Commons Sitting of 28 January 1991

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

    Housing Developments
    Mr. Steen: To ask the Secretary of State for Energy what statutory provisions cover consultations between the electricity industry and a developer prior to new house building developments.
    The Parliamentary Under-Secretary of State for Energy (Mr. David Heathcoat-Amory): There is no statutory requirement for formal consultation in the relevant electricity or planning legislation.
    Mr. Steen: Is my hon. Friend aware that new houses throughout the country are being built close to underground cables and overhead wires and without a guarantee of adequate supplies? That happens because there is no statutory requirement to consult the electricity industry. However, there is a statutory requirement to consult the National Rivers Authority before planning permission is granted. Will my hon. Friend say something to my constituents who are regularly plunged into darkness when the local sub-station is overloaded? Too many houses are being built without consultation with the electricity industry with the result that local electricity boards cannot cope despite all their efforts.
    Mr. Heathcoat-Amory: It is sensible for developers to consult the electricity companies before proceeding, to ensure adequacy of supply. But I assure my hon. Friend that the suppliers can levy reasonable charges on developers to recoup the cost of the necessary transmission lines and plant to service new developments. The charges do not fall on my hon. Friend's constituents.
    Mr. Tony Lloyd: As it is in new buildings that thermal efficiency is most advantageously applied, why is there no statutory requirement on developers to consult not only electricity suppliers but other energy suppliers to ensure that houses have the maximum energy efficiency?
    Mr. Heathcoat-Amory: The energy efficiency requirements for new houses are covered in the building regulations, which were updated and improved in April last year. They should improve the thermal efficiency of new houses by about 20 per cent.

    Electricity Privatisation
    Mr. Squire: To ask the Secretary of State for Energy what is the level of proceeds of the sale of the 12 regional electricity companies.
    The Secretary of State for Energy (Mr. John Wakeham): The sale of the 12 regional electricity companies will raise some £8 billion, more than £5 billion from the sale of the shares and almost another £3 billion from the injection of debt into the companies.
    Mr. Squire: Does my right hon. Friend agree that the high level of those figures is significant and reflects the great success of all those involved in what was a difficult flotation? In view of that large sum, will he suggest to my right hon. Friend the Chancellor of the Exchequer that at least some of the money could be spent advantageously on energy efficiency schemes both on their own merits and as a way of meeting global warming problems?
    Mr. Wakeham: I agree with my hon. Friend about the success of the sale. Privatisation in itself has several advantages for energy efficiency. First, the Electricity Act 1989, under which the companies were privatised, places an obligation on them to promote energy efficiency. Secondly, the creation of competition and a downward pressure on fuel prices should substantially improve energy efficiency. My ministerial committee, set up as a result of the Government's environmental White Paper, is pursuing many other avenues of energy efficiency.
    Dr. Kim Howells: Is the Secretary of State aware that a large tranche of shares in South Wales Electricity was bought by the Welsh water authority and that, given the way things are going with the sale of the regional electricity companies, we are liable to end up with Wales plc, which cannot be a vast improvement on the monopolies that preceded privatisation?
    Mr. Wakeham: Of course, the sale of the shares took place after the companies were put into the private sector. All the regulations were drawn up in accordance with stock exchange rules. As the hon. Gentleman knows, a golden share operates in the company. It would not be right for me to say anything further at this stage.
    Mr. Morgan: Even before the Government have received most of the proceeds of the sale of the regional electricity companies, we are once more being softened up by the aerial bombardment of "Star Trek" before the land invasion of the generating companies begins with the production of the pathfinder prospectus on Friday. Will the Secretary of State confirm that one thing that he has learnt from the disaster of the sale of the electricity distribution companies is that if one keeps back 40 per cent. and underprices 60 per cent., one has some hope of making up some of that underpricing two years later when one sells the remaining 40 per cent?
    Mr. Wakeham: The hon. Gentleman is an observer of the scene, but not a wholly dispassionate one. I do not accept his strictures on the sale of the regional electricity companies. I do not accept that they were underpriced or that the sale of the generating companies will be underpriced. We shall take proper care to ensure that the price struck is fair to taxpayers and investors. Naturally, the fact that we are selling only 60 per cent. rather than 100 per cent. will have to be taken into account.

    Oil Exploration
    Sir Anthony Durant: To ask the Secretary of State for Energy what is the progress of the 12th round of offshore licensing.
    The Parliamentary Under-Secretary of State for Energy (Mr. Colin Moynihan): I am delighted to say that we have received 115 applications covering 81 blocks in the 12th round of licensing. In addition, 37 companies have applied for acreage covering a further 66 blocks in the separate frontier round for the difficult areas north and west of the Shetland islands.
    Sir Anthony Durant: Will my hon. Friend welcome the co-operation between the Government and private enterprise on this venture in the North sea? What would be the effects if the interventionist policies of the Labour Opposition were put into effect in the North sea?
    Mr. Moynihan: This is my hon. Friend's first question since his knighthood and I am sure that the whole House will wish to congratulate him. It is undoubtedly true that a stable, fiscal regime, predictable and well-established criteria for licensing and an oil and gas market that maximises private sector investment are the keys to economic success. Some of the interventionism in the oil and gas market which the Labour party has made it clear that it would deploy would be counterproductive to the success record of the 1980s continuing into the 1990s.
    Dr. Godman: Our interventionist policies concerning the safety of men and women who work on rigs and platforms are far superior to those that the Government put into practice.
    On the licence negotiations, must not companies satisfy the Government about the environmental impact of their work? If so, could not the Government institute some of the recommendations in Cullen at this stage of the negotiations—for example, recommendation No. 17 on page 390 of the Cullen report which talks about the need to implement safety regulations and goal-setting objectives? Why do not the Government introduce some of those recommendations now?
    Mr. Moynihan: First, there is no question about the Government's commitment to implementing measures that will enhance safety in the North sea. The Government have been quick to respond fully to the Cullen report and to make it clear that safety is the No. 1 priority and that the recommendations will be implemented in full.
    If the hon. Gentleman connects his specific point with his first point about interventionism, he will note that Lord Cullen recognised that it was vital that private sector operators should provide a safety case for each platform and should set up a safety audit and that, working with our outstanding inspectorate, they should have the assistance of the public sector to ensure that we enhance safety in the North sea.
    As for environmentally sensitive blocks, the operators in the licensing round who wish to develop those quadrants must ensure that their environmental case is sound and persuade my colleagues in the Department and Ministers that that is the case.

    Gulf War (Ecological Consequences)
    Mr. Dalyell: To ask the Secretary of State for Energy if he will make available the detailed evidence on which he dismissed the scientific warnings given by Professor Paul Crutzen, head of the atmospherics physics department of the Max Planck Institute in Mainz, and Dr. Abdullah Toucan of the Massachusetts Institute of Technology, principal scientific adviser to King Hussein of Jordan, about the carbon monoxide, carbon dioxide, sulphur dioxide, hydrocarbon and photo-chemical smog results of the war in the middle east; and if he will place his detailed technical evidence in the Library.
    Mr. Wakeham: I did not dismiss the warnings of possible fires at Kuwaiti oil fields or criticise particular scientists, but I thought it right to make available the advice that I received on the environmental implications of such fires. That has been followed up by a study by the Meteorological Office which has been placed in the Library of the House.
    Since then Saddam Hussein has set on the course of deliberately polluting the waters of the Gulf, which is a gross act of environmental terrorism, and I believe that the whole civilised world will deplore that action. My right hon. Friend the Secretary of State for the Environment will be making a statement about it later this afternoon.
    Mr. Dalyell: Will the Secretary of State put the detailed evidence that he had from his Department in the Library? Is not it the case that the Government cannot say that they were not warned of the pumping of oil into the water to which the right hon. Gentleman referred? During the Consolidated Fund debate on 19 December, at column 403, I spoke for 55 minutes and gave a specific warning. Surely it is negligent of Ministers not to have taken precautions. As a senior member of the War Cabinet, will the Secretary of State consider the activities and the frivolous answers from that silly little boy, the hon. and learned Member for Grantham (Mr. Hogg), who masquerades as a Minister of State at the Foreign Office—
    Mr. Speaker: Order. The hon. Gentleman is spoiling his question.
    Mr. Wakeham: I think that these matters deserve more serious treatment than the hon. Gentleman appears to be giving them. I am sure that no one has ever underestimated the possibility of serious environmental terrorism. In the case to which the hon. Gentleman referred, I made accessible the best advice available to me on the environmental consequences. The report of the Meteorological Office has been put in the Library.
    It is absolutely clear that the fact that Saddam Hussein is capable of environmental terrorism of this kind—
    Mr. Dalyell: The Government were warned, but did nothing. Why did not the Government do anything?
    Mr. Wakeham: The Government were well aware of the threat. The fact that Saddam Hussein is capable of such environmental terrorism shows, once again, how essential it is that Kuwait should be freed from his grasp. It is because of that man that we have taken our action.
    Dr. Michael Clark: Does my right hon. Friend know whether Saddam Hussein was given such warnings and information about environmental pollution? Does he

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    know whether Saddam Hussein submitted himself to questions on this matter in the Iraqi Parliament? What evidence exists to show that Saddam Hussein took notice of those warnings or the concern of his parliamentary colleagues?
    Mr. Wakeham: My hon. Friend makes his point well. I add only that Saddam Hussein is well aware of the damage that he is doing to the world. That is why his actions are even more criminal than they would be if he were ignorant of such matters.
    Mr. Simon Hughes: As the right hon. Gentleman represents his Department in the War Cabinet, can he tell the House what advice and consultations he and his colleagues have had with European Community Commissioners and Ministers and the United Nations Environment Programme so that the full implications of the environmental risk in the middle east is at all times in the forefront of not only politicians' minds, but those of the military?
    Mr. Wakeham: There have been discussions and consultations among the allies, as well as wider discussions. My right hon. Friend the Secretary of State for the Environment will come to the House at 3.30 to make a proper statement.

    Domestic Heating
    Mr. Harry Greenway: To ask the Secretary of State for Energy if he will evaluate the respective cost of house heating by gas, electricity and oil; and if he will make a statement.
    Mr. Heathcoat-Amory: The cost of heating a house will vary according to the size and type of dwelling, the level of insulation, the comfort level required and the type of heating and fuel used. But the weekly cost of heating an average three-bedroom house by gas, electricity and solid fuel has been estimated at f10·25, £15·50 and £12·10 respectively.
    Mr. Greenway: I thank my hon. Friend for those figures, which will be helpful to people seeking to find the best way in which to heat their homes. Will my hon. Friend take steps to make better information available to people who need to make such decisions as there is precious little current information about?
    Mr. Heathcoat-Amory: I agree with my hon. Friend about the need to give accurate advice on this matter. He will be pleased to know that the new home energy efficiency scheme, which gives grants to low-income households, provides advice of this nature. We also have a new campaign to give information to those improving their houses or moving house, backed up by leaflets available from my Department. I shall ensure that my hon. Friend is sent a copy.
    Mr. Pike: Although these measures are welcome, will the Minister ensure that bodies selling heating appliances explain their thermal efficiency and running costs in a way that is understandable to the person buying them—because much of the official language that is used is not understandable to the purchaser?
    Mr. Heathcoat-Amory: We are pursuing the idea of an energy labelling scheme for such appliances. Clearly we
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    should like it to be compatible with schemes being worked up in other European countries so as to promote free trade too.
    Mr. Holt: Does my hon. Friend agree that, despite the new building regulations, we are still light years behind our European colleagues? Would not it be better if the Government legislated to stop the building of new houses, with single-glazed windows and inadequate insulation, so that people would have cheaper bills irrespective of whether they were for oil, gas or electricity? That would stop the present position, which is nonsensical in this modern day and age.
    Mr. Heathcoat-Amory: Our building regulations compare favourably with those of other European countries, but I agree about the need to improve the thermal efficiency of new houses. In April last year we improved the building regulations and raised standards, We shall see how that goes down generally and then consider the possibility of further improving the regulations in the next round.
    Mr. O'Hara: Is the Minister aware that in the judgment of Sheikh Yamani the interruption of supplies of oil from Iraq and Kuwait need not have—indeed, has not had—a major impact on the world's supply of oil? Does he therefore agree that the major fluctuations in the price of oil since the start of the Gulf crisis represent exploitation of that crisis for profit by the major oil companies? Will he conduct an urgent investigation into those activities?
    Mr. Heathcoat-Amory: I do not agree with the hon. Gentleman's analysis of the oil market; but I can confirm that oil stocks remain generally high.

    British Coal
    Mr. Batiste: To ask the Secretary of State for Energy what was the annual average increase in British Coal's productivity between 1961 and 1979, and between 1979 and 1989.
    Mr. Knowles: To ask the Secretary of State for Energy what was the annual average increase in British Coal's productivity between 1961 and 1979, and between 1979 and 1989.
    Mr. Wakeham: The average annual increase in the corporation's productivity between 1961 and 1978–79 was 2·5 per cent., and the average annual increase between 1978–79 and 1988–89 was 6·3 per cent.
    Mr. Batiste: Given the outstanding improvement in performance that my right hon. Friend has just described, does he agree that the single greatest constraint within which British Coal must still operate is the fact that it is in the public sector? Does he agree with the new year resolution expressed by Mr. Malcolm Edwards, commercial director of British Coal, that he will seek at the earliest opportunity the separation of the coal industry from the machinery of government so that its managers can concentrate on the interests of that industry alone?
    Mr. Wakeham: I agree with both points. There has been a significant improvement in British Coal's productivity, for which I pay tribute to it, but that productivity must continue to improve if British Coal is to hold its own in a competitive market.

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    I agree that the privatisation of British Coal is a desirable objective; it is a commitment of the Government and it will be done in the next Parliament.
    Mr. Knowles: Will my right hon. Friend confirm that, even so, in the lifetime of this Government British Coal's productivity has been almost double that of the previous two decades?
    Mr. Wakeham: Yes, certainly. British Coal's productivity is up 85 per cent. on pre-strike levels, which is excellent progress. It recently achieved an impressive weekly record output of just over 5 tonnes per man shift.
    Mr. Allen McKay: Does the Secretary of State agree that output per man shift depends on the number employed, and that the figure has increased only because of the number of miners who have been made redundant? As to privatisation, will the Minister assure the House and people outside it that in the unwelcome event of British Coal's being privatised, existing arrangements for concessionary fuel supplies or cash in lieu will remain in force?
    Mr. Wakeham: It is not for me to speculate about the privatisation that will occur during the next Parliament. All obligations to employees will be a proper matter for consideration at the appropriate time.
    Mr. Redmond: Does the Secretary of State accept that the Government are behaving in a stupid and irresponsible manner by not having a national energy plan? There is no point in increasing production if market forces are to dictate the amount of coal that the country produces. If it is left to market forces, we shall not meet the needs of the British people.
    Mr. Wakeham: I am not sure that the hon. Gentleman is right. The best way to meet the energy requirements of the nation and of the world is to encourage diversity of supply and that is the basis of the British plan.
    Mr. Barron: Does the Secretary of State accept that any further loss of contracts between British Coal and the generators after 1993 will be viewed as a very poor reward for the miners who have increased productivity in recent years? What action are the Government taking to stop the dumping of foreign coal in Britain, in the interests of not only British Coal but the nation?
    Mr. Wakeham: The Government have done more than any other to assist the industry by giving it financial support, and for the first time ever British Coal has long-term contracts with its customers, the generators. It therefore has the best opportunity of securing further long-term contracts, and it will do so because it has the potential to be the supplier of choice. That is the best way of securing the industry's long-term future.

    North Sea Oil and Gas
    Mrs. Margaret Ewing: To ask the Secretary of State for Energy if he will make a statement on North sea oil and gas developments presently under consideration by his Department.
    Mr. Moynihan: Draft plans for 11 new or incremental oil and gas development projects in the North sea are currently under detailed consideration by my Department.
    Mrs. Ewing: Given the extent of the developments to which the Minister referred, is his Department taking steps to ensure that contracts for the steel pipelines and production and exploration platforms required will be allocated to domestic steel mills? In particular, did the Department establish any contact with the Scottish Development Agency when it prepared its report on the future of Ravenscraig, Clydesdale and Dalzell, when the agency could have pointed out the potential contracts that would arise from the new developments?
    Mr. Moynihan: In the marketplace, suppliers will win contracts only if they deliver top-quality products within specification and on time. The capability to undertake work for the pipeline to which the hon. Lady refers does not exist in the United Kingdom at present because of the quality and thickness of pipes required. On the positive side, I assure the hon. Lady that all three jackets under consideration for Everest, Lomond and the separate riser platform have been awarded to Highland Fabricators. Of course, we take note of the success, or otherwise, of United Kingdom suppliers in that sector.
    Mr. Brandon-Bravo: As oil and gas sources are finite and should be conserved, can my hon. Friend the Minister comment on the Government's support and hopes for the future of converting coal into fuel oil? I refer particularly to the Point of Ayr project, which I and a number of my hon. Friends visited last Friday.
    Mr. Moynihan: On the second point, I am sorry that I was not with my hon. Friend when he made his visit and I shall follow that up in writing. On the first point, my hon. Friend is right to refer to the importance of a sensitive and sensible policy when it comes to the depletion of oil and gas reservoirs. In that context, we pay special care to ensure that the licence rounds, which have been taking place on average every two years in the offshore oil and gas sector, reflect the need for a sensible depletion policy in the long term.

    Alternative Energy
    Mr. Burns: To ask the Secretary of State for Energy if he will make a statement on his Department's investment in alternative sources of energy.
    Mr. Moynihan: Energy paper 55 "Renewable Energy in the UK: The Way Forward" set out my Department's strategy for the development of renewable energy sources. My Department's provision for research and development into renewable energy for this financial year is £20·3 million. This is due to increase by 20 per cent. in the next financial year.
    Mr. Burns: May I thank my hon. Friend for that answer? Would I be right in saying that, rather than simply mouthing platitudes about the need for renewable energy, his Department has provided the expenditure, which has doubled during the past 12 years, to ensure that we meet that challenge?
    Mr. Moynihan: My hon. Friend is absolutely correct. More than simply highlighting the importance of research and development, in which we have invested, my hon. Friend will be aware that we achieved a first by establishing a marketplace, through the non-fossil fuel obligation, to allow renewable projects which are both

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    environmentally acceptable and economically competitive to come on stream. I am sure that, like me, my hon. Friend welcomes the fact that 75 such projects were eligible in the first NFFO tranche and we hope that many more will be successful in the years to come in future tranches.
    Mr. Mullin: Is not the truth that, historically, the hon. Gentleman's Department has been as deeply in hock to the nuclear industry as the Department of Transport has been in hock to the road lobby? Will the Minister give us an assurance that he has now established with civil servants that they should take a serious and long-term interest in alternative sources of energy, and not sit around working out ways to sabotage research on the subject?
    Mr. Moynihan: I reject the hon. Gentleman's last comment, but I welcome the fact that he recognises that the Government have a clear commitment to ensure that renewable energy sources come on stream and that they must be environmentally acceptable, as well as economically competitive.
    Mr. Mullin: What about Salter's duck?
    Mr. Moynihan: From a sedentary position the hon. Gentleman refers to Salter's ducks. I am sure that, like me, he will welcome the fact that both parties have accepted that an independent review should be undertaken. Its findings will be carefully considered. The Government do not wish to put any hindrance in the way of renewable technology that can come on stream and is commercially competitive, as well as environmentally beneficial.
    Mr. Rost: Can my hon. Friend confirm that the best way that he can further help renewables is by increasing the number of power generation projects that he sanctions in the second tranche of the non-fossil fuel obligation, especially waste incineration into energy projects, which will also help the environment?
    Mr. Moynihan: I totally agree with my hon. Friend. I very much hope that, across the range of renewable energy technologies, many projects will come forward in the second tranche of the NFFO and that they can meet the criteria. The more projects that come forward, the more they will be welcomed by the Government.
    Mr. Dobson: Does the Minister agree that if we wasted less energy in Britain we would depend less on imported fuel from the Gulf and other insecure sources of supply? Will he make it a top priority to save energy, to develop alternative sources and to use coal, oil and gas produced here in Britain? To that end, will he instruct the generating companies to abandon their preposterous plans to import more oil, gas and coal and will he make them concentrate instead on energy saving rather than energy sales?
    Mr. Moynihan: I am always pleased to agree with the hon. Gentleman when it comes to energy matters, especially on energy efficiency and energy-saving policies, and to that end I agree with the thrust of his remarks. As regards oil and gas, of course we should like increased production and we should like to ensure that we do not need to become an importer. However the reality, which I know that he accepts, is that in recent months production has had to be restrained, despite world demand for increased production before the Gulf crisis, because of the importance of safety and of ensuring that topside emergency shutdown valves are in place. Safety has been
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    the top priority and that is the reason why production has not been at the highest possible level, as we should have liked.
    Mr. Butler: Will my hon. Friend summarise the current state of the Mersey barrage project?
    Mr. Moynihan: The Mersey Barrage Company reported to me last week. That report explained further the extensive discussions in which the company had engaged to analyse cost-benefit assessments in each Government Department as a result of meetings that it had held with those Departments. A further meeting will take place before Easter. We shall then assess the economic feasibility of the project, as well as the detailed scientific research that has accompanied it. Our aim is to give it as much support as possible, as long as it is commercially viable and meets all the important environmental criteria.

    Oil Exploration
    Mr. Michael Brown: To ask the Secretary of State for Energy how many exploration and appraisal wells were drilled on the United Kingdom continental shelf in 1990.
    Mr. Moynihan: During 1990, 224 exploration and appraisal wells were started on the United Kingdom continental shelf. This is the first time since UKCS activity began that drilling in a single year has exceeded 200 wells.
    Mr. Brown: Does my hon. Friend agree that that is a remarkable figure? Can he confirm that it is the highest since North sea exploration began back in 1964, and will he also confirm that the only threat to this expansion comes from the prospect of a Labour Government, who might again start intervening in the North sea with state-run corporations and set back the magnificent achievements of 1990?
    Mr. Moynihan: I entirely accept the thrust of my hon. Friend's argument—not least because the success that led to what he rightly described as the highest number of exploration well starts since the 1984 record of 109 is evidence of continuing confidence in the United Kingdom continental shelf. That confidence is wholly dependent on a stable fiscal regime, a comprehensive licensing regime and the opportunity for the private sector to excel where it excels best—in the marketplace for the development of oil and gas within the UKCS, and in exports. Any interventionism or return to state-owned control would be extremely damaging to that success story.
    Mr. Dobson: If the Minister thinks that the Tories' record in the North sea is such a wonderful success, how does he explain the fact that, last year and the year before, we were net importers of fuel?
    Mr. Moynihan: First, we were not net importers in cash terms. Secondly, as I have already told the hon. Gentleman—I am surprised that he did not take the point in my response to his last question—safety considerations had to lead to shutdowns and to working conditions for production that were less than optimal for maximum recovery. An example is the present need to handle dead rather than live crude. It was vital that Lord Cullen's recommendations be implemented as matter of urgency, and that the all-party agreement on topside valves be put in place, even if that meant that production would not

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    reach the levels that the hon. Gentleman would have liked. I am surprised that he does not know the answer to his own question.
    Mr. Moss: Will my hon. Friend confirm that last year was the first year of about six in which this country was a net importer of energy?
    Mr. Moynihan: Let me reinforce what I said to the hon. Member for Holborn and St. Pancras (Mr. Dobson). We were not a net importer in cash terms: furthermore, given the total activity on the UKCS, there is no doubt that we can and will increase production. Our net position will not be under threat once the essential safety work is completed. We shall then have not only high levels of production, but a safer North sea in which to operate.

    Energy Conservation
    Ms. Primarolo: To ask the Secretary of State for Energy if he will make a statement on the Government's policy for energy conservation.
    Mr. Wakeham: We continue to promote the adoption of cost-effective energy efficiency measures through a range of programmes and other services offered by the Energy Efficiency Office. A number of new initiatives, including the ministerial group on energy efficiency, were announced in the White Paper on the environment and we are now working to carry these forward.
    Ms. Primarolo: Is the Secretary of State aware that an estimated 6·6 million households suffer from fuel poverty as a result of inefficient fuel heating systems? Does he agree that the lessons learnt from the Gulf crisis and war and the fight over oil, combined with this Government's inefficient approach to energy conservation, mean that a national programme for energy conservation and energy use is urgently required if we are to address the country's energy problems?
    Mr. Wakeham: I agree this far with the hon. Lady—that there is a continuing need for greater energy efficiency. We estimate that about 20 per cent. of all the energy used in this country is wasted. However, we have made some progress. During the last 10 years gross domestic product has increased by 25 per cent. while our energy consumption has remained virtually unchanged. Both commercial and domestic energy efficiency are important. That is why the Government have introduced a home energy efficiency scheme. Grants are provided for basic insulation measures and advice is available for low-income households. We have built on the success of the community insulation project that led to the insulation of about 850,000 low-income homes.

  THE ARTS

    Welsh National Opera
    Mr. Maclennan: To ask the Minister for the Arts what representations he has received on its financial position from Welsh National Opera.
    Mr. Michael: To ask the Minister for the Arts what representations he has received about the future funding of the Welsh National Opera.
    The Minister for the Arts (Mr. Tim Renton): I have received a large number of representations on behalf of Welsh National Opera. Helpful discussions have taken place between the Arts Council of Great Britain, the Welsh Arts Council and the Welsh National Opera, together with a further detailed review of the company's financial position and planned touring commitments in England. I am informed that at its meeting on 30 January the Arts Council of Great Britain will consider a recommended increase in its grant to the Welsh National Opera of between £200,000 and £300,000 in 1991–92 and the two subsequent years.
    Mr. Maclennan: Although I recognise that enhancement fund expenditure is primarily a matter for the Arts Council, does the Minister accept that when it was set up it was recognised that Ministers would be interested in how the money was spent? The Welsh National Opera's quality is appreciated far beyond the bounds of the Principality and particularly in the midlands, where its excellence is widely acknowledged. Would the Minister regard it as an infringement of the arm's-length principle if he were to add his personal approval of the Welsh National Opera's work? Is he happy about the progress of the discussions to which he alluded? I was pleased to hear that a substantial increase in the WNO's grant is being considered.
    Mr. Renton: Yes, of course I am delighted to endorse the artistic quality, repertoire and singing of the Welsh National Opera. I approve and endorse the general criteria under which allocations are made from the enhancement fund. However, the individual allocations are traditionally an Arts Council responsibility. The hon. Gentleman may have forgotten that the Welsh National Opera received £175,000 from the Welsh Arts Council's part of the enhancement fund. At the Art Council's meeting next Wednesday a decision will be taken on whether to increase further the Welsh National Opera's touring grant.
    Mr. Michael: I welcome the Minister's positive response and also the endorsement of the Welsh National Opera by Scotland as well as by England. Does the Minister agree that it is important that the limited budget available to the Welsh Arts Council for other aspects of the arts in Wales should not be eroded to meet the Welsh National Opera's shortfall? Does he also agree that we hope his answer means that there will be a positive outcome for the Welsh National Opera without any such erosion, which would threaten the other arts in Wales?
    Mr. Renton: I do not want the other arts in Wales to be threatened. The Welsh Arts Council received about £750,000 from the enhancement fund. If it has decided that part of that money should be given to WNO, essentially for its work in Wales, that is a perfectly proper decision for it to take. I remind the hon. Gentleman that WNO is receiving a general increase of more than 8 per cent. in its grant for the year ahead and a 11·5 per cent. increase in its touring grant—in addition to the sum that the Arts Council will consider this Wednesday. On that basis, the hon. Gentleman, who has campaigned actively on this matter, should not cry foul too often.
    Mr. Cormack: I thank my right hon. Friend for his remarks. Will he convey the views that have been expressed this afternoon to the chairman of the Arts Council and tell him that there would be widespread

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    disappointment not only in the Principality but throughout this country if this excellent company had to close? We all expect—[Interruption]—or at least, most outside Hayes and Harlington expect, the Arts Council to do the right thing on Wednesday.
    Mr. Renton: I thank my hon. Friend for his support, which does not surprise me. I understand what he means about the widespread support for the WNO. Even the hon. Member for Bolsover (Mr. Skinner), who is not in his seat today, put his name to an early-day motion confirming, I think, "the brilliance of the singing and repertoire of the WNO". That shows that, although that Bench below the Gangway is empty this afternoon, the WNO's message has reached far in the land.
    Mr. Dicks: Many people in this country will still wonder why this subsidy from public funds is going to these organisations, wonderful though they may be. Will he tell the people of this country that he is thinking twice about the amount of money that is given to the arts from public funds—an amount that is increased per annum?
    Mr. Renton: I thank my hon. Friend for his comments. Perhaps he might like to get in touch with the hon. Member for Cardiff, South and Penarth (Mr. Michael) and have a good discussion on the subject. Generally, I am told that not enough money is being given to the arts. In successive public expenditure rounds, both my predecessors managed to obtain settlements in excess of the rate of inflation.
    Mr. Dicks: Shame.
    Mr. Renton: As in opera, it is always helpful to have someone crying "Shame" from the gallery. It reminds one that there is another voice.
    Mr. Fisher: I welcome the Minister's statement, which appears to resolve the Welsh National Opera crisis—that should never have been allowed to happen in the first place—and his assurance that that money will not be given at the expense of other Welsh Arts Council clients. But will he explain, first, whether his office will contribute money directly to the settlement and, secondly, whether the other companies that received a cash standstill budget or a cut of 9 per cent. in real terms—the Bristol Old Vic, the Lyric, Hammersmith, the Black Theatre Forum, the Three Choirs festival, the Eastern Orchestral Board, the Liverpool Playhouse and the Everyman theatre—will receive the same just settlement as Welsh National Opera?
    Mr. Renton: I suggest that the hon. Gentleman reads an article written by Ian Brown, the drama director of the Arts Council, in last week's edition of The Stage. It is headed, "Keep Calm in a Crisis"—a message that the hon. Member might learn to advantage. He says that it is not the Arts Council's job to come to the rescue willy-nilly of every provincial theatre that gets into trouble, no matter whether it has put on the right programme for its customers or whether it is receiving local authority support. That message must be taken on board throughout the country. The settlement to WNO does not mean any direct money from my office.
    I disagree with the hon. Gentleman's comment that this should never have happened in the first place. The Arts Council, rightly, has again crawled over the touring plans
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    of WNO and has reached the conclusion that it should try to make a little more money available—a lot more money available—if that is what its council agrees on Wednesday.

    Arts Funding, Scotland
    Dr. Godman: To ask the Minister for the Arts when he last met members of the Scottish Arts Council to discuss funding for the arts.
    Mr. Renton: I had a meeting with the chairman of the Scottish Arts Council, Sir Alan Peacock, on 11 December.
    Dr. Godman: My question concerns a subject which was close to the heart of my late dear friend Norman Buchan. Will the Minister discuss with the Secretary of State for Scotland how public-sector support might be provided in respect of those crafts that will be denied support from the "Design by Scotland" agency which is to be set up in April? It should be pointed out that, south of the border, support is provided in respect of identical crafts. All that I seek is parity of support for Scots craftsmen and craftswomen.
    Mr. Renton: I am very interested in which the hon. Gentleman has just said. Indeed, if he feels that crafts in Scotland are not being supported where comparable crafts in England are, and if he writes to me giving the details —and provides my right hon. Friend the Secretary of State for Scotland with a copy of his letter—I shall be very happy to look into the problem with a view to finding out the reason for it.
    Dr. Blackburn: Will my right hon. Friend, particularly in the context of these questions, reflect on a most important issue? I refer to the rolling programme of funding that was introduced by his predecessor, which received the full acclamation of the arts world. I hope that my right hon. Friend shares my view that ministerial intervention in the funding of the arts would be quite wrong, particularly in Scotland.
    Mr. Renton: I am not quite sure whether my hon. Friend means that as a rebuke. He is such a kindly man that I think it hardly likely. Like him, I was, of course, delighted when my predecessor set up the rolling programme. One of the difficulties is that some of our clients do not think that the inflation expectation is realistic. Certainly the rolling programme is set in concrete for the time being, and it would be quite wrong for me to try to disturb it.

  CIVIL SERVICE

    Ethnic Monitoring
    Mr. Janner: To ask the Minister for the Civil Service whether he will make a statement regarding the progress of his Department's ethnic monitoring policy.
    The Minister of State, Privy Council Office (Mr. Tim Renton): All Departments and agencies, including my own Department, are implementing the programme for action on race, which incorporates ethnic monitoring.
    Mr. Janner: Does the Minister agree, as his predecessor so clearly did, that it is unacceptable that so few people from ethnic minorities reach the higher echelons of the civil service? Will he please undertake, as his predecessor

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    so rightly did, to make the most energetic efforts to ensure that the policy is not just something on paper—but that it is implemented?
    Mr. Renton: This matter is very close to the heart of the hon. and learned Gentleman. It is true that black and Asian people are under-represented at senior level across the civil service, including my own Department. We wish to increase equality of opportunity, but, as the hon. and learned Gentleman will agree, it is most important that those who reach the higher grade should do so on the basis of merit and not because of their sex or their ethnic background. We hope that, by virtue of the programme of action that we published recently, every Department will have been reminded of the need to give ethnic minorities every possible opportunity to reach the higher grades if that is what they merit.
    Mr. Soames: Is my right hon. Friend aware that in the United States of America positive discrimination of the kind advocated by the hon. and learned Member for Leicester, West (Mr. Janner) has proved to be a total disaster? Does he agree that it would be quite improper, and totally against the interests of the very high-quality civil service that we have in this country, to allow promotion on any basis other than merit?
    Mr. Renton: I hesitate to come between my hon. Friend, who is also a Sussex neighbour, and the hon. and learned Member for Leicester, West (Mr. Janner). Of course, my hon. Friend is right in suggesting that positive discrimination in favour of people of a particular colour or sex would be wrong. What we seek to achieve is equality of opportunity—in simple terms, that the best available person, regardless of skin colour or sex, should get to the top.

    Terrorism
    Mr. Dalyell: To ask the Minister for the Civil Service what representations he has had from the civil service trade unions about the problems posed by potential terrorism originating in the middle east for civil service installations in Britain.
    Mr. Renton: None, Sir.
    Mr. Dalyell: What extra money has been allocated for the defence of such installations? What help will be given to airlines? Some are reeling from the change in the number of passengers they carry, to the extent that they have had to cut back on the orange juice and second cups of tea and coffee that they give passengers for breakfast. That is the position of the airlines and it has been graphically illustrated.
    Mr. Renton: I do not think that questions about the number of orange juices or cups of coffee comes under the province of my Department in any sense. Mine is a strange Department—a duet between the civil service and the arts —but it is not as strange as that. If the hon. Gentleman wishes to ask about the costs of the installations, he must refer such questions to either my right hon. Friend the Secretary of State for Defence or my right hon. Friend the Secretary of State for the Environment, who will make a statement in a few minutes.
    Mr. Peter Bottomley: Does my right hon. Friend agree that it would be more convenient for the civil service,
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    unions and Ministers if people did not drop chemicals on the Kurds, did not go to war with Iran, at a cost of 1 million Muslim lives, and did not start taking over other independent states such as Kuwait?
    Mr. Renton: Although that is not within the province of my Department, I can without hesitation say yes to all my hon. Friend's propositions.
    Dr. Godman: Installations in Scotland require the same protection as that given in England and Wales. I do not make this point out of parochialism. I remind the right hon. Gentleman that the appallingly dreadful terrorist organisation, the Irish Republican Army, does not carry out terrorist activities in Scotland; hence some installations there may be regarded as soft targets.
    Mr. Renton: I listen with great care to the hon. Gentleman. Precautions are in place to protect civil servants, no matter where they are based in the United Kingdom, against the current threat of terrorist attack. That applies whether they are in Scotland or in England or whether the terrorist attacks are by the IRA or by other organisations.

    Executive Agencies
    Mr. Hind: To ask the Minister for the Civil Service if he has any plans to create more "next steps" agencies; and if he will make a statement.
    Mr. Renton: The "next steps" initiative continues to make excellent progress; 34 agencies have now been established, and we expect that number to rise to 50 by this summer. By the end of the year we expect "next steps" will apply to about half the civil service.
    Mr. Hind: My right hon. Friend has made great efforts to achieve this progress, whereby half the civil service will be involved in "next steps" agencies. That is welcome. Most Conservative Members would welcome management of Government services according to private sector discipline. Does my right hon. Friend recognise that it is important that many of these agencies are placed in parts of the country other than the south-east, particularly in areas where unemployment is high? Will he do all that he can to achieve that target?
    Mr. Renton: I thank my hon. Friend for his opening remarks and I fully agree with the second half of his comments. We have a vigorous programme for relocating civil service departments, whether they are moving into agencies or not, in other parts of the country. I was involved in that when I was a Home Office Minister and I shall aim for its continuation while I have my present responsibilities.
    Dr. Marek: When I asked the Minister a question three weeks ago, he answered me courteously, but he answered a completely different question. I ask the right hon. Gentleman to concentrate his mind and to let the House know whether he will meet representatives of the civil service unions to discuss the morale and finance problems in the present lacklustre housing market of civil servants who have been compulsorarily relocated because these "next steps" agencies have been set up.
    Mr. Renton: If the hon. Member for Nottingham, North (Mr. Allen) had turned up this afternoon, I would

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    have specifically answered that question. Of course, I should be delighted to meet leaders of the civil service trade unions at the appropriate time if they wish to see me. I have already met certain representatives of the Institution of Professionals, Managers and Specialists. I shall continue to meet such representatives at the appropriate moments when we have something to discuss.
    Mr. Butler: To ask the Minister for the Civil Service if he will make a statement on progress under the Government's "next steps" agencies initiative.
    Mr. Renton: I refer my hon. Friend to the answer that I gave to my hon. Friend the Member for Lancashire, West (Mr. Hind).
    Mr. Butler: Will any of the "next steps" agencies be relocated to Warrington or Runcorn?
    Mr. Renton: At this stage, I can tell my hon. Friend only that the Liverpool passport office is trying out team-working arrangements which may lead to an increase in the number of staff at that office, that the resettlement agency, working with Knowsley council, is developing alternative hostel facilities and that Companies House has opened a satellite office in Manchester. All those developments are very close to the area in which my hon. Friend is interested and I hope that there will be further developments.
    Mr. Campbell-Savours: Would not "next steps" status be better for the transport section of the Crown Suppliers? Will the Minister assure me that that section will not be sold to a civil servant who has been the subject of a full
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    investigation by the Crown Suppliers and who has been found to have committed three disciplinary offences? Can the right hon. Gentleman assure me that that person will not be allowed to buy the transport section of the Crown Suppliers?
    Mr. Renton: If the hon. Gentleman cares to write to me about the matter, I shall see that it is looked into in great detail.
    Mr. Ian Bruce: Will my right hon. Friend examine carefully all the agencies that we now have in south Dorset? The Admiralty research establishment is to go into the defence research agency. He should also consider the Atomic Energy Authority, the dockyards and various other developments. Will my right hon. Friend try to ensure that if the organisations are passed over to individual managements, care is taken to ensure that they do not all decide at the same time to relocate 8,000 jobs in two years from the very small Weymouth and Portsmouth area? I should be most grateful if my right hon. Friend would examine that matter carefully.
    Mr. Renton: I fully understand my hon. Friend's point, and it is a good point. Naturally, he does not want a lot of employment to move out of his area quickly and all in one go. In my experience, relocation in the civil service does not exactly happen overnight. It happens over a great many years, allowing plenty of time for the local Member of Parliament to make full representations about the effect of relocation on his constituency. I hope that, with his customary assiduity, my hon. Friend would do that if there were any likelihood of all the civil service departments or agencies moving in one go.

