grateful to my hon. Friend the Member for Hyndburn (Mr. Hargreaves) for allowing me to contribute to this Adjournment debate. I am particularly delighted to have the opportunity to speak in what I believe is the first debate in this House on a training enterprise council. As my hon. Friend the Minister knows, when I was a Minister at the Department of Employment I had a modest role in the creation and promotion of TECs, and therefore I have a particular interest in them.
I was fortunate to have an early opportunity last year to visit East Lancashire training enterprise council, my local TEC, and to hear from the chairman, Tony Cann, and the chief executive, Mark Price, of their development plans. As my hon. Friend has said, ELTEC is fortunate in having such committed and enthusiastic leadership.
I shall concentrate my remarks on the organisations in Pendle which work with ELTEC and the delivery of programmes. My constituency has the second highest percentage of people in manufacturing employment in the country—just over 55 per cent.
The largest provider in Pendle is the Pendle Training Group which focuses on training in engineering, electronics, electrical work, construction, care, catering and retail. It operates from a purpose-built centre in Nelson under Jim Heaton and his team. It is reputed to have the best equipped CNC training facility in the United Kingdom. Pendle Training Group has a close relationship with ELTEC, which influences between 75 per cent. and 80 per cent. of its activity. It is a major provider of employment training and youth training. Through ET it is providing continuous updating skills to several hundred adults and it is striving to develop a compact for engineering skills with local employers in conjunction with ELTEC.
In addition the Pendle Training Group has had a dialogue with Nelson and Colne college, my local tertiary college, with a view to developing training in tourism and leisure.
The Pendle re-employment project under Marian Wiseman focuses on providing training for clerical-administration work, woodworking, some building, horticulture and care. It also provides a number of places for trainees with special needs. I look forward to presenting to PRP its approved training organisation status award—the first in east Lancashire for employment training—on 25 January.
In recent discussions with PRP I know that it is concerned about three particular matters. First, it is concerned about the role of the training agent. It would prefer to be able to recruit directly. Secondly, it is worried about the likely 31 per cent. reduction in overall funding

955
and either having to manage with less money per trainee or having to cut the number of trainees. That is a particularly worrying feature with unemployment locally beginning to rise. Thirdly, last year, 80 per cent. of PRP's trainees had special needs and it is especially concerned about their needs given the financial pressures. It has also asked me to ask my hon. Friend the Minister whether any future developments are planned towards community-based projects, perhaps on a pilot basis.
Another provider is College Training Services in Colne under the direction of Ken Williamson. He welcomes the flexibility that ELTEC has brought to training, but again that college has drawn attention to the fact that there has been a reduction in the amount of funding available to deliver quality training as compared with the previous Manpower Services Commission—Training Agency structure for special needs trainees. While ELTEC is trying to make performance-related funding applicable to all schemes, College Training Services makes the point that there will be a vast difference in performance achievement between more and less able young people.
We also have a number of other specialist organisations in Pendle that work closely with ELTEC. BCD under David Owen occupies a prime site in the Arndale centre in Nelson and provides hair and beauty care skills with an almost 100 per cent. record of placement throughout north-east Lancashire in hairdressing salons. It is especially pleasing that a substantial number of its former trainees have gone on to become self-employed.
For some years Rolls-Royce at Barnoldswick has undertaken apprentice training under the auspices of YT. Undert training manager Ray Aspin the company has 53 apprentices at various stages of training who are currently following EITB—engineering industry training board—programmes. Brian Carter, the facility manager of the Barnoldswick plant, is a director of ELTEC.
The Pendle Enterprise Trust under director Ron Morrish is currently working with ELTEC on the enterprise allowance scheme and on improving the quality of Young Enterprise. It hopes to develop an increasingly positive relationship with ELTEC.
The TECs programme is a unique concept which is succeeding in bringing local industry into a more formalised training structure and, for the first time, giving those running local companies a real opportunity to target skills training to the needs of regional industry. I urge my hon. Friend the Minister to do all that he can to ensure that ELTEC and others like it have the resources to fulfil their role. Future prosperity and employment opportunities demand nothing less.
