Commons Sitting of 2 July 1991

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

  CATTEWATER RECLAMATION BILL
  Queen's Consent, on behalf of the Crown, signified.
  Read the Third time, and passed.

  LONDON LOCAL AUTHORITIES BILL [Lords]
  Read the Third time, and passed, with amendments.
  NORTH YORKSHIRE COUNCIL COUNCIL BILL [Lords]
  As amended, considered; to be read the Third time.

  COMMERCIAL AND PRIVATE BANK BILL [Lords]
  Order for Second Reading read.
  To be read a Second time tomorrow.

  BRITISH RAILWAYS BILL (By Order)
  Order for consideration, as amended, read.
  To be considered on Thursday 4 July.

Oral Answers to Questions
  DEFENCE

    Defence Industry
    Mr. Thurnham: To ask the Secretary of State for Defence what representations he has received about the future prospects of the British defence industry; and if he will make a statement.
    The Minister of State for Defence Procurement (Mr. Alan Clark): I have received a number of representations from hon. Members and others.
    Mr. Thurnham: Will my right hon. Friend promote the best interests of all sectors of the British defence industry, including those of missile manufacturing? Does he agree that defence jobs are more secure with the policies of this Government than with those of the Labour party?
    Mr. Clark: My hon. Friend is entirely right. From my own conversations with management and work forces, I can confirm that the defence industry knows well what its prospects would be if Labour ever got its hands on the defence budget.
    Mr. Ashdown: Does the Minister realise the damage that is being done through uncertainty, speculation and rumour as a result of the Government's continued inability to make a decision on the EH101? Will he say today when that decision will be made? I plead with him, for goodness sake say something, because the uncertainty now risks
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    killing jobs, undermining orders, threatening European co-operation and delaying Westland providing a piece of equipment that the Navy desperately needs to do its job.
    Mr. Clark: The right hon. Gentleman, for constituency reasons, chooses to depict that problem in lurid colours. In doing so, he is being somewhat irresponsible because he knows that this is a highly important procurement decision in which a number of factors must be weighed carefully. As the right hon. Gentleman also knows, we are appointing a prime contractor. In the fullness of time, the results of the tender will be made known. It is not for me to accelerate that process, because all the data must be weighed carefully and I do not want to cut any corners.
    Mr. Burns: Is my right hon. Friend aware that the English Electric Valve company in my constituency is a world leader in the manufacture of third-generation image intensifiers? Does he agree that there is something inherently unfair in the fact that, although American companies can tender or compete for supplying the British armed forces with equipment, the EEV cannot compete in the American market to supply the Americans with image intensifiers because the American Government have stressed that non-American companies cannot take part in the tendering process? I should be extremely grateful if my right hon. Friend could look into the matter and try to persuade the American Government to have a more realistic and fair tendering policy.
    Mr. Clark: My hon. Friend draws attention to an extremely important point. He says that the American Government "have stressed" that that cannot happen, but there is no hard and fast rule. From time to time, cases of United States arms procurement protectionism occur and I am always glad to have them drawn to my attention. I shall do my best to raise them in the appropriate quarters in Washington, if my hon. Friend will give me fuller details as soon as possible.
    Sir Patrick Duffy: Is the Minister aware that, in contradistinction to the offensive remarks about the Opposition that were made by the hon. Member for Bolton, North-East (Mr. Thurnham), 1 million skilled workers are engaged in defence work and that, although they understand the need to restructure the forces and for the "Options for Change" exercise, their trade union leaders are concerned that the outcome will bite deep into the core of our high-tech industries? What, then, of our future design teams and professional and highly skilled workers?
    Mr. Clark: Defence spending is set to decline by only 6 per cent. over the next three years. That is no more serious an impact than that which many specialised industries suffer in a time of recession. Equally, I would not want to deny the validity of much that the hon. Gentleman says, because he has deep and sympathetic experience in this area. My hope and belief is that redundancies in highly skilled sectors will rapidly be absorbed in the civilian sector, particularly as the recession turns round and we move back to greater prosperity.
    Mr. Latham: Will my right hon. Friend ensure that when redundancies are about to be announced at Ministry of Defence workplaces, hon. Members are informed of them in advance? Is he aware that I have received letters from trade unions at 35 Base Workshop, Old Dalby, in my

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    constituency, saying that they were told about redundancies, yet the constituency hon. Member was not aware of them?
    Mr. Clark: This is the first that I have heard of that. Had my hon. Friend written to me or my right hon. Friend the Secretary of State we would have tried to deal with the matter circumspectly. In so far as any discourtesy has been suffered or felt by my hon. Friend, I apologise to him.
    Mr. Rogers: In the past two years I have asked the Secretary of State about the Government's defence sales to Saddam Hussein and Iraq. Even in yesterday's debate on the Army, Ministers denied selling arms and defence materials to Iraq. Now that we can prove—the circumstances are outlined in the Financial Times today—that International Military Services Limited, a wholly owned subsidiary responsible directly to the Secretary of State, has been selling arms to the Iraqis, will the Minister make a statement and apologise for misleading the House?
    Mr. Clark: The House does not like Members to read from prepared matter at Question Time, but I hope that I shall be forgiven for doing so on this occasion. IMS was given a licence by the Ministry of Defence to market the design in 1979. A contract was signed in 1981 for the design and supervision of the construction, supply and installation of safety and monitoring equipment. The contract was completed in 1987, as there was a two-year delay in letting the construction contracts, which went to a South Korean firm. Originally, the facility was due to be finished in 1984, and the safety and monitoring equipment was shipped in 1983. All necessary Government approvals were obtained prior to IMS signing the contract in 1981.