The Gulf (Oil Pollution)
3.32 pm
The Secretary of State for the Environment (Mr. Michael Heseltine): Mr. Speaker, with permission I will make a statement about the United Kingdom response to the environmental damage taking place in the Gulf.
The oil spill in the Gulf appears to be the largest ever. It is 35 miles long by 10 miles wide. It appears to contain some 8 million barrels of oil and it is moving down the Gulf at 15 to 20 miles per day. Words are inadequate to condemn the callousness and irresponsibility of the action of Saddam Hussein in deliberately unleashing this environmental catastrophe.
There is a threat to desalination plants and fresh water supplies, to birds and other wildlife, to fish, sea mammals and shellfish, and to local communities dependent for their livelihoods on the sea.
With our allies, the United Kingdom is playing a full part in the world's response to this abomination.
First, we must stem the flow of oil. The United States has already acted on this decisively and, we believe and hope, effectively.
Secondly, we must assess the way in which the oil may flow so that we can assess likely consequences. Action is in hand in the Gulf itself to do that. To supplement it, United Kingdom scientific resources are already being mobilised. Existing computer models at the Meteorological Office and Proudman oceanographic laboratory are being urgently adapted to help give the best possible predictions of the likely behaviour of the slick in the Gulf.
Thirdly, we need to assess possible effects on marine life. The United States is already sending experts. The Natural Environment Research Council is co-ordinating urgent work to bring together here in the United Kingdom information that we have on marine life and effects that could be useful in the Gulf.
Fourthly, in common with other countries, the United Kingdom is taking practical steps to help to protect desalination plants and sensitive coastal areas and inlets. The airlift of an initial 70 tonnes of equipment from the stores maintained by the oil industry will go ahead today, with a further flight tomorrow. Further material will be available if needed. My right hon. and learned Friend the Secretary of State for Transport is looking sympathetically at requests that we have received from the Saudi Government for the loan of small numbers of skilled pollution control experts and advisers. We anticipate being able to respond later today. The Department of Transport will meet European Community colleagues tomorrow to consider whether the Community should send in its standing task force of national experts on oil pollution response. We shall be urging strongly that it should do so.
For the longer term, the United Kingdom is considering now how it will be able to help with the clean-up and restoration of the habitats and human settlements affected once it is safe to do so. We are making arrangements to assess and bring together the contribution that United Kingdom bodies outside Government, whether public, private or voluntary, can make.
The first responsibility for dealing with the environmental problems facing the Gulf lies with the Gulf states themselves. We do not yet know what final form the arrangements for co-ordinating their efforts will take: matters are still developing fast. But, whatever they may
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be, the United Kingdom stands ready to play its full and immediate part. We shall be in touch later today with Saudi Arabia and the other states most closely involved with a first indication of the help that we can offer.
Meanwhile, the United Nations Environment Programme is today announcing its intention to take a lead on improving environmental communications and co-ordinating technical expertise. I have been in touch with UNEP to establish what we can offer by way of expert staff or other help.
On Wednesday, the Environment Ministers of the Organisation for Economic Co-operation and Development meet in Paris. I shall be calling then for all OECD members to respond to this disaster and to take action according to their experience, equipment and skills to offer help to the Gulf states likely to be affected. But there is a wider issue. It is not only war that creates risks. It seems important to recognise the ongoing dangers of environmental calamity which arise from time to time which go way beyond national frontiers.
I mean to raise with OECD colleagues the proposal that we should set up a working party to recommend what more effective preparations we could undertake to cope with these disasters. I have in mind that there should be a register setting out available expertise and available facilities on which affected nations could draw in times of crisis. In this context, we shall be pressing for an early conclusion to the work already in hand in the International Maritime Organisation to put into effect a full-scale international convention on preparedness and response in relation to oil pollution and to set up regional centres to pool resources.
The whole House will be appalled at the environmental damage threatening the Gulf. The Government are determined to do all they reasonably can to assist those faced with the consequences of this outrage. We also intend to inject a new urgency into consideration of the wider issues raised by environmental threats that require co-ordination above the national level.
Mrs. Ann Taylor: I thank the right hon. Gentleman for his statement and the information that he has provided today. I am sure that all hon. Members will agree that any deliberate destruction of the environment, particularly on this scale, is a desperate act which cannot be justified and which could in itself be considered a war crime.
Will the Secretary of State clarify the position with regard to the source of the pollution? It seems clear that the major source of the pollution is the Sea Island oil terminal which has been opened deliberately by the Iraqis. What assessment has been made of any environmental consequences of allied attacks on oil tankers in the area that were reported last week? There has been a great deal of speculation and counter accusation about that point.
The Secretary of State said that expertise and help will be sent from this country. We welcome that, because we have a great deal of high quality and varied expertise, which should be utilised now and when the conflict is ended.
Will the Secretary of State ensure, however, that the technology and advice that are given are appropriate not only to the problem of oil pollution but to the ecosystem in that area? The right hon. Gentleman must be aware that, on occasions, clean-ups can cause more problems. Will the Secretary of State ensure also that the help that we

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can give is offered quickly and in advance of any discussions about who should pay for that work? Can the Secretary of State tell us more about the problems of and the potential threat to water supplies in Saudi Arabia and the rest of the area as a result of the crisis?
There is an urgent priority to protect the desalination plants, but we must bear in mind the fact that the toxic components of oil, PAHs—that is, polycyclic aromatic hydrocarbons—are potentially dangerous in the long term. They can cause cancer and can create a serious hazard. Does the Secretary of State know whether the Government of Saudi Arabia and other areas in the region have the capacity to monitor toxins of that kind? This might be one direct way in which this country could help by providing expertise.
Finally, does the Secretary of State agree that, this weekend, we saw the environment used as a weapon in war by Saddam Hussein and that, whatever the military consequences of that may or may not be, the main victim of the attack has been the environment itself, which leaves every one of us, wherever we may live, much the poorer?
Mr. Heseltine: I thank the hon. Lady very much for the welcome that she has given to what we have said. Our view is that the deliberate decision to open five tankers is responsible for the seepage that has caused such devastation. The second point that the hon. Lady asked me about is whether the solutions that we are applying will preoccupy themselves not only with the oil problems but with the ecosystem of the Gulf. I can give her that assurance. We have significant expertise in this country. That leads me to the hon. Lady's third point, which is whether we will ensure that such help is available quickly. We have made the offers. The expertise that we possess is known, and we shall make it obvious to those who might have recourse to it that that help is available.
On cost, the Saudis have already agreed to pay for the shipment of supplies that is either just about to leave or has already left for the Gulf. My own Department took a small decision to absorb costs within it yesterday, but the broader issues are clear. The environmental threat is the key issue, and the question of apportioning responsibilities for payment will be dealt with as a secondary priority to that, although one cannot lose sight of the matter entirely.
Water supplies in the individual countries concerned are more appropriately a matter for the Governments of those countries. It would not be right for me to try to speculate on how the Saudis or any of the other countries involved feel about the threat to their desalination plants. Monitoring toxins is a matter that comes within what I have already said—in so far as we have expertise, that expertise is available.
Sir Bernard Braine: If one adds the uprecedented and deliberate assault on all the peoples—mainly Muslim—living in the Gulf region to the mass murder two years ago of thousands of Iraqi Kurds by the monster Saddam Hussein, and adds to that the deliberate rape and destruction of a small, independent and peaceful state, is it too early to ask that the international community should start to think in terms of bringing that man, if he survives, before an international tribunal so that, for all time, those monstrous crimes should be recognised and abhorred?
Mr. Heseltine: I am sure that everyone shares my right hon. Friend's indignation at the outrage that has taken place, but it would not be appropriate for me to speculate on the wider issues that he raises.
Several Hon. Members rose—
Mr. Speaker: May I ask hon. Members to confine their questions to the statement and not to bring in wider issues.
Mr. Simon Hughes: May I thank the Secretary of State for his statement and for the British Government's offer to assist in the rescue operation? I also welcome the news that UNEP will take the lead in co-ordinating the international rescue. I am sure that the whole House shares his view that, whatever the dispute over territory and whenever there is a resort to arms, such an attack on the environment is inexcusable and unjustified in all circumstances.
It seems that the immediate concern is that the experts are able to do their jobs efficiently and are protected from injury and death. Could he lead the way to an international agreement that such experts receive the same immunity as the Red Crescent and Red Cross, so that in future we have an international environmental agency which can protect the environment in the same way as the Security Council has sought to protect the peace?
Mr. Heseltine: The hon. Gentleman raises an interesting and important matter, which will undoubtedly be given consideration in the international forums in which such matters are discussed.
I thank the hon. Gentleman for what he said about the UNEP initiative. Dr. Tolba, the executive director, will issue a statement today explaining his intentions. I understand that a team is to go to the Gulf immediately to seek better communications in the light of the sporadic information about the environment that is available. The team will be headed by a British citizen, Dr. Michael Gwynne, the head of UNEP's global environment monitoring system. Another team of technical experts on oil spills will work particularly closely with the Saudi authorities.
Mr. Robin Squire: For the avoidance of doubt, will my right hon. Friend confirm from the Dispatch Box that all the evidence that the Government have suggests that the oil slick is the result of a deliberate act and did not follow from some inadvertent accident resulting from the hostilities? At the forthcoming OECD meeting, will he underline the fact that many of us in Britain expect the fullest co-operation from each of the members of that organisation in this non-military but vital endeavour to save whatever aspects of nature can still be saved?
Mr. Heseltine: I am extremely grateful to my hon. Friend. I repeat that it is our view that five tankers were deliberately opened to cause the spillage. I shall bear in mind what my hon. Friend said about the activities that will flow from the OECD meetings. Today I started the process of contacting my colleagues in the organisation with that in mind.
Mr. Tony Benn: Is the right hon. Gentleman not aware that warnings by King Hussein and others that this would be the inevitable consequence of war made to the Government at the very beginning? Does he accept that it is not convincing to suggest that, when allied

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military planes destroy installations in Iraq, it is a military triumph, but that, when this weapon is used, it is an act of environmental terrorism? Is he not aware that all modern warfare, involving the bombing of civilians, with the casualties that follow, and modern technology, is an organised act of terrorism? Does he agree that the sooner that the war is brought to a conclusion, the sooner lives can be saved and the environment protected?
Mr. Heseltine: Everybody will share the right hon. Gentleman's view that the war should come to an early conclusion. The easy, quick and effective way in which that can happen is for Saddam Hussein to withdraw his forces from Kuwait. The House will not lose sight of the fact that the right hon. Gentleman appears to condone the awfulness of what is happening. It is obvious that, unless we are prepared to resist and confront this man, he will have the opportunity to blackmail us with any technique at his disposal.
Mr. Jonathan Aitken: May I first thank my right hon. Friend for an admirably swift and comprehensive response to this tragedy? Does he agree that this environmental and vicious act of war by Saddam Hussein is likely to be particularly devastating because the Gulf is an enclosed and shallow sea, in which little self-cleansing by tides and waves is possible? Does he agree that speed is of the essence in the cleaning-up operation, because the huge oil slick must be prevented from turning into even more devastating sludge and foam? Is my right hon. Friend aware that the priority appears to be skimming equipment and nets, particularly in areas of intake for desalination plants?
Mr. Heseltine: I very much support what my hon. Friend has said. The equipment that is on its way from this country includes equipment of that sort. It is indicative of the speed with which we think this matter must be addressed that we have got this process under way as quickly as we possibly can. My hon. Friend is perfectly right to say that the ecosystem of the Gulf does not self-purify with the speed of much deeper, rougher waters. That adds to the urgency of the situation.
Mr. Peter Shore: This is an evil and reckless act by an evil and reckless man. [HON. MEMBERS: "Hear, hear."] Can we be told a little more about the effect on the desalination plant? I know that this presents difficulties, but if the right hon. Gentleman could tell us what percentage of the Saudi water supply is potentially at risk if the desalination plants are affected, it would be helpful.
Mr. Heseltine: A high proportion of Saudi water comes through desalination plants, but it would not be appropriate for me, as a Minister in an allied Government, to give indications of the sorts of problems with which the Saudis themselves should most properly deal.
Mr. Barry Field: I am sure that my right hon. Friend is aware that the Isle of Wight leads the world in the manufacture of skimming technology and clean-up equipment, such as the frogmat boom. Can he reassure the House that, if necessary, the troops will be allowed to assist the company on the Isle of Wight to ensure that the equipment is flown directly from Bembridge airport to the
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Gulf? Can he confirm the Government's position on stockpiling mechanical equipment in future, as we have seen that the ecosystem of the Gulf is so delicate that dispersants cannot be used?
Mr. Heseltine: I am sure that we would wish to give every facility to the urgent despatch of equipment, if one felt that the narrow, additional number of hours required to move equipment between one airport and another in the United Kingdom was time-critical. My hon. Friend can feel reassured that, before we take a decision about the use of an airport, we shall be satisfied that we are not prejudicing the undertaking to which we are committed by moving equipment to a different airport from the one which he suggested. Stockpiling is, in the first instance, for the coastal states concerned. The broad issue of how much countries are prepared to deploy in resources for this purpose must be for them, but I hear clearly what my hon. Friend has to say.
Mr. Tam Dalyell: Why is the House of Commons surprised that this dreadful and catastrophic thing has happened? [HON. MEMBERS: "We are not."] Were we not told repeatedly by scientists and, specifically, in c. 403 on 19 December during the Consolidated Fund Bill debate, of the ecological consequences of a military option? The pumping of oil into the Gulf was predicted as it was predictable. Is this not a case of sheer ministerial incompetence? Why are the 70 tonnes of equipment not there already? These Ministers are not competent to run a war.
Mr. Heseltine: The hon. Gentleman will realise that there have been many warnings of many environmental threats as a result of what Saddam Husein can do. The issue is coping with them as effectively as necessary and we are taking those steps. The countries whose coasts are most affected are those who, outside the war zone, are bound to take the lead in such a circumstance. That process is now under way.
Mr. Dalyell: The Government were told, told, told.
Mr. Heseltine: If the hon. Gentleman understands the full implications of this matter, he will know that this House has clearly expressed its determination to resist Saddam Husein in his illegal occupation of Kuwait. There were bound to be risks associated with that process. Not to have confronted Saddam Hussein would have led to larger and more damaging risks in future.
Mr. Anthony Steen: I wonder whether the Secretary of State remembers that, last May, 1,100 tonnes of oil were spilt into the English Channel as a result of the holing of the Rose Bay outside Brixham in south Devon and that it took six Dakotas spraying for four or five days on top of that oil slick, a number of ships with vacuum cleaning equipment to filter the oil through the ships and clean it, as well as thousands of volunteers to clean up the coast, to deal with the problem. Was anything learnt from that experience? I wonder whether it has been estimated how many Dakotas and such ships, as well as volunteers, would be needed to clean up the slick in the Persian Gulf?
Mr. Heseltine: There is one vital point about which my hon. Friend will want to think: the slick is in a war zone. The House will doubly regret the fact that, yesterday, when allied aircraft inspected the slick, they were fired

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upon by Iraqi ground forces. I am afraid that it is a question not of considering what use we can make of Dakotas or volunteers, but of how we deal with the slick once it moves from the military war zone into an area where civilian forces can be deployed.
Mr. Bernie Grant: Will the Secretary of State accept that we are all concerned about the environment, and that we are not prepared to take any lectures from Conservative Members about that?
Will he confirm that, however disastrous the environmental effects of the oil spillage, they are not as disastrous as the effects of bombing innocent civilians in Iraq? Is he also concerned about the effects on the environment of bombing chemical and nuclear factories in Iraq? Given Saddam Hussein's threat to bomb the deep wells in Kuwait, what steps has the right hon. Gentleman taken to prevent that disaster?
Mr. Heseltine: The most effective answer is to remove Saddam Hussein from Kuwait, and that is precisely what we are doing. The hon. Gentleman must bear carefully in mind the fact that those chemical factories, which are the source of such anxiety, have already been used by Saddam Hussein in attacks on his own people. The risks exist, and that is one reason why we must take his threats so seriously. There is no escape from the implications of that, as the House, by overwhelming majority, has recognised.
Mr. Patrick Thompson: Following this appalling and uncivilised act, my right hon. Friend will be aware that many individuals and organisations throughout the country have volunteered support and help. What response can my right hon. Friend give those people?
Mr. Heseltine: I am very grateful to my right hon. Friend for raising that matter. We have been very impressed with the number of people from environmental movements, and other citizens, who have offered help. We would have expected no less in the circumstances. We have asked the Nature Conservancy Council to co-ordinate the applications that we have received to see what capabilities lie behind them, so that, when it is considered safe and appropriate for such facilities to be drawn upon, we shall be in a position to offer them to the Gulf states.
Mr. David Winnick: Has not this act of undoubted environmental terrorism, together with all the other crimes committed by those who run the regime in Iraq, shown that, once again, we can expect nothing better? What has occurred has not weakened, but strengthened, the resolve of the British people that this war must be seen through to the end until the Security Council resolutions have been duly implemented and Kuwait is free of enemy occupation.
Mr. Heseltine: I think that the hon. Gentleman speaks for the whole House; I wish only that it was not apparent that some of his hon. Friends have different views. The fact is that Saddam Hussein has used chemical weapons against his own people, he has attacked innocent Israeli citizens to try to widen the war, and he has unleashed an environmental disaster on the Gulf. Anyone who now fails to understand the urgent need to remove the threat of that man by driving his forces from Kuwait simply does not understand the nature of the man himself.
Mr. Nicholas Soames: In the midst of this awful disaster, will my right hon. Friend pay tribute to the exceptional skill of the American pilots who bombed and destroyed the manifolds at the pumping station yesterday?
Mr. Heseltine: I am sure that the whole House would welcome the opportunity to do precisely that. The environmental disaster already exists, but it could have been a great deal worse if we had not been able to stop the flow.
Ms. Joan Ruddock: In a radio interview this morning, the Secretary of State was asked for his response to Jordan's request for a ceasefire to clear up the oil. He said that Saddam Hussein, having been capable of letting loose the oil and destroying the environment, would of course do much worse if he had a nuclear capability. Because this disaster was predicted, I ask the Secretary of State to tell us what information he has about the environmental consequences of destroying Iraq's nuclear capability on the ground, and to tell us the environmental consequences of the use of any one of the 700 nuclear warheads on American ships in the Gulf.
Mr. Heseltine: The hon. Lady will want to bear in mind the consequences of Saddam Hussein having a fully developed nuclear capability, the dangers of which would greatly outstrip the much lower dangers that flow from the question that she asked. The fundamental question is: does the hon. Lady believe that we should give in to blackmail of any sort—nuclear, chemical or environmental? Once the dictators of this world get the impression that giving in is on offer, there will be no stopping the price that they seek to extract.
Mr. Anthony Beaumont-Dark: Does my right hon. Friend accept that this is an environmental crime unique in its enormity and that Opposition Members—fortunately, they are few—who do not join the whole House in condemning Saddam only encourage this evil man to continue his fight?
Mr. Heseltine: I very much hope that Saddam Hussein will draw no such conclusion, because my clear understanding is that the overwhelming majority of Opposition Members are as appalled as my right hon. and hon. Friends and I are by what has happened. We hear from a small and wholly unrepresentative minority among the Opposition.
Dr. Dafydd Elis Thomas: As a member of that unrepresentative minority, may I ask the Secretary of State to accept that I have been condemning Saddam Hussein for more than 10 years, arid that I will continue to do so?
I condemn the environmental damage done to his own people through chemical weapons and the environmental damage to the whole Gulf through the oil spillage. The right hon. Gentleman has been telling the House that that environmental damage is an acceptable risk in the prosecution of this war, from the point of view of the Government—
Mr. Beaumont-Dark: Of course it is.
Dr. Thomas: The hon. Gentleman clearly endorses that viewpoint. How much more environmental damage does the Secretary of State regard as an acceptable risk?

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Finally, we welcome the moves through UNEP, and the OECD initiatives, but why should we have to wait for an act of war like this before such international co-operation takes place?
Mr. Heseltine: I do not regard the risks as in any sense acceptable, but they were not created by the allies. They exist because Saddam Hussein has built up a chemical and conventional capability on an horrendous scale and he is now building a nuclear capability on an even larger scale. The hon. Gentleman must face the logic of that. He either thinks it right that Saddam should do that and is prepared to live with it, or he joins those of us who believe that this man poses threats that are unacceptable and that the United Nations stand is therefore wholly right.
Mr. Phillip Oppenheim: Is not the implication behind the remarks of those who are now falling over themselves to tell us that they told us so that we should have given in to Saddam Hussein's blackmail? Does not this brutal and vicious act, which will result in the suffering and deaths of hundreds of thousands of creatures in the Gulf, show what an evil man Saddam is? Will not the wildlife of the Gulf probably prove to be ultimately his most enduring and innocent victims?
Mr. Heseltine: I very much share my hon. Friend's anxieties and hope that his forebodings will not come to pass. That will depend on our being able to cope with the environmental risks expeditiously. I also agree with the first of my hon. Friend's observations. Once one has come to conclusions about the nature of the man, about his military capability and about how he is ruthlessly prepared to use it, one can take only one logical decision: it is the one that we have taken—to withstand this man's determination to occupy Kuwait.
Mr. Alan W. Williams: May I bring the Secretary of State back to what my hon. Friend the Member for Linlithgow (Mr. Dalyell) said about warnings of this disaster? Does he recall the Secretary of State for Energy, a member of the War Cabinet, telling us on 4 January that
"suggestions of a global environmental disaster are entirely misplaced"?
That was the Government's response to those warnings. Now that there is an oil slick 20 times the size of that from the Exxon Valdez, what are the possibilities of Iraq re-starting the flow of oil despite the bombing; and will the Government now take seriously the warnings given by Saddam Hussein months ago that he would set fire to the Kuwaiti oilfields?
Mr. Heseltine: Of course, one was very aware of the warnings that came from many people. The only implication of accepting them was that one was prepared to be blackmailed by anyone who had the power to carry out such threats. That position is not one that we are prepared to tolerate. The hon. Gentleman referred to the observations made by my right hon. Friend the Secretary of State for Energy following the extreme forecasts from Jordan. My right hon. Friend was speaking about the firing of oil wells. I spent part of last Friday morning at the Hadley centre for climate prediction and research, when it
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was quite apparent that the advice of which my right hon. Friend spoke is supported by world-class expert opinion in this country.
Mr. Kenneth Hind: Does my right hon. Friend accept that many people in this country feel that a man who shows such contempt for human life, wildlife and the environment should himself become a target in the war, and ought to be removed—as that is the one way that we can protect lives, preserve the environment in the Gulf, and avoid any similar acts in future?
Mr. Heseltine: My hon. Friend, I know, expresses a view that is widely shared. However, the Government are committed to upholding United Nations resolutions, and the military judgments that flow from them must be accounted for by my right hon. Friends the Secretary of State for Foreign and Commonwealth Affairs or Secretary of State for Defence. I am here to talk about the environmental issues that are the subject of my statement.
Several Hon. Members rose—
Mr. Speaker: Order. I must protect the business that is before the House, but I will allow questions to continue for a further 10 minutes. Otherwise, I may have to impose a 10-minute limit on speeches in the subsequent debate. I ask hon. Members to ask brief questions on the statement only, and not on wider issues.
Mr. D. N. Campbell-Savours: May I, as a supporter of the implementation of the United Nations resolution that unfortunately but inevitably led to the war, put it to the Secretary of State that my hon. Friend the Member for Linlithgow (Mr. Dalyell) raised a very valid point? In the light of his warnings, why did not the allied forces bomb the tank facilities on the seafront at Kuwait that feed the sea pipeline from which much of the oil has flowed? If that pipeline had been bombed several days ago, it would have prevented the environmental disaster that my hon. Friend predicted.
Mr. Heseltine: I am not sure whether the world would have understood if, by bombing such a pipeline, we ourselves had been responsible for the spillage that flowed into the Gulf as a result. Although the scale of the disaster would have been much lower, it would have put a totally different construction on our attitudes towards the preservation of the environment.
Sir Antony Buck: Does my right hon. Friend agree that the simple message is that it does not pay to give in to blackmail of whatever type—and that we are here confronted with ecological blackmail? Can our armed forces assist in cleaning up that awful catastrophe?
Mr. Heseltine: At this moment, no British service men are involved in the environmental consequences or their abatement. It is a matter for the military commanders on the ground to decide whether or not it is appropriate for them to become involved.
Mr. Harry Ewing: Is the Secretary of State really telling the country that, despite everything that he learned during his time as Secretary of State for Defence and the vast experience that he gained during his time as a national service man, he was so naive that he did not imagine that such a catastrophe would occur? Does he now acknowledge that it is a consequence of war of the

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type that, over the past four or five weeks, he and his colleagues firmly denied would arise? The Secretary of State talks about Saddam Hussein using chemical weapons on his own people, but has he conveniently forgotten that he was a member of the Cabinet that gave Saddam Hussein £1 billion after he had used chemical weapons against his own people?
Mr. Speaker: Briefly, please.
Mr. Ewing: The right hon. Gentleman makes certain accusations against my hon. Friends—but he should look home, to his own record.
Mr. Heseltine: I think that the hon. Member has completely misunderstood the British Government's approach towards Saddam Hussein's build-up of armaments. There are no grounds whatsoever for the allegations that he has made. If he asked me, "Were these risks and the warnings built into the risk of war?", the case is only answerable in the affirmative, but what conclusions does one draw from that? There is only one conclusion —that one cannot allow oneself to be subjected to nuclear, chemical or environmental blackmail.
As to how one copes with the individual warnings, given that there are a legion of them, it must be a matter for the individual countries concerned, or for the allies, to determine how best to deal with the situation. At the moment, there are no grounds for saying that we could have got equipment into the area faster than we are now doing. It is a war zone, and it is not possible to treat the oil slick in the way that we would have treated it in ordinary peacetime circumstances.
Mr. Henry Bellingham: Further to the question asked by my hon. Friend the Member for Norwich (Mr. Thompson), is the Secretary of State aware that a number of small businesses in East Anglia may well have the technology to help clear up the consequences of this appalling act of eco-terrorism? Will he ensure that those small businesses are given every encouragement by his Department.
Mr. Heseltine: My hon. Friend will understand that we have widely publicised our response, and we have made it clear that we shall do all that we can to help the Gulf states in these circumstances. It would be appropriate for small businesses to show some of the enterprise for which they are characteristically admired, by coming forward with their own offers.
Mr. Harry Cohen: This oil pollution is clearly an environmental outrage for which Saddam Hussein is primarily responsible, but, will the Secretary of State, who went to the War Cabinet meeting this morning, comment upon the article in The Observer yesterday by Julie Flint, which says:
"US bombers attacked two tankers at a Kuwaiti oil terminal on Tuesday."
Is that true, and can we have an assurance now that the allies will not bomb any more tankers?
Mr. Heseltine: I have told the House that the oil slick and the appalling problems that we now have to confront, flowed from the deliberate release of oil from five tankers. That is what the responsibility amounts to. I do not think that it is proper for me to give answers to what could easily
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turn out to be questions of military judgment in confused circumstances. If that has to be confronted, it will be accounted for.
Mr. Jacques Arnold: Are not oil tank farms of this sort fitted with fail-safe systems to stop such spillages; furthermore, are they not fitted with earthwork systems to contain any such spillages? If that is the case, is it not absolutely clear that this incident was deliberate, and was yet another example of the absolute inhumanity of that repulsive regime?
Mr. Heseltine: My hon. Friend comes to the heart of the matter. There is no doubt in our minds that this was a deliberate act, with appalling environmental consequences for the Gulf.
Mr. Win Griffiths: At the meeting which the Secretary of State had this morning, did the team around the table discuss an Australian-manufactured chemical called Sokerol, which is marketed in Europe by a company in my constituency? The company made the Ministry of Defence an offer before the Gulf war started to make the chemical available because, unlike most chemicals, it is an oil-absorbent, which is non-toxic, non-carcinogenic and completely biodegradable. Was that discussed, given the fact that many warnings were issued about what might happen in the Gulf?
Mr. Heseltine: We did not discuss specifically any particular chemical at any meeting I have had today. We determined to draw together all the best information and all the offers that we had received, to evaluate them in so far as we have the capacity to do so, and then to inform the Gulf states of where we can help. I will ensure that the chemical to which the hon. Gentleman refers is put forward for special consideration to ensure that we have not overlooked anything.
Mr. Simon Burns: In the light of the despicable ecological devastation caused in the Gulf over the past few days, will my right hon. Friend accept that his comments earlier today about the possibility of a ceasefire to allow time for clearing up were particularly welcome? Will he now confirm, fairly and squarely, that a ceasefire would not save one bird, one fish or any lives, or ensure that the Gulf spillage could be cleared up? Quite simply, it would play into the hands of Saddam Hussein, and achieve nothing else.
Mr. Heseltine: I could not have put it more effectively. It seems clear to me that a man with Saddam Hussein's record, if given any respite, will claim credit for it; and the respite will do nothing to undermine his ability to start all over again the moment that hostilities begin.
Mr. Tony Banks: However the tragedy occurred, it amounts to a crime against the planet. It is worth reminding the Secretary of State and the House that, when the Opposition were telling the right hon. Gentleman what a maniac Saddam Hussein was, the British and American Governments were cuddling up in bed with the monster. That is what this is really all about.
Will the Secretary of State pledge that all the necessary resources will be made available to the volunteers from animal welfare groups who are prepared to go into the Gulf, even while it is a war zone, to try to rescue some of the animals that are now victims of the collective insanity of man?
Mr. Heseltine: When talking about crimes, the hon. Gentleman should concentrate more of his effort on talking about the criminal who perpetrated the crimes.
It would be entirely wrong for us to suggest to the military commanders the introduction of a civilian presence of the environmental nature suggested by the hon. Gentleman. This matter must be judged by the military commanders, in the light of the circumstances. The presence of such people would immediately mean that the military would have to look after them, protect them and spend a great deal of their time ensuring that there was no enhanced risk to them; that would not be justified in the circumstances.

Points of Order
4.16 pm
Mr. Max Madden: On a point of order, Mr. Speaker. Is it not extraordinary that the Secretary of State for Defence should have announced yesterday, on the radio, fundamental and important changes in the war aims of the British Government in the Gulf? He made it clear that, even if Iraq withdrew from Kuwait, allied forces would launch a ground and air attack on Iraq if it was perceived to maintain a military threat. That is clearly a major change in Britain's war aims; yet the House of Commons is being given no opportunity to question the Secretary of State—or, indeed, the Prime Minister—about such an important matter.
I therefore ask you, Mr. Speaker, to reconsider the application that I made to you earlier for an emergency debate on the war aims of the British Government in the Gulf, arising from the exchanges that have taken place today on a very narrow but nevertheless very important subject. I urge you, Mr. Speaker, to allow such a debate to take place, if the Government are not—
Mr. Speaker: Order. That is plainly cheating. As the hon. Gentleman knows very well, I explained to him when he came to see me—as he has raised the matter, let me say that he did come to see me about it—why it would not be possible for me to do as he asked, as it would be an abuse of our procedures.
Mr. Simon Hughes: On a point of order, Mr. Speaker. About three months ago, I raised with you—you dealt with it sympathetically—the question of where the division lay between the responsibilities of the Department of the Environment and those of the Foreign and Commonwealth Office, in relation to international environmental matters.
Given that there will clearly be opportunities in the House for requests to question Ministers and to table questions, I wonder whether the Secretary of State for the Environment could consult his colleagues in the FCO and the Ministry of Defence. Perhaps a note could be issued explaining which Department should most appropriately deal with matters that fall within such a confused area of responsibility.
Mr. Speaker: I am sure that the hon. Gentleman's remarks will have been heard by the Secretary of State for the Environment, and by those on the Front Bench who are responsible for such matters.

Points of Order

  STATUTORY INSTRUMENTS, &c.
  Mr. Speaker: With the leave of the House, I will put together the three motions relating to statutory instruments.
  Mr. Tam Dalyell: On a point of order, Mr. Speaker.
  Mr. Speaker: Order. I am on my feet.
  I will put the three motions together.
  Ordered,
  That the draft Unfair Dismissal (Increase of Compensation Limit) Order 1991 be referred to a Standing Committee on Statutory Instruments, &c.
  That the draft Unfair Dismissal (Increase of Limits of Basic and Special Awards) Order 1991 be referred to a Standing Committee on Statutory Instruments, &c.

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  That the draft Employment Protection (Variation of Limits) Order 1991 be referred to a Standing Committee on Statutory Instruments, &c.—[Mr. David Davis.]
  Mr. Dalyell: On a point of order, Mr. Speaker. What could be more urgent and definite than the war aims in which we are now involved? If it is said—I understand that it is said—that confusion is being created, that is a judgment that may or may not be made; but if ever an application under Standing Order No. 20 should be—
  Mr. Speaker: Order. The hon. Gentleman is on this subject every day. It is a continuing matter. I have to take into account all relevant matters and decide whether something has happened that is so urgent that the business before the House should be disrupted for this day or for tomorrow. I have made that judgment.

Orders of the Day

  Ports Bill
  Order for Second Reading read.
  4.19 pm
  The Secretary of State for Transport (Mr. Malcolm Rifkind): I beg to move, That the Bill be now read a Second time.
  As an island nation, Britain has a particular interest in the welfare of its ports and harbours. Much of the economic activity of the nation depends on these ports being able to deal with the tremendous demands that are made upon them. Even though the Channel tunnel will become available during the next 10 years, 85 to 90 per cent. of our trade either into or out of the United Kingdom will still be dealt with by our ports and harbours. It is important, therefore, to ensure that our ports and harbours are able to adapt to the changing needs of our economy and to cope efficiently and competitively with the many problems and challenges that they will face.
  Until recently, our ports and harbours were unable to do that. They had been subjected over the years to antiquated, old-fashioned and anomalous legislation that defined their status. Restrictive practices and other difficulties also limited their modes of operation. During the 1980s, therefore, an important Government objective was gradually to change all that so that ports and harbours could face the future with confidence and with a structure that had been adapted to meet the modern needs of the society in which we live.
  In 1983 Parliament approved the privatisation of Associated British Ports. Despite Opposition predictions, that has been a great success. A thriving employee share ownership scheme operates in the ports that were privatised. A large majority of the employees, including the dockers, are shareholders in the companies for which they work. They have seen the benefits that privatisation has brought to those ports.
  Dr. Norman A. Godman: Where does the Clyde Port Authority Bill, which appears to be securely anchored in the other place, stand in relation to clause 1? Will the sponsors of that Bill be advised by Ministers and their officials to throw it on the scrap heap because of the provisions of clause 1?
  Mr. Rifkind: No such advice will be given to the sponsors of that Bill or to the sponsors of the Tees and Hartlepool Port Authority Bill which is going through this House. Those private Bills were sponsored by the port authorities in question. It is entirely for them to decide whether they wish either to continue with their Bills or to wait and then use the provisions of this Bill.
  Mr. Harry Ewing: The Secretary of State referred to the success of the 1983 legislation. Will he define what success there has been in the Scottish ports? Throughout the 1970s, 75 per cent. of all goods that were manufactured in Scotland were exported through Scottish ports. However, those exports are down to 25 per cent. At Grangemouth in my constituency, the number of dock workers has declined dramatically. They are struggling to

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  find enough work to fill the day. Where is the success of the 1983 legislation to which the Secretary of State has just referred?
  Mr. Rifkind: The combination of the 1983 legislation and the ending of the dock labour scheme gave a tremendous boost to the prospects of the port industry throughout the United Kingdom. The fact that the Forth and Clyde port authorities—the two largest in Scotland—are among those most anxious to be privatised shows the opportunities that they believe are available.
  One of the major benefits of the privatisation of Associated British Ports is that, unlike its predecessor, it has been able to use and develop its land for non-port purposes and to diversify its activities where that made sense. The result is a spate of schemes for the regeneration of old docks for recreation, housing and other facilities, thereby benefiting not only the local community but the company. It is right that those benefits should be recognised.
  Subsequent to that privatisation was the ending of the dock labour scheme. The hon. Member for Kingston upon Hull, East (Mr. Prescott) prophesied doom and disaster if that measure was taken forward. He said:
  "We believe that the Bill will be damaging to the ports industry and will bring a return to casual working."—[Official Report, 17 April 1989; Vol. 151, c. 105.]
  Mr. John Prescott: I am glad that the Secretary of State mentioned that, because most reports show that it has been happening. Fifty per cent. of labour is now working for casual rates in many ports, exactly as I predicted. The Secretary of State seems to be as badly informed as were previous Secretaries of State.
  Mr. Rifkind: I was waiting for the hon. Gentleman to promise that the next Labour Government would reinstate the dock labour scheme, such have been its benefits to the national economy.
  The hon. Gentleman knows that the main consequences of the change have been entirely beneficial. We have seen, for example, an end to overmanning. The 50 per cent. net reduction in the number of dock workers in ex-scheme ports shows the gross inefficiency of those ports under the previous arrangements. Productivity in some ports has increased by 50 to 100 per cent. since the ending of demarcation disputes and the introduction of new flexibility. There is now competition among ports, which provides a faster turnround, and lower rates and benefits the whole economy. I should have thought that the hon. Gentleman would particularly welcome the revival of trade in historic ports such as Hull, which has reopened its container terminal and will reopen the Alexandra dock subsequent to these reforms.
  The trust ports, of which there are more than 100 in various parts of Great Britain, have a curious and anomalous status. Some hon. Members might find it useful if I say that trust ports are independent statutory bodies established under local legislation. They are not owned by anybody except the state, nor are they accountable to anybody. Their status is a strange limbo which makes them neither properly public nor properly private, answerable neither to the shareholders nor to the Government.
  Mr. Frank Doran: I am intrigued by the Secretary of State saying that trust status is anomalous. Why are the Government so keen to press our hospital service into trust status if it has such an anomalous legal position?
  Mr. Rifkind: The hon. Gentleman makes an interesting comparison, but he should appreciate that trust status for a port is an anomaly that results from a historical accident; it is not intended to give greater control to those who operate the ports in order to ensure their proper operation.
  Mr. Michael Carttiss: My right hon. and learned Friend said that trust ports are answerable to no one, but does he accept that a number of them, notably the one in my constituency, Great Yarmouth, which has its origins way back in the 17th century, are very much answerable to someone—the community that they serve? Although I do not disagree with the general theme that my right hon. and learned Friend will expound, I want him to offer more praise to trust ports for their accountability to the communities that they serve.
  Mr. Rifkind: I have no doubt that trust ports have done their best, within the constraints of the legislation and of the structures under which they are required to operate. I am not sure that I can agree with my hon. Friend that trusts are answerable to the local community. They are not elected by the local community or indeed, by anybody else. In some cases the Secretary of State for Transport appoints the chairman and all the board members; in others he appoints a minority of the members. In many cases, the appointments are entirely in the hands of others.
  In no case of which I am aware is a trust board entirely answerable to the local community. Whether in the public sector or in the private sector, boards will, I hope, be sensitive to the interests of the local community. However, I do not think that that sensitivity can be described in the terms used by my hon. Friend a moment ago. Indeed, in the case of some appointments I am required to consult other parties. All this is laid down in the local legislation for each trust port. There are over 100 such ports and, although many of them are very small, they form a major component of the ports industry. They include many of the largest ports in the country—London, Medway, Forth, Dover and Tees and Hartlepool.
  Mr. Michael Stern: My right hon. and learned Friend has described the anomalous nature of the trust ports. It would appear that in many cases they have not been fully answerable to the community, as they are supposed to be. Does my right hon. and learned Friend agree that this is entirely applicable also to municipal ports such as Bristol, part of which I represent? Is not it regrettable that, for legal reasons—and for legal reasons only—municipal ports cannot be given the same benefits as trust ports are about to be given?
  Mr. Rifkind: I accept that some municipal ports are in a situation similar to that of the ports covered by this Bill. However, as they can already achieve privatisation through harbour revision orders, legislation such as this is not necessary for their transfer to the private sector.
  Mr. Barry Field: Does my right hon. and learned Friend agree that, where municipal ports exceed the turnover figures set out in the Bill, there is no provision for a Secretary of State to give directions?
  Mr. Rifkind: That is certainly the case. Obviously municipal ports are controlled by the municipality, but there is an option for their transfer to the private sector. That is why it was not thought appropriate to deal with them in this Bill, which is concerned with all ports that have trust status.
  Mr. David Martin: Portsmouth is a municipal port. One difficulty is that local authorities do not have the money to develop ports as they should be developed if they are not to be sold. Brittany Ferries and others would like to invest millions in local authority ports, but they could not acquire shares unless there were some sort of half-and-half arrangement on the way to privatisation which would enable them to reap the benefits of private money doing precisely what municipal ports at present cannot do. In such cases there should be more flexibility.
  Mr. Rifkind: I am sure that many local authorities will allow their ports to be transferred to the private sector, thereby securing many of the significant benefits that will be available to the trust ports. This would enable them fully to develop their potential and to respond to the commercial environment in which, as large businesses in their own right, they must operate. It would give them access to share capital as well as loan capital. It would make them more attractive, as partners, to companies that might wish to go forward in joint venture. It would enable them to stimulate the development of land surplus to their requirements which, under current legislation, they are sometimes unable to do. It would make it easier for them to diversify their activities, thereby ensuring their viability in years to come. It would make them more accountable.
  I emphasise that at the present those ports are not accountable to anyone. If they were companies in the private sector, they would have to be conscious of the need for accountability. Finally, transfer to the private sector would introduce the prospect of substantial employee share ownership. That is not just a theoretical option; as we have seen in the case of Associated British Ports, it is one of the major benefits of the privatisation scheme.
  Mr. Robert Hughes: Will the right hon. and learned Gentleman confirm that the trust ports have access, under conditions, to grants for capital works through the Secretary of State for Scotland or through the appropriate English Minister? The Bill seems to be silent on this point, but does not it follow logically that, if the trust ports become private companies, they will no longer have access to Government loans? What benefit is that to the ports?
  Mr. Rifkind: That is a theoretical question. Apart from the Port of London authority—for which there is different provision in the Bill—there have been virtually no examples of grants or financial assistance from Government to any trust port in recent years. The hon. Gentleman should bear that in mind.
  I am conscious of the fact that one of the main criticisms from certain quarters relates not to the Bill as a whole but to that part of the Bill which permits the
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  Secretary of State in certain circumstances to require a trust port to bring forward a privatisation scheme, and I shall address my remarks to that.
  I emphasise that previous privatisations, almost without exception, have not been enabling measures but have been compulsory measures. The Government and Parliament have said that such and such an industry will be privatised in a particular way and privatisation has not been expressly subject to the consent of an individual company or industry. The Bill is an exception, in that it is primarily an enabling measure. It does not say that all the trust ports will be privatised, as happened in previous privatisation measures. The Bill already recognises that many different circumstances affect individual ports and therefore that it would not be appropriate or wise to have a single policy which automatically and without further consideration applied to all the ports in Great Britain.
  I do not dismiss out of hand the concern that has been expressed in certain quarters, nor do I say that it is unreasonable, unjustified or unnecessary. The Government have recognised that concern in their response and in drafting the Bill. The Bill enables the trust ports to come forward with proposals for privatisation.
  In our view, and we hope in Parliament's view, it will be considered in the public interest that the trust ports, especially the larger ones, will enter the private sector and thereby be able to benefit fully from the opportunities that that will provide.
  Mr. Stuart Bell: I am grateful to the Secretary of State for spending some time on this issue. As I understand it, clause 9 enables the Secretary of State, after an initial period of two years, to give a direction requiring the authority to bring forward a scheme for the purposes of a transfer. Will the right hon. and learned Gentleman explain that clause?
  Mr. Rifkind: I am drawing attention to that point. Generally speaking, and unlike previous privatisation Bills, the Bill is an enabling measure. A fallback power enables the Secretary of State to require a particular trust port to be privatised, but even that power is not unqualified—it is hedged around with all sorts of requirements and preconditions. First, the use of that power cannot be contemplated until two years after the passage of the legislation. Secondly, it can be contemplated only in respect of those trust ports with a turnover of more than £5 million a year. That figure will not be unchanging, but will be indexed to ensure that the real purpose behind that restriction continues for a number of years.
  These conditions mean that, although there are about 100 ports round our coastline, only 14 will be subject to even the possibility of being required to be privatised against their wishes. The vast majority of ports do not see that as a potential risk because of their small turnover.
  Mr. David Harris: Will my right hon. and learned Friend publish the list of 14 ports? He may already have done so by way of written answer, but I should be grateful for that information.
  Let me ask a question about fishing ports? How will the level of turnover—the £5 million requirement—be assessed? I take it that the £5 million relates to the turnover of the port trust itself rather than to total fish sales, which might come under the umbrella of the harbour commissioners. Am I right in thinking that the £5 million