10.34 pm
The Parliamentary Under-Secretary of State for Employment (Mr. Robert Jackson): I am grateful to my hon. Friends the Members for Hyndburn (Mr. Hargreaves) and for Pendle (Mr. Lee) for raising such an important subject in this Adjournment debate. I pay tribute to the role played by my hon. Friend the Member for Pendle in establishing the training and enterprise councils when he was at the Department of Employment, and, as he said, this is the first debate that there has been
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on them. I hope that it will not be the last, and that future debates will be as well-informed and constructive as tonight's debate has been.
Training and enterprise councils have been a runaway success that certainly includes east Lancashire. The TEC initiative was launched in March 1989, and in less than two years we have seen established the full network of 82 TECs in England and Wales. Forty six are fully operational, and the remainder will join them by this summer. That remarkable achievement was possible only because of the enthusiasm and commitment of 1,200 key business and community leaders in all parts of England and Wales. They and their officers and staff have given time and energy in putting their TECs on the map, and east Lancashire is no exception. In my travels since last July, I have met many of the people concerned, and it is phenomenal to see the effort that is being deployed. I support the remarks made by both my hon. Friends about the work of particular individuals.
The chairman of east Lancashire's TEC, Mr. Tony Cann, has proved his ability in the commercial world many times over. He has set up a number of manufacturing companies which have become world leaders and which have won the Queen's award for export. He has built up a strong board of TEC directors, and continues to shape it, to ensure that it is representative of the business interests and people of east Lancashire.
We now have, for the first time ever, a training and enterprise structure led by top business leaders and other key local people who have the power and the resources to apply local solutions to local needs. The TECs have a major role at local level, in bringing about the high-skill, high-productivity economy that this country needs. There is a growing consensus about the importance of that initiative. Last week, I participated in a meeting of the National Economic Development Council, and was delighted to see support for the initiative coming from the Trades Union Congress as well as from the Confederation of British Industry. I pay tribute also to the hon. Member for Burnley (Mr. Pike) for his constructive intervention in tonight's debate.
My hon. Friend the Member for Hyndburn emphasised that the principle underlying training and enterprise councils is that they should be business-led and local. I may add that they are based also on the principle of voluntarism. Localism is important because of the immense variety in different circumstances, labour markets and training markets throughout the country. There is an enormous difference between, for example, east Lancashire and my own area of south-west Oxfordshire.
The fundamental reason for putting business in the lead in training emerged clearly from a study of training funding conducted in 1986, which showed that, at that time, individuals invested £8 billion annually; the state invested £7 billion, which included company tax concessions; and employers invested £18 billion. This country's training effort depends absolutely on the attitude and approach of employers, and it is a mistake to put the state at the centre of the picture. The situation can be transformed only by employers acting upon their responsibilities to pursue better profits, by improving their training efforts.
We must build on that through business leadership. The Government spending on training to which both my hon. Friends alluded increased substantially over the past

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decade—some threefold in real terms—but the fact remains that any real improvement will come by business leadership.
We attach great importance to the principle of voluntarism, and in that I do not entirely agree with the remarks of my hon. Friend the Member for Hyndburn about exhortation and legislation. One can make a good theoretical case for exercising legislative compulsion, but the translation of legislative compulsion into reality involves the creation of political and bureaucratic structures, which detract from the essentially market-based nature of training and from the necessity that training efforts should be employer-led. The TECs represent an option for a market-based and employer-led approach to training which is going to achieve what we need to achieve—a fundamental cultural change in attitudes to training, with ownership of training programmes by individuals and employers. The problem with legislative compulsion is that it does not support those as it should.
Britain has quite a lot of experience of legislative compulsion in training. That experience was not a positive experience. If we have a training problem, its roots go back to the 15 years when we exercised extensive structures of legislative compulsion. The only country which has such an extensive arrangement for compulsion is France. The other countries upon which we might choose to model ourselves, notably the Federal Republic of Germany, Japan and the United States, are essentially using voluntaristic approaches to training.
Therefore, our basic approach is to use the training and enterprise councils to ensure that local business leadership, under contract to the Government, can manage Government training programmes and build upon them as a basis for improving the total training effort under the auspices of business. In that connection, an important new initiative was recently announced by my right hon. and learned Friend the Secretary of State. The investors in people initiative sets a new national standard for effective investment in people. It is a standard which will be the foundation for an action programme, aimed at encouraging employers to plan, act on and to review the training needs of all their employees to achieve business objectives. The investors in people initiative has been developed by the national training task force, and the training and enterprise councils will lead on its local implementation in their area. It will be the device by which they are able to carry a crusade of training into local businesses and local firms, and that will play a key role in the transformations that we are seeking.