    Rapid Reaction Force
    Mr. Ian Taylor: To ask the Secretary of State for Defence what progress has been made towards establishing a European rapid reaction force.
    The Secretary of State for Defence (Mr. Tom King): Western European Union Ministers met in Luxembourg on 27 June. Copies of the communiqué issued after their discussions have been placed in the Library of the House. The Ministers agreed to put work in hand on a future operational role for the WEU. The United Kingdom intends to make a positive contribution to all aspects of the work. One possibility would be the establishment of a European rapid reaction force.
    Mr. Taylor: With the effective ending of the Warsaw pact by the signing of the protocol in Prague yesterday, and with the grave events in the Balkans which threaten the security of the rest of Europe, it is natural that attention should be moving to the idea of a European rapid reaction force. Does my right hon. Friend agree that the justifiable interest of the European Community in stretching the discussion of security to defence would be best protected if the European rapid reaction force were based within the Western European Union, thereby providing a bridge and keeping the command structure under NATO?
    Mr. King: We believe that the prime defence of Europe lies in the NATO alliance to which our forces are assigned. We see that there could be circumstances outside the NATO area where there could be value in European
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    co-operation and where our forces—not separate but separable from NATO—could, perhaps in combination with other European countries, have a part to play in certain circumstances, and we are discussing that aspect in the WEU.
    Mr. Dalyell: Would it be part of the task of a rapid reaction force to search out Iraqi nuclear facilities at Tuwaitha, Abu-Gharaib or wheresoever the Iraqis have taken nuclear facilities in Iraq? If so, would part of its task also be to try to monitor what has happened? Is it not incredible that we make such a fuss about carefully stored nuclear waste, but that no one has monitored the nuclear situation in Iraq after the bombing?
    Mr. King: The hon. Gentleman is well aware of resolution 687. There seems to be clear evidence that Saddam Hussein is already in breach of it, because it requires him to disclose full information about his nuclear materials. We have made it absolutely clear that we intend to implement resolution 687, which involves urgent on-site inspection and the destruction, removal or rendering harmless, as appropriate, of all the items concerned.
    Mr. Brazier: Does my right hon. Friend agree that, in the rapid reaction corps concept, readiness is crucial and that any idea that parts of units committed to it, such as that of the 4th squadron in each tank regiment should be mothballed, would be fatal to the whole design? Does my right hon. Friend further agree that there would be considerable disquiet on both sides of the Chamber if cuts in generals, admirals and civil servants were prevented while cuts in our frontline forces went through?
    Mr. King: On the first point, I have already made the distinction between separable and separate forces. I agree that one would not allocate one squadron in a regiment to the European rapid reaction force while the other remained in NATO. The concept of the European rapid reaction force is comparable to what happened in the Gulf. We transferred to the Gulf forces assigned to NATO, such as the 1st British Armoured Division. I see no concept of having separate forces or different bits of separate regiments. If my hon. Friend will watch this space, he will hear very shortly about our proposals for streamlining the Ministry of Defence, which will meet precisely the objectives that he has in mind.
    Dr. Reid: Does the Secretary of State agree that it is fitting and proper that the rapid reaction force should be placed under British command? Is it not a testimony to the expertise of our troops and the esteem in which they are held by our allies? If the rapid reaction force points to the future need for highly flexible and mobile troops, will the Secretary of State take this opportunity to dispel newspaper reports which have spoken of the emasculation of the Parachute Regiment by the closure of its headquarters, one battalion and all the reserve battalions?
    Mr. King: In the debate on the Army yesterday, my right hon. Friend made it clear that we would not comment on any regiments until I make a statement, which I hope to do before the House rises. I have already made it clear that I hope to publish the White Paper on defence estimates early next week. I hope to make a statement on the details of the Army restructuring before the summer recess.

    HMS Endurance
    Mr. Gill: To ask the Secretary of State for Defence if he will make a statement about the future of HMS Endurance.
    The Minister of State for the Armed Forces (Mr. Archie Hamilton): HMS Endurance has entered her routine maintenance period on return from the Antarctic. She will have an extensive structural survey during her maintenance period. A decision on deployment this winter will depend on the results of that survey.
    Mr. Gill: As one of several Members of this House who has had the pleasure and privilege of visiting the Falkland islands, may I say that any decision not to maintain or replace that vessel will send shock waves through the islands' population? Will my right hon. Friend, in his future deliberations on that subject, further consider the much heightened awareness of people in this country about developments in the south Atlantic generally and their interest in having the Antarctic region maintained in pristine condition?
    Mr. Hamilton: I completely accept that at present the Endurance has a much wider responsibility than merely for the Falkland islands. As for the shockwaves, Falkland islanders are greatly reassured about their future defence interests by the massive investment that we have made in Mount Pleasant airport and by the ability that we have to reinforce at very short notice.
    Mr. William Ross: Although it is well recognised that the other vessels in the south Atlantic have a defence capacity far in excess of anything that Endurance might be able to provide, is it not a fact that the Royal Navy has to carry out quite a lot of scientific work and that that work can be done only by an ice-strengthened ship? Will the right hon. Gentleman assure us not only that Endurance will be kept in service for some years to come, but that when it finally has to be withdrawn from service there will be a suitable replacement vessel both to carry out the scientific work and to offer a public demonstration that we will maintain the defence of the Falkland islands by keeping a vessel down there permanently?
    Mr. Hamilton: I can give the hon. Gentleman the guarantee that he needs: we shall continue to defend the Falkland islands—our investment there is great. I accept that HMS Endurance has a certain value to the Royal Navy, but I am afraid that we shall have to wait and see how things pan out. The future of Endurance depends a great deal on the survey work being done on her at the moment.
    Mr. Wilkinson: Why is my right hon. and gallant Friend so coy about this matter? That is not a role that usually befits him and it is most uncharacteristic of him. Would it not be much better if the Government and the Ministry of Defence recognised that we had a long-term strategic interest in Antarctica and the Falkland island dependencies and that the balance of power round the Horn depends on our presence there?
    Mr. Hamilton: I am trying to be as forthcoming as I can. The fact remains that a survey is being carried out on the ship and we shall have to wait for its results before we can say with any clarity what the ship's future will be.