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  relates to the revenue that the trust receives from the sales rather than to the sales themselves? In respect of fishing ports, that is most important.
  Mr. Rifkind: I confirm that the £5 million refers to the turnover of the trust port itself.
  My hon. Friend asked which trust ports will be affected by the potential power of compulsory privatisation. They are the ports with the largest turnover—London, Dover, Tees and Hartlepool, Medway, Forth, Tyne, Ipswich, Clyde, Harwich, Aberdeen, Milford Haven, Poole, Lerwick and Blyth. Those are the only ports affected at present, although turnover will be subject to indexation, and other ports may come into the category if their turnover increases in years to come.
  Mr. John Ward: My right hon. and learned Friend has been so generous in giving way that I, too, am tempted to intervene. He will be aware that the Poole harbour commissioners control an area of about 10,000 acres. We are anxious that, under any new legislation, the present environmental standards and regulations protecting the area against exploitation—at present, the whole harbour is designated a site of special scientific interest —should apply. Will my right hon. and learned Friend confirm that that will be so whatever he may recommend by way of privatisation for all or part of the harbour?
  Mr. Rifkind: I am well aware of my hon. Friend's interest in Poole harbour and its future. I can give him the assurance that he seeks. Any requirements in respect of conservancy matters and environmental issues that affect the existing trust ports will equally affect any successor private sector port. The ports will be subject to exactly the same legislation and will have exactly the same obligations. Moreover, we have the precedent of Associated British Ports, whose conversion from public sector to private sector status has led to no diminutions either in obligations or in standards of behaviour on environmental protection.
  I was explaining to the House the preconditions for compulsory privatisation: two years must have elapsed and the port must have a turnover of at least £5 million. There is an additional factor. If, after the two years, the Secretary of State for Transport wishes to require a port to bring forward a privatisation scheme, that scheme will be subject to consultation with the port authority and with other interested parties. My successor or I would wish to listen carefully to any considerations that might be put before us, and to arguments as to why privatisation might be inappropriate given local circumstances. Therefore, it would not automatically follow that other ports falling within the category would be privatised. That would depend on the response of the port and of other local interests.
  Mr. Tim Janman: Let me raise two points from the opposite direction. First, can my right hon. and learned Friend assure the House that, in Committee, he will consider reducing the £5 million cut-off to £1 million, thus bringing in a further eight ports? Will he also consider reducing the two-year period to one year, as that seems much more realistic?
  Secondly, Belfast is one of the largest trust ports in the United Kingdom, with a turnover of £10 million. Once
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  again, Northern Ireland has been excluded from important legislation and an important trust port has been missed out. Even if it means introducing a separate Bill, will my right hon. and learned Friend consider the possibility of giving Belfast the same opportunities as the trust ports included in the Bill?
  Mr. Rifkind: On the latter point, I would want to take into account the views of my right hon. Friend the Secretary of State for Northern Ireland. On the first point, we shall naturally listen with great interest to the arguments made in Committee and we shall consider amendments, including amendments tabled by my hon. Friend in an attempt to make the opportunities even more widely available, which is clearly what he wishes.
  Mr. Robert Hughes: Will the Secretary of State say more about the criteria for invoking the compulsory privatisation clause? As the right hon. and learned Gentleman will know, the matter has been discussed widely over a considerable period. What would the right hon. and learned Gentleman say to the majority of the commissioners of the port of Aberdeen who were appointed by him in his previous incarnation as Secretary of State for Scotland, who represent commercial and industrial interests in the city of Aberdeen and who have solemnly declared that they are opposed to privatisation because they see no need for it? Why does the Secretary of State want to go against his own business friends?
  Mr. Rifkind: No decision about Aberdeen could be taken until at least two years after the enactment of the Bill. We would then wish to consider the circumstances at the time and to hear not only the port authority's conclusion but the reasons for it. We should want to consider whether they were valid reasons that needed to be taken into account or whether they reflected a misunderstanding of the likely implications of privatisation. It is premature for the hon. Gentleman to assume that Aberdeen will be a candidate for compulsory privatisation and to expect to know what the relevant consideration may be at some time in the future.
  Let me deal with the proposals concerning the Port of London authority.
  Mr. James Wallace: I am sure that the right hon. and learned Gentleman, who was Secretary of State for Scotland in his previous incarnation, is well aware that Lerwick harbour trust had succeeded both in diversifying its port business and in developing its surplus land. Clearly, such achievements are possible under the auspices of the trust port as presently constituted. Will the right hon. and learned Gentleman confirm that the Government would not stand in the way of trust ports seeking to increase their powers and to develop in that way merely because they had not opted for privatisation?
  Mr. Rifkind: The hon. Gentleman will appreciate that one of the problems that the trust ports face is the great difficulty involved in extending their powers. They are constituted under trusts which lay down their powers and responsibilities. A number of ports have been prohibited or inhibited from developing what would otherwise be the normal commercial activities of a company seeking to make the best use of the assets available to it in respect of surplus land. For Lerwick and for other ports, the

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  privatisation option provides the most attractive way of releasing opportunities and does not entail any dangers of that kind.
  The Bill deals with the Port of London authority separately and in a manner different from the other trust ports. The Bill provides for the privatisation of a trust port in its entirety, except in the case of the PLA. The PLA is empowered under the Bill to sell off its commercial docks at Tilbury, but it will retain its conservancy and other statutory functions as regards the River Thames as a whole.
  In concluding that this is the right course to take for the PLA, we have had in mind three factors peculiar to London. The first is the sheer size of the area for which the present PLA is responsible: 150 km of river from Teddington lock to well seaward of the Medway estuary and Clacton-on-Sea. The second is the very wide range of regulatory functions that the PLA undertakes compared with other port authorities, including in particular the regulation of public passenger traffic on the Thames. The third is the place and role of the river in the capital city —for example, in its use for state occasions and by royalty.
  I know that the PLA welcomes the proposals. The House will wish to know that the proceeds from the sale of Tilbury will go towards repaying to the Government the PLA's outstanding debt and repayable grant.
  The Bill also includes provisions about navigational aids in harbour authorities' areas. These will correct an anomaly whereby some harbour authorities are financially responsible for all navigational aids in their areas and others are not. Where the harbour authorities are not responsible for those aids, the general lighthouse authorities—Trinity House in England and Wales, the Northern Lighthouse Board in Scotland and the Commissioners of Irish Lights in Northern Ireland—are. The Bill makes it possible for those responsibilities to be transferred from the general lighthouse authorities to the local ports.
  Let me outline the specific provisions of the Bill. Part I deals with the privatisation of trust ports in general. Clause I defines a trust port by excluding other categories of harbour authority. It also excludes the Port of London authority from the provisions of part I. It empowers trust ports to set up a successor company to which the property, rights, liabilities and functions of the trust port may be transferred.
  Clause 2 provides for the property, rights, liabilities and functions of the trust port to be transferred to the successor company on the coming into force of a transfer scheme to be made under this part of the Bill. Part I of schedule 1 contains supplementary provisions which relate to all transfers under this clause.
  Clauses 3 and 4 oblige a successor company, once the trust port's undertaking has been transferred to it, to issue securities of the company to the trust port as and when the trust port directs it to do so. The trust port is obliged to dispose of the whole of its holdings in the successor company at the time and on the terms that it thinks fit.
  Clause 5 lays down that a trust port may not exercise any of its powers under clause 3 or clause 4 without the consent of the appropriate Minister. The clause also empowers the Minister to give the trust port authority directions about the exercise of those powers. In most cases in this context, the appropriate Minister will be the Secretary of State for Transport. But for fishery harbours in England he will be the Minister of Agriculture, Fisheries
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  and Food, and for similar harbours in Scotland and Wales, the Secretaries of State for Scotland and for Wales, respectively.
  Clause 5 enables Ministers to approve the price at which a port is sold and also to whom it is sold. The Government will therefore be able to ensure that a fair price is paid for each port and that will be a main consideration of Government in considering ports' proposals for sales. In the Government's view, competitive bidding will be the best means of ensuring that a fair price is paid for each port. However, we also recognise the aspirations of many in the trust ports to carry out management and employee buy-outs. Such buy-outs give the work force the opportunity of participating directly in the benefits of privatisation and of acquiring a stake in their own business. We wish to encourage such management and employee buy-outs and are considering how to give effect to some degree of preference for them. Clause 6 contains supplementary provisions to the preceding clauses.
  Clause 7 provides for the Minister to dissolve the authority once its functions have been discharged. Any remaining property, rights and liabilities of the trust port authority will then be transferred to the successor company. Those will include the proceeds of the sale of securities in the company, after payment of the Government levy and capital gains tax.
  Clause 8 lays down the procedure to be followed by trust ports in making schemes for the transfer of their undertakings to successor companies. The trust port will need to submit a scheme to the Minister. The trust port will be required to advertise the fact that a scheme has been made and to notify its employees and those persons who have a locus in the appointment of members of the trust port authority; and it will be required to make copies of a scheme available for inspection. Representations regarding the scheme may then be made to the Minister within a period of 42 days from the date of advertisement. The Minister then considers whether to confirm the scheme, with or without modifications, and such confirmation will be given by means of an order.
  Clause 9 gives the Secretary of State the reserve power to direct a trust port to make a transfer scheme. I have already said why that is a flexible proposal which takes into account the particular concerns that have been expressed by hon. Members and also by ports.
  Clause 10 sets out the annual turnover requirement to which I have already referred. Clause 11 empowers the Secretary of State to make a transfer scheme of his own where he considers that a scheme which a port authority has been directed to make is unsatisfactory.
  Clause 12 provides for a 50 per cent. levy to be charged on the proceeds of sale of the trust port's successor company. Hon. Members who followed the progress last year of the two private Bills promoted by the Clyde and the Tees and Hartlepool port authorities will be familiar with the concept and with the case for it. A similar 50 per cent. levy is chargeable on disposals under those two private Bills through the provisions in sections 115 to 120 of the Finance Act 1990. The trust ports have no legal owner except the state.
  In the absence of a levy, therefore, the purchaser of the port would receive back the entire proceeds of the sale along with the port itself. It would be difficult, to put i t mildly, to justify a windfall gain of such a scale going to the

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  buyer, especially as we should aim for a level playing field between newly privatised trust ports and ports already in the private sector.
  Mr. Kenneth Hind: I wholly support what my right hon. and learned Friend is trying to achieve, but as a supporter of the abolition of the dock labour scheme, I see what he is doing as a further logical step to free our ports. Will he give us an indication of how he will give the remaining 95 trust ports the opportunity to become privatised which I believe is the appropriate place for those ports in the marketplace?
  Mr. Rifkind: Every one of those ports will have the opportunity to be privatised under the provisions in the Bill. The only distinction between those ports and the larger ones is that the Secretary of State could not compel them to bring forward privatisation schemes unless they had a turnover of more than £5 million a year. However, all the ports that so wish may come forward for privatisation under the Bill, and we should be happy to encourage them to do that.
  Mr. Spencer Batiste: Will my right hon. and learned Friend clarify the tax and levy position? From what he has described, it seems that there will first be a 50 per cent. levy and then a capital gains tax assessment on the proceeds remaining. The balance of that money will go back to the authority and will ultimately be passed back to the purchaser. Is there not a more simple way of netting all that so the original bid can reflect the real sums involved instead of there being a complex scheme which leaves a certain amount for the Government, in the knowledge that the rest will return at the end of the day to the people making the bid?
  Mr. Rifkind: I should be happy to hear any suggestions from my hon. Friend for an even simpler way of dealing with these inevitably complex matters. It is important that there be a clear distinction between the levy and capital gains tax. They are based on different concepts and they are obligations for different reasons. I am not sure that there is a simpler way, but if my hon. Friend has any proposals, we should be very happy to consider them sympathetically.
  Mr. Bell: I am grateful to the Secretary of State for explaining why in clauses 12 and 15 we are talking about a 50 per cent. levy. On 15 March 1990 the Minister for Shipping and Public Transport said, in relation to the Tees and Hartlepool Port Authority Bill, that the reason for taking 50 per cent. was that
  "there is a general rule that, when assets acquired or approved by a non-Exchequer Body with the aid of Government grants are disposed of, an appropriate proportion of the proceeds should go to the Exchequer."—[Official Report, 15 March 1990; Vol. 169, c. 749.]
  In the case of Tees and Hartlepool, the reason was that grants had been given 20 years ago. The Secretary of State referred to a level playing field, but he is now changing the goal posts.
  Mr. Rifkind: The fact that grants have been paid is an important factor. However, even if no grants had been paid, it would be wrong for the entire value of the ports to revert to the purchaser who might have had no previous involvement in those ports.
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  When reflecting the public interest, the Government should be able at least to participate in the benefits that flow from the privatisation of those ports, and the proposal meets that public interest requirement in a fair and acceptable way. The only example where that was not the case was the privatisation of the Trustee Savings bank. That was unique in that it reflected the many millions of people who already had a direct interest in the TSB through their savings. That was a unique form of privatisation. In every other case it has been right and proper for the public, through the Government, to expect a share of the proceeds from the privatisation.
  Mr. Richard Holt: While we are considering Tees and Hartlepool, will my right hon. and learned Friend confirm that the additional levy referred to in clause 16 is not part and parcel of the Tees and Hartlepool privatisation and therefore would not be introduced retrospectively for land sales by the Tees and Hartlepool authority which at the moment are excluded?
  Mr. Rifkind: My hon. Friend is referring not to the 50 per cent. levy but to the possibility of a clawback on the disposal of any surplus land. Such a proposal is not contained in the Tees and Hartlepool Port Authority Bill which my hon. Friend is helping to guide through the House at the moment.
  In the past, the taxpayer has contributed to the development of at least some of the trust ports, although on a relatively modest scale. We consider that it would be right to leave part of the proceeds of sale with the buyer as an additional incentive for privatisation, and we believe that a 50 per cent. levy establishes a fair balance between the interests of the taxpayer and those of the new owners of the port.
  Mr. Holt: May I press my right hon. and learned Friend for an answer? I appreciate that he has recognised that I am piloting a private Bill through the House, but he did not answer my question. Quite simply, it was whether the Government have any intention at this very late stage, bearing in mind that the Tees and Harlepool Port Authority Bill will receive a Second Reading in the House of Lords tomorrow, to insert a clause into the Tees and Hartlepool Bill similar to that which my right hon. and learned Friend is introducing into this Bill for all other trust ports?
  Mr. Rifkind: We have no intention of making any changes to the Bill that my hon. Friend is bringing forward in connection with those matters. Obviously, as this Bill goes through the House, we shall have to see whether improvements or changes are required, but we have no intention at the moment of making the changes to which my hon. Friend referred.
  I draw hon. Members' attention to one difference between the levy provisions in this Bill and those in the Finance Act. Under the Finance Act, the levy is chargeable either on the proceeds of sale or on the market value of the port, whichever is the greater. Under this Bill, the levy will be charged only on the proceeds of sale. That is because, under this Bill, the Government will be able to ensure that the port is sold for a fair price and there is therefore no need for the market price provision. That change will add greater certainty to the sum on which levy and capital gains tax will be chargeable, since it will be on the proceeds that capital gains tax also will be chargeable.

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  Clause 13 sets out the arrangements for the payment of the levy. Clause 14 sets out the arrangements for the provision of the information which the Secretary of State will need for the purposes of the levy. Clause 15 provides that the levy paid will be allowable as a deduction against capital gains tax liability, and makes other supplementary provision relating to the levy.
  Clause 16 provides for the Secretary of State to make an order for a levy of 50 per cent. on any gains from the disposal of land by the successor company within 10 years of the transfer of property to the successor company. The details of the clawback provision to be made under this order, and on precisely what types of transaction it will bite, are still being considered. That clawback provision will be a further element in establishing a proper balance between the interests of the taxpayer and those of the new owners of the privatised ports. It will be some discouragement to anyone who might intend to purchase a port merely for purposes of land speculation.
  Clause 17 is supplementary.
  Mr. Harry Barnes: Apart from the point mentioned by the hon. Member for Langbaurgh (Mr. Holt), how close is part Ito the Tees and Hartlepool Bill and the Clyde Bill? The Secretary of State said that there were similarities. Certainly, in connection with the successor company and the 50 per cent. clause, there is much overlap. The Tees and Hartlepool Bill and the Clyde Bill were encouraged and assisted by the Department of Transport. It seems rather strange that the Bill is making progress in the House of Lords when this umbrella provision could apply to Tees and Hartlepool and Clyde.
  Mr. Rifkind: Obviously, this Bill is to ensure that we do not need a private Bill every time one of the 100 ports in the United Kingdom may wish to bring forward privatisation measures.
  Mr. Barnes: What is the difference?
  Mr. Rifkind: There are two differences between this Bill and the provisions of the private Bills. One is the absence of clawback provisions in the private Bills, and the second is that the 50 per cent. levy in the private Bill falls on either the price received or the market value, whichever is higher. I have been explaining that, in the case of this Bill, the levy falls on the proceeds. We do not need to have the market value consideration, because it is an open competitive process.
  Part II is concerned with the sale by the Port of London authority of the port of Tilbury. Clause 18 empowers the PLA to establish a company to take over the Tilbury undertaking. Clause 19 provides for the PLA to submit to the Secretary of State a scheme for the transfer o f the Tilbury undertaking to that company. The Secretary of State's confirmation of such a scheme, with or without modifications, will be given by means of an order made by the Secretary of State. The statutory functions of the authority, to the extent that they relate to the undertaking to be transferred to the new company, will be transferred with it, subject to any exceptions made in the scheme.
  Clause 20 is supplementary to the provisions in clause 19. Some of the property to be transferred to the Tilbury company would have required a works licence had it been owned by anyone other than the Port of London
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  authority. Under clause 21, such licences will be deemed to have been granted to the Tilbury company on the date on which the transfer of property takes effect.
  Clause 22 empowers the authority to dispose of the securities of the Tilbury company, subject to the consent of the Secretary of State, who will be empowered to give the PLA directions concerning the disposal. Clause 23 enables the Secretary of State to direct the authority to form a company and to submit a transfer scheme for the Tilbury undertaking. That power will be available to the Secretary of State two years after enactment of this Bill.
  Part III contains the provisions about navigational aids in harbour authorities' areas to which I referred earlier, together with certain supplementary provisions. Clause 25 confirms that harbour authorities have power to mark arid to light their harbours and that they are to be regarded as local lighthouse authorities. The clause prevents the general lighthouse authorities from installing lighthouses, buoys or beacons in the area of a harbour authority unless they are aids to general navigation. Clauses 26, 27 and 28 cover similar detailed matters.
  Clause 29 makes provision about the tax treatment of companies formed under parts I and II and of shares and debentures issued by them. Clause 30 makes provision for certain exemptions from stamp duty. Clauses 31 to 36 make various supplementary provisions, including the extent to which the Bill will apply to Northern Ireland.
  Mr. Peter Viggers: Will my right hon. and learned Friend undertake to bring the merits of the Bill o the attention of my right hon. Friend the Secretary of State for Northern Ireland? I am concerned that, with some exceptions, the Bill does not apply to Northern Ireland. There are important ports in Lame, Warrenpoint and Londonderry, but I am particularly concerned about Belfast.
  When I was responsible for industry in Northern Ireland, the firms of Short Brothers and Harland and Wolff were privatised, and the Belfast harbour board is a substantial landowner, with Harland and Wolff and Shorts as its tenant. We have an anomalous situation in which a trust is the landlord of a privatised company. In that case in particular, it is most important that Belfast should be enabled to take advantage of the privatisation that is indicated in the Bill.
  Mr. Rifkind: I am grateful to my hon. Friend for intervening because he enables me to give an answer that will please him and many of my hon. Friends. Although the provisions of the Bill do not apply to Northern Ireland with regard to these matters because they are reserved for the Northern Ireland Office under its own system, it is my right hon. Friend's intention to introduce similar measures for the benefit of Northern Irish ports. Clause 35(3) of this Bill will enable it to apply the levy provisions in respect of any similar measures introduced in Northern Ireland in a similar way. Ports in Northern Ireland will be able to have similar facilities available to them, as my hon. Friend hopes.
  The measure should be seen as a further stage in the modernisation of the ports of the United Kingdom. The reforms that were introduced in the 1980s, in particular the privatisation of Associated British Ports and the ending of the dock labour scheme, made an enormous difference to the ability of our docks to cope effectively and impressively with the needs of the late 20th century. It is important that

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  the trust ports should also have those opportunities. The provisions in the Bill will not only ensure the public interest but ensure that ports throughout Britain will be able to respond in a way that will meet their aspirations, which will benefit not only the companies but, equally important, all who work for them.
  5.7 pm
  Mr. John Prescott: The Secretary of State's speech contained much rhetoric but not many facts. I appreciate that a new Secretary of State for Transport is not always able to ascertain the full facts of what has occurred and must therefore rely on the advice of his Department. That may be dangerous in this case, so I shall point out some of the relevant facts of the matter.
  There are always grounds for change in the ports industry; the argument is about the nature of that change and the purpose of it. My maiden speech was about the port of Hull and the shipping and maritime industry, which hon. Members know to be my background. I have heard debates on the docks industry for more than 20 years, and I have seen how the Government's policy has developed.
  The Secretary of State was correct to point out that all the other measures that have come before the House, including the dock labour scheme and the privatisations, are part of the Government's strategy. It is a ports policy —the Government have not stood on the side. They clearly have a strategy and have seen a need to privatise the port industry, to deregulate it, to break up trade union organisations, to deny workers' rights, and then to proceed to sell off for development the land assets of many ports. The Bill represents the conclusion of that policy.
  The Secretary of State has rightly put the Bill into a proper political context. There are provisions on the navigation lights system, which, as anyone who knows anything about the industry is aware, has been a vexed matter for an awfully long time. It is not properly organised. Historically, it has been organised badly. Those provisions will not find much opposition among Labour Members. We think that they will probably represent a better way of dealing with the problem.
  It could be argued—indeed, Lord Rochdale said this in his investigation into the ports industry—that the trust ports have certain difficulties. But Lord Rochdale did not conclude that they should be privatised. He said that certain laws could be changed, such as the rule on the ports' borrowing requirements, and that the structure of the companies could be changed. He said that that could be done by order. He did not say that it would necessarily need one big Bill. However, I concede that, if the Government want to make a general principle applicable to all trust ports, it is better to do so in one piece of legislation, rather than by presenting separate Bills to the House.
  When the Tees and Hartlepool Port Authority Bill and the Clyde Port Authority Bill were before the House, the Minister said that the Government sought to deal with the matter through public legislation, rather than private Bills. That makes good sense. It is a good argument.
  What is the Government's clear intention in the Bill? Is it simply to create a better and more efficient ports industry, as the Secretary of State claimed at a conference
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  last week? In his introductory remarks, the Secretary of State was asked why, if it was a historical accident that trust ports were set up, the same principle had been applied to hospitals and port authorities. He did not answer the point clearly. It is the same principle. The new bodies will be appointed by the Secretary of State. They will not be accountable, yet he is breaking up the existing bodies because he feels that they are not accountable.
  Trust ports did not arise by historical accident. There is one significant difference between what he proposes and what was originally intended when trust ports were set up. Trust ports were seen as a way of serving the community's needs. They were not intended to be used as profit-making centres. They were intended to meet the needs and service requirements of the whole community. They are non-profit-making organisations. The argument is about whether a non-profit-making port or a port that exists solely for profit is better for the community. At the heart of that argument is the desire for access to valuable land on which an awful lot of profit can be made. Indeed, it is possible to make a killing. In the Bill, the Government go out of their way to make sure that they will get a share of the booty when the ports are privatised.
  Mr. Holt: All the trust ports have different historical backgrounds, so it is not possible for the Secretary of State, to state the history of trust ports from the Dispatch Box. The historical origin of my trust port of Tees and Hartlepool is that the Government of the day wanted somewhere to bunker their ships and needed to ensure that there was a navigational channel as far as Stockton, and that sailors were supplied with the goods and victuals required in the event of war. The hon. Gentleman makes a silly statement.
  Mr. Prescott: If the hon. Gentleman believes that that is a contradiction of my view, he simply shows how ignorant he is of the purpose of the ports. He said that his port was set up as part of a public policy to meet a community's needs and to serve a national interest. The motive was not profit but the need to meet the nation's interest. Those who set up the bodies said that the ports should not exploit their position at the expense of others who wished to use the port. What the hon. Gentleman said fits in with the definition that I gave. Perhaps he will carefully examine his own port and determine why it was created. The Secretary of State made another point that I shall deal with in detail. It is a controversial matter. He quoted my speech of—I cannot remember the year.
  Mr. Nicholas Baker: 1983.
  Mr. Prescott: I thank the hon. Gentleman. It was my speech on the dock labour scheme. It could not have been 1983.
  Mr. Rifkind: 1989.
  Mr. Prescott: Yes—1989. I should have known not to rely on Whips, or at least Conservative Whips. That is not divorced from the matter with which I am dealing. In my speech in 1989, I said that the circumstances of workers would deteriorate if the Dock Work Bill was passed. The Bill was about workers' conditions. The workers' conditions have deteriorated. Casualisation has taken place in the industry, as people predicted. I know of 25 ports where casualisation has occurred since the dock labour scheme was abolished. Several of them are in

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  Scotland, so I should have thought that the Secretary of State would know about them. They include Dundee, Greenock and Leith.
  There was a switch from the registered dock labour scheme to casual labour, sometimes at the rate of £2·50 an hour. People are hired by the day or half day. I expressed the fear that that would happen. I also said that workers would not be represented by trade unions in negotiations. That has happened in most ports around the country. According to the law, apparently an employer can recognise a trade union but he is not required to negotiate with it. That is what Associated British Ports has done throughout the industry.
  There are many examples of where conditions have deteriorated. Under the dock labour scheme, training and health and medical facilities were provided. Such facilities are no longer provided in many ports. I said at the time that that would be one of the consequences of repealing the dock labour scheme. I was correct. The Secretary of State claims that what has happened contradicts what I predicted. He is wrong. If he tours the ports and asks questions, he will find that what I told him was correct.
  I do not want to leave the Secretary of State with the impression that we do not concede the argument that some reform is needed. We conceded that the dock labour scheme needed some changes. As the Secretary of State must be aware, the Labour Government attempted to reform it. Two Labour Members abstained, and the reforms and the legislation fell.
  The Minister for Shipping and Public Transport (Mr. Patrick McLoughlin): Will the hon. Gentleman give way?
  Mr. Prescott: No. I want to put this on the record.
  As Opposition spokesman on transport I was involved in discussions with Mr. Finney—one of the notorious people involved in the matter. He was then director general of the British Ports Federation and director of the National Association of Port Employers. I sought to tell him that there was room for negotiation and discussion. I suggested that we should put the deal on the table. I was prepared to talk to all parties. I understood that he was prepared to talk to the employers, but he said that no one would talk. I believe that they were prepared to talk.
  I heard no more from Mr. Finney. Clearly, it was not necessary for him to communicate further because he was carefully planning to abolish the scheme. As he said in his document, he
  "masterminded the highly successful campaign to end the Dock Labour Scheme, co-ordinating political activity"
  for it. Yet he was telling me at the time that he did not intend to abolish the scheme. I shall come to Mr. Finney in a moment. He was one of the architects of the Government's abolition of the scheme. The Government are set to make an awful lot of money out of it, but I shall come to that point later.
  I have not argued and the facts do not suggest that the Labour party does not concede the need for some change. In many of my speeches I have called for a ports policy. The Government do not believe in a ports policy. They do not believe in planning in the ports or any other industry. That is their position. Yet the inquiries conducted by Lord Devlin and Lord Rochdale concluded that it was necessary to have a consistent investment policy to meet the national interest, and that that required some planning framework, whether for investment or the development of ports.
  Mr. Janman: Will the hon. Gentleman give way?
  Mr. Prescott: No. I have no desire to give way -to the hon. Gentleman.
  Mr. McLoughlin: Why not?
  Mr. Prescott: He is such a small man. He will be out at the next election, so I do not want to waste any time.
  I have always advocated some form of change in the ports, but the Bill must be seen against the background of the past 10 years of Government policy for the ports industry. The first approach was made by the former Secretary of State for Transport, the right hon. Member for Sutton Coldfield (Sir N. Fowler). When he became Secretary of State, he argued that there would be no interference with the ports. He said that he was not prepared to make any money available to the industry and did not intend to throw money at the problem. He said that there would be no public subsidy whatever. Then the Government began to dismantle the National Ports Council, which was set up by a Tory Government after the Rochdale committee report.
  The Secretary of State began to notice the problem of increased capacity in the industry and of shipowners playing off port against port. There were many examples of that, but I do not have time to go into the details. The Government then proposed privatisation and to do away with public ownership, as they did with the British Transport Docks Board. It is now readily agreed that the Government sold it off for a song. If the Bill contains any evidence that the Government have learnt any lessons, it is the clause that allows them to obtain at least some value from the betterment of land whichwill take place at a later stage. That is one improvement. At least the taxpayers —the Government claim to act on behalf of the taxpayers —will now receive some of that value instead of losing hundreds of millions of pounds as they did in the price that was set for the British Transport Docks Board.
  The Bill is concerned largely with the trust ports. I hear that there is no legal definition, although there is a qualification about that. No doubt we can discuss that in Committee. The problem is similar to the old one with the Trustee Savings banks. They are a special form of bank, as we said in our debate on their privatisation, just as trust ports are a special form of port. There are publicly owned ports, privately owned ports and trust ports. The argument is that they could be kept that way.
  The argument that trust ports should be kept to meet community needs, rather than used for profits and their assets exploited to the advantage of those who own them, is legitimate and should be considered. The Government do not want to put the emphasis on service. They believe that the community's needs will be met through the pursuit of profit and competition. The case has not been proven, either through the privatisation of the bus service or some railway facilities, that competition, privatisation and the pursuit of profit meet social and community needs. That is at the heart of the difference between this side and the Government on these matters.
  It has been useful to have a copy of what I thought was the Secretary of State's Second Reading speech at the Waterfront conference a week ago. He spelled out what he considered to be the Bill's aims. In his speech today he confirmed that the policy is to promote and develop the viability of competition in the industry. He feels that that is the best way forward. Therefore, the Bill is to remove the

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  constraints on the trust port status. What are those constraints? I hear that these ports have difficulty raising money, and I read what Rochdale said about it.
  I should like to have more evidence from the Secretary of State—this is probably best dealt with in Committee —about the kind of constraints that have prevented them from developing. Many have grown to become large ports and have been able to meet much of their investment requirements. Therefore, the Secretary of State must show us that they were effectively constrained. I am far from accepting that point. Nevertheless, we should perhaps deal with the constraint which Lord Rochdale depicted. It could be dealt with in different ways. Rochdale gave some examples, and the Minister acknowledged that there was an alternative path.
  The Government's philosophy is to leave the way open to competition, price and the market system. Anyone who has read the Rochdale and Devlin reports will know their analysis that competition led to the ports competing so much on price that they did not invest. Port investment was run down to such an extent that Tory and Labour Governments had to pump millions of pounds into the docks industry to modernise it. That had nothing to do with labour conditions; it simply had to do with investment in the ports industry. That is admitted by all the reports that are there for everybody to see—reports which resulted from inquiries set up by Tory Governments.
  Mr. Roger Moate: The hon. Gentleman seems to be relying a great deal on the Rochdale and Devlin reports. Although his memory for dates is a bit wobbly today, can he remind us when those reports were published? I have forgotten, and I should like to see whether he is up to date with this industry.
  Mr. Prescott: The Rochdale report came out in 1966. The inquiry was appointed by a Tory Government.
  Mr. Janman: That was a quarter of a century ago.
  Mr. Prescott: Well, at that time the argument was whether we could simply leave the matter for the market to decide, and Rochdale said no, it was against the national interest. So Tory and Labour Governments invested a lot of money in the industry. That is why the Secretary of State is claiming that he wants to take 100 per cent. from the PLP because a lot of money was given to the PLP. The debt runs to about £145 million. Nevertheless, the argument has been waived and the Government have moved from that position.
  Mr. Ward: Wrong again—not the PLP, the PLA, the Port of London Authority.
  Mr. Prescott: Great. The hon. Gentleman will for ever last on that seat.
  The debt is a problem which the Secretary of State acknowledges. The very policy that the Secretary of State advocates will be based on the same philosophy that created such problems before.
  The Secretary of State said today that if the ports were released, they could expand capacity. The problem in the British ports industry has always been excess capacity and how to deal with it. The problem has been how to deal with not having to reproduce the investments in the ports or,
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  indeed, introduce expensive infrastructure into each of the ports. It is a real problem. In Europe there is no problem about planning the industry and making sure that only certain ports develop and fit in with regional and economic development. That is normal for Governments of the left and right in Europe. Over here, there is an ideological difference about whether there is a role for Government. Here, the Government's only role is to intervene and try to get the money. Our dispute with the Government is that their approach could lead us to the same problems to which that philosophy led us before.
  I have given the example of the dock labour scheme. It was introduced to end casual labour. As soon as it was abolished and everything about maximising profit and cutting wages came in, we ended up with a casualised scheme.
  The explosion in the industry came when everybody was forced down to poor working conditions. That is what led the Government to set up the Devlin commission. The Tories have always set up these commissions into what is going wrong, things have always gone wrong because of the private sector's handling of the situation, and the commission always come up with recommendations that the Government must intervene to put the industry on a proper footing.
  Mr. Barry Field: Can the hon. Gentleman explain to the House why dockers who were previously registered under the scheme, at Southampton now say that they do not wish to return to the scheme as they are better off working at Southampton in enhanced financial circumstances?
  Mr. Prescott: The BTDB, which is now Associated British Ports, came to an agreement that there could be a labour co-operative in that area. The co-operative decided to provide the labour because the port authority decided to get out of doing that. That is another feature of the privatisation of ports which Rochdale pointed out. The port authorities did not do anything about hiring labour. It was all left to private companies, which led to many conflicts.
  In Southampton, a co-operative deal was struck with the workers, who set up their own company. There is no consistency about that, of course. In Hull, the authority dismissed most of the workers from the scheme. Many of the workers got together and offered a co-operative arrangement, but the authority refused to reach agreement with them. The policy is not consistent, but I presume that that is why the workers in Southampton feel that they have got a better deal.
  I am not against workers wanting control over their working conditions. It means that they work a scheme and try to deal with their labour conditions. The Bill supposedly suggests that the shares might go to workers in some sort of employee share ownership plan. That is a bit of icing on the cake. At the end of the day, the sale of the trust ports will be determined by the Secretary of State. He has already said that a fair price will be determined and that bidding will be competitive. That will create problems. The corporate structures, the corporate raiders, the big companies, will come in to buy the ports because they can see the land value involved. They will probably just want to take the assets and leave the rump or whatever is left of the port. Under the Secretary of State's formula, it will be possible to do that.