My hon. Friend the Member for Hyndburn referred to the idea that TECs should be local. We are very keen that they should be given the freedom to find local solutions to local problems. That is something which the TECs have stressed very strongly and which we have been meeting. At least 25 per cent. of payments for youth training and employment training will normally be based on outputs, rather than time spent on programmes, and that will give the TECs a powerful incentive to decide how they will arrange for the people in their community to have high-quality training, leading to nationally-recognised vocational qualifications and to worthwhile jobs.
We have changed the system for the funding of the enterprise allowance scheme to give greater flexibility, and we have also merged budgets for business training and the enterprise allowance scheme so that TECs will have the
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flexibility that they have been asking for. Furthermore, we have transferred the responsibility for work-related further education—a programme worth about £100 million a year —to the TECs. That is evidence of our confidence in the future of TECs. Overall the budgets available for training enterprise councils have increased.
My hon. Friend the Member for Pendle asked about the possibility of community-based projects. That is an interesting idea and there may be a possible role for TECs in that. I have tried to outline the way in which we intend the TECs to develop and to grow. My hon. Friend the Member for Hyndburn asked for an assurance that the Government will listen to the training and enterprise councils and I am happy to give that assurance. We have indeed listened very closely to what they have been saying, and that is the basis upon which we have given the flexibilities that I have just described.
TECs can benefit from a provision announced in the last Budget which means that companies making donations to TECs can claim tax relief.
As I have emphasised, we have also cut down the bureaucracy to a minimum compatible with the principle of accountability to Parliament for the spending of taxpayers' funds.
TECs are unique and are learning from one another. We are striving to achieve the right balance between giving them the freedom that they need and the accountability required. TECs, more than any other enterprise, have the ability to bring about far-reaching and lasting benefits in the local economy. They will directly impact upon the well-being of a great number of people, from management to the operative level in every part of England and Wales, and it is in everybody's interest to ensure that they succeed.
My hon. Friend knows that ELTEC has been operational since May of last year. The board has drawn up creative and challenging plans and set itself a number of major tasks. Its members are using youth training and employment training to create more opportunities in the manufacturing sector, which, as both my hon. Friends stressed, and as the hon. Member for Burnley said, is so important in the east Lancashire economy, by offering training in greater skills.
They are encouraging manufacturing companies to recruit more from the ethnic community. At the same time they seek to develop the skills of the ethnic community to meet the needs of local industry. They are promoting greater co-ordination of enterprise agencies and others to improve the quality of services offered to start-ups and small businesses.
The centrepiece of east Lancashire TEC's plans is the establishment of a lifetime training programme. The programme's objective is to promote, organise and pump-prime the development and training of the existing workforce in east Lancashire. It aims to commission by March this year some 20,000 hours of training. This is an exciting proposal and it may well provide valuable lessons for replication in other parts of the country. It sits well with the investors in people initiative. I am certain that encouragement by way of pump-priming activities and the fostering of commitment to training and development will be much more effective than compulsory levy systems, which have failed us in the past. I look forward very much to hearing how lifetime training develops.
East Lancashire TEC also recognises the potential for developing education and industry links and has already drawn up plans to develop compact arrangements, to

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which my hon. Friend the Member for Pendle referred, in its area. As my hon. Friends know, east Lancashire's objectives have an important economic focus, as clearly set out in the TEC board's objectives. But let me quickly say that the TEC board also has a clear understanding of the social aspects of its responsibilities and of the need to include the disadvantaged within the provision and initiatives of the TEC. I have already given the example in respect of the ethnic communities. The fundamental measure of east Lancashire TEC's success will be the added value that it will bring to the local community.
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I know that my hon. Friends support the TEC initiative and east Lancashire TEC in particular. I give my hon. Friend the Member for Hyndburn my assurance that the Government will do everything in their power to ensure that the TECs prosper and grow and become a major vehicle for economic regeneration and development in every part of England and Wales, including east Lancashire itself.
Question put and agreed to.
Adjourned accordingly at fourteen minutes to Eleven o'clock.