    RAF St. Athan
    Mr. John P. Smith: To ask the Secretary of State for Defence whether he will consider making enhanced payment to civilian employees at RAF St. Athan to prevent them from being recruited by competing employers.
    The Parliamentary Under-Secretary of State for Defence Procurement (Mr. Kenneth Carlisle): The existing civil service pay system provides sufficient flexibility to enable pay rates to be adjusted to overcome local recruitment and retention problems. There is no evidence that any such adjustment is necessary at present in respect of the civilian employees at RAF St. Athan, and I cannot speculate about what may happen in the future.
    Mr. Smith: I thank the Minister for that reply. As yet, there is not a problem at RAF St. Athan, but, given the pay differentials of up to 25 per cent. between the Ministry of Defence and civil aviation companies, there is a danger that when British Airways builds its unit at Cardiff-Wales airport there could be mass poaching of skilled precision engineers from RAF St. Athan. That will have serious defence implications. I hope, therefore, that the money is available should the air officer commanding maintenance unit call for special payments.
    Mr. Carlisle: To make enhanced payments there must be clear evidence that existing rates are failing to attract adequate staff. There are no significant staff shortages at present and we have no problems with recruitment. Should the situation take a turn for the worse, however, we shall take the necessary action to maintain proper employment at St Athan.

    Kurdish Refugees
    Mr. Harry Barnes: To ask the Secretary of State for Defence if he will make a statement on the assistance given by his Department to Kurdish refugees.
    Mr. Tom King: The initial deployment of RAF Hercules and Chinooks played a major part in getting vital supplies to the refugees in their desperate plight. That assistance was then backed up by 3 Commando Brigade Royal Marines, who helped ensure the safe return of refugees from the mountains. Throughout, they have worked closely with the other coalition forces and the aid agencies in this remarkable achievement. There are at present about 1,200 United Kingdom personnel in northern Iraq and nearby in Turkey, providing reassurance to the Kurds. We are consulting our allies on a suitable security presence in the area to underline our continuing interest in preventing a recurrence of the previous persecution.
    Mr. Barnes: The Kurds of Iraq feel that they are being left unprotected. British troops may pull out too early. What is to be done about assisting the United Nations to pick up the role that allied troops have been playing, so that the United Nations can deploy the necessary forces and resources? Will the British Government see that the United Nations is helped in that way?
    Mr. King: Many of the Kurds who have expressed such concern are alive only because of the action that saved the lives of hundreds of thousands. To my personal knowledge and from observation, those people would be dead if

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    Operation Haven had not been launched. I draw the hon. Gentleman's attention to the answer in which I said that we would consult our allies about a suitable security presence in the area. My right hon. Friend the Prime Minister has also spelt out our criteria, which we expect to see established.
    Sir Alan Glyn: Is my right hon. Friend prepared to allow troops to remain there until the United Nations has a force that is capable of guarding the secure areas where Kurdish refugees are staying?
    Mr. King: We certainly look for a significant presence by the United Nations, but we would not rely on that alone. We are considering in what ways we can back that with a security presence in the area and effective warnings to Iraq that any renewed repression would meet the severest response. We want to see a continuing deterrent military presence in the region to back those warnings, and the maintenance of sanctions against Iraq. That is the strategy which was spelt out by my right hon. Friend the Prime Minister and it has wide support among our allies.
    Mr. Ron Brown: As Turkey wishes to join the European Community, will the Secretary of State, when he next meets his counterparts in Turkey, advise the Turkish Government that it would be helpful if the Kurds in Turkey were not persecuted, as they are at the moment?
    Mr. King: The hon. Gentleman will be aware that all the relief efforts, which have resulted in the saving of hundreds of thousands of lives, owe a great deal to the support and help that we have had from the Turkish Government in connection with our bases. It would not have been possible to mount the rescue operation without the active support of the Turkish Government, to whom I pay tribute. That co-operation was given at a time when Turkish policemen and others were being shot by Kurdish terrorists.

    Directorate General of Quality Assurance
    Mr. Devlin: To ask the Secretary of State for Defence if he will make a statement about the future of the directorate general of quality assurance.
    Mr. Ian Bruce: To ask the Secretary of State for Defence if he will make a statement about the future of the directorate general of quality assurance and the outcome of the study into relocating this to Portland.
    Mr. Kenneth Carlisle: We are continuing to examine, in the context of "Options for Change", exactly what technical services currently provided by the directorate general of defence quality assurance will be needed in future and how they might best be supplied.
    Mr. Devlin: Is my hon. Friend aware that the indecision in his Department since November has resulted in one of the five flagship sites on Teesside effectively being blighted? I urge my hon. Friend to bring his review forward as quickly as possible so that we can get on with an alternative development if necessary or with the development of the facility if he decides to send it to us.
    Mr. Carlisle: I recognise that my hon. Friend is anxious for a decision. So am I. However, substantial sums of
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    public money are at stake and it would be wrong to announce a decision until we have thoroughly concluded our studies.
    Mr. Bruce: I wonder whether the Ministry of Defence has got this quite right, because surely no other buyer would seek to put its quality assurance in a building that was separate from its other functions. Surely it would be far more sensible to locate geographically close to suppliers, users and research facilities—in Portland for instance.
    Mr. Carlisle: There is a considerable overlap between our research establishments in the technologies of quality assurance. A very good centre is in Portland in my hon. Friend's constituency. As I have said, in view of the high expenditure that is envisaged for any move, we must finish our studies properly before reaching a decision on the future of DGDQA.
    Mr. Frank Cook: We are well aware that considerable sums of public money are involved in the decision. A letter from the National Audit Office to my hon. Friend the Member for Workington (Mr. Campbell-Savours) dated 19 June categorically states:
    "A core project can be accommodated within the available finance."
    That is some sort of reassurance. Will the Minister guarantee that a decision will take account of the numerous youngsters who have been taken on for training as a result of the original decision to take this to Teesside? Will he also take account of the numerous instances of other Government relocations that have been directed away from Cleveland on the strength of 1,500 jobs that were to go there in the first place?
    Mr. Carlisle: Of course we shall take various circumstances into account, but under "Options for Change" our aim has to be to reduce the support areas within the Ministry of Defence in line with the armed services. This means that we have to look carefully at our plans to ensure that they are truly justified in the new circumstances.
    Mr. Cartwright: Will the Minister spare a thought for the quality assurance staff at Woolwich, who have been operating under a cloud of continuing uncertainty for 15 years? How does he expect them to do a good job when they still do not know where they and their families will end up? Is not it time that the Government took a decision on this and, having taken it, stuck to it?
    Mr. Carlisle: I am aware of the need to come to a decision on this important issue as soon as we can.