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  Anybody who has looked at management-worker buy-outs knows that the problem for them is that they cannot raise enough money to purchase the company. Many corporate raiders come along and offer much more than the value of the company because they see the advantage of that. That does not lead to worker co-operation and worker shareowning; it leads to big companies owning more of the ports and eliminating the competition.
  Mr. Ronnie Campbell: Does my hon. Friend remember that, when we were involved in the privatisation of the Tees and Hartlepool Port Authority Bill, Mr. Hackney, who was the director of the port, said that, once it was privatised, he would buy other ports on the same coast?
  Mr. Prescott: I am sure that that is so. Ports are bought mainly to ensure that they do not provide competition. Anyone who has looked at the evidence from the deregulation of aviation in America will see that a few big companies have taken over the small ones. Big companies dominate the industry. The Secretary of State might believe that it is against the national interest to have big corporations taking over more and more of these ports and perhaps we should hear his policy on that in Committee. Once one holds a view on that, it is a policy of national interest—a Government policy to have an idea of what sort of port industry is wanted.
  The Bill is solely about selling to those who will pay most. That may well undermine the Government's alleged intention that a lot of ports providing competition is the best way forward. That kind of policy causes us concern. A lack of thinking about port policy dominates most of the Government's approach to the Bill.
  The dock labour scheme has been mentioned a great deal, and I am sure that we will hear a great deal more about it. What makes me particularly annoyed about the Government's approach to the scheme is not that the Bill makes similar promises to what was promised on the Dock Work Act 1989. I am thankful for the paper produced for the Waterfront conference that points out that in one of the clauses the Government guarantee that trade unions will be recognised, that there will not be any unfair dismissals, that there will be the right to consultation and that the Bill is not anti-union. Frankly that is what was said about the dock regulation scheme. It did not mean a damn thing. The guarantee in the Bill will be no more protection for the workers in the industry than that given when the dock labour scheme was abolished. If the Government claim to be concerned about conditions in the industry they should address that problem.
  There is a conspiracy against the port industry motivated by those who want to make an awful lot of money. The Waterfront conference, which was addressed by the Secretary of State, was set up by the Waterfront Partnership. It was organised by Nicholas Finney, lain Dale and Peter Cropper. It is interesting to note that each of those men claims with pride to have been the architect of the "successful" campaign for the abolition of the clock labour scheme. One of them used to be director of the Conservative research department, and another worked as a researcher for Tory Members of Parliament. What we have is three Tories out to make a few bob from the industry.
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  At one time, Mr. Finney was the director general of the British Ports Federation. He acted in bad faith when he told me that he was prepared to talk about the renegotiation of the dock labour scheme when, at that time, he was actively involved with Ministers in its abolition. Two weeks before its abolition, the then Prime Minister made it clear that she had no intention of so acting, and its abolition appeared to be a surprise to her.
  It is interesting to compare the then Prime Minister's statement with the evidence given by the Department of Transport to the Public Accounts Committee. The Department was asked why the assessment of the costs or the abolition were five times greater than the Department had estimated. The Department replied that it had had to hurry the thing through. I do not know why the Department gave that reason for having to pay so much. All three previous Secretaries of State attended lunches with representatives of the port industry and made it clear that they agreed to the abolition of the dock labour scheme within five years. That was said despite denials issued in the House.
  We now know that there was close co-operation between the Department of Transport and the three gentlemen of Waterfront Partnership. They were involved in the abolition of the dock labour scheme, but they now appear to have become involved in the privatisation of the trust ports. Those three gentlemen are now about to set up a consultative organisation to tell people how best to deal with the trust ports. No doubt that will be a remunerative exercise and they will make a lot of money. I, as the Opposition spokesman, have sought the views of the PLA, and the British Ports Federation, but I have received no response. Perhaps I should go to the Waterfront Partnership to discover the views of the owners in the industry.
  Mr. Janman: The hon.Gentleman keeps on talking about making money and Mr. Finney. As a result of the abolition of the dock labour scheme, the only things that are making money are British ports and, therefore, British industry and our country. That has happened because the turnround time in the ports has been reduced by half. Tilbury in my constituency has had similiar success. The productivity of its container division has increased by 87 per cent. The ports are making money not only for themselves and their workers but for Great Britain plc.
  Mr. Prescott: I have no doubt that the hon. Gentleman is quite happy for people to be paid £2·50 an hour for eight hours on the docks. He would not work for that money, but such pay is one of the consequences of the abolition of the dock labour scheme.
  In Hull, I spent a long time arguing with the BTDB. Stupid Treasury rules deployed by Labour and Tory Governments did not allow the ports to use their land as they wished. They were also subject to external financial limits that prevented them from borrowing to develop. Labour and Tory Governments made a mistake by listening to the damn Treasury civil servants and they did not have the intelligence to change the system. The hon. Member for Thurrock (Mr. Janman) should understand that it is only because of subsequent changes that the ports are making money.
  I have never argued that there is no room for change in the industry—in the past, I was involved in trying to reach new agreements on such changes. There were unacceptable

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  practices in the industry. I made my dislike of those practices known when we discussed the dock labour regulation scheme. I did not like the fact that dockers' sons always got a job and with preferential treatment. I have always made my criticisms known.
  One of the benefits of the document produced by the Waterfront Partnership was that it enabled me to read the paper produced by Mr. Prebble of the New Zealand Government. He is a Transport Minister and he came to see me to talk about problems associated with docks. When the New Zealand Government sought to deregulate the port industry they declared their intention for change and entered discussions on how best to achieve that. Despite the controversial nature of those changes, they were made with agreement.
  It is also interesting to note that the New Zealand Government were able to bring about a 50 per cent. reduction in the dock labour force, but that it cost them just £20 million. When our Government made similar changes, it cost £135 million. The Public Accounts Committee, not surprisingly, has attacked the Government for being so stupid with taxpayers' money and throwing it at people.
  The Government should have negotiations with the unions in the industry and others who are willing to talk, but they have got together with people who want to get to the cash. It is all about getting access to the land and the booty. The Bill has nothing to do with ports policy or fairness and justice in our industry. It is simply about how to rob trust ports of their money, land and associated assets.
  The port employers may have got the Government to agree to the repeal of the port trusts, but now they are shocked that the Government want to take a share. I agree with the Secretary of State's suggestion that the Government should get some of the cash—I would prefer to suggest that it should be the community that gets the cash. There is no reason why the rewards from the sale of a particular port should not go to its local authority. That money does not necessarily have to go to the taxpayer; the local community has a right to some of the cash. I do not suggest that those local authorities should receive 50 per cent. of the cash—I should be happy to see them receive 100 per cent.
  In the formula announced by the Secretary of State, the share received by the Government slides about from 50 up to 100 per cent.—that is what is worrying the employers. Those employers thought that they had done all the work and would get all the booty. They have done various deals, but the Government have now introduced a levy by which they will take 50 per cent. of the cash.
  The Secretary of State has gone even further, however, by taking reservation powers. He does not want to be involved with the tiddlers; he wants to deal with those ports that have a turnover of £5 million. He is interested in the 12 biggest ports, which command 63 per cent. of the trade—that is where the money is. If those ports do not want to change willingly, the Secretary of State will impose those changes. Now we have a port policy.
  The Government's policy is not directed towards achieving the best investment and standards in the country's interests; it is directed towards getting the booty and a share of the land. The Government are committed
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  to that policy because the Financial Secretary to the Treasury has told us that he wants £5 billion a year from privatisations. That is Government financial policy up to 1994, and they have lined up all manner of public sector facilities to be sold off. The Bill has nothing to do with port policy. Yet again, Treasury policy is being imposed on the ports. That policy has done more damage to our ports, under Labour and Tory Governments, than anything else.
  The Bill is an attempt to reach the £5 billion target. The Government talk about giving the workers shares, but what a load of nonsense. Workers and managements will be unable to bid against P and 0 and BTDB—they want to buy up the ports. They will succeed, and then they will cut out the competition. What will be Government policy then? Perhaps we shall find another Lord Rochdale in the 1990s who will tell us what to do with our port policy. That is the future offered by the Government.
  I warn the Secretary of State—this will send shivers down his spine—that there will be a clawback. He reserves the right to do more, and says that it must be done in the first two years, which brings us within reach of the time of the next Labour Government. If I am appointed Secretary of State for Transport—who knows?—the right hon. and learned Gentleman will have left me great flexibility to deal with these ports. The Secretary of State will leave me tremendous powers to deal with all of them. I warn him that those powers will be used to go much further than he anticipates.
  I have said nothing about harbours and navigation—we can discuss them in Committee. The same goes for the Port of London Authority, which is treated separately in the Bill. My experience of that authority shows that it is still savagely anti-union and that it has worsened conditions in the industry. That does not inspire confidence in an improvement in working relationships in the industry. The authority does not bother to communicate with Opposition Members or to tell us what it thinks about a Bill such as this.
  There has to be an alternative. We shall scrutinise the Bill and what we inherit when we come to office. We believe that the Bill has nothing to do with port policy, and such a policy must be developed. Most European countries have one, after all. The policy must integrate our infrustructure: roads, railways and the gateways to the water must be linked with the rest of the country. The whole system must be co-ordinated; decent labour practices must be introduced; we must recognise the International Labour Organisation obligation that we are supposed to recognise, and the EC social charter.
  We shall look into all those aspects when we come to power. All that the Bill does is allow the Government access to the wealth in the land involved. It will worsen the conditions of the workers. I have predicted that correctly before and I predict it again now. On all these grounds, Opposition Members will vote emphatically against the Second Reading.
  5.41 pm
  Mr. John Ward: Unlike the hon. Member for Kingston upon Hull, East (Mr. Prescott), I remain confident that my right hon. and learned Friend will continue to issue regulations to the ports for some years to come.
  I want to express the concern of my constituents about the possible effects of this Bill on the port of Poole. It is

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  perhaps inevitable that the Government should adopt a blanket approach to privatisation of the ports, but I hope to show that the ports covered by the Bill are not all the same, and to persuade the Minister that account should be taken of local variations and, above all, of the wishes of local people.
  The port of Poole has been described as a textbook trust port. A port of some sort has been there since Roman times, and its fortunes have varied. Sometimes, as in the days of the great sailing ships, it has prospered due to the north American trade. At other times it has declined, as when deep-water ports such as Southampton were built to take the new steam ships.
  In 1895, an Act of Parliament set up the Poole harbour commissioners to
  "conserve, regulate and improve the Port and Harbour of Poole".
  This they have done for nearly a century, and I pay tribute to the way in which they have balanced the needs of industry, leisure and fishing over the years.
  The commissioners have followed a programme of modernisation and development, not always uncontroversially but always after consultation, and with a sensitivity which could act as a model for any such authority.
  We now have a successful cross-channel-style port with regular scheduled freight and passenger roll-on roll-off ferry services to the Channel Islands and Cherbourg, as well as a conventional cargo operation which handles bulk cargoes and steel. But to many of us who live in Poole, that is only a relatively small part of the story.
  The present harbour commissioners also protect the environment of the second largest natural harbour in the world. It covers some 10,000 acres and is a haven for many waders and wildfowl. The whole harbour is designated a site of special scientific interest. Brownsea island and a large area south of the harbour in the constituency of my hon. Friend the Member for Dorset, South (Mr. Bruce) are owned by the National Trust, and there is an on-going management plan agreed by the local authorities and other bodies concerned with the harbour.
  Up to 10,000 small boats and windsurfers are estimated to use Poole harbour during the year, and it is the present harbour commissioners who agree the reasonable mooring rates with the various yachting organisations.
  In and around Poole harbour, we have western Europe's largest onshore oilfield. The operator, BP, has spent a tremendous amount of time on scientific studies to establish how to carry out the development of Wytch Farm with the minimum of disruption to the environment.
  The House will shortly be asked to consider a private Bill to establish an artificial island near Poole to recover oil from a large area, and the present harbour commissioners are accepting even now new responsibilities in conjunction with the local authorities to ensure that the oil operations are suitably supervised and controlled.
  Poole harbour is also the base port for a thriving commercial fishing fleet, and it provides landing and marketing facilities for boats from the surrounding area. Currently, there are 138 registered vessels based at Poole, whose port benefits from its central position, coupled with good communications, particularly for the export of fish to the continent.
  Besides the usual catches of fish, Poole is the base for a thriving and expanding shellfish industry, which is providing employment opportunities for younger fishermen. Poole harbour was recently designated as one of the
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  nursery areas, for the important bass fisheries. New EEC legislation is due to come into force in 1993, and it will certainly have an effect on the local industry. Negotiations are currently in progress between the southern sea fisheries district and both the Poole harbour commissioners arid Poole borough council to ensure that the right facilities are available.
  Those involved are confident that, with the Poole harbour commissioners running the port, a satisfactory solution can be found, but they are concerned that a private company might well have a different outlook. Fishing is important to the local economy and provides employment for several hundred people, but the industry can operate effectively only with the full and active support of the port authority.
  In this haven of peace and tranquility, we have now received our copy of the Government's Ports Bill. I must say right away that I agree with the principle of privatisation. Numerous examples show that industries which have been nationalised have prospered even beyond expectations when they have been privatised, and this has proved that the drain on taxpayers' money which some of these industries represented can be stopped.
  My point about the Bill is that there are different types of port, and that we should not attempt to curb the individuality of those which are successful by applying a blanket policy of privatisation. Some ports are operated by local councils, using money provided by local community charge payers and taxpayers, and some of them are prime candidates for privatisation to avoid inefficiency and waste. Under such circumstances, privatisation must be attractive to the local population.
  However, I have already explained that Poole is a trust port and, as such, is not a drain on the funds provided by community charge payers and taxpayers. It is self-supporting, and the present system run so successfully by the Poole harbour commissioners has proved how a method conceived by local people can evolve to safeguard the unique local environment. It is precisely the unique qualities of the port of Poole that I am trying to highlight.
  As I have said, I am convinced that privatisation is the best way forward for some ports, but Poole already has a successful, thriving port without it being a burden on the local community.
  By making full use of the income from those using the port, the Poole harbour commissioners have safeguarded the environmental attractions of the harbour, to such an extent that it is enjoyed to the full not only by the local population, but by the many hundreds of thousands of visitors who come to Poole each year.
  Why, then, should we change the status quo? I have yet to be approached by anyone in Poole who wants our port to be privatised. Local people are happy with the way that things are, and are satisfied that their best interests are served by the harbour commissioners—most of whom are local men.
  The obvious solution to the dilemma would be to remove the element of compulsion from the Bill. I raised the question of compulsion in connection with privatisation with my right hon. Friend the former Secretary of State during Question Time on 26 November, and I remain convinced that privatisation should not he compulsory.
  I fully understand and welcome the fact that, in introducing this Bill, the Government want to provide a quicker and simpler mechanism for the privatisation of

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  ports, rather than applications being subject to the time-consuming and costly option of a private Bill. Some ports are already pursuing private Bills of their own, and I am glad that those who want to privatise their ports will be helped considerably by the Bill. However, I still fail to see the merit in compelling successful ports that have the overwhelming backing of local people to privatise their operation simply because that is what some other ports wish to do.
  While the principle of privatisation is, quite rightly, one of the mainstays of this Government's policies, so too is the principle of freedom of choice—and I cannot see how that this latter principle applies to the Bill. Nevertheless, if it is felt that privatisation must take place, the Government should acknowledge that special conditions ought to apply to some ports.
  A precedent for such a course of action has already been set by the way in which the Port of London authority is to be dealt with. The PLA is responsible for the whole of the river frontage, but the vast majority of that area is not a working port, so only Tilbury docks is to be privatised under the Bill. In Poole, the working docks comprise about 50 acres—only a tiny fraction of the total area of the harbour, which covers some 10,000 acres. That is much larger than the area that is to be left with the PLA in respect of London.
  If privatisation must apply, I suggest that a similar compromise could be achieved and a levy charged on the privatised port in order to provide the money required for the upkeep of the rest of the harbour. Poole is not a deep harbour, and dredging and maintaining it costs a considerable amount of money.
  My hon. Friend the Minister for Shipping and Public Transport has kindly agreed to visit Poole, to see for himself the situation there. I assure him of a warm welcome, and of a very comprehensive briefing about both Poole harbour and local opinion on the Bill. I thank him in advance for taking the time to visit us, and for at least listening to our point of view.
  I hope that my hon. Friend will come to Poole with an open mind. Perhaps, during his visit, he will be able to provide us with a convincing reason why the port of Poole should be privatised, as no one has yet managed to do so. It seems that this will be a case of privatisation for the sake of privatisation—not because there is any local need or desire for the port to be privatised, but because all ports are to be lumped together for the sake of some sort of harmony of policy.
  I therefore put the following questions to my hon. Friend the Minister. If privatisation is to be forced on us, how are we to protect the environment? How do we ensure that local people benefit, as they have for many years, from their greatest local asset? How do we ensure that the port is not taken over by asset-strippers or by those who will wish to maximise profit at the expense of the environment, the activities of fishermen and small boat owners, and the whole local population—who benefit from the present balanced approach to management?
  As trustees of a unique and beautiful harbour, the Poole harbour commissioners continually strive to achieve a harmonious existence between the numerous and often conflicting recreational, environmental and commercial
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  interests of the harbour. In addition, the commissioners must adhere to a continuing programme of planning and investment to maintain a viable port.
  I hope that I have said enough to show the grave concern felt in Poole and the surrounding area about the port and harbour falling into the hands of a commercial organisation whose sole motive will be to make a profit for its shareholders—or, worse still, into the hands of an asset-stripper who could, in a short time, ruin the work that has been accomplished over many years to protect Poole and its surroundings.
  Surely there can be no finer system of port administration than the unsubsidised, self-financing trusteeship of Poole. Those of us who live there simply cannot understand why the Government seem intent on compulsory privatisation.
  5.56 pm
  Mr. Robert Hughes: No Government have been more dogmatic or ideologically blinkered than the present Administration, and the Bill proves how difficult it is for a leopard to change its spots. It is a relic from the Thatcher era, and it comes before the House only because of the policies embarked on by the former Prime Minister, which no one can find a way of reversing.
  It is strange how quickly the zeal for privatisation has faded. I expected from the hon. Member for Poole (Mr. Ward) a rip-roaring defence of the Bill and of privatisation, together with a demand that the Government should go even further. The hon. Member for Thurrock (Mr. Janman), who has left his place, suggested that allowing two years before privatisation is too long, and that the minimum qualifying turnover of £5 million is too large. The hon. Gentleman made a rapid exit from the Chamber. Perhaps he had advance warning of the speech of the hon. Member for Poole, but I understand that he is consulting Nick Finney. Fair enough—he is perfectly entitled to do so.
  Mr. Hind: A number of my hon. Friends who remain in the Chamber think that two years is too long, and are concerned that the remaining 95 ports may be allowed to do nothing and will not develop, in order to avoid pressure for privatisation. Perhaps the door should be open to all 115 ports, rather than just to those which have a turnover of more than £5 million a year.
  Mr. Hughes: Now that the hon. Gentleman has made his intervention, perhaps he also will make a rapid exit from the Chamber.
  Mr. Holt: On a point of order, Madam Deputy Speaker. I object to any hon. or right hon. Member consulting someone who is in the Chamber but not on the Floor of the House when they are supposed to be in their place. I voice that objection whenever such an action is taken by a Labour Member, so I must do so also in the case of a Conservative Member. I ask you, Madam Deputy Speaker, to draw attention to that undesirable practice.
  Madam Deputy Speaker (Miss Betty Boothroyd): The hon. Member for Langbaurgh (Mr. Holt) has himself drawn attention to it. His concern will have been noted by hon. Members and will, of course, be recorded in the Official Report.
  Mr. Hughes: I do not want to interfere in private and difficult matters, but the hon. Member for Langbaurgh (Mr. Holt) raises a serious issue, and I hope that the hon. Member for Thurrock will desist from taking further advice in that way. No one could object if he chose to have a cup of tea with Mr. Finney downstairs.
  No one has made any real case for the Bill. There are deficiencies in the trust ports legislation, and certain problems remain to be resolved. However, the Minister did not identify one port as being inefficiently managed or serving its area badly, making it necessary to introduce such legislation. Such deficiencies as exist could easily be remedied by minor statutory changes to free up trust ports that are bound by existing legislation that is too onerous.
  The Bill clearly illustrates the narrowness of the Secretary of State's approach. There is no need for privatisation. I am advised by the Aberdeen harbour board that it totally opposes the Bill—especially the clause that imposes compulsory privatisation after two years. The board has discussed the Bill at length. The concept of privatised trust ports has been with us for some time. It has not come out of the blue, so it has been possible to give it mature consideration before reaching a point of view.
  Conservative Members may be interested to know the membership of the Aberdeen harbour board. On 1 January 1991, it comprised two representatives of Grampian regional council, Councillor A. Main and Councillor A. Stuart. One representative is nominated by Aberdeen district council, Councillor H. E. Rae; one is nominated by Aberdeen chamber of commerce, Mr. D. Paton; one is nominated by the Scottish Trades Union Congress, Councillor R. R. Webster.
  The following members are appointed by the Secretary of State, after consultation—after consultation with the fishing industry: Mr. Patrick Lynch, managing director of North Star Fishing Company Ltd.; after consultation with the Aberdeen chamber of commerce on export and import of cargoes: Mr. Michael Horsfall, managing director of North Eastern Farmers Ltd.; after consultation with the Aberdeen Base Operators Association, operators of the oil base: Mr. Roderick Mathieson, managing director of Wood Group Offshore Ltd.; after discussion with the United Kingdom Offshore Operators Association, the oil-related interest: Mr. Keith Allan, technical operatons director of Shell Expro (Aberdeen); after consultation with the cargo-handling interests: Mr. Ramsay Pirie, the managing director of John Cook Agencies Ltd.; after consultation with the Institute of Chartered Shipbrokers, shipowner or agent: Mr. Tony Peers, managing director of Seaforth Maritime Group.
  The direct nomination of the Secretary of State, without statutory consultation, is Mr. John W. Cradock, who is a local businessman, and the general manager is Mr. Barclay Braithwaite. There is a total of 13 board members and if hon Members care to make the calculation, they will find that eight of the 13 are from commerce and industry and clearly look after their own interests—that is quite proper—but mainly the interests of the port and the region served by Aberdeen harbour board.
  Hon. Members are entitled to ask how Aberdeen harbour board has discharged its responsibilities. For a number of years, Aberdeen has funded all port development out of revenue. In the past decade, it has spent £27 million on port maintenance and development.
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  The board expects to spend a further £37 million in the next 10 years and to fund it from strong cash reserves and existing borrowing powers.
  Aberdeen has no surplus land. Practically all its land is taken up by port facilities. The small amount of land which is not used by the port is leased to a local shipyard, A. and P. Appledore. The ownership of that land is extremely important, as it prevented the previous company, Aberdeen Shipbuilders, from asset-stripping the shipyard when it went into liquidation, having run up enormous debts in a short time. This is not the occasion to go into how those debts accummulated in such a short period, or to comment upon the financial irresponsibility demonstrated by the owners of that shipyard. I shall pass that subject by for the moment.
  Aberdeen harbour board, under its current constitution, has powers to diversify into port-related work if it so wishes. Aberdeen is run in an extremely businesslike fashion. In 1988, the harbour board made a profit of £2 million, after tax, on a turnover of £10 million. That is a pretty good return of profit on turnover after tax, and in 1990 it is forecast that that return will be exceeded, although we do not yet have the accounts.
  Hon. Members may think that Aberdeen has been able to make reasonable profits by continually increasing charges for use of the port, rather than through efficiency. The truth is that the main ships and goods charges increased by 5 per cent. increase since 1983. Apart from a 5 per cent. increase in 1990, there has been no increase since 1983. That is a pretty efficient output since 1983—Aberdeen has managed to maintain its level of charges and increase profits. I cannot imagine that any private industries, or indeed a privatised port, would manage to do any better.
  Aberdeen has a splendid record; nothing could be used to demonstrate that the port could do better in the hands of a private company. The case speaks for itself.
  The board has considered the matter for many years, but it is totally against the idea of privatisation, and it is concerned that a well-managed port, which looks after local interests, could be bought by an outside agency—outside the Aberdeen area, outside Scotland and even outside the United Kingdom. I am sure the Minister will tell me if I am wrong, but I can find nothing in the Bill which restricts the ownership of British ports to companies which have their headquarters in this country.
  Let us imagine that the port of Rotterdam or some other port suddenly decided to buy Aberdeen port for its own interests. It might simply run down the port over a period of years, suck it dry of profits and go into liquidation, and then we would be in difficulties.
  Mr. Bell: My hon. Friend may be aware that one of the conditions that we were able in Committee to put into the Tees and Hartlepool Port Authority Bill, when that port was privatised, was that the headquarters of the port would always have to remain on the Tees. If that provision is lacking in this Bill, should we not work to incorporate it in Committee?
  Mr. Hughes: I totally agree with my hon. Friend. We certainly need to be sure that the main business is conducted from the ports when they are established. We should go further: we should write a provision into the Bill that no foreign company should be allowed to have an interest of more than a certain percentage in such a

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  company. I do not know whether that should be 10 per cent. or 40 per cent., but the Bill should be worded so that ownership of a huge block of shares would not result in control of the company. One does not have to own 51 per cent. of the shares of a company to control it, because a block of 20 or 30 per cent. of the shares could mean that one would have control.
  Aberdeen is a buoyant port. In the annual report, the chairman says:
  "The cargo handled in 1989 increased to 3·22 million tonnes, the first year in the port's long history that the 3 million tonnes level has been exceeded. The shipping handled also increased to 8·89 million gross registered tonnes. Increases in commercial traffic played a large part in the rising figures, with oil-related traffic remaining strong. The difficult situation faced by the fishing industry in respect of quota reductions was reflected in the noticeable drop in white fish landings."
  I quoted that because hon. Members may well take the view that the reason why Aberdeen is so buoyant is solely because of oil-related work in the North sea—for which we should be grateful. However, ordinary commercial activities in the port have been doing well and increasing. Aberdeen is a splendid port and it is living up to its reputation. Clearly, the Secretary of State should leave well alone.
  When the Minister replies to the debate, will he answer a question which I asked the Secretary of State in an intervention? What would happen to trust ports which hitherto have had access to grants for capital works? The Secretary of State said that that was theoretical. The fact is that, for a number of years, no trust port has had any money from the Government for development. That is not what I call theoretical. It is the practical effect of how the Government have dealt with their relationship with trust ports.
  Setting out a prospectus is quite a different matter. In the Bill, we must make the position clear about grants for capital developments to prospective purchasers of trust ports. They must be clearly told—I believe that this is intended in the Bill—that, once they become private companies, they will be dependent upon the market for raising money for capital work, either through revenue or borrowing. My question must be answered in the House.
  The Bill had nothing to do with ports policy— Conservative Members understand that only too well—but everything to do with the problems that the Government have got themselves into over the abolition of the dock labour scheme. I do not want to go over all the ground again; let me simply say that I have some sympathy with my hon. Friend the Member for Kingston upon Hull, East (Mr. Prescott). We all had discussions with the port employers and others involved in industry, and they all said that they were not going hell for leather to ensure the abolition of the dock labour scheme.
  I well remember having discussions, as Labour's transport spokesman, with Nick Finney, director of the National Association of Port Employers—NAPE. I hope he will not feel that I have broken a confidence—not that it matters much now; it is all water under the bridge. He asked me, before the general election of, I think, 1983—elections come and go so quickly—whether I would be prepared to use my good offices to set up a "consultation conference" involving both employers and unions, to discuss the deficiences of the dock labour scheme and the
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  possibility of improving it in a way that would allay the dockers' fears about casualisation and uncertainty of employment. It was felt that the two sides could be brought together for the good of ports policy and the nation in general. Then, suddenly, we were presented with a Bill to abolish the scheme.
  The Government estimate that, in the two years following enactment of the Bill, they will gain £30 million to £50 million from the levy. It has been explained, quite properly, that no one knows how many ports will opt for privatisation, and that the proceeds are therefore also unknown; but £30 million to £50 million is considered a reasonable estimate. Other estimates, however, put the value of the trust ports much higher: some think that, given existing sales and the future development value of land that is sold off, the levy could make the Government as much as £200 million. I do not know the true figure, but I should like to hear the Secretary of State's prediction of the values and the long-term gain.
  The Bill is designed for the sole purpose of recouping some of the losses resulting from the abolition of the dock labour scheme, which was disastrous for the Government's coffers. The Minister may shake his head, but we were solemnly told at the time of the abolition Bill that the cost to the Government would be approximately £25 million —and that would be the Government's share; the other £25 million, representing the total cost of redundancy payments, would be met by the employers.
  The only trouble was, a nice, fat, juicy loophole was left in the Bill. If a stevedoring company went into liquidation, who picked up the tab? The Government had to pick up 100 per cent. of the redundancy costs, not just the amount that they had promised; they had to pay the employers' share as well. That juicy little loophole cost the Government an estimated £135 million, five times the estimate in the Bill.
  That is financial mismanagement of the grossest kind. If a local authority, having estimated that a measure would cost £25 million, acted so badly and irresponsibly that the eventual cost was five times as much, it would be hauled through the courts and its members disqualified for life —but not this Government: they get away with such behaviour by sweeping it under the carpet as though it were some minor peccadillo that could be easily forgotten.
  What did the Government say when challenged—by, I believe, the Public Accounts Committee—about their gross underestimate? Their lame excuse was, "Well, we took the Bill through in a hurry, and the financial costs were difficult to predict." That came from a Government who try to pretend that they can conduct their business better than the Labour party, and that the taxpayer's finances, rather than tame ideology, are the first thought in their mind. The truth is that the Bill is intended to recoup money and cover up the deficiencies of the past.
  At its best, the Bill could be described as a scatter gun, intended to resolve a problem that no one has ever spelt out. Such problems can be dealt with in other ways. No example has been given of a single trust port whose circumstances required the introduction of such legislation. The existing deficiencies could easily have been sorted out by other means; the Government should take account of the national interest. Nothing has been said about port strategy or port organisation, apart from the Secretary of State's throwaway remark that ports would still be needed after the opening of the Channel tunnel. That was a

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  brilliant flash of insight: I suspect that it was furnished by the excellent QC's mind that he brings to bear on such issues.
  Of course there will still be ports when the Channel tunnel is in operation; but, as the Secretary of State well knows, the tunnel will have a major influence on port developments in this country. He has said nothing about that. I believe that the Bill is completely unnecessary, and full of blinkered ideology: I shall certainly vote against it.
  6.16 pm
  Mr. Michael Carttiss: First, let me welcome the Bill and congratulate my right hon. and learned Friend the Secretary of State on making such progress so early in 1991. Secondly, I join other hon. Members in expressing my concern about the notion of the Exchequer's taking 50 per cent. of the proceeds of any sale of shares in a privatised port. I do not quarrel with the notion of a 50 per cent. clawback on the sale of land owned by a port; I see the validity of that, and understand my right hon. and learned Friend's argument justifying a half share in the proceeds from the disposal of shares. Nevertheless, I am not happy about the position, and I should like to say more about it later.
  My third point concerns the turnover figure of £5 million, which I think should be rather lower. A turnover of £1 million would bring in only another eight or nine ports, so a lowering of the figures would not be significant. My right hon. and learned Friend the Secretary of State has said that he intends to apply index-linking and that the £5 million turnover is not intended to bring in other ports by virtue of the effects of inflation; he says that the figure will rise, but, as I said, I should prefer it to be lowered.
  Opposition Members have expressed their objections. It gives me great joy to be able to quote my very good friend, the socialist chairman of Great Yarmouth borough council's economic development committee, who welcomed the prospect of the privatisation of the port of Great Yarmouth. I have a cutting from a local newspaper to that effect. My friend was also the Labour party candidate for Great Yarmouth in the general election. If he had won, there is no doubt that he would have done nearly as good a job for the constituency as I do; let us leave aside the fact that the election of a Labour Member of Parliament for Great Yarmouth would of course mean a Labour Government, a disaster which I am sure none of us will ever have to contemplate.
  To be fair, John Cannell, the chairman of Great Yarmouth borough council's economic development committee, believes that the ideal solution would be for the port to be municipalised. If a Labour Government were returned to power, he says that he would press them to allow local authorities to run ports. Such an odd view would find little favour elsewhere in Great Yarmouth. John Cannell said:
  "The port authority would need to have the confidence of its major users in relation to the policies that have been carried out over the years. What interests us as a borough council is that the changes to the port should be of benefit to the town as it is the major source of revenue."
  All of us in Great Yarmouth agree about that. I repeat what John Cannell said:
  "The changes to the port should be of benefit to the town as it is the major source of revenue."
  The report draws attention to the £5 million turnover and ends by saying:
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  "At present Yarmouth's turnover is about £.4–5 million, but Mr. Cannell"—
  my Labour opponent in 1987—
  "added that this governmental figure could be subject to amendment in the future."
  His positive approach is in marked contrast to the negative approach that is always adopted by the hon. Member for Kingston upon Hull, East (Mr. Prescott) when transport issues are discussed.
  I welcome the Bill. However, I do not believe that to privatise everything is good. Some take the view that if something moves, or even stands still, it should be privatised. I have not liked that element of Conservative party thinking during the last 20 years.
  Mr. Robert Hughes: What has happened to the Thatcherite zeal that the hon. Gentleman exhibited at the last election? The manifesto promised to privatise everything that moved. Why has he suddenly changed his mind?
  Mr. Carttiss: I have not suddenly changed my mind. Like me, the hon. Gentleman is a member of a political party. Therefore, one tries to persuade one's party to do the things in which one most firmly believes. However, the speed and direction in which one goes may be slightly faster than one likes. I do not know how any hon. Member can criticise me by saying that I am less than enthusiastic about every privatisation measure. Such a curious intervention deflects me from my main point and will incur your wrath, Mr. Deputy Speaker, if I say too much about it.
  My hon. Friend the Member for Poole (Mr. Ward) said that he objected to the element of compulsion in the Bill. He asked for more flexibility. He suggested that we should take more account of local circumstances and views. He made an eloquent appeal to my hon. Friend the Minister for Shipping and Public Transport. If the privatisation of the ports brings the benefits that my right hon. and learned Friend the Secretary of State outlined—and I believe that it will—those benefits should be self-evident. Local people should be allowed to decide for themselves. It is an enabling Bill. My right hon. and learned Friend is allowing time for discussions to be held. My port is not covered by the Bill.
  Mr. McLoughlin: Any trust port can become a private company. The only element of compulsion, as the Bill is drafted, applies to those ports with an annual turnover of more than £5 million. The Bill as drafted will not prevent the port of Great Yarmouth from seeking privatised status.
  Mr. Carttiss: I am grateful to my hon. Friend for his helpful intervention.
  Mr. John McAllion: If the hon. Gentleman is satisfied that there will be compulsion only when a port has a turnover of more than £5 million, will he withdraw what he said about being in favour of the £5 million limit being lowered so that his port of Great Yarmouth can also be compulsorily privatised?
  Mr. Carttiss: I expressed sympathy with the strong arguments advanced by my hon. Friend the Member for Poole when he applied them to Poole. His arguments have merit and should be examined. However, unlike my hon.

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  Friend the Member for Poole, I should not be averse to an element of compulsion if ports have a turnover of less than £5 million.
  The port of Great Yarmouth currently reinvests its entire annual surplus of £1 million in quayside piling, costing £8,000 per metre. It has a rolling programme that covers its 8,000 m of quay. It also reinvests its money in the provision of plant to encourage the handling of general cargo. Tomorrow morning, the port authority will officially open a warehouse that it has provided to generate more cargo traffic in Norfolk. Such port facilities do not always attract an immediate return on the initial investment. They may not therefore be an obvious subject for privatisation. The trust port is concerned about long-term developments that may not lead to immediate investment returns but that nevertheless should be carried out in the interests of the community.
  The trust port ploughs all its surplus income back into the port to create facilities for port users. The first priority of a private company is its shareholders' dividends. After a compulsory purchase, a problem might arise if a single user bought the port. I refer to a private company, a group of ports, a property developer or a foreign purchaser. There would be no certainty that the paramount interests of the community could be protected. That is one reason why the statutory port trust was established in the first place. The Bill's enabling and reserve powers provide no protection. We may need to consider that point further in Committee.
  We should consider what happened when the former statutory water company in Great Yarmouth was privatised. It is now under French ownership. The last thing I want is the French buying up the port of Great Yarmouth. They bought Great Yarmouth and Lowestoft water company and merged it with Essex water company. The one thing that we dislike in Yarmouth more than having the water company owned by the French is the fact that it is now called Suffolk Water plc.
  Mr. Janman: For the past two or three years, the water that has come out of our taps in Essex has been French-owned and has not seemed any the worse for it. Will my hon. Friend expand further on what he means by benefits to the community? Surely the main objective of a port is to ensure that it benefits its customers. Conservative Members believe that the best way of achieving that is for management to be accountable to shareholders. To enable them to pay a better dividend, management will try to maximise profits by giving customers a better service. Why does he think that those two things are not compatible?
  Mr. Carttiss: I am grateful to my hon. Friend, who will have an opportunity to make his speech and to enlarge on his concerns. I am talking about the possibility of a single company purchasing a trust port and operating it in its own interests.
  Great Yarmouth is the major port on the east coast for the offshore oil and gas industries. It services oil rigs in the southern sector of the North sea. The northern sector is serviced by Aberdeen, which developed and blossomed from our experience in Great Yarmouth. The oil and gas industries and the shipping that serves them are vital to the operation of the port. I would not want an offshore oil company to buy the port and to make the offshore
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  industry the pre-eminent concern of the port. That might be in the interests of shareholders, but it would not be in the interests of the community for the port to lose its general cargo-handling activity.
  One of our major port users is the roll-on/roll-off ferry between Great Yarmouth and Scheveningen, the port of The Hague. Two ships daily are run by the Maersk Company-owned Norfolk Line. Although I would be pleased for it to be more involved in the port, I would not want the port to be run for the benefit of the ferry and to the exclusion of the important work of the offshore industry.
  Lowestoft has become the major fishing port in our area. However, companies that operate oil rigs, gas platforms or roll-on/roll-off ferries are not interested in fishermen. In the interests of the community, the port must have some commitment to those fishermen. That deals with the points of my hon. Friend the Member for Thurrock (Mr. Janman), but I shudder to think what would happen if the French took over.
  The General Council of British Shipping has written to most hon. Members. In its letter, it expresses its concern that
  "ports may exploit their monopoly position over their captive customers in order to maximise revenue. Oil refineries and other waterside industrial plant are effectively totally captive."
  It makes a further point that is relevant to the point that I have been making:
  "There is likely to be a trend towards port takeovers and concentration, thus reducing further the restraining influence of inter-port competition. Already about one quarter of UK seaborne trade is handled by the private company Associated British Ports."
  The neighbouring port of Lowestoft, six or seven miles south, is owned by Associated British Ports. The port of King's Lynn, in the constituency of my hon. Friend the Member for Norfolk, North-West (Mr. Bellingham), who is working diligently in front of me in support of the Department of Transport, is owned by Associated British Ports. I do not object to King's Lynn or Lowestoft being owned by Associated British Ports, and I am sure that it has done a marvellous job, but it would not be good for Yarmouth and the three or four other ports that operate on the east coast to be part of that one group.
  I was grateful to my right hon. and learned Friend the Secretary of State for allowing me to intervene when he said that trust ports are not answerable to the Government. That is one of their good features. Anything that is not answerable to the Government, of whatever particular hue, must be commended. I was sent here to ensure that the number of things that are answerable to the Government are reduced. It is one of my unhappinesses that, despite being an absolutely rabid Thatcherite, over the past 10 or 11 years we have been too much inclined to increase the role of Government, which does not fit with some of the things that we are supposed to be doing.
  The Secretary of State said that trust ports are not answerable to the Government. That is a damned good thing. I object most strongly, therefore, to the 50 per cent. levy on the proceeds. The Government have done absolutely nothing for the port of Great Yarmouth in its more than 500 years of existence. We have not had a penny piece from them. We even have difficulty getting money for flood protection. Much of the work that is done shoring up

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  the quaysides is related to the flood protection of Great Yarmouth, in particular the low-lying area that we know as Cobholm.
  We have hell's own job—excuse my language; I should say that we have great difficulty, but people in Yarmouth will understand what I mean—in getting enough money from the Anglian water authority, as it was, and the Ministry of Agriculture, Fisheries and Food for essential flood protection work. The cost of that has been borne by the port of Great Yarmouth. The Government are saying, "We want you to be commercial, more energetic in the private enterprise field," and they want 50 per cent. of the money when they have not given us a penny.
  In Committee or on Third Reading, I shall quote Members of Parliament for Great Yarmouth who have complained about the failure of successive Kings and Queens, from Elizabeth I onwards, to put a penny piece into the port of Great Yarmouth. Indeed, in the time of Henry VIII we had to contribute to the port of Dover.
  Clawing back money from land sales is fair enough—the port of Yarmouth has no land to sell because it belongs to the borough council—but for the Government to claw back 50 per cent. of the proceeds when they have never done a thing for the port of Great Yarmouth is quite wrong, and I shall oppose it until the very end, although I am delighted to support the general aims of the Bill.
  Several hon. Members rose—
  Mr. Deputy Speaker (Sir Paul Dean): Order. Many hon. Members wish to speak in the debate. I hope that those who are called will bear that in mind.
  6.38 pm
  Mr. Stuart Bell: I am grateful for being called so early and to follow the hon. Member for Great Yarmouth (Mr. Carttiss), who made an interesting and fluent speech on behalf of his constituents. I was struck by his remark that he would shudder to think what would happen if the French took over the port of Great Yarmouth. We in Tees and Hartlepool would shudder to think what would happen to any Frenchman who tried to take over the port of Hartlepool, given what allegedly happened there to a Frenchman during the Napoleonic wars. They hanged him, but, as it happened, it turned out to be a monkey.
  When the hon. Gentleman referred to Henry VIII, I was reminded of how the House had chided my hon. Friend the Member for Kingston-upon-Hull, East (Mr. Prescott) for his reference to the Rochdale report. "How far back was that?" my hon. Friend was asked. The answer is 25 years. Surely my hon. Friend may be forgiven for going back 25 years when an hon. Member has just gone back to the time of Henry VIII. I am sure that the Government will not seek to claw anything back from the port of Great Yarmouth —should it be privatised—in respect of the time of Henry VIII. In the case of Tees and Hartlepool, they clawed back 50 per cent. and then capital gains tax on some very small amounts paid in the early 1960s.
  The interesting point, the real thrust of this debate, concerns how the Government have lost their way in relation to privatisation. My hon. Friend the Member for Kingston-upon-Hull, East, in his peroration, touched on this point. The Government now see privatisation as a source of finance rather than as ideology. They see
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  privatisation as a means of financing their own recession rather than as a means of bringing free market benefits to the community.
  Mr. Moate indicated dissent.
  Mr. Bell: The hon. Gentleman protests. Let him look at the facts. I am glad to see the hon. Member for Thurrock (Mr. Janman) in his place. He made a very important intervention during the speech of the Secretary of State
  —a point touched upon briefly by the hon. Member for Lancashire, West (Mr. Hind), who, although he is not in the Chamber at the moment, will probably we well and truly involved in the Committee stage debate.
  The Secretary of State pointed out that the Bill would make possible the privatisation of 14 major trust ports —in fact 12, as Tees and Hartlepool and the ports of the Clyde are already being privatised via the private Bill route. The hon. Member for Langbaurgh (Mr. Holt), with his usual diligence, has been sitting through this debate. He has pointed out that the Tees and Hartlepool Port Authority Bill will have its Second Reading debate in another place tomorrow.
  Ports that have an annual turnover of £5 million will not fall within the terms of clause 9, which, according to the explanatory and financial memorandum,
  "enables the Secretary of State, after an initial period of 2 years, to give a direction requiring the authority to bring forward a scheme for the purposes of"
  privatisation.
  That brings me back to a point made by the hon. Member for Thurrock. In an intervention the hon. Gentleman asked the Secretary of State to consider introducing in Committee stage an amendment to reduce the amount from £5 million to £1 million and to reduce the period from two years to one year. There is no doubt that the hon. Gentleman—I give him credit for this—was wearing his ideological running shoes. It is an ideological point. It would be perfectly right for an ideological Government to reduce the period to one year, and the amount to £1 million. However, the Secretary of State was not wearing his ideological shoes; he was wearing the running shoes provided by the Treasury. His speech was a Treasury speech. The Treasury has made its calculations.
  Mr. Janman: The hon. Gentleman mentioned my earlier intervention. What is the whole crux of this operation? It is not simply about the Treasury getting as much money as it can; as the hon. Member for Kingston upon Hull, East (Mr. Prescott) said, it is about what to do to encourage investment, productivity and competitiveness in the ports industry. If one thinks that having plcs—the other two options being trusts and fully nationalised ports—would be the best way of achieving increased investment, surely there is no need to delay the matter. In addition, as many ports as possible should be compelled to come forward in the shortest possible period and take up the benefits of such a structure.
  Mr. Bell: The hon. Gentleman anticipates a great deal of what I am going to say. I have been trying to make the point that trust ports did not previously have constraints. Indeed, they were able to invest. They were able to benefit the local community and there was never any need for an ideological commitment to privatisation. I shall deal with all these points at a later stage.
  Obviously the Treasury made its calculations. It calculated, no doubt correctly, that the real money lies in