    Regimental System
    Mr. Cran: To ask the Secretary of State for Defence what implications his "Options for Change" review will have for the regimental system.
    Mr. Tom King: Even though numbers will reduce under "Options for Change", the Government have made it clear that they believe in, and will maintain, the regimental system.
    Mr. Cran: My right hon. Friend has, rightly, not ruled out the possibility that some regiments and battalions may have to be disbanded. Does he agree that the criteria for that purpose should be not whether the battalion or

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    regiment has an illustrious past or a name but rather how well it has recruited and retained its members? Will he consider the possibility that, if some battalions and regiments have to be disbanded, they could be transferred to the Territorial Army and the name retained for other use?
    Mr. King: That possibility has been considered. The Army is pursuing this matter in consultations and I am sure that that is the right way to go about it. One of the most objectionable remarks made in the debate yesterday was that I should have intervened and decided, without consulting the Army or giving it the opportunity to determine this difficult change for itself. In the end, I have to take the responsibility and I shall have to stand at the Dispatch Box and justify the decisions reached. Therefore, it is far better for me to invite the Army to see whether it can arrive at the most satisfactory solution for the Army.
    Mr. Martlew: Ministerial guidelines say that the criteria used for the reduction in the infantry should take into consideration previous amalgamations and the geographical area for recruitment. Is the Minister aware that there will be great anger in Carlisle and throughout Cumbria if there is a move to disband the King's Own Royal Border Regiment? Will he give a guarantee that he will look carefully at keeping the county regiments, because there will be even greater anger if the two Yorkshire regiments of the King's Division are left unchanged?
    Mr. King: I have no doubt that there will be great anger in the hon. Gentleman's constituency about possible changes to regiments. I wonder how much anger there would be if he or any of his constituents knew that his Front-Bench spokesmen have said that they see no further relevance in the regimental system.
    Mr. Boscawen: When my right hon. Friend exercises his responsibility in making decisions on the future of the regimental system, will he bear in mind the fact that a central part of that system is the training of recruits and refresher training of non-commissioned officers and officers? The system that has been built up over many years is excellent, so will my right hon. Friend not discard it easily or lightly?
    Mr. King: I give my hon. Friend the absolute undertaking, which I know is shared by the Army board and those involved in the exercise, that none of those decisions will be taken easily or lightly. These are serious issues. Almost all right hon. and hon. Members recognise that changes have to come, but they raise difficult issues which we shall consider seriously.
    Mr. Menzies Campbell: The Secretary of State will have had the opportunity to consider at leisure the speeches made in the debate yesterday, including, I hope, the most telling contribution from his predecessor, the right hon. Member for Ayr (Mr. Younger). Does the Secretary of State realise that he could remove a great deal of the anxiety that is felt about possible changes to regiments if he were to make it clear now that the ability to recruit and to retain will be regarded as the primary factors in determining whether regiments continue?
    Mr. King: I am grateful for the thoughtful and constructive contribution from my predecessor in this office. He said, fairly, that when the Army board puts forward its proposals and I announce to the House
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    whatever decisions are taken upon them, we must make clear the basis and the reasons for those proposals. The decisions will not be easy. There is great concern for the loyalty and all the other features of the regimental system that we cherish which will be at stake. However, I fully accept the comments of my right hon. Friend the Member for Ayr (Mr. Younger).
    Mr. Hague: Given the importance of the ability to attract and retain good recruits, even though my right hon. Friend cannot comment, will he note that, with the sole exception of the Gurkhas, the Green Howards is the best-recruited regiment in the British Army and the last locally recruited regiment in the north-east and that its amalgamation or disbandment would be a serious blow to the recruiting ability of the Army?
    Mr. King: My hon. Friend is joining others in giving a positive demonstration of why we believe, unlike Opposition Members, that there is much in the regimental system that is worth preserving and that we intend to keep.
    Mr. John D. Taylor: Yesterday the nation recalled the battle of the Somme some 75 years ago. The event was particularly commemorated throughout Northern Ireland because of the sacrifices of Ulster people and southern Irish people, both Roman Catholics and Protestants. Will the Secretary of State ensure that those great traditions are retained by maintaining the Royal Irish Rangers?
    Mr. King: The right hon. Gentleman will have heard me say earlier that I shall not comment on individual regiments, but I understand why he raises that point. As he will know, I have personal experience of the excellent work and traditions of that regiment.
    Mr. Couchman: My right hon. Friend is entirely right to stress the importance of consultation with the Army and taking the onus for the difficult decisions on the Army; but at the end of the day, political decisions will have to be made and when he as Secretary of State makes those decisions, will he bear it in mind that the large regiments, particularly the Queen's and the Anglian regiments, are the result of amalgamations in past years and that they must remain as viable regiments in the future?
    Mr. King: My hon. Friend puts well one of the concerns that I know are felt by many regiments that have already faced amalgamation, lost their traditional names and gone forward to establish a considerable esprit de corps and reputation of their own. I understand that point very well.

    Explosive Handling Jetty
    Dr. Godman: To ask the Secretary of State for Defence, pursuant to his answer to the hon. Member for Greenock and Port Glasgow of 21 May, Official Report, column 456, if he is in a position to outline the steps he proposes to take in order to deal with the delays in the explosive handling jetty construction programme; and if he will make a statement.
    Mr. Archie Hamilton: I have nothing to add to the answer that I gave the hon. Gentleman on 21 May—that the explosives handling jetty construction programme has been subject to some delay and we are currently examining what further steps are necessary in order to maintain the programme.
    Dr. Godman: It is more than three years since I first criticised the consultants, Rendel, Palmer and Tritton, for their unwise recommendation concerning the use of concrete instead of steel for the construction of the jetty. Is not it the case that because of the use of concrete the cost of the jetty has risen from £98 million to £141 million and it will not now be completed until 1993–94? Is not that nothing short of a scandal?
    Mr. Hamilton: I am aware of the hon. Gentleman's continuing interest in the project. It is true that the whole apparatus will have to be strengthened more than was originally envisaged; however, I do not know that that can be blamed on the use of concrete rather than steel. We are now taking all possible measures to rectify the problems and to ensure that the entire explosives jetty comes on stream in time for our Trident boats.
    Mr. McFall: Has not the project almost careered out of control because of the 56 design changes that have been made? I have been contacted by contractors in my constituency who are owed millions of pounds, while at the same time they are being chased by the Treasury and others for VAT payments. Will the Minister give an undertaking that he will contact other Departments to ensure that that stops? More important, will he investigate what I said in last Thursday's Royal Navy debate about sub-contractors, so that their affairs can then be put in order?
    Mr. Hamilton: The project has certainly not "careered out of control". As the hon. Gentleman says, changes have been made in the design contract; as I said, we are now trying to rectify the position. If sub-contractors have individual problems relating to payment, I should be grateful if the hon. Gentleman would write to me. We can then investigate them.

    Ships and Submarines
    Mr. Douglas: To ask the Secretary of State for Defence if he will make a statement on the current number of ships and submarines in service with the Royal Navy.
    Mr. Kenneth Carlisle: The Royal Navy currently has three aircraft carriers, an escort fleet of around 50 destroyers and frigates which is being reduced to around 40, two assault ships and other specialist amphibious shipping, and a substantial flotilla of smaller warships. In addition to the four Polaris boats, we currently have 14 nuclear-powered submarines and seven diesel electric submarines.
    Mr. Douglas: Does the Minister accept that we are witnessing a continued decline in the number of naval vessels? Can he tell us how many naval bases we shall require and whether Rosyth will continue to be among their number?
    As for submarines, will the Minister tell his hon. Friends and some Opposition Members who signed the sixth report of the Select Committee on Defence, that no one in Scotland wants a nuclear submarine, decommissioned or otherwise, as a museum piece? If they want it, why do they not stick it in the Thames?
    Mr. Carlisle: The House should be reminded that, in 1989 and 1990, the Labour party conference voted to cut British defence spending by £9 billion a year, or over a
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    third of the current defence budget. The brutal truth is that that would lead not to tenders for the order for three frigates—which we have just achieved—but to the destruction of most of the Navy and of hundreds of thousands of jobs in naval bases, industry and elsewhere.
    Mr. Trotter: Does my hon. Friend accept that there will be a continuing need for first-line technology in the Royal Navy and that that will require an ongoing building programme? Does he take on board the fact that it is essential for the shipbuilding industry to have some idea of the number of ships likely to be ordered over the next five to 10 years?
    Mr. Carlisle: I understand what my hon. Friend is saying. I am certain that Swan Hunter will produce an impressive tender for the three new frigates.
    Mr. Boyes: Will the Minister consider the establishment levels required on ships and submarines and, in particular, the deployment of Wrens on submarines, so that the skills for which they have been trained can be fully utilised? Women must have equal opportunities; if they wish to serve on submarines, the necessary arrangements should be made without delay.
    Mr. Carlisle: As I said last Thursday, we are studying that possibility.
    Dame Janet Fookes: Many of us think that the fleet is already being cut to the bone without any further reductions. How many of the ships that are currently in service can go to sea at present and are not in the process of being refitted or repaired?
    Mr. Carlisle: As I said, our policy is to order new ships to replace the older ones and thus to have a more effective Navy. I remind the House that, should Labour's plans ever be implemented, the effect on our equipment and defence budget would be catastrophic.

    Private Barry Hemingway
    Mr. O'Brien: To ask the Secretary of State for Defence if he will make a further statement on the death in the Falkland islands of Private Barry Hemingway.
    Mr. Archie Hamilton: I very much regret the sad death of Private Hemingway, but I am sorry that there is nothing that I can add to what has already been made known to the hon. Gentleman in his correspondence with my Department.
    Mr. O'Brien: Following the tragic death of Private Barry Hemingway in a hospital in Montevideo from a virus developed as a result of diving in the Falklands, his family are at a loss because they have asked several questions but the answers are still outstanding. His mother was told on 8 August last year to be ready to fly out to her son, but that failed. She asked for more information and was told that it was not available because the satellite had broken down. People in Germany were made aware of her son's death before she was.
    Will the Minister conduct an inquiry into the death of Private Barry Hemingway and will someone call to see the family so that they can be given the information first hand? Can we have answers to the questions that the family has put to me and that I have put to the Minister, but which have not yet been answered?
    Mr. Hamilton: I am sorry if some of the hon. Gentleman's questions have not yet been answered. The provision to fly Mrs. Hemingway to see her son was on the basis that he was recovering from the original viral pneumonia that was diagnosed. It was only subsequently that his condition deteriorated and he had a cardio-respiratory arrest, which, tragically, killed him. I shall look again at the correspondence that we have had with the hon. Gentleman and answer any questions that have not yet been answered. Somebody will certainly visit Mrs. Hemingway.