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  the assets and in the capital gains tax of the 12 major trust ports rather than in the other 100 or so ports, small as they are—my hon. Friend the Member for Kingston on Hull, East called them minnows—that are also covered by the Bill. If the Secretary of State is still an ideologue of the free market—perhaps his years as Secretary of State for Scotland diluted that commitment—he may well take the advice of the hon. Members for Thurrock and for Lancashire, West, both of whom, I hope, will be on the Standing Committee. If the Secretary of State is ideologically committed, he will accept the suggestions.
  Of course, the money that is available in the case of the 100 or so trust ports, less the 12 to which I have referred, is so small that the Treasury is not required to intervene. Therefore, the Secretary of State will not intervene. But the Treasury has gone a little further in its thinking and its analysis. It saw the prospect of 50 per cent. of assets going and the prospect of capital gains tax on the remaining 50 per cent., and now it sees the prospect of a clawback provision in respect of the sale of land. In this regard, I shall deal later with the intervention of the hon. Member for Langbaurgh.
  Clause 16, according to the explanatory and financial memorandum,
  "makes provision for a levy on gains accruing to a successor company as a result of certain disposals of any land or interest in land that is transferred to the company".
  We see the Treasury very much at work here—in respect of the 50 per cent., in respect of the capital gains tax and, now, in respect of the sale of land by the successor company.
  The hon. Member asked the Secretary of State whether this clause would affect the legislation privatising the port of Tees and Hartlepool. He wanted to know, in short, whether there would be a clawback provision. The Secretary of State's answer, to which we shall hold him, was that there would not be. Thus there is possibly some reward for Tees and Hartlepool for having taken the private Bill route of privatisation.
  But the hon. Member for Langbaurgh may not have seen the other side of the assurance. The fact is that the levy will be based on the price only—not on the price of the market value. The situation may turn out to be that, while the 50 per cent. levy in respect of ports privatised under this legislation is based on price only—the Secretary of State was very clear about that point—it may be on price or on market value in the case of Tees and Hartlepool. Thus, there may be a loss for Tees and Hartlepool. In that case, the port may find that what it gains on the swings of the clawback it will lose on the roundabout of market values.
  I wish to develop a theme mentioned by my hon. Friend the Member for Kingston upon Hull, East. In his peroration, he talked about the Treasury getting its hands on the booty. As I am a little more romantic, I shall refer to pots of gold rather than booty. The Treasury sees pots of gold dotted around the country. It realises that we are in a recession and that its receipts from taxation are falling. On another occasion the Minister for Shipping and Public Transport told us that the Government did not have sufficient legislative time to introduce a Bill to privatise the trust ports. However, when the Treasury saw the benefits, the Government were suddenly able to find the time. So I
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  am not entirely uncomfortable with the argument that there is not the unseen hand of Adam Smith but certainly the unseen hand of the Treasury behind these proposals.
  Mr. McLoughlin: The point that I was making at the time to which the hon. Gentleman refers was indeed that the Government did not have time for a public Bill. However, we are now in a new Session of Parliament, and this proposal was included in the Gracious Speech. That does not detract from what I said at the time of the passage of the private Bills.
  Mr. Bell: Let me quote what the Minister said:
  "It is still our intention to bring forward Government legislation on trust ports at the earliest convenient opportunity. But given the pressure on the legislative programme, private legislation is the only way by which these ports can quickly be converted into fully fledged private sector enterprises."
  On that occasion the Minister was talking as a member of a Government who had too tight a programme to permit intervention by way of a new Bill. When we were talking in the House about the Tees and Hartlepool privatisation, no one suggested that 50 per cent. of the authority's assets would be taken from it, and the hon. Member for Langbaurgh, who sponsored that Bill, knows that full well. Treasury counsel said in Committee that the Treasury proposed taking 50 per cent. of the assets.
  I accept that privatisation is a legitimate part of the Government's programme. They won a general election on that mandate. As I repeated in the House on 15 March,
  "The concept of privatisation is legitimate. It was an ideological commitment that the Conservative party made at the time of the 1979 election."
  The former Minister for Aviation and Shipping, now Minister for Shipping and Public Transport, said that the Government wanted 50 per cent. of the assets because of Treasury input many years ago through grants, and that it was therefore legitimate for the Treasury later to say that it wanted to claw back some of the money. I disagree with the principle that some small grants given in the 1960s should result in 50 per cent. of a company's assets being taken from it.
  The Secretary of State was able to handle my intervention when I said that the situation had changed. He said that it would be wrong for a successor company to have the full benefit of a 100 per cent. sale of assets. But 50 per cent. of those assets are going to the Government. The Government want to ensure that the Treasury will not be undernourished because of the sale of the trust ports. Clause 9 enables the Secretary of State, after an initial period of two years, to give a direction requiring an authority to bring forward a scheme
  "for the purposes of a transfer".
  The Secretary of State will not be happy with the value set upon such a company unless he is satisfied that that is its proper value. The Treasury will get its 50 per cent. and is working hard behind the scenes.
  The Tees and Hartlepool port authority may have a lot to answer for. Ideological commitment made the former Secretary of State for Transport say that he wanted the trust ports to turn themselves into companies and to go private. On 15 March 1990, the present Minister for Shipping and Public Transport said:
  "That was why, as has been mentioned already, about a year ago my right hon. Friend the Member for Southend, West (Mr. Channon), when he was Secretary of State for

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  Transport, encouraged trust ports which saw benefits in turning themselves into companies to bring forward their own private Bills."
  The Tees and Hartlepool port authority followed that encouragement and moved forward on the privatisation road. It may have a lot to answer for, but little to show for its precipitate move to beat its competitors—the purpose behind the Tees and Hartlepool Port Authority Bill. The Bill that we are debating may reach the statute book before the Tees and Hartlepool Port Authority Bill, notwithstanding the fact that its legislative start means that it will be considered in the other place tomorrow night. The authority has spent hundreds of thousands of pounds on this procedure—money held in trust for the state.
  We have heard much about the state owning the trust ports. The state is you, Mr. Deputy Speaker, and me and other hon. Members. We are the beneficiaries of having trust ports and of a system going back 180 years, as the hon. Member for Langbaurgh reminded us, and we are the beneficiaries of stable ports. The Secretary of State told us that 90 per cent. of our imports still come through the trust ports. The Tees and Hartlepool port authority has thrown away hundreds of thousands of pounds on its privatisation Bill, to little effect, as is shown by the fact that we are debating this enabling Bill only a few weeks after the Tees and Hartlepool Port Authority Bill completed its proceedings in the House of Commons.
  The hon. Member for Great Yarmouth talked about 50 per cent. which I would point out, in the case of the Tees and Hartlepool authority, lest we lose ourselves in percentages, comes to £32 million. In addition, there will be a loss on the capital gains. The Government's ideology of free enterprise and a free market is being set aside and the Treasury is putting its long arm into the pockets of the trust ports. That does not bode well for the other 12 trust ports, including Newcastle and Blyth, which are likely to be privatised over the next two years.
  In introducing the Bill, the Secretary of State talked about a constraint on the activities of trust ports. He was reading again from his brief, but he must have overlooked an exchange on Second Reading of the Tees and Hartlepool Port Authority Bill. The hon. Member for Langbaurgh was making the same point as the Secretary of State, but my hon. Friend the Member for Stockton, North (Mr. Cook) said:
  "in 1984–85, the port authority did not feel that it was bound by the alleged restriction and invested in property, finance, aviation, air travel, timber importing, transport, display signs, storage, security fencing and engineering."
  All those investments were carried out by Tees and Hartlepool as a trust port. We made the point then, as we do again tonight, that the trust port had the authority to carry out all that investment, if it wished—even in a fish and chip shop, a business to which the hon. Member for Langbaurgh has already referred.
  So that the record is clear and we all know the role of the present Minister for Shipping and Public Transport, I shall again quote from his speech on 15 March 1990, when he said:
  "There is a general rule that when assets acquired or improved by a non-Exchequer body with the aid of Government grants are disposed of, an appropriate proportion of the proceeds should go to the Exchequer."—[Official Report, 15 March 1990; Vol. 169, c. 733–62.]
  That rule was set side, as was shown by statements by Treasury counsel in Committee on the Tees and Hartlepool Port Authority Bill and then in the proceedings on the Finance Bill, when the hon. Member for
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  Berwick-upon-Tweed (Mr. Beith) played an important role. Sections 115 to 120 of the Finance Act 1990 extend this principle.
  As I said in an intervention in the speech of my hon. Friend the Member for Aberdeen, North (Mr. Hughes), in Committee on the Tees and Hartlepool Port Authority Bill we won a commitment from the authority that its headquarters would be on Teesside. We welcome that commitment, and in Committee on this Bill we shall look for a similar commitment in respect of other trust ports. It is not good enough to create a framework in which the ports can be taken over by successor companies which, as my hon. Friend the Member for Aberdeen, North said, may have their headquarters in Amsterdam. Even though the trust ports are privatised, we want a local community spirit, which can be achieved by a provision in the Bill stating that an authority's headquarters should be where the port is situated.
  In referring to the 14 ports, the Secretary of State touched on the Tyne, which is an important port. If it is privatised, we shall look for the same assurances for which we looked in the debate on the Tees and Hartlepool Port Authority Bill. We shall want to know what assurances there are that shares will go to staff and to local pension funds. We welcome the emphasis on employee participation, but 50 per cent. of the work force lost their jobs because of the abolition of the dock labour scheme. The concept of the docker—a proud profession going back over 100 years—was replaced by the concept of the unskilled labourer.
  Mr. Holt: I know of the hon. Gentleman's keen interest in this matter, and both he and the people of Teesside know of mine. Will the hon. Gentleman take it from me that I have yet to receive one letter from an employee of the Tees and Hartlepool port authority objecting to the private Bill that I sponsored?
  Mr. Bell: I think that it was President Nixon who coined the phrase "the silent majority". Perhaps the silent majority were not communicating with the hon. Gentleman.
  I worked hard to ensure that those who were unhappy with the proposals following the abolition of the dock labour scheme received proper redundancy money and could retire from the profession in which they had worked happily for many years, enjoying the exercise of their skills. We shall be looking for the worker participation to which I have referred if proposals are advanced in respect of the Tyne.
  When the Minister winds up, he may wish to touch on this question: what emphasis was placed, in the Government's study of the Bill, on the development of commerce and jobs following the privatisation of the trust ports? Did those factors enter into the reckoning? Has there been any indication of what the prospects will be? The hon. Member for Thurrock referred to that matter earlier. We shall be calling for all that information when we examine the Bill in Committee.
  My hon. Friend the Member for Aberdeen, North said that the Bill was the legacy of the Thatcher years, and clearly it is. It is a hard-faced Bill dealing with financial rather than with port matters. However, it may bring to an end—I am sure that you, Mr. Deputy Speaker, would welcome this—the corruption of the private Bill procedure that characterised the Thatcher Administration. The then

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  Minister for Aviation and Shipping told the House frankly, honestly and clearly that the matter was properly the subject of Government legislation but that, as no Government time was available, the private Bill route had had to be taken.
  That corruption of the private Bill procedure cost the House many hours of debate and much tension and aggravation. It will cause the same reaction in the other place. The same happened with the Clyde Port Authority Bill. I hope that that corruption of our procedures is now a thing of the past and that the new Administration will not so take the House of Commons for granted as to corrupt our proceedings in that way.
  As my hon. Friend the Member for Kingston upon Hull, East said, the Government's ideological commitment to privatisation is enfeebled and diluted and their policy has not necessarily succeeded. As my hon. Friend the Member for Workington (Mr. Campbell-Savours) once said, any fool can sell assets at half their value. The Government are now insisting on getting the full value of the assets so that the Treasury can take its 50 per cent. and so that they can nibble away at the financial consequences of the recession. In ideological terms, the Bill is poor and ill thought out. The Minister knows as well as I do that it is a Treasury measure—a financial measure which arises from the Finance Act 1990. That is why the Opposition will vote against it.
  7.4 pm
  Mr. David Shaw: In principle, I welcome the Bill, which has much to commend it to my constituents. It is certainly important to my constituency, as 10,000 people there are employed in work relating directly or indirectly to the activities of Dover port.
  Dover is a most successful port and I commend its management and employees for the successful way in which it has grown up in the past decade and more. It has coped with the enormous expansion of trade that has resulted from the Government's policies and is extremely efficient, dealing with twice the volume of traffic—in terms of tonnage and of passengers—that it dealt with 10 years ago. Dover has invested a considerable amount in information technology to ensure that it is a modern port with modern facilities to provide for the speedy transfer of passengers and to enable them to enjoy all that it has to offer.
  The port is indeed an enjoyable area. New restaurant and shopping facilities have been provided to ensure that passengers' holidays and recreational visits are as enjoyable as possible. Both for the lorry driver transferring freight abroad and for the passenger looking forward to his or her holiday, it is an extremely successful port.
  Dover's interests in privatisation are numerous. In particular, we should bear in mind the policy of the local council as Dover prepares itself for the changes that are likely to result from the opening of the channel tunnel. It is the council's policy to expand tourism and leisure opportunities in Dover and east Kent, and that expansion cannot take place without the greater freedom resulting from privatisation of the port. Various developments have been proposed for Wellington docks and parts of Dover port, and privatisation, or the transfer of the port's undertakings to a limited company, will facilitate them. I
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  look forward to the potential that Dover will enjoy if privatisation enables us to develop the leisure and tourism facilities that will make us a successful area over the next 20 or 30 years.
  Access to financial markets will be improved in respect of companies that are privatised. There will be considerable opportunities for expanding the port and its undertakings and operations. Such access to capital may not be so readily available to ports that remain trust ports.
  With the channel tunnel coming on stream in 1993, the timetable is a particular problem for Dover, and I understand that the Minister has said publicly that Dover may not be forced to privatise at the same rate as ports elsewhere. If the channel tunnel has not yet opened, and if it is not known how much trade will be taken away as a result of its opening, it will be difficult to issue a prospectus or tender document. With the channel tunnel offering such an expensive route to the continent, however, we hope to keep the vast majority of our trade, if not all of it. We certainly intend to fight hard in the competitive marketplace to ensure that that happens.
  The other aspect of the privatisation measure that needs to be tested in Committee—I look forward to hearing what the Minister has to say about it—is the hope that management and employees may bid successfully for many of the ports' undertakings. It is important to ensure that there is a level playing field. When we examine the 50 per cent. levy and the financial structures, we may find that there is not, and that management and employees will not have the same opportunities to buy the port as ferry companies or other corporate bodies. Especially in respect of ports as important to the local community as Dover is, it will be important to ensure that each of the interested parties has a fair opportunity to submit a successful bid.
  I am also concerned about the 50 per cent. levy. I differ from Opposition Members because I believe that the levy is a small amount of money. The amount of money that the levy will raise is inconsequential within the totality of Government spending. There are always some Government Departments—we know which ones and I do not need to name them—that always look for the last £10 million, £15 million, £20 million or £30 million. However, we must bear in mind the fact that the ports have been paying a great deal by way of corporation tax over the years and a great deal of national insurance contributions have also been paid.
  As hon. Members have said, the Government have done quite well out of the ports and they do not deserve to be sticking their little hand into the pot on this occasion. I remain to be convinced whether the levy should be 50 per cent. or whether it should exist at all. Ministers must examine their consciences—and perhaps a bit more than their consciences—before they claim that the levy is right and proper in the circumstances.
  Mr. Ron Brown: Does the hon. Gentleman accept that the Government are justifying a form of asset stripping by proposing the levy? That is clearly unacceptable to the Opposition, and I am sure that it is unacceptable to many Conservative Members. The Bill will be challenged and I hope that the next Labour Government will have proposals about public ownership to ensure that those assets are returned to the community.
  Mr. Shaw: I disagree with the hon. Gentleman about asset stripping. My major concern is whether the

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  Government will achieve their objective of constructing a level playing field between, on the one hand, the employees who might want to bid with management to own the port in which they work and, on the other, a company which might be able to enjoy tax advantages. A company with that potential might be able to make a higher bid. I hope to examine that point further and to take advice from outside about it. The Government should take such advice, too.
  In most privatisations the Government normally appoint a financial adviser and they determine the financial structures with the assistance of that adviser. The adviser is usually an eminent merchant bank or firm of accountants which has expertise and experience in that area. I hope that my hon. Friend the Minister will tell us about the extent of the financial advice that has been taken and whether that advice was on the industry in general or on individual ports.
  Although some ports might be able to afford a 50 per cent. levy and such a levy might be appropriate for some ports, the levy might be inappropriate for ports such as Dover, bearing in mind the fact that considerable capital expenditure will be required over the next decade to keep Dover at the forefront of the market and in a position in which it can compete successfully against the channel tunnel.
  Mr. Janman: My hon. Friend is homing in on an important point. When I first examined the Bill, my gut instinct about the levy was the same as that expressed by him. However, if the levy was reduced, more cash would appear on the balance sheet of the new company. Would that increase the price that would have to be paid, thus making it more difficult for an employee-management buy-out, which, I believe from my hon. Friend's comments, both he and I would want to be encouraged?
  Mr. Shaw: I accept that point, but from my experience of accountancy and mercant banking, it would be possible for a bidder to put up quite a lot of cash, for quite a lot of cash to enter the balance sheet and then for that cash to be returned, especially if the funding arrangements used some form of debt, debenture stock or even redeemable preference shares. As a result, the cash might not be left in the port's balance sheet. Instead, it might be removed by the controlling purchaser. I believe that we should all consider the matter in greater detail. By the time that the Bill reaches Committee, we will have had an opportunity to take more financial advice from the various bodies interested in the Bill and to examine what the levy means for capital structures.
  I want to look at some long-term projections about what might happen to the port in my constituency and the effect of the levy on the price that might be paid for the port. If the levy was lower, there might be higher bids for the port. However, a lower levy might not change the bidding process at all. As most people with experience of share valuations will know, valuations tend to be based on profits and the amount of extra cash entering a balance sheet would, in this instance, have only a marginal effect on the valuation of ports that are relatively profitable. In the case of Dover, the extra few million pounds would probably not be as significant as the overall value of the port, which might be £50 million or £60 million. I am worried about the levy. We must consider what effect it might have.
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  I have seen calculations which show that the port authority could make capital losses when transferring the port's undertakings into the port company. If capital losses were made, would that loss be offset against the corporation tax paid by the existing harbour board or authority, or would it be usable as a capital loss in the subsequent company? That would mean an uneven playing field for the corporate bidder for a port against the management and employee buy-out. The Government might be thwarted in their declared aim of trying to ensure that management and employees have a beneficial opportunity of purchasing the port.
  Mr. Ted Leadbitter: Last year I spent three and a half hours in the House debating the privatisation of ports and, in deference to other hon. Members, I will not be making a speech tonight.
  In March 1988 the Secretary of State for Transport made it clear that he was unhappy about the responses to the privatisation of the trust ports. Dover and many other ports were not keen on privatisation because under the legislation there were no powers to invest, expand and improve and there were no inhibitions on competition between ports. However, when I referred to the 50 per cent. levy last year as a rip-off, Conservative Members —including the Minister—interpreted the levy not as a take for the Treasury, but as a gain for the port.
  I cannot understand the dichotomy in that thinking. The hon. Member for Dover (Mr. Shaw) is genuinely expressing concern, but the Government's official stance last year was that what was left was a gain for the port authority. I have news for the hon. Gentleman. In addition to the 50 per cent. levy, another 17·5 per cent. in the form of taxation must be taken into account. That means that well over 65 per cent. will be removed when the sale of those ports takes place.
  Mr. Shaw: I am sure that the hon. Gentleman and most other hon. Members will appreciate that the gist of my point is that the Government are entitled, on behalf of the taxpayer, to put their snout in the trough. However, in this instance we want to ensure that the amount that the Government take from that trough is limited to a fair amount and that something is left for those who work in and expect to make a livelihood from the port over the next decade or so.
  I was worried when the 50 per cent. levy was passed by Parliament last year, although, at that time, there was no question of its affecting my port. I believe that we must consider the point carefully now and discover whether the Government have the right figure. We must also consider the implications. So far, I have seen no financial projections that consider the implications and what might happen.
  Mr. Frank Haynes: If I remember rightly, the hon. Gentleman was a member of the Committee that considered the Electricity Bill. I remember the Government's proposals on the electricity industry levy, but I do not remember the hon. Gentleman supporting what we said about the levy. However, he is now seizing the opportunity more or less to say to the Government, "Come off it. You are charging too much." The hon. Gentleman never said a flipping word in Committee about the levy on the electricity industry. Why is he facing two ways?
  Mr. Shaw: The hon. Member for Ashfield (Mr. Haynes) and I spent many enjoyable hours together in Committee considering the Electricity Bill. He knows full well that my view at the time was that the Opposition had absolutely no credibility in their case on electricity privatisation. The Opposition's arguments have failed and they have been proved to be totally wrong by the fact that 12 million people in this country wanted a bit of the electricity privatisation. That was a substantial number.
  Mr. Haynes: But at the same time, we strongly recommended that the nuclear side should not be privatised. The hon. Gentleman went along with the privatisation of the nuclear side of the industry, but, finally, the Government decided to back off and take it out. What about that, then?
  Mr. Shaw: Although that is not strictly relevant to the Bill—
  Madam Deputy Speaker (Miss Betty Boothroyd): Order. I hope that the hon. Gentleman will not go down that avenue this evening.
  Mr. Shaw: I would not dream of going down that path. Under socialism, the true costs of the nuclear industry were not known. It was only later, after the Bill had been considered in Committee, that the Conservative Government and the Conservative party managed to discover the true costs—
  Madam Deputy Speaker: Order. The hon. Gentleman is now abusing the time allotted to him. Perhaps he will continue with his Second Reading speech.
  Mr. Leadbitter rose—
  Mr. Shaw: I take your point, Madam Deputy Speaker. I was hoping to give way one more time. I hope that the hon. Gentleman will forgive me if I do not.
  Mr. Leadbitter: On that point.
  Mr. Shaw: I shall give way very briefly.
  Madam Deputy Speaker: I hope that it is relevant.
  Mr. Leadbitter: The hon. Gentleman knows that I chaired the Committee that considered the Electricity Bill. I heard not a single word of criticism about the take. The hon. Gentleman is expressing reservations about this Bill. I respect that, but he is voicing his concern only because the matter affects Dover, which he represents.
  Mr. Shaw: I assure the hon. Gentleman that electricity and the port of Dover affect Dover and my constituents. The different issue in this case is that the electricity levy was of nowhere near the same significance or proportion. It was for a totally different purpose. Here we are involved with something substantial—50 per cent. It is a capital up-front payment.
  The other point which is different is that, in the case of the electricity privatisation, I was satisfied that the Government had financial advisers, I was satisfied with the figure work that was going into it and I was satisfied with the way in which the Government presented the privatisation. I hope to be satisfied with the way in which the Government are handling this privatisation. I am satisfied with most aspects of the Government's presentation of the privatisation argument, but I remain to be convinced on the issue of capital structures and the
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  effect that the 50 per cent. levy, which is substantial, will have. If I am selected to serve on the Committee, I shall be able to make substantial points to the Minister about the 50 per cent. levy and whether it should be changed.
  Another oddity of the Bill is that it does not address the monopoly powers of the Crown Estate Commissioners who own land offshore. In the case of some ports that land offshore may be within the port. In the case of Dover, which has no great land mass outside the port or even inside the harbour area, when it wants to expand, within the port or harbour walls but under water, the land must be reclaimed with the express written approval of the Crown Estate Commissioners. They do not sign the letter or give their approval for nothing. From research that I have undertaken, I know that they make a request for a substantial contribution—that is a monopoly power—over land that is obtained without any competition. The land price often has no relationship to land prices that one may pay elsewhere.
  I should like to hear whether the Minister believes that, if ports are to operate in a private sector manner and on full commercial terms, the Crown Estate Commissioners should be able to hold a privatised port to ransom. Will the Minister consider amendments to the Bill or a way of ensuring that the Crown Estate Commissioners cannot distort the price of, often, a small piece of land underneath the sea, which is vital if a port needs to expand or develop its operations?
  Overall, the Bill is good for ports and good for the port of Dover and the people of Dover, but one or two matters must be examined in Committee, and we will need to be convinced on those points.
  Mr. Leadbitter: On a point of order, Madam Deputy Speaker. I have listened with great interest to the submission of the hon. Member for Dover (Mr. Shaw) and his concern about the 50 per cent. levy. He made a strong plea, did he not, for the levy to be examined again? I do not understand how the House is expected to receive such a submission when, on 15 March 1990, the hon. Gentleman is recorded as actually voting for the 50 per cent. when we considered the Tees and Hartlepool Bill.
  Madam Deputy Speaker: That is a debating point; it is certainly not a matter for the Chair.
  7.26 pm
  Mr. James Wallace: Several hon. Members, in particular Conservative Members, have expressed a willingness to serve on the Committee. That must come as a reassurance to the Whips, but several reservations have been expressed. If hon. Member's votes follow their voices, it will lead to some constructive Committee debate.
  I share the concern of the hon. Member for Dover (Mr. Shaw) about the monopoly position of the Crown Estate Commissioners. According to harbour trustees and fish farmers in my constituency, the Crown Estate Commissioners exact considerable sums in respect of operations on their land. There is precious little evidence of what they put into it in return. If the hon. Gentleman tables amendments in Committee relating to the Crown Estate Commissioners, hon. Members will have a useful dialogue on that point.
  My hon. Friends and I do not have any objection to the enabling parts of the Bill. We realise that the bulk of the

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  United Kingdom's trade—about 92 per cent. of our exports and imports—still uses our ports. Therefore, ports clearly play an important role in our economy. All my hon. Friends supported the Government in the ending of the national dock labour scheme. We believed that it would enable many of our ports to become more competitive. Competition between United Kingdom ports is a good spur to offering better facilities.
  We are also aware that there is considerable competition between United Kingdom ports and those of our continental partners—I refer in particular to the south-east of England—and anything that adds to the ability of our ports to be more competitive and provide valuable services must be to our advantage. We should not forget the potential of ports on our west coast. With the opening of the channel tunnel, they could provide an entry into the European Community, particularly if the Government are prepared to support the north and Scotland and provide them with decent rail links.
  Our general support for the enabling provisions of the Bill reflects the fact that those who opted for private legislation have become frustrated, and no doubt many other ports that wish to opt for privatisation have not chosen to do so because they have seen how private Bills tend to get bogged down.
  This is probably not the place to discuss private legislation procedure. Suffice it to say that it is not satisfactory in all respects. This enabling Bill should ease the passage of ports which wish to be privatised.
  I note that clause 8 provides for representations to be made to the Secretary of State once a scheme has been proposed to him by a port which wishes to enter the private sector. I shall be interested to hear from the Minister what considerations will be relevant in determining whether the Secretary of State's consent should be given. One anxiety shared by many people is that, if predators, who are perhaps major port users, hid to such an extent that they gain effective control of a port, they will use that power to discriminate against other potential port users who may be their competitors. I shall be interested to know what considerations will be taken into account when representations are made to the Secretary of State.
  As many hon. Members have already said, perhaps the most offensive and potentially damaging part of the Bill is that which provides for the compulsory privatisation of ports. Ports with a turnover of more than £5 million per annum may be forced to privatise. The Secretary of State said that several safeguards, as he called them, had already been written into the Bill.
  First—a measure not entirely welcomed by Conservative Members—there would be no compulsory privatisation order within the first two years of the Bill becoming an Act. The £5 million threshold would be index-linked and there would be prior consultation. I accept that those safeguards are better than nothing, but if, after considering the matter and noting that the way to privatisation of a port had been simplified, a trust port decided that it did not wish to go down that road, the matter should he left there.
  A port may reach that decision for good reasons, including not least the interests of the community served by the port. Ports should not come under pressure from central Government to privatise if they do not wish to do
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  so. To have that cloud or threat hanging over them even in the first two years may inhibit a port from pursuing ventures that it wishes to take on.
  The Secretary of State gave reasons why ports would be attracted to privatisation. He mentioned access to share capital for port development, development of surplus land, diversification of port business, clearer accountability and emphasis on profitability and the possibility of employee share ownership schemes.
  My constituency interest in the Bill is that the Secretary of State could compel Lerwick harbour trust to privatise. In 1989, its turnover was £5·5 million, so it comes within the ambit of clause 9. The harbour trust was established in 1877 by the traders and merchants of Lerwick to oversee the maintenance and management of the port and harbour. In the past 20 years, Shetland has faced challenges and opportunities for development, and Lerwick Harbour Trust has responded.
  Let us take the criteria set down by the Secretary of State. The trust has found funding by both investing its profits and raising money through the banks. It has shown resourcefulness and imagination in developing its land and diversifying its activities. If the House listens to the activities that the Lerwick harbour trustees have undertaken, it will see what they have achieved in addition to their statutory harbour duties and providing facilities for the oil and fishing industries and for ferries.
  The trustees have managed to lease warehouse space to haulage firms and fish farmers. They have used some of their land for farming: 1,000 sheep are maintained on 1,400 acres. The trustees have invested in a 64-bedroom hotel in Lerwick, which was opened some six years ago by the right hon. Member for Ayr (Mr. Younger) when he was Secretary of State for Scotland. The trustees have provided important car parking facilities in the centre of the town. Many of my constituents grumble about the price charged, but everyone can accept that car parks in the centres of towns are a valuable facility.
  The trustees have been instrumental in the past 12 months in developing a large herring and mackerel processing factory, which employs about 100 people. The facilities in the factory are state of the art and of the highest quality and standard. Those activities have been undertaken by a trust port. The trustees have shown that they can develop land and diversify their activities without recourse to privatisation. I accept that there are problems with employee participation—which, as some hon. Members will be aware, my party has long espoused. I hope that no tax or other restrictions will be placed on trust ports—if they wish to continue as trusts—developing profit-sharing schemes in which employees can participate.
  The Secretary of State also mentioned accountability. The Lerwick harbour trustees are six Islands councillors, three harbour ratepayers and three representatives of local shipowners. Half the trustees are democratically elected representatives of the community, and subject to all the pressures of which we are well aware. Harbour ratepayers and local shipowners are accountable to their peers in the harbour and the local business world. There can be no question but that, if they made feeble decisions or failed to take commercially based decisions, they would soon come under a great deal of pressure.
  We may be asked to give up that accountability for the accountability of the harbour board of directors to their shareholders, many of whom would be anonymous, with no knowledge of or interest in the business of the harbour.

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  We would be asked to give up a real accountability for an arrangement which notionally provides more accountability but in practice provides far less.
  The Government's proposals recognise the need to seek profitability, but fail to recognise the need to take into account community interest. Compulsory privatisation of the ports would fail to provide for the community interest. The Secretary of State did not address the fact that many ports take into account the interest of the community, which is the way in for imported goods and the way out for exported goods. I have already mentioned the fish processing factory built in my constituency. The harbour trust was very much involved in setting it up. It brought together the expertise in the harbour—the fish processors and the fishermen of the community. It bonded that together and provided a valuable service and employment within the community.
  If we had a company solely engaged in seeking profit, many activities which benefit the community as a whole would be lost. The trust is a valuable asset to a local community which is forced to capitalise on every possible asset. Its privatisation would be a great loss to that community. That is why we do not wish to see compulsion. I hope that the Government will take such considerations into account if it crossed their mind to implement the clause which would force unwilling harbour trustees down a road which they did not wish to travel. As several hon. Members have said, what is true of Lerwick harbour trust is also true of harbour trusts in many other parts of the country.
  I note from the financial memorandum that the Government expect to raise between £30 million and £50 million from the levy in the first two years after the Bill becomes an Act. Will corporation tax be applied to any transfer of assets under the Bill which could be classed as a capital gain? That would undoubtedly lead to an increase in the 50 per cent. net proceeds of sale.
  We have heard various reasons why the figure of 50 per cent. was chosen. The Secretary of State said the levy would be 50 per cent. of the proceeds of sale, whereas, under the Finance Act 1990, it could be up to 50 per cent. of market value. One of the consequences of the Finance Act distinction was that up to 3 per cent. of the total proceeds could be discounted if shares were sold to employees below value. Do I understand that there is no reference to that in this Bill and nothing in it to lessen the Government's commitment to encouraging employee participation, albeit that even 3 per cent. appeared rather limited?
  Why this levy? In previous debates, the Secretary of State told us that there had already been pay-outs in terms of Government grants. In previous debates, my hon. Friend the Member for Berwick-upon-Tweed (Mr. Beith) challenged the Minister and asked what proportion of Government grant gave rise to a 50 per cent. levy. The Minister was unable to answer, and moved away from that ground. We are now told that it is to disallow unfair competition between different ports, and if there is a windfall profit, it must be taxed.
  I wish I could hear what Tory Members would say if a Labour Government introduced a tax on profits at 50 per cent. to achieve social justice between competing parties. No doubt they would see that as rampaging socialism.
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  Why should the Treasury have its snout in the trough just because some extra money is going round? The hon. Member for Dover seemed to accept that that was quite reasonable, but then said that the sum involved was inconsequential. It may be inconsequential to the Treasury, but it is consequential to the local communities from where it comes.
  Why must the money go to the Treasury? Why can it not go to some local common good fund of the local authorities for investment in infrastructure related to the port? If we are to have successful port developments, they will undoubtedly require better services, including roads. Local authorities will come under pressure to provide those services. If they can get a nest egg or some windfall profit to help with that investment, surely it would be a better use of the funds than for the funds to go back into the coffers of the Treasury.
  The final part of the Bill relates to lights and navigational aids. It is clear where this move has come from. Many hon. Members on both sides have opposed the ever-increasing pressure on increasing lights dues. No doubt an opportunity has been seized to reduce lights dues by removing some of the responsibility to harbour authorities in the hope that different harbour authorities will be competitive and will not try to pass on the full additional costs to the shippers, and that some saving will be made to the shipping companies.
  Again we are faced with further duties being imposed on local authorities and harbour authorities without necessarily the revenue or the income with which they can carry these out, unless they pass the costs on with higher harbour charges. Will the Minister consider the possible unfair competition between different ports? A port such as Peterhead needs few navigational aids, but ports along a long length of river, such as the Forth or the Clyde, will inevitably need far more navigational aids. As a result, they may well be at a disadvantage. Those ports will have to pick up a far greater level of responsibility than those where there will be few navigational aids.
  I am also aware that many of the navigational aids on the Yell Sound for Shetland and the Pentland Firth for Orkney which are within the respective councils' harbour areas are not necessarily navigational aids for shipping using the port and harbour facilities. They are general aids for through traffic. Clause 26(1)(b) may well cover that point, and navigational aids for through shipping may not become the responsibility of the local harbour authority. I suspect that that is covered, but confirmation would be welcomed. Otherwise, the harbour authorities could face a considerable bill as years go on, particularly in the years after the revenue from oil developments declines.
  The enabling provisions of the Bill are welcome. They will facilitate the procedures for ports that wish to take advantage of this. The provisions which compel ports are not in the interests of the communities served by the ports, and for that reason my hon. Friends and I will vote against the Bill.
  7.44 pm
  Mr. Barry Field: May I put your mind at rest, Madam Deputy Speaker, by informing you that the white confetti falling past your Chair is a late attempt by Hansard to give you a white Christmas?
  Madam Deputy Speaker: I have had confetti thrown at me in a former capacity as a bridesmaid, but never, alas, as a bride.
  Mr. Field: I am sad to hear that, Madam Deputy Speaker, gazing, as I do, on your delightful form when you occupy that Chair.
  I am disappointed that the hon. Member for Kingston upon Hull, East (Mr. Prescott) is not in his place. Anybody who heard his speech could not help but be reminded of prehistory. There is talk on the Isle of Wight of building a dinosaur museum, and I was rather hoping that I might be able to nominate him for inclusion.
  The hon. Gentleman made two specific points which should be answered. First, he said that the abolition of the dock labour scheme was an attack on workers' rights, and that it led to the depression of their wages. The House will recall that I mentioned the dock workers in Southampton who have said publicly that they are happy with the abolition and that they have gained considerably financially.
  It is on the record of the House that the Transport and General Workers Union did not oppose the privatisation of the trust ports. I am delighted to see the Parliamentary Under-Secretary of State for Scotland, the hon. Member for Eastwood (Mr. Stewart) in his place because, during debates on the Finance Bill, he talked about this 50 per cent. levy. He also played a part in piloting the Clyde Port Authority Bill through the House. I think I am right in saying—I am sure that he will put me right if I am wrong—that the Scottish TGWU did not object to the Bill, nor did the local authority, which is Labour-controlled. Remarkably, that great den of prehistory, the Labour party, objected to it. That shows how adrift it is in continuing to speak against this legislation.
  Secondly, when the hon. Gentleman attacked my dear friend Nicholas Finney, it enabled me to conclude that he was two sandwiches short of a picnic. Mr. Finney has been a marvellous advocate of the British ports industry. He has done much to further its competitiveness. If his hand is behind the Bill, it will definitely be better as a result.
  The hon. Gentleman answered a query that I had. The other day the, Waterfront Partnership conference to discuss the British ports industry was attended by the French. The French Government are taking a serious interest in what is happening in this country because they are concerned about their dock labour scheme and the rundown and dilapidation of their docks. They are looking to the example set by Great Britain and the Conservative Government in this legislation which is beginning to transform our entire ports industry. I hope that the Waterfront Partnership will advise the French Government when they come to privatise their ports industry. I should point out that France has a socialist Government. That shows, yet again, what a remarkable pace-setting piece of legislation this is.
  The delegates at the conference were not confined to France. They came from Spain, Italy, Portugal, Estonia, Russia, Australia, Finland and Sweden—all to hear what marvellous work we are doing. I had thought that they all came to hear my right hon. and learned Friend the Secretary of State give a most excellent speech in the remarkable manner with which he delivered an extraordinary tour de force to the General Council of British Shipping at its centenary dinner. That certainly earned him the admiration of all his Conservative
  722
  colleagues there. Thanks to the hon. Member for Kingston upon Hull, East we now know that none of that was true. Apparently everyone came to see the "infamous" Nicholas Finney.
  I should declare an interest in the Bill. I am a member of the Company of Watermen and Lightermen. It took two Acts of Parliament to subdue that company—it ignored the first—because it was so unruly. That company is based on the Thames.
  Tonight is a remarkable opportunity for a humble Back Bencher who had a part in drafting the Bill. In the Finance Bill Committee, I suggested to the Treasury that there should be a clawback on property redevelopment within 10 years of privatisation of the ports. That is the normal condition in commercial transactions. The device is often used if the land sold has property redevelopment potential. If such an arrangement had been used in the past, it would have saved the Government from a number of difficulties such as those connected with the Royal Ordnance sale and Rover. I suggested that arrangement because I believed that the 50 per cent. levy that the Treasury was seeking on the equity of the trust ports on privatisation arose from its concern about cashing in on the property assets.
  At the time I did not realise that we would shortly have a Scottish Secretary of State for Transport—the Scots have a well-known interest in all finance. The Bill contains two 50 per cent. clawbacks—one for the property development potential and one which was sought by the Treasury. I agree with hon. Friends who say that we do not expect the Government to have their cake and eat it. I a m anxious that the Treasury should continue to push for the clause that gives it a 50 per cent. share of the equity, or the proceeds, on privatisation.
  I share the concern expressed by my hon. Friend the Member for Dover (Mr. Shaw) at the amount of money demanded by the Crown Estate Commissioners. The solution is available to all hon. Members who share that concern—they can apply for membership of the House of Commons yacht club, which is an all-party organisation. I am the secretary of that club, and this Wednesday we are having a meeting to discuss the concern felt among harbour authorities about the demands placed upon them by the Crown Estate Commissioners.
  The hon. Member for Kingston upon Hull, East spoke of the restraints on the owners of trust ports. He was concerned that those owners would be unshackled as a result of the Bill. The best equivalent example that I can cite to the hon. Gentleman which should answer his concern is the Building Societies Act 1986. Before that Act building societies were required to perform in a particular way. They could invest only in gilt-edged securities and they had to keep a certain level of reserves in liquid assets. After that Act, however, a tremendous number of assets were freed up. Building societies now offer cash machines, cash cards and a network of facilities never available before. The trust ports will experience similar freedom.
  The Bill will enable the trust ports to move from the treacle of trust ownership to the free-capital market. It will ensure that those ports' assets are made to work harder and that existing and future investments will have to be justified. The trust ports handle about half British overseas trade. In 1989 they imported and exported 480 million tonnes of goods worth £162 billion. Each trust port has its own Act of Parliament and is run by a stultifying mixture of executive officers and Government appointees which stems from the old tradition of public involvement in port