  PRIME MINISTER

    Engagements
    Mr. Harry Ewing: To ask the Prime Minister if he will list his official engagements for Tuesday 2 July.
    The Prime Minister (Mr. John Major): This morning I had meetings with ministerial colleagues and others. In addition to my duties in the House, I shall be having further meetings later today.
    Mr. Ewing: Is the Prime Minister aware that the prospectuses for PowerGen and other privatised industries say that Her Majesty's Government do not expect to use their shareholding to vote on resolutions before the annual general meetings of those companies, but—this is the important point—that they reserve the right to do so? Will the Prime Minister, for once, act decisively, do as he did in the case of the chairmen of the banks and call in the chairmen and chief executives of all the privatised industries and make it clear to them that he will use the power given to him in the prospectus to intervene and stop the obscene salary increases that they are granting to themselves—or is this yet another example of all talk, all dither and no action?
    The Prime Minister: I have made clear my view on the large increases on a number of occasions. I have also made it clear that the freedom given in the prospectus is not to be used in that fashion. The hon. Gentleman has been told that before and I reiterate it now.
    Mrs. Roe: Will my right hon. Friend take time today to look into the effect on the employment of women of implementing the provisions in the social charter which relate to part-time work? Will not the social charter, which is fully supported by the Labour party, destroy job opportunities for women and restrict the flexibility of part-time work from which so many women benefit?
    The Prime Minister: I agree with my hon. Friend. We are able to support parts of the social charter, but the draft directions on part-time work would add substantially to the cost to British industry and, in so doing, cost the jobs of many people.
    Mr. Kinnock: Is the Prime Minister still certain that, as he promised just two weeks ago, Britain will come out of recession in the second half of this year?
    The Prime Minister: Yes, I still believe that we will see the economy move out of recession during the second half of this year. That view is echoed by a number of independent commentators and I see no reason to revise our previous forecasts.
    Mr. Kinnock: The engineering employers, steel makers, car manufacturers and retailers are all telling the Government in clear terms that the serious losses of jobs, output and capacity will continue for the rest of this year and even into 1992 and beyond. What evidence does the Prime Minister have to demonstrate that those people, who certainly live in the real world, are wrong?
    The Prime Minister: As the right hon. Gentleman knows, the latest CBI survey is precisely in line with the Red Book forecasts, which show that the economy will come out of recession in the second half of this year. The right hon. Gentleman will have seen that the G7 Finance Ministers agreed that the world economy was moving out of recession and back into growth. The impact of that will certainly assist our recovery in the second half of this year.
    Mr. Kinnock: As for the forecasts of recovery from the world recession, can the right hon. Gentleman tell us which other major industrial country has had a zero-minus-growth rate this year—[Interruption.] Under the policies of this Government—[Interruption.]
    Mr. Speaker: Order. Interruptions take a lot of time.
    Mr. Kinnock: Under the policies of this Government, a zero growth rate would be an improvement.
    Can the Prime Minister tell us which other major industrialised country has has a growth rate of minus 2 per cent. this year? What sort of recovery can the right hon. Gentleman look forward to, when every manufacturer in Britain clearly records a loss of capacity and of confidence that have eroded the British manufacturing base for the second time in 10 years?
    The Prime Minister: As for the long-term strength of British industry, the right hon. Gentleman should read the recent comment by the director general of the CBI. He said:
    "Virtually everything associated with our manufacturing base is better today than it was in the so-called 'golden era"'
    to which so many people look back fondly. The director general was right—that was the era of strikes, loss of delivery, lost market shares and Labour.
    Sir Ian Lloyd: My right hon. Friend will doubtless have had reported to him the serious news that the Japanese research and development total exceeded £9 billion for the first time last month. Of that sum, £1·5 billion is spent by the five largest semiconductor firms in Japan, exceeding the total research and development expenditure on semiconductors of the United States and western Europe. Had this matter been considered by the Advisory Committee on Science and Technology, which my right hon. Friend chairs? If it has, does that committee share the views of the congressional committee on semiconductor dependency about the serious implications that that has for the defence and the industrial base of the western world?
    The Prime Minister: My hon. Friend rightly makes the point that the huge research and development in the private sector has brought about the remarkable improvement in Japanese productivity in recent years. I shall chair a meeting of ACOST in the near future and I expect that that is one of the matters that we shall discuss.
    Mr. Nellist: To ask the Prime Minister if he will list his official engagements for Tuesday 2 July.
    The Prime Minister: I refer the hon. Gentleman to the answer I gave some moments ago.
    Mr. Nellist: Is the Prime Minister aware that 16-year-olds on youth training have had their allowance frozen at £29·50 for several years and that, had their allowance risen since 1978 in line with average earnings, it would be £68·60 today? How does the Prime Minister think that those youngsters feel when they again read reports in the press that the heads of newly privatised industries such as PowerGen are awarding themselves pay rises of up to 163 per cent? Does the right hon. Gentleman think that those youngsters are worth so much less than Mr. Wallis?
    The Prime Minister: As I said a few moments ago, I have made my opinion on these large increases perfectly clear. As the hon. Gentleman will be aware, we have a more substantial employment package for young people than this country has ever had and it was added to just a fortnight ago by my right hon. and learned Friend the Secretary of State for Employment.

    European Single Currency
    Mr. Janman: To ask the Prime Minister what assessment he has made of the benefits accruing from a single currency in the European Community to the United Kingdom and other European Community countries either now or in the future.
    The Prime Minister: Theoretically, a single currency within a single trading area can save industry the risks and costs of exchange rate transactions. It also saves ordinary travellers cost and inconvenience. Of course, all those advantages apply to a common currency such as that which the United Kingdom has proposed.
    But the economic benefits of a single currency can be exaggerated and they carry economic risks with them. If widely divergent economies are forced into the straitjacket of a single currency, the strains in the system may be unsustainable.
    Mr. Janman: I am grateful to my right hon. Friend for that reply. Was he in the Chamber last week to hear the critical but interesting observation that a federal state bears three distinguishing marks? One of those marks is the existence of a single currency and of a central bank. Does my right hon. Friend agree that the sentiments behind that observation, made by the right hon. Member for Bethnal Green and Stepney (Mr. Shore), fly in the face of the Labour party's policy on Europe?
    The Prime Minister: I entirely agree with my hon. Friend. It is clear that the Labour party is split on the question of Europe.
    Sir Russell Johnston: If the Prime Minister is saying that he agrees that a single currency is acceptable in principle, is not it also logical that a European central bank should control European-wide interest rates?
    The Prime Minister: What I have said repeatedly about a single currency is that if it is market driven and if it is required, it is acceptable to us in principle. However, as the hon. Gentleman will have heard me say yesterday, we have maintained our reserve on the prescriptive single currency which is at present before the Community.
    Mr. Fayell: With my right hon. Friend's successful Luxembourg conference behind him, will he reject any new proposals to interfere with the Government's right to tax, to spend and to fix interest rates, as otherwise the non-imposition of a single currency could be but a hollow victory?
    The Prime Minister: We are still at the very early stage of negotiations on economic and monetary union. I have already made it clear that I am as jealous as any other hon. Member of the rights of the House.
    Mr. Spearing: Is the Prime Minister aware that last Friday I asked the Financial Secretary to the Treasury what studies had been made into the benefits for the United Kingdom of economic and monetary union? He answered by referring in column 541 to a written answer that he had given to me on 7 December at column 216. Both answers showed that no study had been made of the benefits. As the First Lord of the Treasury, will the Prime Minister tell us why that is so?
    The Prime Minister: I set out in my original answer to my hon. Friend a few moments ago what the theoretical advantages of a single currency would be. The hon. Gentleman may care to read that answer.

    Engagements
    Mr. Hayward: To ask the Prime Minister if he will list his official engagements for Tuesday 2 July.
    The Prime Minister: I refer my hon. Friend to the reply that I gave some moments ago.
    Mr. Hayward: Will my right hon. Friend take time to consider the impact on income tax of a massive increase in public spending? Will he in particular say whether he has received any detailed written response to the analysis of the Labour party's programme which was issued by the Chief Secretary to the Treasury about a fortnight ago?
    The Prime Minister: My right hon. Friend makes a telling point. I can confirm that I have received no such written response. The Opposition are remarkably coy about their spending plans. These days they set great store by the Financial Times, but, as that newspaper said recently:
    "Any Labour Government would face clear choices: either unsustainable borrowing, or significantly higher taxation, or a great many disappointed hopes for higher public spending"—
    or, of course, all three.
    Mr. Eadie: To ask the Prime Minister if he will list his official engagements for Tuesday 2 July.
    The Prime Minister: I refer the hon. Gentleman to the reply that I gave some moments ago.
    Mr. Eadie: In view of the Government-inspired vendetta against the miners and their union, which is now in disrepute, will the right hon. Gentleman give us an assurance that we are not on the verge of another scandal? As the Government have authorised Rothschild bank, Touche Ross and Geoffrey Chancer to advise the Government on the privatisation of the coal industry, will the Prime Minister give us an assurance today that the £6.5 billion miners pension fund will not be used as bait to sell off our coal industry?
    The Prime Minister: There is no vendetta against the miners. If the hon. Gentleman had listened to Question Time a few days ago, he would have heard of the number of miners in Nottinghamshire, for example, who now earn well over £20,000 a year, so little is the vendetta of the Government.
    Mr. Barry Field: To ask the Prime Minister if he will list his official engagements for Tuesday 2 July.
    The Prime Minister: I refer my hon. Friend to the reply that I gave some moments ago.
    Mr. Field: May I refer my right hon. Friend to my ten-minute Bill on 29 June 1988, at column 399 of the Official Report, when I proposed financial penalties on parents of perpetual truants? In the process of introducing
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    the Bill, I referred to the 1985 Home Office report on parental supervision and delinquency. Has not the case been proved that if parents are careless of the whereabouts of their children, the children are more likely to offend? Is not it high time that we tightened up the rules on truancy? As my old friend, ex-prison governor and Isle of Wight broadcaster C. A. Joyce used to say, "I never met a criminal from a loving and caring home."
    The Prime Minister: My hon. Friend raises an important issue. It is vital that parents fulfil their duty to secure their children's education. As my hon. Friend will know, under the provisions of the Criminal Justice Bill, the maximum fine for the parents of truants will rise to £1,000. We are very concerned to bring an end to truancy and, through that and other policies, we will seek to do so.