  723
  facilities. The Government began to dismantle such involvement with the privatisation of the British Rail Sealink harbours and Associated British Ports and, subsequently, the abolition of the dock labour scheme. Those changes have contributed to a renaissance in our port industry.
  The success of the Government's policy can best be demonstrated by the fact that, before the abolition of the dock labour scheme, Associated British Ports employed 1,700 dockers. Today it employs just 30, while it has seen a 10 per cent. increase in traffic.
  As the House knows, I chaired the Tees and Hartlepool Port Authority Bill. I asked the Library to compare the tonnage and traffic performance of Associated British Ports post-privatisation with that of the trust ports. In every case, Associated British Ports had out-performed the trust ports since privatisation. That is yet another reason for the Bill.
  The hon. Member for Orkney and Shetland (Mr. Wallace) spoke about buoyage and suggested that he knew where the provisions relating to that had originated. I can tell the House exactly the origin of those proposals—I suggested them to the Department of Transport and Nicholas Finney. I have pursued that cause for many years.
  If we had implemented such a measure when we privatised Associated British Ports considerable benefit would have accrued to the taxpayer. In the Solent, for example, we would have pushed out the harbour limits from the Needles to Nab tower. If we had had such foresight that change would have removed the cost of buoyage from the taxpayer or from Trinity House. The cost of that buoyage and the light dues would have been transferred to the owners of Associated British Ports. However, Trinity House is still responsible for the buoyage. It is also worth noting that, remarkably, in the midst of the Gulf conflict, the Admiralty still lays some of the buoys in the Solent. One may ask why on earth the Admiralty is involved in such action in 1991. The buoys in the Solent are there to aid navigation, but they are principally used as yacht racing marks.
  Trinity House has responsibility for buoyage and it must deal with the anomaly posed by the Port of London authority—perhaps the Minister is aware of similar anomalies in the Northern Lighthouse Board. The PLA has had its navigation marks in the Thames, free of charge, but at a cost to the rest of us, since it was granted a charter from Henry VIII. It is iniquitous that the rest of us should pay for that buoyage and the light dues when they are provided free for the PLA on the Thames, despite the fact that the PLA is an asset-rich organisation. I am delighted that that matter has been addressed in the Bill.
  There is one singular omission from the Bill—it makes no mention of the port of Sharpness in the constituency of my hon. Friend the Member for Stroud (Mr. Knapman). I have my hon. Friend's permission to mention his constituency interest tonight.
  I have a particular interest in the port of Sharpness because it is owned by the British Waterways Board. Such ownership is an anomaly. I take that interest because someone regularly sends me "Inland Water Transport News" which is published each month. That someone has decided that, one day, the Solent will be made into a canal.
  724
  One day Sharpness may want to be privatised, and it may get into the £5 million bracket. We should not allow the Bill to proceed without clearing up the anomaly of Sharpness, the only port owned by the British Waterways Board.
  My hon. Friend the Member for Stroud would be here tonight were he not Parliamentary Private Secretary to one of our ministerial colleagues at the Ministry of Defence. Even now, my hon. Friend is playing an active part, as we would wish, in assisting matters relating to the Gulf war.
  The Bill is silent about pilotage exemption certificates. The Minister will know that with the help of the General Council of British Shipping I took on the issue of the exploitation by Portsmouth harbour, a municipal port, of such certificates. The legislation never intended them to be revenue-producing. The Port of London authority is also abusing the legislation. When a ship master has completed his six voyages which allow him to reapply for a pilotage exemption certificate, and his seventh voyage takes him a mere 100 yards further upriver than his previous six voyages, he will not be allowed to guide the ship upriver without employing a pilot. That is clearly contrary to the legislation, which was intended to liberalise. Some port authorities are using the legislation to raise revenue, although it was intended to free the movement of ships in our ports and rivers and allow them not to employ pilots if they regularly call at certain ports.
  Mr. Eddie Loyden: Conservative Members seem to disregard the fact that pilotage is a safeguard for ships, which require the expertise of pilots with local knowledge. Why are Conservative Members always trying to remove these safety standards? We have them in every industry and they contribute to the safety of those who work there; and they are in the general interests of the ports.
  Mr. Field: Because the people of the Isle of Wight have been going back and forth to Portsmouth harbour since time immemorial. Portsmouth never charged for pilotage for the docking of ferries from the Isle of Wight until the introduction of this legislation. Portsmouth harbour authorities even tried to charge for the supply of a pilotage exemption certificate for the Gosport ferry. Does the hon. Gentleman really suggest that the Mersey ferry should be charged every time it crosses the Mersey? Of course it should not, and that is the sort of nonsense that I am talking about.
  To return to navigation lights, I hope that officials in the Department will carefully examine any schemes that emerge to ensure that nearby headlands are included and can be included under the legislation in locations where they are not the main points of navigation. I refer, for instance, to St. Catherine's, Start point and Portland bill. In that way we shall push out the harbour limits and get as much as possible out of control and regular maintenance by our light authorities. In that way, we can effectively reduce light dues and make our ports more competitive.
  The Government should take another look at the thorny issue of the 50 per cent. clawback. It is proper that the Government should safeguard themselves by means of the clawback on land development, but it is wrong of them to say that they do not own the trust ports and have no interest in them—so they must be the subject of private Bills—and then to say that they own 50 per cent. of them

  725
  and want some money for the taxpayers' purse. In this respect I do not want to align myself too much with my hon. Friend the Member for Great Yarmouth (Mr. Carttiss), whose predecessor deprived the Isle of Wight of a famous resident by signing his death warrant and sending King Charles up to London to be executed.
  Given the excellent work that Scottish Ministers have done to ensure that CalMac is, as far as possible, a profitable company, it is extraordinary, now that we have a well-known Scotsman as Secretary of State for Transport, that the Department of Transport still subsidises the Woolwich ferry and leaves it free of charge. That should not continue; it is time the Woolwich ferry was privatised.
  8.4 pm
  Mr. Frank Doran: My hon. Friend the Member for Aberdeen, North (Mr. Hughes) spoke at length about the situation at Aberdeen harbour, and I should like to develop some of his points. He made it clear that the harbour is efficient and profitable. In the last reported financial year, its turnover was just over £10 million, and profit after tax was in excesss of £2 million. In the past 10 years, £27 million has been invested in refurbishing the harbour, which has been virtually rebuilt, and all the money came from the board's own resources.
  The harbour is an efficient operation, serving the needs of local communities not only in my constituency and that of my hon. Friend the Member for Aberdeen, North but in the whole of north-east Scotland, including the constituency of the hon. Member for Orkney and Shetland (Mr. Wallace). The harbour is a vital part of the community's infrastructure.
  The views of the harbour board are therefore relevant to this debate. We have heard a great deal from Conservative Ministers about the need for an enterprise culture and to open up harbours and ports to market forces. Such forces already apply in Aberdeen, but the board, which mainly comprises representatives of the business community and users of the port, has made a strong plea to the Government and to me that it be allowed to remain as a trust.
  I have received a letter from the chief executive of the harbour board; it is strong stuff, and it says more than I can about the position of the harbour and how important it is that it should retain the flexibility with which its present status provides it. The letter is dated 24 January 1991 and signed by R. B. Braithwaite, general manager of Aberdeen harbour and chief executive of the board:
  "My board have carefully considered the subject of privatisation and concluded that there are no benefits to be gained for Aberdeen harbour and there are significant dangers for some port users. Taking the points in the press release :"—
  a press release from the Department of Transport dated 17 January 1991, in which the Secretary of State announced the publication of this Bill—
  "'enhance the prospects of port development by giving them access to share capital.' We have, for a number of years, funded all port development from our own revenue. Some £27 million has been spent in the last decade on port maintenance and development. We envisage our future positive cash flow, together with our strong cash reserves and present borrowing powers, quite adequate to fund planned future development (currently estimated, as indicated in the Chairman's statement to the 1989 Annual Accounts at £37 million over the next 10 years). We have, therefore, no need of share capital."
  726
  The next purpose raised by the Secretary of State in the press release was
  "to stimulate the development of surplus land. Most trust ports are restricted to development for port purposes.' As you will be aware, we have no surplus land. All our land is of necessity heavily utilised in port operations to handle our increasing traffic levels."
  The third purpose is to
  "'enable port undertakings to diversify their businesses.' We at present have powers within our constitution to diversify into port related businesses. The Board, in running such an active regional port, has no wish or need to diversify into businesses not related to the port. Should we, however, wish to do so in the future we could promote a Harbour Revision Order to give us greater powers (as has been obtained by other ports such as Blyth)."
  The Secretary of State's next purpose is
  "to bring about clearer accountability and greater emphasis on profitability."
  The general manager's letter continues:
  "As was stated in my Chairman's letter to Lord Brabazon, the Board is accountable both in law and through its membership. The purpose of the port is primarily to serve all port users, and, therefore the commerce, industry and people of our region. It was for this purpose that the trust status, with its legal accountability, was created, and it is every bit as relevant today in a strong regional port such as Aberdeen. In addition, Aberdeen operates in a competitive market environment and has to respond to customers' requirements. In this respect, we are accountable to our customers in the same way as a private company. An accountability that has more real meaning in the operation of a business than accountability to shareholders. The fallacy of the shareholder accountability argument has often been demonstrated, for example, by the recent Guinness and Ferranti situations.
  With regard to profit, we do place emphasis on running the harbour on a businesslike"—
  Madam Deputy Speaker: Order. I shall be grateful if the hon. Member will paraphrase from the letter, rather than quote from it at length.
  Mr. Doran: With respect, Madam Deputy Speaker, I am drawing to the end of the letter, and I did emphasise how important I thought it was to put it fully on the record. It makes its points very emphatically, and I would like them entered into the record rather than attempt to paraphrase them in my own words.
  Madam Deputy Speaker: I hope that the hon. Member is reaching the end of the letter. In general, the House is not very tolerant of long quotes, and right hon. and hon. Members are expected to paraphrase, and not weary the House in this way. The hon. Gentleman may think that it is important to quote extensively from the letter, which I am sure is relevant, although it does not improve the quality of debate. I trust that he will soon reach its conclusion.
  Mr. Doran: I will, Madam Deputy Speaker—and I may add that it will make for a shorter speech from me.
  Madam Deputy Speaker: That is very welcome news.
  Mr. Doran: The letter continues:
  "With regard to profit, we do place emphasis on running the harbour on a businesslike and commercial basis. We have built one of the most modern and efficient ports of our size in Europe which is also profitable. You will see from our 1989 accounts that we made a profit after tax of over £2 million on our £10 million turnover, and these figures will be exceeded for 1990."
  The general manager adds that the port gives high priority to the service provided to its users—a much higher priority

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  than profit, whereas a private company would place much greater emphasis on that aspect. The harbour's substantial profits are all ploughed back into the port.
  The board's decision to reject the privatisation proposal was unanimous, despite the fact that its membership comprises mainly local business people and port users. Therefore, the general manager's letter accurately reflects the board's own view.
  Aberdeen port sees itself as responsive to local needs. Over the past 10 years, it has needed to react dramatically to the increase in harbour use brought about by the growth in the oil business and changing habits in the fishing industry. It has coped well, and it has no wish to privatise. I admit that the harbour may welcome the flexibility offered by the Bill, but the fear that it will be compelled to privatise is increased by Government statements.
  The points made by the harbour's general manager in the letter from which I have just quoted were presented also in his letter to the Secretary of State in November. He received a reply from Lord Brabazon, Minister for Aviation and Shipping, dated 22 November 1990. The general manager made it clear that there was no wish for privatisation, set out the arguments against it, and asked the Government to justify their use of the reserve power.
  Lord Brabazon replied:
  "It would therefore be a matter of concern if the number of ports coming forward quickly with privatisation schemes was very small and if no further schemes seemed to be in prospect."
  The Government are already anticipating failure, as Lord Brabazon's letter makes clear.
  Even though I object to the philosophy behind privatisation, I accept that the Government may want to provide extra flexibility in the form of another option, but my harbour authority and I find repugnant the element of compulsion. Lord Brabazon's reaction was amplified in a speech made on 23 January by the Secretary of State, when he addressed the Waterfront Partnership conference:
  "The very differing circumstances of those ports even above the threshold are recognised. A decision to use the reserve power will only be taken after full consideration with any individual port; and the commitment to consult is written into the Bill."
  The Secretary of State repeated that assurance today, and made much of the requirement to consult that is written into the Bill.
  Like many other hon. Members, I am currently in the midst of a consultation process on whether my local hospital should apply for trust status under the new health service legislation. The hospital's unit manager has already made it clear every time that he has been asked to confirm his position that, whatever may be the outcome of the consultations, he is determined to make an application for trust status anyway. The harbour board is very aware of the attitude that is being adopted in relation to that process of consultation, which it believes is encouraged by the Scottish Office. Therefore, there is no great expectation that the process of consultation promised by the Bill will be any fairer.
  That suspicion is given credence by remarks made by the Minister for Shipping and Public Transport at a press conference on 17 January when, referring to the reserve power, he said:
  "The Government would be disappointed if only one or two ports came forward quickly to privatise. The Government would used the reserve powers for the 14 trust ports"—
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  including Aberdeen—
  "unless there were good reasons for not doing so."
  No suggestion there of consultation, or of anything other than compulsion.
  Protection needs to be provided for harbours such as Aberdeen, which has proved successful, has met changing needs, and is properly serving its local community. When the Secretary of State was pressed today on public interest, he seemed to accord it a much lower priority—as does the Bill. When I pressed him on his reference to the anomaly of trust status, he responded with a comment about modern business needs. The Secretary of State ignores the public responsibilities that are placed on trusts, and which will not easily be passed into private hands.
  Historically, our harbours and ports were community facilities. In Scotland, they were usually controlled by local authorities or by direct grant to commissioners under the Crown. Later, they were controlled by private orders that clearly set out the duties and responsibilities of the Commissioners, trusts or local authorities responsible for them. Those bodies were charged with protecting the public interest, regulating the harbours, and developing their facilities to the benefit of the local community. Aberdeen has done all three very well.
  After close scrutiny of the Bill, the Aberdeen harbour board is concerned about the extent of public protection that will remain under privatisation. I confess to not having studied the Bill line by line, but my brief examination of it gives rise to several concerns. Clause 2(2), which concerns the transfer of undertakings, states:
  "(b) all functions conferred or imposed on the authority by any statutory provision of local application; are transferred to … the successor company."
  There is no mention there of whether the new companies' first priority will be to serve the interests of the public or its shareholders. Neither is that aspect covered by the supplementary provisions with respect to tranfers that are specified in schedule 1. The Government should clarify what priority is to be given to public interests.
  Earlier, mention was made of pilotage. In Aberdeen, harbour pilotage is compulsory for safety reasons. However, it is expensive, and may be seen as a disincentive to possible customers.
  There are some unprofitable operations in Aberdeen harbour. We have one of the largest fish markets in Britain and it is vital to the local community. In my constituency, about 3,500 jobs depend upon the import and sale of fish at the harbour. If a profit-orientated company came along and decided that the market was no longer profitable and either increased charges, which because of the profit margins in the industry at the moment might put a lot of people out of business, or scared fishing boats away to other ports—there has been a lot of that recently, as there is a lot of competition in that area of the industry—those 3,500 jobs would be put at risk.
  What obligations will be imposed upon the private company so that that wider issue would be considered in Aberdeen? The fishing industry is crucial for the local community, and no less important than all the other activities of the harbour, and it must be preserved; but it does not make a profit. Where will that come in the scale of priorities?
  I do not see anything in the Bill which provides for the insolvency of any of the companies. I know that Aberdeen harbour has gone through hard times and that other harbours suffer from time to time. What will happen, and

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  who will protect the public interest? If a company goes bust, where are the reserve powers? There is nothing in the Bill to deal with that. Will the Secretary of State keep responsibility to operate the harbour to ensure that it operates, or impose some other body which can operate it? Will he recreate the trust? In that situation, what would his reserve powers be? While dealing with the principle of the Bill, the Minister needs to explain those issues. Genuine concerns exist on this side of the House and they have been well expressed by all Opposition Members who have spoken.
  I am speaking on behalf of local interests, but I know that my concerns can be applied to virtually every harbour in the country, and I know that Aberdeen harbour is not unique in its opposition to reserve powers. Of the 14 harbours which may be targeted and which come within the terms of the Bill, as I understand it at least nine oppose the measure. These are serious issues, which demand a response from the Government.
  8.21 pm
  Mr. Patrick Nicholls: I fully support the Bill. It seems to me to be the logical next step, following on from the abolition of the dock labour scheme, which I was involved in when I was at the Department of Employment. The scenarios put forward in opposition to the scheme at that time proved wholly ill founded, and I have no doubt that some of the fears and the comments that we have heard tonight about what will happen in the port industry if this measure goes ahead will prove equally ill founded.
  I shall bear in mind your strictures, Madam Deputy Speaker, about time and the fact that other hon. Members will wish to speak. Therefore, I intend to confine my remarks to certain matters of detail which concern me.
  The explanatory notes on the Bill state that clause 16
  "makes provision for a levy on gains accruing to a successor company as a result of certain disposals of any land or interest in land that is transferred … The levy is charged on disposals made within a period of 10 years after the date of transfer and is charged at the rate (subject to change by order) of 50 per cent. of the amount of the gain."
  The details of the Bill provide for clawback to be levied on "deemed disposals" where the value has been enhanced—for example, where planning permission has been granted for change of use, but where no cash proceeds have changed hands. Obviously, the Government hope that trust ports will come forward with privatisation schemes without delay, but I have no doubt that, if they want that to happen, the Government will have to accept some narrowing of the incidence of clawback in at least four basic respects.
  First, clawback should apply only on cash disposals of land which yield a gain. Secondly, clawback should be limited to genuine windfalls. Thirdly, the base cost for clawback must be clarified. Finally, the time limit for the application of the clawback should be set at five years, at the most, and certainly not at 10 years, which is provided for in the Bill.
  Let me clarify those points. Clawback cannot be made to apply to gains arising on "deemed disposals" without risking serious policy reverses, and especially by frustrating economic regeneration. Worse still, if there are distressed sales in a bad market simply to raise money to pay the levy, it could cripple the successor company. The irony is that we have been down that path before.
  Let us think back to Labour's development land tax experiment in the 1970s, which confirmed the total
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  impossibility of collecting a betterment levy when no cash had been realised. That point was made on Third Reading of the Development Land Tax Bill in 1976. My right hon. Friend the Member for Hertfordshire, North (Mr. Stewart), who subsequently had a distinguished career in Government, especially in the Treasury, pointed out in that debate to our hon. Friend the Member for Hove (Mr.. Sainsbury).
  "My hon. Friend … referred to the structure of this tax and the fact that, because of the deemed disposal, it would fall to be paid, in many cases, before the funds were received either, in the case of a capital investment, before the value was realised or, in the case of a trading operation before the profits accrued."
  He concluded, and I commend these words to my hon. Friend the Minister who will be winding up the debate:
  "We believe that this is a fundamental weakness in the tax itself."—[Official Report, 12 July 1976; Vol. 915, c. 215.]
  My right hon. Friend was right on that occasion, and the same is true now. That analogy is on all fours with the situation that we are now considering. It seems to me that it would be wholly wrong to try to revive today the concept of "deemed disposals". That should have no part whatsoever in the policies being advocated by the Government side of the House.
  On windfall profits, it seems to me absolutely imperative to restrict clawback to cash disposals which result from windfall profits obtained by changes in planning use, which were not contemplated—that is the key point—at the time of the sale of the successor company. Exemptions should be permitted on all trading operations within the successor companies.
  If one obtains a profit through normal trading activity—not involving a disposal of land to realise cash—it should not be regarded as a suitable case for clawback. The base cost for calculating clawback should be the full market value of the land in question at the date of privatisation.
  I fully accept—on this at least, I am completely ad idem with my hon. Friend the Minister—that the Government have to act in the interests of the taxpayers, and that, if at all possible, the taxpayers should realise that the Government are acting in their interests. However, if we are to make any sense of this at all, we have to start with a recognition that, by proposing competitive tendering as the basis for selling a trust port, the Government are already ensuring that the price paid for a port reflects the full market value of its assets. At the moment, I do not see that reflected in the Bill. The potential development value of a port's surplus land will be taken into account by bidders, whether or not planning permission has been applied for.
  The pathfinder prospectus for electricity privatisation envisaged original cost as the base value of the calculation of clawback in certain cases of land disposal or betterment. It follows from what I have said that that base cannot be applicable in the case of trust ports by virtue of the interposition of the levy on proceeds which—although I would not expect my hon. and right hon. Friends to concede it—is a particularly cunning device of Government, because in many cases it will produce a 100 per cent. levy, rather than a 50 per cent. levy.
  If time permitted, I could show how that would come to pass. Suffice it to say for the purpose of my argument this evening that the only reasonable basis for trust ports is full market value on privatisation day. The reason for

  731
  that is that it is only by choosing that point that the Government will avoid what is effectively piling tax upon tax.
  Let me say in passing, although it is an extremely important point, that a great deal of care will have to be taken to ensure that there is no overlap between clawback tax and capital gains tax. This is an argument which should appeal to my hon. and right hon. Friends on the Front Bench, because using the basis of original cost will only serve to build large amounts of potential tax liability into the original flotation. That will have a correspondingly depressing effect on the bids submitted by potential buyers and hence on the point of sale proceeds.
  I accept the Government's obvious concern—concern which has been expressed in differing ways by hon. Members on both sides of the House this evening—that it is conceivable that a port might attract the attention of an asset stripper, or someone who does not intend to carry on business there in the traditional way of the port. It seems to me, however, that there is a limit to how far the Bill can go to protect against that possibility without doing serious damage to its own intentions. Let me put it simply: all potential clawback devalues the port concerned at the point of privatisation, with all the attendant effects on the Government's possible proceeds.
  Obviously I do not wish to suggest that clawback has no place in such arrangements. Surely, however, it can play a part only in the event of a complete windfall: when a gain on land has accrued to a port in a way that no one could reasonably foresee at the time of privatisation, and—this is an important "and"—when that gain has been realised by sale. As I have said, the question of deemed disposals should have no place in our deliberations.
  Finally, let me deal with the issue of the time scale. Even a five-year period for clawback will bear heavily on management and employee-buyout buyers, who will be obliged to exploit land potential quickly because of the high gearing that they will probably have incurred in mounting a bid in the first place. Clawback should be restricted to a maximum of five years from the date of privatisation; a 10-year post-privatisation period would certainly not be appropriate.
  Mr. McLoughlin: Two years.
  Mr. Nicholls: My hon. Friend says, "Two years," on the basis that politics may be the art of the possible; however well briefed he may be, I do not think that he will be able to argue about a five-year maximum when he winds up the debate, and I can imagine a case being made for two years. There are precedents for the approach that I recommend: I am thinking of, for instance, the Scottish Development Agency.
  Those are all detailed points; had time allowed, I would have expanded on them. I do not, of course, expect detailed answers tonight, but they are all obvious points of concern to anyone with a knowledge of the ports industry. My right hon. and hon. Friends must have already reflected on them, at least in outline. Although I do not expect my hon. Friend the Minister to go into details on this occasion, I hope that I will hear something about the Government's provisional thinking, rather than another recitation of the time-honoured formula—recited by myself on occasion—that runs, "All these points are
  732
  extremely interesting, and will be borne in mind and considered in due course." Mine are all obvious points, but they are none the worse for that. As I have said, I hope that my hon. Friend will at least share his provisional thinking with me.
  I am, of course, aware that the detailed operation for clawback will have to be set out in a statutory instrument following the enactment of principal legislation. Let me emphasise, however, that my proposals cannot be seen as peripheral: they go to the heart of the Bill, and I feel that it is no exaggeration to say that, while the Bill could still be the success that it deserves to be if they are not adopted, if we get this wrong we will entirely defeat its purposes. It would be a grim irony if—because of a failure to pay attention to points that the Government must, to some extent, have considered already—we managed, in dealing with this excellent measure, to snatch defeat from the jaws of victory.
  8.33 pm
  Mr. Tony Worthington: I am sorry that I could not be here earlier to hear the Secretary of State explain the Bill; I hope that he did not deal with all the points that I intend to make.
  I oppose the Bill because it is so narrow. There is much more to a port than the commercial interest—the profit-and-loss account. The Clyde port authority, for instance, is not concerned merely with the city of Glasgow; its responsibility extends down into Ayrshire and across to the island of Arran, and takes in all the surrounding sea lochs, too. Obviously, there will be conflicts between commercial, leisure and land interests.
  Mr. Ieuan Wyn Jones: We in Wales have similar concerns about the commercial aspects of privatisation. Often, the sort of action that is favoured by Conservative Members is against the interests of the local community, whose interest in the running of the ports should come first.
  Mr. Worthington: That should certainly be taken into account. I do not want to return to the issues raised during the debates on the Clyde Port Authority Bill, but, for example, the port of Glasgow is a highly artificial creation: it exists only because of the persistent dredging in the area. A small private company might decide that, in commercial terms, it was not worth continuing to dredge the port: if its interest was confined to the land on the banks, it would be happy to throw away the river that means so much to local people.
  Major philosophical issues lie behind the Bill; I wish, however, to dwell on one or two points. This will earn me no favours from the Opposition Front Bench, but I consider this Bill superior in many respects to private Bills such as the Clyde Port Authority Bill and the Tees and Hartlepool Port Authority Bill. Why should the safeguards in this Bill be denied to the Clyde? The Government seem to have listened to Opposition criticism of the Clyde and Tees and Hartlepool authorities, and written safeguards into this Bill as a result; they are not in those private Bills, however.
  Under clause 5, the disposal will be supervised by the Government. I do not like the present Government, but I feel that, if what I regard as a public asset belonging to the community is to be disposed of, it should be done in a way that includes some parliamentary safeguard. The present

  733
  members of the Clyde port authority, who established the way in which the authority was to be privatised, were set up as the key figures in the launching of the successor company. Clearly, such an arrangement contains the potential for a considerable conflict of interests.
  An obvious example is the valuation of assets. If I am the seller of the assets, it should be in my interest to obtain the maximum possible price; if I am the buyer, it is in my interest to pay the lowest possible price. If, however, I am both buyer and seller—as is happening with Clyde port authority—it will lead to an ambiguity of interests that should not arise in any Bill that is dealt with in the House of Commons. I am glad, therefore, that this Bill provides for a supervisory role for the Minister—who, in the case of a Scottish Bill, would be the Secretary of State for Scotland. That is another improvement: for the first time, responsibility for a Scottish port will be transferred from the rather distant care of the Department of Transport to the Scottish Office. If I am wrong, I am sure that the Minister will deal with the point.
  Mr. McLoughlin: The Secretary of State for Transport will decide these matters. If it should be a fisheries question, it will be decided by the Minister of Agriculture, Fisheries and Food.
  Mr. Worthington: I am grateful for that clarification. My point, however, is that a Minister of the Crown can examine the structure of a company set up by a port authority and say that it is or is not in order. No safeguard whatsoever is provided in the Clyde Port Authority Bill. The port authority members will decide who obtains the shares. They will decide how the company is to be privatised. It is completely wrong that no safeguard should be included in the Clyde Port Authority Bill.
  As for clause 8, the schemes set up by the relevant port authority will lead to the submission of copies of the memorandum and articles of the company. The safeguards that are provided in this Bill are not to be found in the Clyde Port Authority Bill or in the Tees and Hartlepool Port Authority Bill. The people who were appointed by the Department of Transport and who happen now to be port authority members will set up a successor company in the way that they see fit.
  Neither I nor any other hon. Member nor any member of the public will be able to bid for shares in the company. Only the present members of the port authority can buy shares in the privatised company. That is not good enough. There may be a dispute as to whether the port authority belongs to the nation, but what is not in dispute is that the port authority does not belong to the port authority members. They should not be able to set up a company, for whatever reason, as they see fit without control being exercised over them by the public and by Parliament.
  I welcome clause 16, which refers to windfall profits. All hon. Members agree that people should be deterred by regulation from becoming members of the company if they have no commitment to the area or to the workers in that company. They should not be allowed to pick up a great deal of money simply because the assets were undervalued, thus leading to the market price greatly exceeding the previous valuation. I applaud the Government for introducing safeguards to prevent windfall profits from being made. Why is not a similar safeguard included in the Clyde Port Authority Bill? The Minister recognises that,
  734
  when ports are privatised, certain rules should be followed. If such a safeguard is good for all the other ports—London, Aberdeen, Great Yarmouth and so on—it should be good for the Clyde, too. Safeguards should be written into the Bill to cover the way in which a company is set up, and a similar provision should be written into the Bill to cover windfall profits.
  I hope that the Minister will say something about how the Clyde Port Authority Bill and this Bill will work in tandem. The Clyde Port Authority Bill is being considered in the other place. As the Government have such a large majority, it will eventually be passed. This Bill will be considered in this House and then in the other place and it, too, will eventually be passed. It is possible that this Bill will be passed first, but it is more likely that the Clyde Port Authority Bill will be passed first and will receive Royal Assent.
  This Bill lays down how a port authority is to be privatised. It says:
  "'Relevant port authority' means any body which is a harbour authority, other than one within subsection (4) below."
  It excludes any company having a share capital, a local authority, the British Waterways Board, Associated British Ports and the Port of London authority.
  The Bill lays down the means by which a port authority should be privatised. At that time, the Clyde port authority may not have been privatised. It may not by then have become a company with a share capital. Does that mean that the Clyde Port Authority Bill has no validity because this subsequent Bill lays down that this is the way in which a port authority should be privatised?
  8.46 pm
  Mr. Tim Janman: I am pleased to have caught your eye, Mr. Deputy Speaker, because you will know that the largest trust port in the United Kingdom is in my constituency. I refer to the very fine port of Tilbury. I give a warm welcome to the Bill. Its objective is to free all trust ports in Great Britain, including Tilbury, from the constraints that trust port status places upon them.
  Tilbury is the largest trust port in the country. Moreover, it is the finest port in the country. I am immensely proud to represent it and the many men and women who live in my constituency who work in it. Tilbury, with a turnover of £45 million a year, is trying to compete against Hamburg, Rotterdam, Antwerp and Felixstowe, but it is having to do so with one hand tied behind its back. An organisation that is not truly commercial has to try to compete with commercial organisations. It is hampered by the constraints of its trust port status.
  The hon. Member for Kingston upon Hull, East (Mr. Prescott) rightly said during his comments—the hon. Member for Middlesbrough (Mr. Bell) called it a peroration and I am not sure whether that was a compliment or an insult—that the crux of the debate should be about what is best for the ports industry in this country. It should be about the best way to make sure that all our ports use their resources most effectively to make sure that they are as profitable and productive as possible and to increase employment in the ports. It comes down, therefore, to whether we think that the best status for a port is to be in the public sector—whether through the national Government or a local authority—or to be a trust port or a plc.

  735
  If our ports are to be provided with a combination of maximum flexibility, through access to share and loan capital, and to have removed constraints that exist with trust port status, but are to maintain the initiative and ability to react quickly to the marketplace, which is not possible when anything is in public ownership, trust ports should be made plcs. That will be the most intelligent course and the best way forward for our ports industry. Then all our ports can plan to use their resources and to invest in the most forward-looking, flexible and intelligent way.
  My hon. Friend the Minister knows from his visit to Tilbury about a week ago that not only the management but many of the employees are keen and enthusiastic about a management-employee buy-out. They fear being taken over by an unknown quantity. Although I do not necessarily agree that their fears are well founded, they exist and it would be dishonest of me to pretend that they do not. I should like a management-employee buy-out of Tilbury and every docker to have a stake in the ownership and future of the port. I should like Tilbury dock to be given to the dockers. That has been the essence of the populist-capitalist philosophy that the Government have pursued for 11 years. I very much hope that that will be the eventual outcome for the port of Tilbury and its employees.
  If that occurs, it will enhance the already high motivation that has been apparent from docker up to chief executive since the abolition of the appalling dock labour scheme. It is important to say that Tilbury's main asset is its work force, whose structure, commitment and expertise have improved enormously since the abolition of the dock labour scheme. The management of the port has invested heavily in training and has made excellent industrial progress. As I said when I intervened in the speech of the hon. Member for Kingston upon Hull, East, productivity records are continually being broken. Before the abolition of the dock labour scheme, I would not have read in a local newspaper of new productivity records being set in Tilbury. Every month or so, I see such welcome publicity in my local newspaper.
  Tilbury is a major national trading asset. It will be enhanced if the objectives of the Bill, which I support and welcome, are met.
  But—I now come to the "but"—as the Bill stands, will those objectives be met? I agree with my hon. Friend the Member for Dover (Mr. Shaw) and my hon. Friend the Member for Teignbridge (Mr. Nicholls), who made an excellent speech, that several unnecessary and spurious obstacles in the Bill will slow and hamper its objective of plc-ising, if I may create a new "ising" term, trust ports in the United Kingdom.
  My first concern, as I hinted earlier, is why on earth there should be a two-year wait before the Secretary of State can use his reserve powers to force the reluctant management of some trust ports to remove themselves from their current moribund and static status into the exciting and challenging world of the marketplace, free from the constraints that they hide behind under trust port status. I agree that one cannot go from A to B overnight and that time must be available to work out how one will get from A to B, but one year would be a perfectly
  736
  reasonable period for the management of a trust port that genuinely wished to move to the status of a plc to get from A to B. Two years is twice as long as is necessary.
  My second worry is why the Bill limits the cut-off point at £5 million. My hon. Friend the Member for Great Yarmouth (Mr. Carttiss) agreed that the figure should be £1 million. In Committee, the Government should accept an amendment allowing an order-making power so that the figure can be reviewed with a view to reducing it to less than £1 million after the Bill has become law and in the light of experience. By reducing it to £1 million, another eight ports can be included immediately. I am pleased that, at the £5 million point, Belfast will have the opportunity of becoming a plc under separate legislation.
  My third worry is about the consultation aspects of clause 8. Either we want to privatise these ports or we do not. I hope that the Government will consider exactly what consultation and representation from the locality mean. If that means consultation on how changing the port from a trust to a plc is achieved, I am in favour of that—I am in favour of as many ideas and perspectives on how that can be achieved and brought into play as possible—but I would not want the Secretary of State to be taken off on a lot of irrelevant tangents that are put forward to frustrate the Bill's objectives. I am happy for consultation to remain in the Bill if it is consultation about how. I hope that it will be limited to how, and not extended, as it seems to be, to whether, the change in status from trust port to plc status takes place.
  My fourth concern about the Bill is the levy, about which we have heard much. I support what my hon. Friend the Member for Dover said. As my hon. Friend the Minister knows, the 50 per cent. levy does not apply to the port of Tilbury. Fifty per cent. of the proceeds of the sale of the port of Tilbury will go to the Port of London authority, which will pay off debts that it owes to the Government, and I welcome that.
  I am concerned that, for the other ports, this is simply the Treasury trying to get its sticky fingers on money that it should not have. The remarks of my hon. Friend the Member for Dover were interesting. One would not want to reduce the levy if it would mean—theory points to this, but it will not necessarily be borne out in practice—that the sale price would be higher than it would be otherwise, thereby discouraging management-employee bids. As I said earlier, my hon. Friend the Minister will know that I am keen on preference being given to management-employee buy-outs.
  Provided that lowering the levy does not contradict in practical terms or go against that objective, I would urge my hon. Friend the Minister to see whether the levy can be abolished or significantly reduced. As my hon. Friend the Member for Teignbridge said, in reality the 50 per cent. levy on sale price could mean that a 100 per cent. levy is put on market value, which simply is not on.
  My fifth concern about the Bill is the clawback procedure, which is quite startling. When my hon. Friend the Minister replies to the debate, will he clarify the definition of "gain"? Whatever the percentage of the clawback, it should be applied only to the quantum gain in the value of the land vis-a-vis its original value when the port was first bought by the new company. When the competitive bid is made for the port, the value of all the land in the geographical area covered by it will be included

  737
  in the price that the successful bidder makes for the port. It would be double counting to have clawback on the total value of land that is sold.
  It seems to me that one of the benefits of the legislation will be the release of surplus land at the larger ports, such as Tilbury—land which is currently being put to no use. Irrespective of how productive or efficient many of the larger ports are, and irrespective of how much more successfully they will be able to take on their competitors when they become plcs, the fact is that the industry has changed considerably since the second world war. With reducing numbers of people and the disappearance of outdated equipment, there is land that is genuinely surplus.
  Of course, the Bill must contain provisions to discourage the sort of land speculation to which my hon. Friend the Member for Teignbridge referred. We do not want to see whole ports being bought up and, two years later, turned into housing estates. If that should happen, the asset of a port would be lost. On the other hand, we do not want the new owners of ports to be prevented from selling land that is genuinely surplus and could be used for another purpose—whether industry or, in the south-east, much-needed housing. The Bill, as it stands, runs the risk of resulting in a long and unnecessary delay in having land sold and then put to productive use.
  Mr. Ian Bruce: Does my hon. Friend agree that there is a danger in having a time limit of 10 years? A new owner, five years after acquisition, might decide that some land was surplus and might decide to leave it for another five years in order to get full value. Would not that be a great disincentive to getting the land quickly into productive use?
  Mr. Janman: It certainly would. My hon. Friend has simply re-emphasised a point that I may have laboured. Of course, my hon. Friend the Member for Teignbridge has been tainted by service in the Government. He suggested that the clawback should apply after 10 years. I suggest that it should apply after two years, and that the level should be only 35 per cent.—a fairly good figure, as it is, I think, the current level of corporation tax—rather than 50 per cent.
  If the stagnant land at many of our ports—land which will continue to be surplus after the passage of the Bill —is to be brought into productive use, we must get the balance right. We must protect our ports. We must ensure that they do not cease to be ports as a result of land speculation. At the same time, we must not put up a barrier to incentive for new companies to get rid of surplus land that is never going to be needed for port activity.
  The Bill contains hurdles that serve the vested interests of those moribund managements that fear the freedoms and disciplines of the marketplace and the accountability to the shareholders that will come about once they become plcs. That is why I say that we must not have a £5 million limit. We must compel more of these ports to become plcs. We know that that will result in more effective use of these resources, from the point of view of both the port and the national interest. That is the whole reason behind the Bill. At present, while some of these moribund trust port managements fiddle, many of the ports remain under-utilised. Our objective must be to turn as many trust ports as possible into plcs as quickly as possible.
  738
  I support the Bill because, in my judgment, it will eventually benefit every member of the Tilbury work force. I want to see the port of Tilbury become the most successful, most dynamic and most diverse port in northern Europe. I am absolutely convinced that this legislation, for which I shall vote, will see that objective achieved.
  9.4 pm
  Mr. Ronnie Campbell: As the Member for the constituency of Blyth Valley, I shall speak about. the port of Blyth. It is a very old port. It was a submarine base during the war and was one of the largest exporters of coal during the 1930s, the 1940s and the 1950s. It is one of the 14 ports that have been mentioned, having a turnover of between £5·5 million and £6 million. That, of course, is unfortunate for the port itself. It has a work force of about 2,000, including those engaged in port-related occupations. The port authority has a vested interest in ensuring that what happens is in those people's interests. For the past 120 years, the port has received. £200,000 in Government grants, which says a lot for the 50 per cent. rip-off in the Bill. Governments have given little to Blyth.
  Last Friday evening, the local authority, the county authority, my hon. Friend the Member for Wansbeck (Mr. Thompson)—whose constituency borders the harbour— and I had a meeting with the harbour commission which runs Blyth port. We feared the Bill. The commission told us that it did not want the port privatised. Blyth is a fairly big port with many modern facilities. It has always looked forward, even when it lost the coal trade because of the closure of most of the mines in the area. It has a lot going for it. The harbour commissioners are not raging socialists. They are not like me, but I am the Member of Parliament for Blyth Valley and I take their advice. Some of the men and women on the commission have been running the port for a long time and have much more idea of how the port would run after privatisation than I have.
  Who will buy and take over the port? Much has been said about that. I was on the Committee on the Tees and Hartlepool Port Authority Bill. When asked whether the port authority would buy into other ports if the Bill became law, the chief executive said that it would certainly buy other ports on the coast. The harbour commissioners are afraid that that could happen and that Tees and Hartlepool plc would be able to buy into Blyth.
  Some people may say that Tees and Hartlepool plc would make a good job of Blyth. Blyth has two roll-on/roll-off facilities to deal with paper from Finland. The Tees and Hartlepool port authority is building a second roll-on/roll-off facility, so nothing would stop it closing the facility at Blyth and bringing the work to Tees or Hartlepool. The plc would take over Blyth and leave it desolate.
  Blyth has always made a small profit, but if it does not get sufficient turnover, it will die. It has a bill of £2 million a year for dredging because the harbour contains a lot of silt. The harbour commission has looked for and bought land. It is all very well saying, "Sell the land to anyone who comes along," but what will happen if the land is sold to a company like McDonalds, which sells buns and beefburgers, but someone else comes along and says, "I

  739
  want to build my factory next to the river"? Does the authority say, "Sorry, we have just sold the land to McDonalds"? What will happen to the land then?
  One has to plan harbours. Ports authorities have to keep land in reserve in case an industrialist knocks on their door and says, "I want a bit of land to build a factory for my exports or imports." Harbour planning does not involve selling land to whoever comes along and giving it to the highest bidder. Ports such as Blyth, which are on the fringes, are there waiting to be sold off and asset-stripped. That, at any rate, was the fear expressed to us on Friday night by the harbour commissioners—men who have spent their lives dealing with the harbour and who operate according to its traditions.
  If that happened, Blyth would stand to lose 2,000 jobs, and that would be a great loss. Not many years ago, just after the miners' strike, the pit went through the review procedures and was closed, with the loss of more than 1,000 jobs. The Government gave us nothing to replace those jobs. With the exception of a few new jobs at factories in the industrial complex at Camlington, those jobs have never come back to Blyth. I hope that there will be no asset-stripping but, if there is, more jobs could be lost to the Blyth area.
  The harbour commissioners told my hon. Friend the Member for Wansbeck and me that they feared compulsory privatisation because the port's turnover is at the £5 million mark. In respect of such ports, the Secretary of State should examine the consequences of privatisation and consider what has been achieved. If he did that with Blyth, he would not bother to privatise because things are going along very nicely, thank you.
  9.10 pm
  Mr. Michael Irvine: My constituency port—Ipswich—has prospered during the past decade. It has taken advantage of its geographical position and its generally good industrial relations to expand and develop. It may surprise hon. Members to learn that Ipswich is now the sixth largest container port in the country—behind only Felixstowe, London, Southampton, Hull and Liverpool. That excellent performance is a tribute to the management of the port of Ipswich and to all who work in it.
  Ipswich has done well as a trust port, but I believe that, with proper safeguards, privatisation could bring it further benefits. I emphasise the need for proper safeguards, because there are hazards. I have no quarrel with the kind of takeover which has as its aim the strengthening and development of a port. That kind of takeover can clearly bring economic benefits, but there are two kinds of takeover which we definitely need to deter. The first is a takeover of the asset-stripping variety, in which a predator comes along concerned only with property values and with no interest in the port as such. Such a predator can all too easily damage and even kill off a perfectly viable port. The danger is particularly great in the south-east of England. We all know to what unrealistic levels property values rose two or three years ago. With property values now so depressed, that danger has temporarily disappeared, but the risks will reappear as soon as the property market recovers.
  740
  I am glad that my right hon. and learned Friend the Secretary of State gave some indication that he was aware of those risks. In his opening speech, he rightly recognised that different circumstances affect different ports and that some are much more at risk of an asset-stripping takeover than others. He should take account of that in exercising his powers under the Bill.
  The levy or clawback provided under clause 16 will act as a deterrent to asset-stripping. In so far as it is a deterrent, I welcome it. However, it is important to remember that the clawback provision could hamstring a privatised port which plans to expand and modernise its facilities and wishes to sell the assets that are surplus to its requirements in order to finance that expansion and modernisation. We must not allow such plans for expansion to be held back. Clause 16 gives the Secretary of State considerable discretion over how he operates the clawback. I hope that he operates it to discourage asset-strippers, but not so as to hobble ports that want to sell assets to raise money to invest in improvements.
  The second kind of takeover that must be guarded against is that made with the intention of eliminating a competitor port. Abolition of the dock labour scheme has greatly increased competition between ports. Quite a few ports in the new competitive climate might be only too glad to eliminate competition by means of a takeover. The principal safeguard in the event of that sort of takeover bid would be the Monopolies and Mergers Commission. However, when we consider the Bill in Committee, the threat posed by that sort of takeover should be very much in our minds.
  I was glad to hear my right hon. and learned Friend the Secretary of State say that he was considering how best to encourage management-employee buy-outs, and that he had it in mind to provide a degree of preference for those buy-outs. There is a great deal of interest in a management-employee buy-out among those who work in the docks in my constituency. In deciding what degree of preference to accord such a buy-out, I hope that my right hon. and learned Friend will remember that the enthusiasm and commitment which would be generated by a management-employee buy-out would immensely improve efficiency and flexibility. That would bring benefits not just to the managers and employees, but to shippers, consumers and the economy as a whole. There is a great deal to be said for management-employee buy-outs.
  9.17 pm
  Mr. Eddie Loyden: I have been very interested in this debate and in particular in the speeches of Conservative Members, because those Conservative Members who represent constituencies with ports are showing more caution about the Bill than are those who do not represent ports. There is good reason for that.
  Many trust ports share my belief that there is no justification for the Bill. The port transport industry has recently undergone a further upheaval with the abolition of the national dock labour scheme. People who praise the legislation which abolished the scheme should bear it in mind that at that time the Secretary of State for Transport and his Ministers promised that the abolition of the scheme would enhance the ports because land would

  741
  become available to developers which at the time was not available as a result of the strictures placed on it by the national dock labour scheme.
  There is no evidence that such enhancement has occurred in the port of Liverpool. It was also claimed that the abolition of the dock labour scheme would result in the creation of 50,000 jobs in and around the ports industry. Will the Minister tell us what has happened to those jobs or when that objective will be realised? It is clear that that prophecy has not been fulfilled. It was a fraud on the part of those who made that speculation.
  The ports of Britain are still a key sector of British industry. Therefore, the House should pause to think what would happen in circumstances in which our ports went completely outside the accountability that now exists. The port transport industry, shipping and trade, have been at the heart of Britain's economy for centuries. I accept that many changes have taken place in the pattern of world trade. In particular, the development of the European Economic Community has transformed the trading patterns of this and many other countries. None of us can foresee what changes may take place in future. The Government have disregarded the retention of a port transport industry with accountability to this place.
  There is evidence also that interrelated industries such as shipping have been disregarded by the Government. Over the years, the British merchant fleet has been reduced to virtually nothing. That, too, has been at the heart of Britain's economy. There is no justification for the Government treating those industries in such a cavalier fashion.
  The truth of the matter is made clear by hon. Members whose interest hinges on who is to get the rich pickings from the Bill—for example, land speculators. Many ports are in exactly the same position. Speculators in the port transport industry are not concerned about the industry. If there are rich pickings, that is where their interest lies, and they do not care about the future of the ports. Many hon. Members do not realise that a port is not comprised only of docks.
  There are also river approaches, bays and so on. They must be subject to conservancy, buoyage and lights, which places a burden on the port transport industry. What will happen to such safeguards if and when ports are taken over by those who will not reinvest? Conservative Members know that they are interested in land for speculation which will go to the highest bidder for whatever purpose. That has been the Government's policy over the past 11 years.
  Conservative Members tell us of the success over the past 11 years of the capitalist enterprise system. We are in the middle of a grave recession. Is that the success story of the past 11 years? The Government still pursue with vigour the ideology that they have followed for the past 11 years. At the moment, attention is being diverted to events in the Gulf. When the problems in the Gulf are over, people will again realise that the economy of this country should be on the agenda.
  Conservative Members have no right to tell us of their successes of the past 11 years. That success story has brought about rising unemployment, damaged British manufacturing industry base and caused a grave recession. Conservative Members have a blatant cheek to lecture us on the benefits of the port scheme.
  Mr. Ian Bruce: Will the hon. Gentleman give way?
  Mr. Loyden: I have very little time, so I shall not give way.
  Several Members have rightly asked what safeguards there will be against predators. What does the legislation say about such safeguards? What provision will there be in the Bill to safeguard conservancy and the buoyage and lights of the ports? How will the legislation ensure that the ports are not sacrificed to money grubbers who come into the port to buy land cheaply and dispose of it at great profit to any bidder who comes along? Such people have no interest whatever in the port industry. That is a great danger for the ports.
  We cannot leave the ports in the hands of this Government. I sincerely hope that my hon. Friends on the Opposition Front Bench are making note of what is happening in the ports. We shall expect a dramatic change in the attitude of the next Labour Government to the port. transport industry. The industry needs accountability.. There is too much at stake to allow the ports of Britain to be run by any Tom, Dick or Harry who comes along and makes a bid for a port. I hope that the Minister will talk straight to the House and that in Committee the matters raised tonight will be properly considered and debated.
  9.25 pm
  Ms. Joan Walley: My hon. Friend the Member for Liverpool, Garston (Mr. Loyden) admirably illustrated the detailed concerns of Opposition Members about the ports industry and how it should fit into an integrated transport system. I have not heard Conservative Members express the same detailed concerns this evening.
  Until now we have been forced to debate the merits of privatising trust ports in respect of particular ports—Clyde and Tees and Hartlepool. We discussed their privatisation under the pretext that it was private business. Yet throughout those debates Opposition Members knew that the private Bills were really Government measures introduced in response to Government pressure.
  If there is still any doubt about that, we need look back no further than the Committee proceedings of the Finance Bill last year. Government amendments made it clear that the new private legislation would be out of the question unless it was accompanied by changes in the financial arrangements. The amendments passed assured the Government of receiving half the proceeds from the sale of the assets which, until then, were assumed to belong to local interests and the local community which had built up and developed the local trust ports undertakings, albeit with some grant from Government many years ago.
  Only when the Treasury had spotted the pots of gold of which we have heard this evening did the Government make time for what had until then masqueraded as private Bills to be converted into a public Bill. Now at last we have the opportunity to debate the underlying principles of trust port privatisation. The comments by my hon. Friend the Member for Aberdeen, North (Mr. Hughes) at the beginning of the debate underlined the fact that no real case has been made for privatising trust ports.
  There will be time in Committee for the Opposition to oppose this privatisation measure. The time that will be available compares well with the limited amount of time in Committee on the two private Bills. Procedural problems thwarted real debate. Presumably the many Conservative Members who have spoken tonight will ask to serve on the

  743
  Committee. Perhaps they will join the Opposition in tabling some amendments. It seems that a majority of those who have spoken favour the proposals that we suggest rather than this blatant privatisation measure.
  Mr. Ian Bruce: Will the hon. Lady give way?
  Ms. Walley: No, because time is short.
  Does the Minister agree that the private legislation currently going through Parliament was made redundant as soon as the Government announced their intention—[Interruption.]
  Madam Deputy Speaker: Order.
  Ms. Walley: I am aware that many hon. Members—[Interruption.]
  Madam Deputy Speaker: Order. The hon. Lady should be given a proper hearing.
  Ms. Walley: I am aware that many hon. Members wanted to speak and for that reason I do not intend to give way. It is important that the Minister has an opportunity to reply to the many points that have been made.
  Has the private legislation going through Parliament been made redundant since the Government announced their intention—[Interruption.]
  Madam Deputy Speaker: Order. Only one debate can take place in this Chamber at a time, and the hon. Lady is speaking at the moment.
  Ms. Walley: Indeed, Madam Deputy Speaker, and that debate is about the privatisation of the trust ports.
  When the Minister replies will he tell us whether the Bill makes redundant the legislation currently before Parliament? We believe that it was made redundant as soon as the Government announced their intention to find time this Session to introduce this enabling legislation. During the debate, we have heard that there are serious anomalies. The point was made with particular reference to the Clyde Port Authority Bill.
  The passage of private legislation to date has been a severe abuse of parliamentary procedure and of Finance Bill Committee procedure, and a waste of public money. [HON. MEMBERS: "Why?"] Because two concurrent pieces of legislation have left us with an anomalous situation. The Government have not clarified where this leaves the Clyde Port Authority Bill and the Tees and Hartlepool Port Authority Bill.
  The Government have no scruples about blurring the distinctions between what belongs to a local community and what belongs to taxpayers. They have no scruples about using taxpayers' money to reward future shareholders. That is clear from every other privatisation of public assets. As with the Trustee Savings bank, where ownership could not be clearly identified, they are blurring the distinction now with the trust ports.
  My hon. Friend the Member for Kingston upon Hull, East (Mr. Prescott) began by showing that the Bill was about money and asset stripping, and the rest of his speech bore that out. Just like last year, when the then Chief Secretary to the Treasury had to move quickly on 15 March, and had to introduce new clause 67 to the Finance Bill on 3 July 1990 to safeguard the Government's financial interests in the privatisation that was then going
  744
  through Parliament, this measure is about finance. It has nothing to do with transport, other than that it is the Secretary of State for Transport who is presiding over the sale of public assets. If he cares about transport, he should be safeguarding the trust ports. Even the definition of trust port is now about how much money such a port makes and how much its turnover is. It has nothing to do with transport infrastructure.
  What have we heard from Government Members about the importance of trust ports and their place in an integrated transport system, where investment in the local infrastructure complements and underpins the national transport infrastructure, rather than undermining it? The main body of the Bill is about financial arrangements. Under this privatisation, it will be more important to pay the privatisation tax, to pay the levy and to invest in property than to invest in the local ports and build them up to serve the interests of the local community and economy.
  So far, the Second Reading debate has failed to spell out the implications for trust ports. They can be bought by companies with scant interest in their operation as ports. We should remember to look at the comments of my hon. Friend the Member for Aberdeen, South (Mr. Doran) about fishing interests. Companies will want to buy the trust ports to strip them of their assets. In doing so, they will increase the profitability of other companies in which they may already be involved. Those companies will have no commitment to run the ports for the local area. The Government are obsessed with profits, but at least those considering the Tees and Hartlepool Port Authority Bill have managed to wring from the Minister a commitment that that port authority will seek a local office in the area that the new plc will serve.
  The Secretary of State said that the trust ports will be free to privatise, but even the British Ports Federation acknowledges that privatisation is not the answer to the development needs of some trust ports.
  Mr. Ian Bruce rose—
  Ms. Walley: I shall give way in a moment.
  When the Minister replies, he should say whether all the ports will be dealt with in the manner spelt out by the Secretary of State when he spoke of his commitment to compulsion.
  Mr. Bruce rose—
  Ms. Walley: In view of the time, I had better proceed.
  Mr. Bruce: But the hon. Lady said that she would give way.
  Ms. Walley: I shall give way if the hon. Gentleman's point relates to compulsion.
  Mr. Bruce: I am grateful to the hon. Lady for giving way so gallantly. In view of what she just said, can she confirm whether it is Labour party policy to take back all the ports into trust status and to reintroduce the dock labour scheme, which many of her Back-Bench colleagues would love?
  Ms. Walley: I can only say that much depends on the timetable and the likely date of the general election. We shall consider the situation when we know that timetable.
  Tonight we have heard a lot about level playing fields. We have been told that the Government have a stated

  745
  intention of introducing such a level playing field in terms of all ports—municipal, plc or trust. The hon. Member for Dover (Mr. Shaw) made particular reference to that. Perhaps the Minister can tell us what has happened to the draft European directive on state aids to ports, which was published in 1989, but has not seen the light of day since. Do not many continental ports receive massive subsidies for the development of new facilities? Where does that leave the concept of level playing fields?
  The hon. Member for Great Yarmouth (Mr. Carttiss) said that that port had not received a penny piece from the Government. That contrasts unfavourably with those infrastructure subsidies—they are not ruled out under the treaty of Rome—which other European countries give to develop their integrated transport structures. Most European Governments recognise that ports are part of the essential infrastructure, and they heavily subsidise their operating costs and investments. The Government, in comparison, do not have the same attitude.
  The Bill is a further step towards establishing ports as business entities that provide their own resources with the minimum of state or local authority support. Trade will naturally be directed to the subsidised ports. The Government should be warned that, under the new arrangements, our ports could be taken over by European competitors. That would make the prospects for the British economy, already suffering from recession, even worse. I agree with my hon. Friend the Member for Middlesbrough (Mr. Bell) that the Standing Committee should consider an offers ceiling on the amount that foreign companies can invest in the plcs which replace the trust ports. In Committee, I hope that the Government will consider what happens when the successor companies go bankrupt, a problem to which my hon. Friend the Member for Aberdeen, South drew attention.
  The lack of reference in the Bill to an integrated transport policy is matched only by an omission of health and safety considerations and the need for an integrated environmental policy. Subsidiary companies will take over existing responsibilities, but Conservative Members and the Government have expressed little concern about conservancy and the detailed operations in the ports—maritime access, channels, lights, buoys, navigational aids, sea locks, breakwaters, docks, quays and reclaimed land. We need a regulatory body of some sort. During proceedingts on the Bill to privatise the water industry we heard a great deal about the need for such a regulatory body, and after much pressure on the Government we ended up with the National Rivers Authority. Have the Government any proposals for a similar body to deal with these issues?
  How do the Government intend to resolve the potential conflict between a profit-maximising port operator and his responsibility for safety and conservancy? When the directors of the holding company and the statutory corporation are members of each other's boards, independence must be doubtful. How does the Minister envisage that the newly identified environmental objectives such as safe and environmentally sound management of the waste generated by ships in port and contingency plans for cleaning up spillages will be paid for under the new financial arrangements for trust ports?
  Given the maritime and navigation security changes about which the Minister is consulting even now, what arrangements does he have in mind for security under the new plcs in the ports?
  746
  Trust ports have been responsible to their local communities; they have served local interests; and they have served the port industry. Today many Conservative Members have said that they agree with privatisation in principle, but that they do not want it for the port or constituency that they represent. In view of the decision announced by the Government on 4 December 1990—
  Mr. Janman: Will the hon. Lady give way?
  Ms. Walley: I will not, because there is no time.
  Fifty-six national health service trusts were to be set up precisely to look after local issues and to enable local decision-making to go ahead—
  Mr. Janman: On a point of order, Mr. Speaker—
  Mr. Speaker: Is it a point of order or of frustration?
  Mr. Janman: It is a point of order. Is it in order for the hon. Lady to mislead the House by claiming that many Conservative Members are against the Bill, when that is clearly not so?
  Ms. Walley: The Minister knows full well what 1 meant. He is the one who will have to deal with Conservative Members who do not fully support the proposals in the Bill.
  The case for the privatisation of the trust ports has not been fully made; the case for a national strategy, in the ports industry is, however, overwhelming. The Bill does not give us such a strategy, and that is why we shall vote against it.
  9.42 pm
  The Minister for Shipping and Public Transport (Mr. Patrick McLoughlin): We have heard a confusing set of arguments from Opposition Members today. Listening to the first part of the speech of the hon. Member for Kingston upon Hull, East (Mr. Prescott), I had the impression that he was going to support the Bill, but then his arguments, as usual, became more confused. At one point he mentioned how trust ports are serving the community; at another, he said that a Labour Government would want to direct certain ports and invest huge sums in them. But how would ports not lucky enough to have been selected by that Government be able to serve their communities under the interventionist policies of the hon. Gentleman?
  The hon. Member for Kingston upon Hull, East referred several times to the Rochdale committee, which sat more than 20 years ago and is thus not very relevant to the port industry today.
  The hon. Gentleman suggested that the Bill's sole purpose is to maximise some £5 billion for the Treasury. We expect the Bill to raise between £30 million and £50 million in its first year of enactment, so we shall have to look elsewhere to maximise a return of £5 billion.
  The hon. Member for Stoke-on-Trent, North (Ms. Walley) referred to the Aviation and Maritime Security Act 1990. There will be no exemptions in respect of private ports, because that legislation covers them, too. Any regulations that the inspectors consider necessary will be applied to those ports, as to others. However, when we consider that Act, it was made very clear that we would scrutinise the individual circumstances of each port, as they are all, by their very nature, different from one another.

  747
  I did not imagine that I would find myself agreeing with the hon. Member for Liverpool, Garston (Mr. Loyden), who said that he wanted to see the Government out of the ports. However, I agree. I want to see the Government out of the ports, and for them to become part of the private sector, as fully fledged independent bodies subject to no Government interference in the appointing of their boards. The only point on which I would part company with the hon. Member for Garston is that I want to see all Governments kept out of the ports, which I want to see thriving in the private sector.
  Mr. Ian Bruce: My hon. Friend says that he wants all Governments kept out of ports. Will he extend that philosophy and introduce a clause that will keep all councils out of ports as well? Weymouth is not a trust port but is owned by the council. It was a profitable port when the Conservatives lost control of the council some years ago—but for 1991, the council is budgeting for an income of £400,000 and a subsidy of £750,000. What will the Government do about that?
  Mr. Prescott: The hon. Gentleman should tell the truth.
  Mr. McLoughlin: As my right hon. Friend the Secretary of State explained, the Bill does not embrace local authority ports because they can be subject to privatisation under existing provisions. There is an important distinction to be drawn between local authority and trust ports.
  Mr. Ian Bruce: On a point of order, Mr. Speaker. I distinctly heard—and I am surprised that you did not—the hon. Member for Kingston upon Hull, East (Mr. Prescott) shout "Tell them the truth." I did tell the truth.
  Mr. Speaker: That is a frivolous point.
  Mr. McLoughlin: The Bill has two particularly unusual features. First, we are not seeking to privatise a single organisation—as we did, for example, in the case of British Airways. Nor are we seeking to privatise a finite and specified group of such bodies, as in the case of the electricity industry. Instead, our main objective is to lay down a framework that any of the trust ports will be able to use in selling themselves into the private sector, without the need to promote their own private Bills. I hope that I can reassure my hon.Friend the Member for Great Yarmouth (Mr. Carttiss) by confirming that his port could come within the scope of the Bill as drafted, but not within the scope of the compulsion clauses—on which I shall comment later.
  Secondly, the Bill is concerned with bringing fully into the private sector substantial bodies that have no direct owners and which can only be described as being owned only by the state. That gives rise to the issue, which some hon. Members find very interesting, of whether there should be a Government levy. By restricting the levy to 50 per cent., we are providing a substantial incentive to the trust ports to come forward for privatisation. That incentive is over and above the benefits that privatisation will itself bring to the ports and which my right hon. and learned Friend the Secretary of State described in opening the debate.
  The benefits are such that the Clyde and Tees and Hartlepool port authorities brought forward their own
  748
  Bills to privatise themselves before the opportunity arose for the Government to introduce the present Bill in its programme. It will be for those two authorities—I hope that this answers the question of the hon. Member for Stoke on Trent, North—to decide whether to press on with their private Bills or to withdraw them and seek privatisation through this Bill. I could well understand it if they took the view that they are likely to secure the benefits of privatisation more quickly by pursuing their private Bills than by waiting for the enactment of the Ports Bill and seeking privatisation thereafter.
  If I may revert for a moment to the levy, hon. Members will see that the levy provisions in the Bill include, in clause 12(5), the possibility for the Secretary of State, with the consent of the Treasury, to vary the rate of levy. There is a similar possibility in the provisions about the clawback of part of the gains from subsequent land developments.
  I noted the arguments put forward by a number of my hon. Friends about the time scale for the clawbacks. I think that at least three or four of my colleagues, including my hon. Friends the Members for Teignbridge (Mr. Nicholls), for Thurrock (Mr. Janman) and for Dover (Mr. Shaw), mentioned that issue. Obviously, we shall return to it in Committee, when we may want to discuss it in greater detail.
  Mr. Moate: I am most grateful to my hon. Friend. Does he agree that virtually everyone who has caught the Chair's eye today and some of those who did not—even though we represent the largest ports in the United Kingdom—has expressed support for the management-employee buy-outs and believes that the Secretary of State should give preference to such schemes? If he finds that the levy and clawback proposals militate against such buy-outs in favour of outside investment groups, will he undertake to discuss revising those rules with the Treasury so that, in every case where they are proposed, sensible schemes from management and employees would prove to be the winners?
  Mr. McLoughlin: I am very sympathetic to the idea of management-employee buy-outs. That goes along the line that the Government have developed in the many privatisations that we have steered through the House. That line will ensure that—
  Mr. Robert Hughes: On a point of order, Mr. Speaker. Is it in order for the Minister to show such discourtesy, instead of addressing the House?
  Mr. Speaker: I had not noticed. I think that the Minister was addressing one of his hon. Friends on the Benches below the Gangway.
  Mr. McLoughlin: I was saying that we hope that privatisation of the trust ports will continue with Government policy, which has meant that, through various privatisation measures, people who have worked in those industries for many years can play a proper role and start to own some of them. That is where our policy diverges so greatly from that of the Opposition, who are only interested in the state owning and people having no rights and powers in their own industries.
  My hon. Friend the Member for Faversham (Mr. Moate) referred to management-employee buy-outs, and I am keen on that idea. The hon. Member for Kingston upon Hull, East has opposed every privatisation measure which has been brought before the House by the

  749
  Government. The Conservative party have given rights to workers in industries, whether they are state-owned or, as in this case, trust ports, so that they can own part of the industry in which they work and which is so much a part of their livelihood.
  If I may revert for a moment to the levy, hon. Members will see that the levy provisions in the Bill include, in clause 12(5), the possibility for the Secretary of State, with the consent of the Treasury, to vary the rate of levy. There is a similar possibility in the provisions about the clawback of part of the gains from subsequent land developments. That is in clause 16(6). I should explain the intention here. As I have explained, the Government believe that the 50 per cent. rate of levy is a fair one. We intend to apply that rate in all cases. But we believe that it would be a mistake to have to look to further primary legislation to make it possible to vary the rate. It would be wrong to speculate at this stage in what circumstances the Government might wish to do this, but it is, I think, a sensible precaution to have these provisions in the Bill.
  It may be sensible if I elaborate on the question of ownership of the trust ports, which has been a matter of some significance in the framing of the Bill. I should make it clear from the outset that no one is arguing—certainly not the Government—that trust ports are not the direct owners of their assets and property. What is at issue is the ownership of the trust ports themselves. Hon. Members may recall that it was decided in another place in July 1987 that the Trustee Savings bank belonged to the state. This followed the passage of the Trustee Savings Banks Act 1985. The same principle applies to the trust ports.
  Following that judgment in another place, the National Audit Office pointed out that it was open to the Government to consider whether parliamentary approval should be sought to enable the Crown to assume some measure of ownership of the Trustee Savings bank. The same considerations apply in the case of the trust ports; it is therefore for Parliament to decide who should benefit from the sale of the ports.
  The Government, however, took none of the proceeds from the privatisation of the TSB. How, then, do they justify taking a 50 per cent. levy in the case of the trust ports? The trust ports are similar to the TSB in that they are trusts owned by the state, although not, of course, by the Government; but they are different from the TSB in a number of important respects. We consider that those differences justify the passing of a share of the proceeds to the Exchequer.
  The ports themselves are, I think, concerned about several main issues in the Bill. The first is the levy on the sale of the ports, about which enough has already been said; the second is the clawback on gains from the development of land. As I have said, we shall deal with that point in a separate order and we shall welcome the views of the port industry. Another point of concern relates to when the Secretary of State will use his powers of compulsion. We decided on the two-year delay because we feel that it allows the ports substantial period during which to see the benefits of privatisation. Some ports already see those benefits, and will privatise quickly.
  I take the points made by the hon. Member for Orkney and Shetland (Mr. Wallace), and my hon. Friends the Members for Poole (Mr. Ward) and for Dover, about the anxieties felt by certain ports. We appreciate the importance of considering the ports individually and we shall take part in consultations before any decisions are
  750
  made. I was pleased to hear from the hon. Member for Orkney and Shetland that his party would be supporting the Bill—[Interruption.] I gather that he did not say that; I am not really surprised.
  I was interested to read the following in Lloyd's List International not long ago:
  "If you do not understand the question, sit on the fence —that seems to be the motto of the UK's Liberal Democrats when it comes to dealing with ports.
  Only last year their 17 MPs managed to split three ways in the votes over abolishing the Dock Labour Scheme and now, it seems, ports privatisation is causing them a few problems as well.
  In March, five Liberal Democrats voted against the Tees and Hartlepool Port Authority Bill. So far so good. But this week five Liberal Democrats voted in favour of an almost identical Bill—seeking to privatise the Clyde Port Authority.
  What is more, two MPs"—
  the hon. Member for Berwick-upon-Tweed (Mr. Beith) and the hon. and learned Member for Fife, North-East (Mr. Campbell)—
  "voted in different lobbies on each occasion. Even more surprising is the fact that their transport and shipping spokesman … did not vote …
  The Liberal Democrats Press office seemed as perplexed by the issue as their MPs. When asked about a reason for the change of heart, back came the reply, 'I haven't got a clue.' Pressed further on the issue, the answer changed to 'such is life'."
  Mr. Wallace: Will the Minister give way?
  Mr. McLoughlin: The hon. Gentleman knows that I have not time to give way, although I am as keen as anyone else to find out the true views of the Liberal Democrats.
  We have had an interesting debate. I look forward to the Committee stage of the Bill, when we shall be able to argue about some of the detailed points raised by a number of hon. Members. There is no doubt that the Bill is greatly wanted by a number of ports throughout the country: it will free them from the constraints under which they suffer as trust ports. The demand is clear; two ports have already introduced private Bills—which, as a number of hon. Members have pointed out, have already taken up a good deal of parliamentary time.
  The Bill is the right way in which to privatise trust ports. Its passage will represent an important first step in the development of the ports industry. It is an important Bill, which marks a positive step forward for the ports industry. Without Government interference, the ports will be able to get on with the job. I commend the Bill to the House.
  Question put, That the Bill be now read a Second time:—
  The House divided: Ayes 260, Noes 204.

  Division No. 48]

  [at 10.00 pm

  AYES

  Adley, Robert

  Bennett, Nicholas (Pembroke)

  Aitken, Jonathan

  Benyon, W.

  Alexander, Richard

  Bevan, David Gilroy

  Alison, Rt Hon Michael

  Biffen, Rt Hon John

  Amess, David

  Blackburn, Dr John G

  Amos, Alan

  Blaker, Rt Hon Sir Peter

  Arbuthnot, James

  Body, Sir Richard

  Arnold, Jacques (Gravesham)

  Bonsor, Sir Nicholas

  Arnold, Sir Thomas

  Boscawen, Hon Robert

  Ashby, David

  Boswell, Tim

  Banks, Robert (Harrogate)

  Bottomley, Peter

  Batiste, Spencer

  Bottomley, Mrs Virginia

  Beaumont-Dark, Anthony

  Bowden, Gerald (Dulwich)

  Bellingham, Henry

  Bowis, John

  Bendall, Vivian

  Boyson, Rt Hon Dr Sir Rhodes

  751

  Braine, Rt Hon Sir Bernard

  Hawkins, Christopher

  Brandon-Bravo, Martin

  Hayes, Jerry

  Brazier, Julian

  Hayhoe, Rt Hon Sir Barney

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

  Hayward, Robert

  Bruce, Ian (Dorset South)

  Hicks, Robert (Cornwall SE)

  Buck, Sir Antony

  Higgins, Rt Hon Terence L.

  Burns, Simon

  Hill, James

  Burt, Alistair

  Hind, Kenneth

  Butler, Chris

  Hogg, Hon Douglas (Gr'th'm)

  Butterfill, John

  Holt, Richard

  Carlisle, John, (Luton N)

  Hordern, Sir Peter

  Carlisle, Kenneth (Lincoln)

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

  Carrington, Matthew

  Howell, Rt Hon David (G'dford)

  Carttiss, Michael

  Hughes, Robert G. (Harrow W)

  Chapman, Sydney

  Hunter, Andrew

  Chope, Christopher

  Irvine, Michael

  Churchill, Mr

  Jack, Michael

  Clark, Rt Hon Alan (Plymouth)

  Jackson, Robert

  Clark, Dr Michael (Rochford)

  Janman, Tim

  Clark, Rt Hon Sir William

  Jones, Gwilym (Cardiff N)

  Clarke, Rt Hon K. (Rushcliffe)

  Jones, Robert B (Herts W)

  Colvin, Michael

  Kellett-Bowman, Dame Elaine

  Conway, Derek

  Kilfedder, James

  Coombs, Anthony (Wyre F'rest)

  King, Roger (B'ham N'thfield)

  Coombs, Simon (Swindon)

  King, Rt Hon Tom (Bridgwater)

  Cope, Rt Hon John

  Kirkhope, Timothy

  Cormack, Patrick

  Knapman, Roger

  Couchman, James

  Knight, Greg (Derby North)

  Cran, James

  Knight, Dame Jill (Edgbaston)

  Critchley, Julian

  Knowles, Michael

  Currie, Mrs Edwina

  Knox, David

  Curry, David

  Lang, Rt Hon Ian

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

  Latham, Michael

  Devlin, Tim

  Lawrence, Ivan

  Dicks, Terry

  Leigh, Edward (Gainsbor'gh)

  Dorrell, Stephen

  Lennox-Boyd, Hon Mark

  Douglas-Hamilton, Lord James

  Lester, Jim (Broxtowe)

  Dover, Den

  Lilley, Peter

  Dunn, Bob

  Lloyd, Sir Ian (Havant)

  Durant, Sir Anthony

  Lloyd, Peter (Fareham)

  Eggar, Tim

  Luce, Rt Hon Sir Richard

  Emery, Sir Peter

  Lyell, Rt Hon Sir Nicholas

  Evans, David (Welwyn Hatf'd)

  McCrindle, Sir Robert

  Evennett, David

  MacGregor, Rt Hon John

  Fallon, Michael

  MacKay, Andrew (E Berkshire)

  Field, Barry (Isle of Wight)

  Maclean, David

  Fishburn, John Dudley

  McLoughlin, Patrick

  Fookes, Dame Janet

  McNair-Wilson, Sir Patrick

  Forsyth, Michael (Stirling)

  Madel, David

  Forth, Eric

  Malins, Humfrey

  Fowler, Rt Hon Sir Norman

  Mans, Keith

  Franks, Cecil

  Maples, John

  Freeman, Roger

  Marshall, John (Hendon S)

  French, Douglas

  Martin, David (Portsmouth S)

  Fry, Peter

  Mates, Michael

  Gale, Roger

  Maude, Hon Francis

  Gardiner, Sir George

  Mawhinney, Dr Brian

  Garel-Jones, Tristan

  Maxwell-Hyslop, Robin

  Gill, Christopher

  Mayhew, Rt Hon Sir Patrick

  Glyn, Dr Sir Alan

  Meyer, Sir Anthony

  Goodhart, Sir Philip

  Mills, Iain

  Goodlad, Alastair

  Miscampbell, Norman

  Gorman, Mrs Teresa

  Mitchell, Andrew (Gedling)

  Greenway, Harry (Ealing N)

  Mitchell, Sir David

  Greenway, John (Ryedale)

  Moate, Roger

  Gregory, Conal

  Montgomery, Sir Fergus

  Griffiths, Peter (Portsmouth N)

  Moore, Rt Hon John

  Grist, Ian

  Morrison, Sir Charles

  Ground, Patrick

  Morrison, Rt Hon Sir Peter

  Grylls, Michael

  Moss, Malcolm

  Gummer, Rt Hon John Selwyn

  Mudd, David

  Hague, William

  Nelson, Anthony

  Hamilton, Hon Archie (Epsom)

  Neubert, Sir Michael

  Hamilton, Neil (Tatton)

  Newton, Rt Hon Tony

  Hampson, Dr Keith

  Nicholls, Patrick

  Hannam, John

  Nicholson, David (Taunton)

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

  Nicholson, Emma (Devon West)

  Hargreaves, Ken (Hyndburn)

  Norris, Steve

  Harris, David

  Onslow, Rt Hon Cranley

  Haselhurst, Alan

  Oppenheim, Phillip

  752

  Page, Richard

  Speller, Tony

  Paice, James

  Spicer, Sir Jim (Dorset W)

  Patnick, Irvine

  Spicer, Michael (S Worcs)

  Patten, Rt Hon John

  Squire, Robin

  Pattie, Rt Hon Sir Geoffrey

  Stanbrook, Ivor

  Pawsey, James

  Stanley, Rt Hon Sir John

  Peacock, Mrs Elizabeth

  Steen, Anthony

  Porter, Barry (Wirral S)

  Stern, Michael

  Porter, David (Waveney)

  Stevens, Lewis

  Portillo, Michael

  Stewart, Allan (Eastwood)

  Powell, William (Corby)

  Stewart, Andy (Sherwood)

  Price, Sir David

  Sumberg, David

  Raison, Rt Hon Sir Timothy

  Summerson, Hugo

  Redwood, John

  Tapsell, Sir Peter

  Rhodes James, Robert

  Taylor, Ian (Esher)

  Riddick, Graham

  Taylor, John M (Solihull)

  Ridley, Rt Hon Nicholas

  Taylor, Teddy (S'end E)

  Ridsdale, Sir Julian

  Tebbit, Rt Hon Norman

  Rifkind, Rt Hon Malcolm

  Thompson, Patrick (Norwich N)

  Roberts, Sir Wyn (Conwy)

  Thorne, Neil

  Roe, Mrs Marion

  Thurnham, Peter

  Rossi, Sir Hugh

  Tredinnick, David

  Rost, Peter

  Trippier, David

  Rumbold, Rt Hon Mrs Angela

  Viggers, Peter

  Ryder, Rt Hon Richard

  Wakeham, Rt Hon John

  Sackville, Hon Tom

  Walker, Bill (T'side North)

  Sainsbury, Hon Tim

  Waller, Gary

  Shaw, David (Dover)

  Wheeler, Sir John

  Shaw, Sir Giles (Pudsey)

  Widdecombe, Ann

  Shaw, Sir Michael (Scarb')

  Wilshire, David

  Shephard, Mrs G. (Norfolk SW)

  Wood, Timothy

  Shepherd, Colin (Hereford)

  Young, Sir George (Acton)

  Shepherd, Richard (Aldridge)

  Younger, Rt Hon George

  Shersby, Michael

  Skeet, Sir Trevor

  Tellers for the Ayes:

  Smith, Tim (Beaconsfield)

  Mr. Nicholas Baker and

  Soames, Hon Nicholas

  Mr. David Davis.

  NOES

  Abbott, Ms Diane

  Cousins, Jim

  Adams, Mrs. Irene (Paisley, N.)

  Crowther, Stan

  Allen, Graham

  Cryer, Bob

  Archer, Rt Hon Peter

  Cummings, John

  Ashdown, Rt Hon Paddy

  Cunliffe, Lawrence

  Ashley, Rt Hon Jack

  Dalyell, Tarn

  Ashton, Joe

  Darling, Alistair

  Banks, Tony (Newham NW)

  Davies, Rt Hon Denzil (Llanelli)

  Barnes, Harry (Derbyshire NE)

  Davies, Ron (Caerphilly)

  Barron, Kevin

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

  Battle, John

  Dewar, Donald

  Beckett, Margaret

  Dixon, Don

  Bell, Stuart

  Dobson, Frank

  Bellotti, David

  Doran, Frank

  Benn, Rt Hon Tony

  Dunwoody, Hon Mrs Gwyneth

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

  Eadie, Alexander

  Benton, Joseph

  Evans, John (St Helens N)

  Bermingham, Gerald

  Ewing, Harry (Falkirk E)

  Bidwell, Sydney

  Fatchett, Derek

  Blair, Tony

  Faulds, Andrew

  Blunkett, David

  Fearn, Ronald

  Boateng, Paul

  Field, Frank (Birkenhead)

  Boyes, Roland

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

  Bradley, Keith

  Fisher, Mark

  Bray, Dr Jeremy

  Flynn, Paul

  Brown, Gordon (D'mline E)

  Foot, Rt Hon Michael

  Brown, Nicholas (Newcastle E)

  Foster, Derek

  Brown, Ron (Edinburgh Leith)

  Foulkes, George

  Buckley, George J.

  Fraser, John

  Caborn, Richard

  Galloway, George

  Campbell, Ron (Blyth Valley)

  Garrett, John (Norwich South)

  Campbell-Savours, D. N.

  George, Bruce

  Canavan, Dennis

  Gilbert, Rt Hon Dr John

  Clark, Dr David (S Shields)

  Godman, Dr Norman A.

  Clarke, Tom (Monklands W)

  Gordon, Mildred

  Clelland, David

  Gould, Bryan

  Clwyd, Mrs Ann

  Grant, Bernie (Tottenham)

  Cohen, Harry

  Griffiths, Nigel (Edinburgh S)

  Cook, Robin (Livingston)

  Griffiths, Win (Bridgend)

  Corbett, Robin

  Grocott, Bruce

  Corbyn, Jeremy

  Harman, Ms Harriet

  753

  Haynes, Frank

  Meacher, Michael

  Heal, Mrs Sylvia

  Meale, Alan

  Henderson, Doug

  Michael, Alun

  Hinchliffe, David

  Michie, Bill (Sheffield Heeley)

  Hoey, Ms Kate (Vauxhall)

  Mitchell, Austin (G't Grimsby)

  Hogg, N. (C'nauld & Kilsyth)

  Moonie, Dr Lewis

  Home Robertson, John

  Morgan, Rhodri

  Howarth, George (Knowsley N)

  Morley, Elliot

  Howells, Geraint

  Morris, Rt Hon A. (W'shawe)

  Howells, Dr. Kim (Pontypridd)

  Morris, Rt Hon J. (Aberavon)

  Hoyle, Doug

  Mowlam, Marjorie

  Hughes, John (Coventry NE)

  Mullin, Chris

  Hughes, Robert (Aberdeen N)

  Murphy, Paul

  Hughes, Roy (Newport E)

  Nellist, Dave

  Hughes, Simon (Southwark)

  Oakes, Rt Hon Gordon

  Illsley, Eric

  O'Brien, William

  Ingram, Adam

  O'Hara, Edward

  Janner, Greville

  O'Neill, Martin

  Jones, Ieuan (Ynys Môn)

  Orme, Rt Hon Stanley

  Jones, Martyn (Clwyd S W)

  Patchett, Terry

  Kaufman, Rt Hon Gerald

  Pendry, Tom

  Kennedy, Charles

  Pike, Peter L.

  Kinnock, Rt Hon Neil

  Powell, Ray (Ogmore)

  Lamond, James

  Prescott, John

  Leadbitter, Ted

  Primarolo, Dawn

  Leighton, Ron

  Quin, Ms Joyce

  Lestor, Joan (Eccles)

  Radice, Giles

  Lewis, Terry

  Randall, Stuart

  Litherland, Robert

  Redmond, Martin

  Livingstone, Ken

  Rees, Rt Hon Merlyn

  Lloyd, Tony (Stretford)

  Reid, Dr John

  Lofthouse, Geoffrey

  Richardson, Jo

  Loyden, Eddie

  Robertson, George

  McAllion, John

  Robinson, Geoffrey

  McAvoy, Thomas

  Rogers, Allan

  McCartney, Ian

  Rooker, Jeff

  Macdonald, Calum A.

  Rooney, Terence

  McFall, John

  Ross, Ernie (Dundee W)

  McKay, Allen (Barnsley West)

  Rowlands, Ted

  McKelvey, William

  Ruddock, Joan

  McLeish, Henry

  Sheerman, Barry

  Maclennan, Robert

  Sheldon, Rt Hon Robert

  McMaster, Gordon

  Shore, Rt Hon Peter

  McNamara, Kevin

  Short, Clare

  McWilliam, John

  Skinner, Dennis

  Madden, Max

  Smith, Andrew (Oxford E)

  Mahon, Mrs Alice

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

  Marek, Dr John

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

  Marshall, David (Shettleston)

  Soley, Clive

  Martin, Michael J. (Springburn)

  Spearing, Nigel

  Martlew, Eric

  Steinberg, Gerry

  Maxton, John

  Stott, Roger

  754

  Strang, Gavin

  Wigley, Dafydd

  Straw, Jack

  Williams, Rt Hon Alan

  Thomas, Dr Dafydd Elis

  Williams, Alan W. (Carm'then)

  Turner, Dennis

  Wilson, Brian

  Vaz, Keith

  Winnick, David

  Wallace, James

  Wise, Mrs Audrey

  Walley, Joan

  Worthington, Tony

  Wardell, Gareth (Gower)

  Wareing, Robert N.

  Tellers for the Noes:

  Watson, Mike (Glasgow, C)

  Mrs. Llin Golding and

  Welsh, Michael (Doncaster N)

  Mr. Ken Eastham.

  Question accordingly agreed to.
  Bill accordingly read a Second time, and committed to a Standing Committee pursuant to Standing Order No. 61 (Committal of Bills).

BUSINESS OF THE HOUSE
Ordered,
That, at this day's sitting, the Ways and Means Motion may be proceeded with, though opposed, until any hour.—[Mr. Neil Hamilton.]

PORTS BILL [MONEY)
Queen's Recommendation having been signed—
Resolved,
That, for the purposes of any Act resulting from the Ports Bill, it is expedient to authorise the payment out of money provided by Parliament of any expenses incurred by a Minister of the Crown in consequence of the provisions of the Act.—[Mr. McLoughlin.]

WAYS AND MEANS

  PORTS BILL
  Resolved,
  That, for the purposes of any Act resulting from the Ports Bill, it is expedient to authorize—

  (1) a levy on disposals of—

  (a) securities; or

  (b) rights to require the issue of securities;

  of any company to which the undertaking of a harbour authority is transferred under the Act;

  (2) 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 transferrred by such a transfer subsists;

  (3) the payment into the Consolidated Fund of all payments of levy under the Act, interest on unpaid levy and penalties in respect of levy.—[Mr. McLoughlin.]

Financial Services
10.15 pm
The Minister for Corporate Affairs (Mr. John Redwood): I beg to move,
That the draft Financial Services Act 1986 (Delegation) Order 1991, which was laid before this House on 19th December, be approved.
The purpose of the order is to give to the Securities and Investments Board a power parallel to that of the Secretary of State for Trade and Industry under the Financial Services Act 1986 to take action against an individual who may be making money or causing investors to lose money while contravening the conduct of business provisions under that legislation. The SIB has a power parallel to the DTI under the FSA to take such restitution orders against authorised persons or appointed representatives. The order would give it a similar power to take action, where appropriate, against people who are not authorised.
This is a small transfer of additional power which will enable the SIB to pursue one or two extra cases. In the interests of good regulation, I commend the order to the House.
10.16 pm
Ms. Marjorie Mowlam: I welcome the order and the enhanced powers for the SIB that will result. Why has the Minister brought forward this parallel power for the SIB and DTI now? The Financial Services Act was introduced in 1986. Why has the order come forward now, rather than in 1988, 1989, or 1990? One must assume either that the SIB needed this power before, and without it has been functioning inefficiently, or that the DTI had the power and has not used it efficiently. Either the SIB has not had the full powers necessary to do its job or the DTI has not been doing its job. It would be useful if the hon. Gentleman would explain why he finds it necessary to introduce the order after so many years.
This is just another tinkering with the Financial Services Act. Because of the speed with which the legislation was introduced and the way in which it was cobbled together, we continue, week in, week out, to have these difficulties.
Mr. Tim Smith: "We"?
Ms. Mowlam: I mean "We". Last week, I talked to people in the City and to a unit trust group and asked them about the FSA's function. Giving an example of Government tinkering and the difficulties that have resulted since the legislation was introduced, they said that, since June 1989, they have had 24 consultative papers from the SIB, including three major ones, 90 changes to the SIB rulebook, 14 updates to the rulebook for the Investment Management Regulatory Organisation, two complete rewrites of the IM RO rulebook, and an attempt to rewrite the rulebook in simpler language.
Mr. Smith: What is wrong with that?
Ms. Mowlam: The hon. Gentleman asks what is wrong with that. We have these changes month in, month out because of the way in which this cobbled together financial services legislation was introduced by the Government. The order is just another elastoplast applied by the Government to the SFA. The Government should be
756
considering the surgery that will be needed to make the SFA work more efficiently for industry and investors as we move toward a single European market.
We must place the order in the context of Europe and the legislation that we hope will come as we move towards a single market. We hope that five directives will be in place to allow the single market to move forward in the 1990s. The order deals with fraud and protecting investors' money. As the previous financial debate was too early in the Minister's view, it would be useful if he would explain why we have not yet had a consumer directive from Europe. It is needed desperately. The Economic and Finance Council and similar organisations tell me that, although this small delegation order deals with one aspect of fraud in relation to investors and the City, we have no chance of having a consumer directive in place at the same time as the investment services, capital adequacy and other directives.
I dread to think what will happen, come the completion of the single market, when a Spanish investor is working through a French company with a subsidiary in Britain. Supposedly, home rules will function in those circumstances. Does the Minister really believe that that will constitute consumer protection in the 1990s? The Minister feigns support for consumer protection, but, as yet, we have seen little evidence in the European negotiations that that will be forthcoming in 1992.
Let me ask the Minister to clarify five points. First, why now? Secondly, will the Minister confirm that the present delegation order has nothing to do with the difficulties at Hamilton House? I understand that many investors await compensation following the problems and difficulties of Hamilton House and that the Securities and Investments Board is having trouble dealing with their problems because it has been waiting for months for the response from the Department that would allow the investors to get their money back. The worry is that, as a result, directors are taking money out of the country, and that money that could be recouped by restitution under an order such as this has not been obtained. Is Hamilton House at the back of the Minister's mind? Is that why he feels it necessary to delegate powers concurrently to the SIB and the Department?
Thirdly, will the powers that will be given to the SIB concurrently with the Department apply only to restitution of directors as individual unauthorised persons under the Financial Services Act, or will they also apply to accountants and solicitors? Who will the order, and the powers delegated to the SIB, cover?
Fourthly, will the order apply to cases such as Polly Peck and Levitt? If so, will it be used by the SIB; if not, why has not the Department used its powers already?
Fifthly, there have been reports in the press recently that many members of the Financial Intermediaries, Managers and Brokers Regulatory Association are concerned that, because of the cost of compensation—particularly in the Levitt case, if that cost proves to be very high—the association will not be able to pay the necessary compensation. Does the order have something to do with the SIB and Levitt's difficulties? What is the Minister's response to those at FIM BRA who say that, if the Levitt case results in great demands for money, the present compensation scheme will not be able to handle those demands, or that, if it does, it will be at the expense of

757
independent intermediaries whose payments into the compensation scheme are at present higher than their payments for membership of FIMBRA?
Will the Minister come clean on those issues and explain what relation the order has to our regulatory system?
10.23 pm
Mr. Anthony Nelson: It is an honour to follow the hon. Member for Redcar (Ms. Mowlam). The House respects the way in which she has followed these matters and her careful and close interest in them. She does a great service to the minutiae of the Financial Services Act 1986 by following up these matters and fulfilling her remit so well.
I welcome the order, which marks a further stage in the transition towards the transfer of power from the Secretary of State to the Securities and Investments Board. When the Financial Services Act was passed, many of us envisaged an increasing devolution of supervisory powers down to the SIB and we recognised that it had to be a tried and tested procedure.
I see in his place my hon. Friend the Member for Beaconsfield (Mr. Smith), who played such a formative role in these matters. I think that he would agree that the careful balance that has been struck between self-regulation and central supervision has stood the test of time. The Government have been right to ensure that the Securities and Investments Board does not run before it can walk. In fact, the SIB has a creditable record, and I believe that the devolution of parallel responsibility for investigating the contravention of the status of authorised person or appointed intermediary represents an important devolution of power.
As, in the end, it comes down to people and to those who are authorised to conduct investment businesses, it is a great vote of confidence in the SIB that the Government and the Secretary of State are prepared to devolve this particular power. The order is not a technical or sidelining measure. It is an important reflection of the progress, responsibility and success of the SIB and the policy that the Government have enunciated and pursued since the enactment of the Financial Services Act 1986. I congratulate my hon. Friend the Minister on presenting the order today.
10.25 pm
Mr. Tim Smith: I, too, welcome the introduction of the order. I asked the Library how many orders had been made under the Financial Services Act 1986. I was told that this is the 61st order on the Library computer, which lists the orders subject to affirmative and negative resolutions and also commencement orders.
The flexibility of the Financial Services Act 1986 is demonstrated in the fact that it is possible to make such changes, which may simply be tinkering. However, each change is in response to new circumstances. The financial services industry is continually producing new products and it is inevitable that we will have new regulations. Regulations that simplify life for investment businesses are particularly welcome.
Ms. Mowlam: To what new product or simplification is the order related? It strikes me that the reality has not changed.
Mr. Smith: I was not suggesting that this order was before us as a result of a new product. The scene is changing, and the idea that we can have permanent rules and regulations is not realistic. The market is constantly changing, and it is inevitable that the rules and regulations made under the Financial Services Act will change in response. It is not realistic to suppose that we will have a long period during which there will be no changes to the rules. There are many proposals on the stocks at the moment which deal with new investment products—for example, unit trusts that allow people to invest in futures. I am not suggesting that this order deals with such a change. I shall be interested to hear my hon. Friend the Minister respond to the hon. Member for Redcar (Ms. Mowlam) and tell us why the order has been introduced today, because I cannot answer that.
As my hon. Friend the Member for Chichester (Mr. Nelson) said, it is right that as the SIB becomes more experienced, more powers should be passed to it. As my hon. Friend said, that is a recognition of the fact that the SIB has made progress and is now widely respected. A mark of that was the award in the new year's honours list of a knighthood for Sir David Walker, which I welcomed. That was good news.
My only complaint about the order relates to the explanatory note. It would have been nice if the explanatory note covered what my hon. Friend the Minister said in his opening remarks. It is a typical explanatory note, in that it tells us nothing about the order. I had to look up the relevant sections in the Financial Services Act to discover what the order did. The explanatory note should be what it says and not a circuitous civil service effort that tells us nothing that we did not already know.
10.27 pm
Mr. John Greenway: None of us wants to prolong our proceedings. I agree that the order makes further progress towards the devolution of powers to the SIB. I do not want to speak specifically about the order, but instead to take this opportunity, as the hon. Member for Redcar (Ms. Mowlam) did, to voice one or two other concerns relating to the financial services industry generally.
I want to state first how much the people in the financial services industry in this country recognise the stand that my hon. Friend the Minister has taken in respect of the European Community directives, particularly on capital adequacy rules. It will come as no surprise to hon. Members to learn that, as the people who work in the industry trundle off to bed tonight, they are thinking not about the order that we are considering, but about their future in relation to what will happen to capital adequacy. I encourage my hon. Friend to continue his fight.
When we discussed this matter right after the summer recess, my hon. Friend the Minister said that too many people were caught by the current interpretation of the exemption rules. I hope that my hon. Friend will continue to press that matter. Without question, European Community directives pose a serious threat to the viability of the independent financial adviser in the next decade. It would be sad if that competitive industry, which is at the heart of what we wish to see in Europe, were destroyed in

759
the name of creating a European single market. I know that my hon. Friend recognises those matters, and I hope that he will continue to pursue them robustly.
The order also raises another matter to which the hon. Member for Redcar referred—the continuing problem of the compensation scheme. As my hon. Friend the Minister knows, I firmly believe that investor protection continues to be the Achilles' heel of the financial services industry. It is increasingly to the credit of the Financial Services Act 1986 and the Government's persistence with the measure that we have begun to expose people who should not be in the industry because they cannot be trusted to look after investors' money.
Dr. Lewis Moonie: There are many more around.
Mr. Greenway: However many there may be, the financial services legislation has created a mechanism that has exposed those who are dishonest in a way that the old Prevention of Fraud (Investments) Act 1958 never did. For that reason, everyone in the industry recognises that there have been benefits from financial services legislation.
The corollary is that, in putting the compensation arrangements in place, we are in danger of threatening the existence of the independent sector which we wish to protect. Above all, I am concerned that the likely demands on independent financial advisers, small firms, and on people who are regulated by the Financial Intermediaries, Managers and Brokers Regulatory Association or by the Insurance Brokers Registration Council to contribute to the compensation scheme could be such that they will either be driven out of business or will seek to become tied agents to protect their livelihoods. That would not be good for investor advice in the long term.
I do not expect my hon. Friend to respond to my comments tonight—I have raised a wider subject—but I am sure that he will understand that the debate provides an opportunity to remind him and the House that there are widespread concerns within our financial services industry about these matters. I am sure that my hon. Friend will understand why I felt that I should raise them.
10.32 pm
Mr. Anthony Beaumont-Dark: The Financial Services Act 1986 was introduced with the best of good intentions. I do not know whether it has actually worked, but it has been proved to be hugely costly. The costs run into hundreds of millions of pounds, but still the Levitts, the Polly Pecks and hundreds of other crooks still seem to get through. It is not that the Act is too strong—in some ways it is too weak. One of the great problems is that we have a system in which, before ne'er-do-wells can be brought to book, they must go through a vastly expensive and time-consuming legal system.
The Americans have something to teach us. Under their set-up, without having to go through their courts—their court process is much more long-winded than ours—they can fine people considerable sums. Salomons was fined $1·3 million the other day because of its ne'er-do-wells. That is a good thing.
If we should do anything, it is to make sure that, without all the vast expense, we give more confidence to
760
the individual. It is not the Government's fault if crooks abound. Given the right backing, the City is one of the best policemen of itself that there has ever been. Let us take compensation. When the stock exchange was only individual stockbrokers, it literally guaranteed all its clients against loss due to the malfeasance of any stockbroker, but today the limit is £40,000. Yet the cost of malpractising brokers is about 20 times more than it was before the Financial Services Act 1986 was introduced.
The Financial Services Act 1986 may be a step in the right direction but how much does it genuinely support and defend the small investor? Investors still seem to lose tens of thousands of pounds to crooks. People such as Adam Faith are allowed to continue giving advice in the Mail on Sunday. We all know what his advice is worth. It is worth what someone will pay him for it. Financial journalists should be much better controlled. Unless we bring them to book and keep much tighter control of them, including those who tip—most people who tip have bought for themselves beforehand—we shall not progress. The Act deserves support, but there is still an awfully long way to go.
10.35 pm
Mr. Redwood: I am grateful to my hon. Friend the Member for Chichester (Mr. Nelson) for his helpful comments in support of the Securities and Investments Board and this transfer of powers and to my hon. Friend the Member for Beaconsfield (Mr. Smith) for his favourable comments on the way in which the Government have progressively transferred powers to the SIB so that it can do the job that was envisaged for it when the House passed the Financial Services Act 1986—the FSA. I take note of his comments on explanatory notes. I, too, prefer explanatory notes that are intelligible and give all the information required. I shall certainly seek to achieve that next time.
My hon. Friend the Member for Ryedale (Mr. Greenway) was right to worry about threats to independent financial advisers in Britain which may be posed by certain draft European directives. He can rest assured that, if there is anything that I can do to stop those unfortunate drafts being passed, I shall do so. Anything that he, as a powerful advocate for that sector, and his friends in the sector can do to put our joint case to Brussels and make sure that enough member states support our just cause, will be welcome. We must make a combined effort to make sure that our case is fully understood time and again in Brussels so that the directive can come out in the right shape.
My hon. Friend the Member for Ryedale will be pleased to know that the Government are strongly committed to a strong independent sector for financial advice. He may have seen some reference in the past few days to my speech and a press release on the subject of commissions. That is another issue of importance to independent financial advisers. Both he and my hon. Friend the Member for Birmingham, Selly Oak (Mr. Beaumont-Dark) made the powerful point that the best protection for honest members of the profession—the vast majority—must be by the regulators finding the crooks and those guilty of misdeeds as quickly as possible in order to limit the losses, prevent hardship to retail customers and prevent the image of the entire industry being tarnished by the few wrongdoers.

761
That is the purpose of the Financial Services Act regime. As my hon. Friends have said tonight, there is evidence that such people are being found more quickly and that stronger action is being taken now that we have the regime. Both my hon. Friends can rest assured that I shall do anything in my power to make sure that the small minority who are guilty of misdeeds are brought to book, and that the regulators follow them as swiftly and completely as possible.
The hon. Member for Redcar (Ms. Mowlam) asked several questions. She asked why we were bringing these powers forward now. It is now that the SIB has requested the transfer of the powers. That is as good a reason as any. We have progressively transferred powers to the SIB as it has sought them. It has sought this important power and we are happy for it to have it. The SIB may have cases that are appropriate for this treatment.
The hon. Lady asked me about a specific case. She must know that I will not tell her about any specific case in such a sensitive area. It is no help to the regulators to alert people to possible actions against particular businesses. I shall stick to my usual practice of making no comment on individual regulatory cases, for the good reason—I hope that she approves—that it would only make the task of the regulator more difficult.
Ms. Mowlam: I accept the point, however frustrating that may be at times. Can the Minister see that the logic of his argument without specific cases is that, if he grants this power concurrently to the SIB now, it is because it has asked for it? The SIB must have asked for the power because it feels that it needs that power to do the job efficiently. If the power at present lies with his Department, one must conclude that the Department is not doing its job efficiently.
Mr. Redwood: That logic does not work. Now or in future, the SIB will know in detail about cases which the DTI has left it to handle, where it thinks that the particular power would be useful. It would be an unnecessary expense and a waste of time and trouble to transfer all that information, interrupt the investigations or transfer the intelligence when it would be easier for the SIB to do the task. The hon. Lady's smile shows that she well understands that that is how this works in practice and why the proposal has come forward now.
Mr. David Shaw: Keep her smiling.
Mr. Redwood: To keep the hon. Lady smiling may be difficult, but it brings us naturally on to the subject of her lunches. I am glad to hear that she is now lunching in the City and learning about the important challenges facing the City.
The hon. Lady asked why there had been so many consultative papers from the SIB and changes in the rule books. It is because this is a dynamic industry, with constant changes in the range and style of products and services, which therefore raises new challenges to the regulators. The regulators want to hear what the City practitioners and the retail interests have to say about these proposals before regulating, so they issue consultative papers. There have been changes in the rule books for that reason, and because the SIB has introduced its new settlement which is designed to produce shorter, simpler, more intelligible rule books. That required the
762
revision of the old ones, which were not satisfactory. I am sure that the hon. Lady, like me, will welcome that revision.
As for this being elastoplast, that is a silly image to choose. I wonder what surgery the hon. Lady is proposing. I ask her in every debate what this drastic surgery is that she would like to apply to the Financial Services Act.
Dr. Moonie: It is none of the House's business.
Mr. Redwood: So may it stand. It cannot be a serious criticism of the Government's policy if the alternative is not on offer and the House is not to be told what it may be.
The hon. Lady asked whether the action could take place against directors only, or also against others. She will be pleased to know that it could be taken against anyone who contravenes the FSA in the way specified in the order. That could include accountants or lawyers breaking the conduct of business rules and profiting by so doing. She can rest assured that this applies not just to directors, but to anyone who undertakes crooked work at the expense of the public.
The hon. Lady asked about the costs of compensation. I understand some of the worries of FIM BRA members in that connection. The main protection against unreasonable escalation of the compensation fund must be tight regulation to detect these things as early as possible, to nip them in the bud before they become expensive.
Mr. John Greenway: Does my hon. Friend agree that there is a problem—I entirely take his point about not wanting to deal with specific cases—with some recent frauds that have come to light in which losses have been incurred before the Financial Services Act was put in place? Given the Government's extremely generous response to the losses incurred by clients of the Barlow Clowes affair, does he accept that the Government will have to think carefully about how these people should be compensated for losses incurred before the regulations were brought into force?
Mr. Redwood: The question of who is eligible for compensation under the new regime is for t he compensation fund. There may be cases that should be taken up with it on behalf of those who are seeking compensation. It is not for the Government to specify, as we do not run that fund.
As to whether the Government should do anything along the lines of the action taken in relation to Barlow Clowes, my hon. Friend will remember that there were special circumstances in that case. The most important point was the ombudsman finding against the Government. In the light of that and the number of people who had been affected, together with the concern expressed in the House about the matter, the Government decided to make the ex-gratia payment. I do not think that we can accept that, in all cases where there have been losses of any kind, at any date in the past, the Government should automatically make such payments. On that issue, I fear that I cannot help my hon. Friend as much as he would like.
I hope that I have answered all the questions raised, and I commend the order to the House.
Question put and agreed to.
Resolved,

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That the draft Financial Services Act 1986 (Delegation) Order 1991, which was laid before the House on 19th December, be approved.

STATUTORY INSTRUMENTS, &c.

  VALUE ADDED TAX
  Motion made, and Question put forthwith pursuant to Standing Order No. 101(5) (Standing Committees on Statutory Instruments, &c.).
  That the Value Added Tax (Construction of Dwellings and Land) Order 1990 (S.I. 1990, No. 2553), dated 13th December 1990, a copy of which was laid before this House on 17th December, be approved.—[Mr. John M. Taylor.]
  Question agreed to.

  NORTHERN IRELAND
  Motion made, and Question put forthwith pursuant to Standing Order No. 101(5) (Standing Committees on Statutory Instruments, &c.).
  That the draft Road Traffic (Amendment) (Northern Ireland) Order 1991, which was laid before this House on 18th December, be approved.—[Mr. John M. Taylor.]
  Question agreed to

Gas-powered Vehicles
Motion made, and Question proposed, That this House do now adjourn.—[Mr. John M. Taylor.]
10.45 pm
Mr. Tony Speller: I have already received two reactions in advance of my speech tonight on the possibilities of natural gas or hydrogen gas as a future fuel for vehicles.
The first reaction came from Mrs. Halliday, a lady whom I have never met and probably never shall. She telephoned me to say that, during world war two, methane-driven cars were used and that, in Wolverhampton, taxis ran on gas supplied by British Oxygen. I did not know that, and I am grateful to Mrs. Halliday for her helpful comments. I cannot say the same about the rather pathetic efforts of a local newspaper that managed the headline
"Chicken Dung Plan to Foil Saddam".
I have read and respected that paper for many years, and it is a pity that it can treat such a serious subject in such a flippant manner.
The majority of my speech relates to research that has been conducted in the United States. It is more fearful of oil shortages than the United Kingdom, for understandable reasons. When the United States had its first oil shock a few years ago, many Americans started to think about alternatives to total dependence on fossil fuels. Two thirds of the oil consumed in the United States is burned by motor vehicles, but at present there are no practical substitutes for oil. American experts say that the most likely alternatives to gasoline or diesel will be methanol, compressed natural gas and electricity.
The essence of the problem is the general lack of knowledge on the subject. In Britain, when a problem goes away, we tend to forget about it until it recurs. The problem about oil has resurfaced now because of the Gulf conflict.
As environmental problems become more serious, and are taken more seriously, natural gas becomes a more important fuel than those of us who use it for our central heating and cooking have ever thought. Apart from the sun, wind and water power, natural gas is by far the cleanest source of energy. It could be the fuel of the future for motor vehicles, which are the greatest cause of pollution on our streets now.
A refrigerator can run on electricity, kerosene or gas. It may surprise people to learn that most bits of machinery, including motor cars, can be run on such energy sources. We are used to conventional cars that use regular or unleaded petrol, or diesel. Most of us are aware that various forms of gas, mostly methane and gases derived from sewage, have been used in the past to power vehicles. I accept that such ventures have been undertaken mostly out of curiosity or to promote a particular enterprise. For some years, Anglian Water has used escort vans powered by its home-produced gas. Such project have been experiments rather than serious operations.
Electric milk floats are common, but no one has ever produced a battery sufficiently compact, swift to charge and sufficiently powerful to take a full sized vehicle on the road for the normal distance required in the working day.
Why gas? At this time of the Gulf war, which is at least partly oil-related, there is every logic in looking for a basic

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fuel for vehicle propulsion that has its source in those countries that do not want to be dependent upon oil from the middle east.
In future, electricity generation will turn largely to gas in a co-generation role as opposed to the previously more conventional coal, or the long expected, but frankly distrusted, nuclear power.
In the past, everyone has assumed that gas, a finite substance, would run out at the end of this century or not far into the next century. For basically commercial reasons, gas stocks have always been underestimated. There is no doubt now that supplies in Europe alone are enough to keep us going well into the middle of the 21st century.
Gas is far less damaging to the environment than coal, or petroleum products. If I seem to swing between electricity generation and vehicle propulsion, that is simply because, for far too long, we have lived under a rather stratified form of science which assumes that energy for electricity generation comes from coal or nuclear and that energy for motor cars comes from petroleum products. When pressed, experts may accept that there are possibilities in gas or electric or even steam-driven vehicles, but these are considered unimportant, almost amusing, relics of past research.
The problem with new ideas is always that no one knows whether they will work in practice, even though they work in theory. So it was with gas vehicle propulsion. But no longer, although I was surprised to have to travel to Minnesota to find such propulsion not only acceptable but becoming almost mandatory at state level as a method of economic and environmentally sound propulsion.
In the USA, with its speed limit of 55 miles an hour, gas propulsion is acceptable, and I find it similar to diesel. Certainly gas-propelled vehicles have slower acceleration, but they have a good cruising speed and excellent fuel economy.
Ingenuity is the hallmark of the new gas engineer. In Minnesota, gas spigots are installed free of charge in people's garages if they possess a gas-powered car. They drive in at night, fill up overnight and drive off next morning without needing to fill up at a service station.
New service stations are now required to have facilities to fill up vehicles with gas as well as with diesel or petrol. That is all very sensible, but by and large none of these things have happened or even been accepted in this country as yet.
I chair the all-party alternative energy group, which is not against any form of power generation but which is much in favour of conservation—that famous fifth fuel—and the use of fuels which are efficient, economic and low in pollutants. Alas, I do not expect in my time to be able to offer the House a water-propelled car, but one day H20 may be split into hydrogen and oxygen and we shall get our gas fuel, if not from the tap, then at least from a local source.
I submit that gas propulsion is not only not eccentric but the logical future method of propulsion. It is economical to use, although I have no doubt that my right hon. Friend the Chancellor would soon slap the equivalent of a petrol tax on if it became a standard fuel. But my argument in favour of Government support, and Government consideration is also a request to the private commercial sector to consider whether it should not look at something unusual but not illogical. We have gone from theory to practice. For many years, we have been able to
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convert petrol-driven cars to gas, with a bulk cylinder filling the boot. Indeed, one of my hon. Friends has run a vehicle twice around the clock using gas. Yet I suspect that hon. Members did not know that or realise that the effect had been achieved.
For years, this conversion method has worked, and now the Americans are building cars with engines designed to run on gas. That is the logical way forward. General Motors has manufactured such a car, codenamed GMC 3500, I believe. Toronto Transit uses 40-seater buses that run entirely on natural gas.
Mrs. Sandra Hale, commissioner of administration in Minnesota, has said:
"The Mideast crisis has made energy conservation fashionable again but, in Minnesota state, good energy conservation never went out of fashion. When our Country's petroleum supplies were threatened in the 1970s, Governor Rudy Perpich initiated energy conservation measures that carried the State through the crisis. These measures became a permanent part of State operations because they made sense for the longer term. The results have been impressive."
Energy-efficient compact vehicles predominate. Minnegasco is the local natural gas distributor in Minnesota. With its help, more than 20 commercial fleets have been converted to natural gas propulsion.
Also in the United States of America, the solar energy research institution in Golden, Colorado, is working on clean fuels such as the hythane system, whereby natural gas is blended with hydrogen towards an ultimate clean vehicle fuel. Nearer home, according to Automotive Engineering, May 1990, BMW is researching hydrogen-powered engines for some of its luxury cars. It will take a long time to make the full transition, but the beginning is there.
In the United Kingdom, British Gas recently acquired—with good timing, in view of my debate—Consumers Gas of Ontario, Canada's largest gas distribution company. British Gas is far from being some dreary old utility. It is now a huge international group seeking, treating and selling gas worldwide. Its chairman, Mr. Bob Evans, is a frequent visitor to the House, and confirms that the new company is fully committed to caring for the environment. He intends to spend $30 million in Canada on research and development, much of which will concentrate on the use of gas to power vehicles.
There are other good things to come. The Ricardo Group, a British research and development company, claims that natural gas is a high-quality engine fuel, and that existing petrol engines can be easily converted to use it. But that is the past. The group is now testing prototype gas bus engines on behalf of the co-Nordic natural gas project. This involves a consortium of five major Scandinavian urban bus companies, with the tightest emission controls anywhere in the world. There is already acceptance that the system works, and people are experimenting—but not shouting the news as loudly as I would like. British Gas, the leader, has been in the field for many years, and is now committed to research and development.
Mr. Colin Shepherd: I am grateful to my hon. Friend for allowing me to put a question to him in his very interesting debate. As he said, I have been running my car on liquid petroleum gas for 13 years to remarkably good effect in terms of engine wear, and of feeling clean environmentally. However, it has been enormously frustrating to see the negative pricing policy adopted by

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retailers, plus the Government's negative taxation policy, lead to a steady reduction in the number of outlets, so that liquid gas is now hardly available throughout the country. I am fortunate that I still have access to it.
Does my hon. Friend agree that British Gas and others must develop an aggressive, competitive and outgoing positive policy, and should educate retailers of the advantages? Above all, the Government must adopt a positive taxation policy that will result in it being in the interests of the public to use that alternative and very effective fuel.
Mr. Speller: I can only agree with my hon. Friend, and I thank him for his endorsement of the policy that I suggest.
The Government showed great sense in their tax policy on unleaded fuel—which, although it may be more expensive to produce, is cheaper to buy. That was the first good sign. If interests such as British Gas are serious—I believe they are—they will have to develop a countrywide distribution system, though probably starting in London and the south-east. If that is not done, the whole concept will come to naught.
Manufacturers must follow the lead of General Motors and acknowledge the need for clean-fuel cars. Britain and the whole of Europe are now prepared to talk clean motoring as well as just plain motoring.
It would also be good to be independent of oil supplies from the middle east and to lower particulate emissions. Although Britain has its own oil resources, it has even greater gas resources. I ask my hon. Friend the Minister not for cash—which makes a pleasant change these days—but to support such research as may be sought. On the commercial side, it is important for the Government not just to make an appraisal of the possibilities but to level the playing field between the various forms of motor fuel. I believe that gas is the logical fuel of the future. We have it. It should be cheaper. It is certainly cleaner—and it makes good sense to many of us to use it.
10.59 pm
The Minister for Roads and Traffic (Mr. Christopher Chope): I congratulate my hon. Friend the Member for Devon, North (Mr. Speller) on obtaining this debate, because he has made a stimulating contribution on a subject of which many hon. Members are blissfully ignorant. I am sure that in the years to come many people will read his speech and will say that, as chairman of the all-party alternative energy group, he has yet again made a valuable contribution. Certainly gas-powered vehicles are an interesting subject and one that we must take seriously in our search for more environment-friendly road transport.
At present, the Government are targeting vehicle emissions. We are successfully encouraging the use of unleaded fuel and we have recently agreed in the European Community, tough emission standards for all types of new car which will take effect from the end of next year. We are now seeking much tighter standards for lorries. Later this year we shall introduce a totally new emissions check into the MOT test to encourage people to keep their engines in tune.
Alternative fuels are a good example of an area where one needs to consider the trade-off between the advantages
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and the disadvantages. Solving one environmental problem by switching from one fuel to another can often create another—or there may be an economic penalty. The objective must be to get the balance right in each case. So what role do we see for alternative fuels?
A very wide range of alternative fuels is in principle possible, but there are no panaceas. It is necessary to consider not only the environmental benefits but other factors, such as the practicality of the fuel for road vehicle use, availability, refuelling and supply infrastructure and cost. The possibilities include LPG, natural gas, electricity and hydrogen, among others. Some of those are already in use to a limited extent in some countries—for example, natural gas in New Zealand and electric vehicles in this country, where by world standards we have a large fleet of electric vehicles. Others, such as hydrogen, are at the experimental stage.
The Government recognised many years ago the benefits of natural gas as a clean, convenient fuel for domestic and industrial use. Since the exploitation of resources in the North sea began in the early 1960s, gas production has increased steadily. In 1989, 45 billion cu m was being produced from 28 offshore gas fields and one onshore field, at a value of about £2·1 billion. Four new offshore fields began production in 1989. There are reserves of between 560 and 1,770 billion cu m, which is estimated to be between 10 and 30 years' consumption at the current rate of 55 billion cu m per year.
Recently, concerns about global warming have focused attention on the use of fuels such as natural gas instead of the conventional fossil fuels, oil and coal. These fuels have low carbon-to-hydrogen ratios and produce less carbon dioxide, the principal greenhouse gas.
The successor companies to the Central Electricity Generating Board—PowerGen and National Power—are considering projects to generate electricity from natural gas using energy-efficient combined cycles of gas and steam turbines. A number of other companies are making similar plans in competition with PowerGen and National Power.
As my hon. Friend will know, the Road Vehicles (Construction and Use) regulations permit the use of gas as a fuel for road vehicles, but the only type of gas allowed by the regulations at present is liquefied petroleum gas. This can be stored in liquid form at comparatively low pressures—about 250 psi—and has been used as a fuel in motor vehicles for many years, but not in large quantities, at least in this country.
The use of any other gaseous fuel in road vehicles is prohibited by the regulations. This is because the detailed requirements cater only for gases at the sort of pressure found in LPG systems.
Mr. Colin Shepherd: Will my hon. Friend recognise and look into the argument that I tried to make in an intervention on my hon. Friend the Member for Devon, North (Mr. Speller)—that liquid petroleum gas has not been more widely used in this country, as compared with Holland and western Canada, because the taxation structure has been wrong, and the Government have had a large role in the lack of uptake of gas-powered vehicles?
Mr. Chope: I shall certainly look into that. It is a responsibility of my right hon. Friend the Chancellor of the Exchequer. I know that my hon. Friend has first-hand knowledge of this subject. I am sure that my right hon.

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Friend the Chancellor will be interested in his experience, and I will ensure that these comments are drawn to his attention.
Compressed natural gas has to be stored at very much higher pressures—up to 3,000 psi—and compressed to very high pressure to store reasonable quantities in the vehicle. This requires much stricter standards for safe storage and use. That is why the number of vehicles using CNG is very small, and the number of special approvals that we have given is also very small. If the demand for the use of CNG were to increase, we would have to consider an amendment to the Road Vehicles (Construction and Use) Regulations, setting out standard specifications for the gas systems to be used.
We permit reputable organisations to experiment with CNG in road vehicles, but they must apply to the Department of Transport for approval, with details or the gas system that they propose to use, its design specifications and how they propose to inspect and test it. At present, to my knowledge, three organisations hold such approvals, with 29 vehicles running on the roads. In the past, some have experimented with gas reclaimed from waste disposal areas, but all are now obtaining their supplies from the gas mains.
British Gas plc recently said that it wishes to promote the use of CNG in road vehicles, and it is setting up an organisation for that purpose. As my hon. Friend said, it is currently setting up field trials in the United Kingdom which will make use of experience in the Netherlands and Canada—the latter arising out of the recent acquisition of Consumers Gas. A great deal of work will need to be done before any results become apparent, but my officials are working in collaboration with British Gas to formulate suitable specifications for the gas system for inclusion in the regulations. Early developments in this market are likely to be in relation to commercial vehicle fleets having the relevant characteristics, and that is where the important environmental benefits will be most evident. I must stress, however, that it will be a long time before vehicles running on CNG are commonly available for the private motorist.
Natural gas has advantages, in that it is abundant and its CO2 emissions can be about 30 per cent. lower than those of petroleum fuels. However, natural gas, or methane, is itself a greenhouse gas, and must be compressed or—in what are at present rare cases—liquefied when used in vehicles. One survey taking possible methane losses and compression and liquefaction into account puts the relative greenhouse emissions of natural gas used in vehicles at 19 per cent. lower for CNG and 15 per cent. lower for liquefied gas, compared with those in vehicles using conventional fuel.
But that advantage is largely offset if account is taken of performance and space standards. That stems partly from the weight and space penalties associated with storage of CNG in the vehicle, and the likelihood that any transition to CNG vehicles would involve dual fuelling, so that cars use petrol or CNG.
Mr. Speller: I am interested to know why a vehicle running on gas must be able to run on petrol as well. No one has suggested that a vehicle that runs on petrol should also be able to run on gas. I hope that my hon. Friend will also mention the great advantage of independence from suppliers in the middle east.
Mr. Chope: There is certainly no reason why a vehicle should not run solely on CNG, but, if the supplies are not readily available, it is understandable that many vehicle owners will want dual fuelling. As, during the transition, only a limited amount of CNG would be available, most vehicle owners would demand dual-fuelling facilities.
New petrol-fuelled cars will soon be much cleaner, with the introduction of stringent limits which will reduce noxious emissions by about 80 per cent. compared with the current limits. A petrol engine meeting those new standards would require accurate fuel management and a catalytic converter, but would produce lower noxious emissions than one powered by natural gas without a catalytic converter. There is no fundamental technical reason why cars using natural gas cannot be designed to meet the new emission limits, but clearly any relative percentage differences between fuels will then be of much less importance in absolute terms, as only very low emission levels are permitted.
In the case of heavy-duty engines for lorries and buses, the very low levels of particulates associated with natural gas may prove a useful advantage, but the CO2 advantage in use relative to diesels is lower. Operators of such vehicles are very sensitive to range and cost factors, but in some countries CNG has been used to a limited extent in bus fleets. Some fleet operators may find the special refuelling facilities and operating costs worth while, and the drawbacks of reduced load space and reduction in performance acceptable for their particular operations.
But even in countries where CNG has established a reasonably large presence numerically, the vast proportion of vehicles still use conventional petroleum fuels. On that basis, it is likely that the vast majority of vehicles in the United Kingdom will continue to use petrol and diesel in the medium term. The small proportion of the fleet using natural gas would have a limited benefit in reducing CO2 emissions, but that would not be a complete solution.
My hon. Friend mentioned the desirability of alternative sources of energy. The point is well taken, but we must have regard to practicalities and, with the best will in the world, I do not think that it would be possible at present to convert the whole British vehicle fleet to take CNG, although, if my hon. Friend has his way, it will come about sooner rather than later.
Mr. Colin Shepherd: Is it not a question of the whole process being incentivised, to use a horrible word? If those who set the parameters wish there to be an increase in the use of alternative fuels, a structure must be devised for it, just as happened with unleaded fuel—to great effect.
Mr. Chope: My hon. Friend has a point, but the point made by hon. Friend the Member for Devon, North was that in Minnesota there is quite widespread use of CNG.. I understand that the tax on petrol in the United States is much lower than it is here. Therefore, one cannot necessarily say that in the United States there is an incentive to use CNG which does not exist here. Due to the higher petrol taxation in this country, one might expect there to be greater incentive to use CNG.
This is a welcome debate, and I am grateful to my hon. Friend the Member for Devon, North for his positive contribution to it. Improvements in the efficiency of conventional vehicles, which constitute the vast majority of the fleet, still offer the greatest potential benefits in helping to limit CO2 and other emissions from road

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transport. We wish to encourage the development of vehicles powered by currently unconventional sources of energy. We see some long-term potential for CNG vehicles in our continuing efforts to improve the environment.
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Question put and agreed to.
Adjourned accordingly at eleven minutes past Eleven o'clock.