Asylum
3.31 pm
The Secretary of State for the Home Department (Mr. Kenneth Baker): With permission, Mr. Speaker, I should like to make a statement. My noble and learned Friend the Lord Chancellor will be making a similar statement in another place.
The number of people seeking asylum in the United Kingdom has risen sharply, from 5,000 a year in 1988 to more than 30,000 in 1990. From January to May this year, 21,000 applications were received—a rate of nearly 1,000 a week. In the light of that increase, the Government have been examining asylum arrangements, and I would like to inform the House of our initial decisions.
Britain has a long tradition of providing refuge for people who face imprisonment, torture or death because of their beliefs or ethnic origin. But for hundreds of millions of people who live in disordered countries or under totalitarian Governments the answer to their problem does not and cannot lie in emigration to the west.
Last year, about 500,000 people applied for asylum in Europe. Numbers of this kind cannot be sustained year after year and go far beyond what was envisaged when the present international arrangements were established.
Fear of persecution is no longer the dominant element for many asylum seekers. In only a small minority of cases in the United Kingdom are the applicants shown to have a "well-founded fear of persecution", as required by the terms of the 1951 United Nations convention on refugees. The convention is an instrument of last resort, designed to protect life and liberty from immediate threat. It does not confer an unfettered right to travel the world and settle in the country of one's choice. It does not oblige parties to facilitate, still less to encourage, the arrival of asylum applicants. We cannot allow immigration control to become optional, nor must we let the institution of asylum to be undermined by abuse.
Across Europe, Governments are having to review their procedures and to provide additional resources to cope with the unprecedented weight of numbers. I am, of course, discussing the problem with our EC partners. In the United Kingdom, we have decided to take the following action.
First, we want to make it absolutely clear that the United Kingdom is not normally prepared to entertain claims from individuals who have failed to claim asylum in the first safe country that they reached. If individuals arrive here who could have safely claimed asylum elsewhere on their way to the United Kingdom, they will be sent back to that country for the claim to be dealt with there. The only exception is where the applicant has such close links with the United Kingdom that his or her claim should be considered here. In particular, applicants who arrive from other European Community countries should claim asylum there. The asylum convention that we signed in Dublin last year deals with these matters. We shall strengthen procedures at seaports and airports, particularly at Dover, to identify such applicants.
Secondly, the Immigration (Carriers' Liability) Act 1987, through charges on airlines, discourages the acceptance of passengers who do not have valid travel documents. I recognise that many carriers have tried to comply with this, but other carriers are simply not doing enough. I am therefore laying before the House today an
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order doubling from £1,000 to £2,000 the charge payable by the carrier for each passenger who fails to produce valid documents. We shall increase our programme of training for airlines' staff to implement that Act.
Thirdly, my right hon. Friend the Foreign Secretary and I are exploring, with the co-operation of host Governments and airlines, other ways to improve document checks at certain overseas airports. We are willing to provide document specialists to advise carriers about the authenticity of travel documents, perhaps taking photocopies of travel documents for later verification. The police will continue to seek out corrupt agents who are operating in or through the United Kingdom, some of whom have already been prosecuted and convicted.
Fourthly, I am particularly concerned that asylum seekers can arrive here with no passport or other means of identification and must be admitted while their claim is considered. Evidence is coming to light that some asylum seekers have made multiple applications for asylum and have claimed social security benefits in a number of different identities. That is not acceptable. We have recently required asylum seekers to provide photographs of themselves. I am considering the contribution that fingerprinting might make in such cases. My right hon. Friend the Secretary of State for Social Security and I are examining how the opportunities for such fraud can be reduced. I will consider whether any further powers are needed.
Fifthly, the present system for handling refugee applications is excessively cumbersome. The system is now completely overloaded. There are 50,000 undecided cases and the backlog is growing at more than 3,000 cases a month. The average decision time is already more than 16 months and is getting worse.
On 26 April, I announced proposals to speed up the process. Accelerating the process will bring early justice to the genuine applicant and the speedier removal of many more bogus applicants. We are recruiting up to 500 staff for the immigration department at Croydon so that the initial determination can be made more rapidly.
At the earliest parliamentary opportunity, we shall introduce a Bill to allow a substantial acceleration and simplification of procedures. The present opportunities for delay through repeated representations and litigation will be substantially pruned.
Some asylum seekers already have the right to appeal to the immigration appellate authorities before removal, but some have not. The Bill will make it clear that all those who are turned down in the determination process will be able to appeal while they are in the United Kingdom. In addition, new procedural rules will impose time limits for the submission of material in support of claims. Decisions on cases will take into account such matters as the deliberate destruction of travel documents and entry by deception. We shall also carefully examine the credibility and good faith of applicants who make claims for asylum after they have resided in this country for some time.
My noble and learned Friend the Lord Chancellor will be recruiting extra adjudicators and other support staff to the appellate authorities to ensure that asylum appeals will be heard more quickly.
In order to assist the process of improving and streamlining adjudications, my noble and learned Friend the Lord Chancellor and I also propose to change the publicly funded arrangements for advice and representation in asylum and immigration cases. At present advice

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and assistance but not representation are available to those whose means qualify them under the legal aid green form scheme. We propose that in future advice and assistance, and where necessary representation before the immigrant appellate authority, should instead be provided by the United Kingdom Immigrants Advisory Service. We believe that this will enable those who genuinely need it to be given such help more economically and effectively than under the green form scheme. When the necessary arrangements are completed my noble and learned Friend the Lord Chancellor will bring forward regulations to effect the change, which will be subject to the affirmative resolution procedure.
In consequence of this, and as a result of the extra work which will flow from the changes that I have announced today, we intend to increase substantially the Home Office grant to the United Kingdom Immigrants Advisory Service. I am grateful that the United Nations High Commissioner for Refugees continues also to contribute to the costs of the refugee unit of UKIAS.
Our aim will be to decide all cases within a matter of months from start to finish. But in some cases it will be clear from the outset that the applicant has no claim to our protection. The Bill will provide for accelerated handling of clearly unfounded cases. An adjudicator will be able to dismiss an appeal without an oral hearing upon deciding that there is manifestly no substance to the claim.
I believe that the rapid rejection of a large number of unfounded claims and the early departure of those applicants from this country will play a major part in deterring further abuse of the process and allow us to tackle the dramatic growth in the number of applications.
The Government recognise their obligations to genuine refugees, but they also have an obligation to the British people to control immigration. Those obligations can pull in different directions. Our aim is to arrive at a balance between them which is in line with the realities of the modern world. I believe that the measures that I have announced today represent such a balance.
Mr. Roy Hattersley: The Home Secretary began by reminding the House of Britain's long and honourable tradition of providing asylum for genuine refugees. I am sure that the whole House will be determined that our reputation as a refuge for the oppressed should not be destroyed, and that we should not lose the genuine benefits that we have from time to time enjoyed as a result of providing asylum for oppressed minorities.
Much of the Home Secretary's statement concerned the necessity of ensuring that those who apply for asylum as a means of avoiding immigration regulations should not be allowed to enter the country. No sensible person could disagree with that intention—not least because the interests of the ethnic minorities in Britain are damaged by such conduct. However, does the Home Secretary agree that it is equally important to ensure that genuine asylum seekers are not denied entry because of the obsession with keeping out bogus applicants? [Interruption.] If any Conservative Members below the Gangway want to argue against the contention that genuine asylum seekers should be allowed into the country, I hope that they will say so as the debate progresses.
The Home Secretary will expect me to agree—and I gladly give my agreement—to his intention to take the strongest possible action against corrupt agents, and also
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his intention to increase the staff available for dealing with the work, although, clearly, we shall want to see the methods by which the work is to be dealt with, and the intended speedy procedures that the Home Secretary outlined.
The right hon. Gentleman spoke of multiple applications, but in a parliamentary answer we were told that the Government has no idea how many multiple applications had been made. Can the right hon. Gentleman provide evidence to justify even considering the idea of fingerprinting—a proposal which many hon. Members, I hope and believe, on both sides of the House will instinctively find repulsive. For such a proposal even to be considered there would need to be a great deal of evidence of multiple applications, and I repeat that the Home Secretary's most recent answer on the subject was that he did not know how many there are or how many there have been.
If the proper balance between providing illegal entry and allowing necessary asylum is to be achieved, the Home Secretary will wish to answer a number of detailed questions. I shall ask him some of them this afternoon, on the understanding that we shall debate these matters in the not-too-distant future.
I warmly welcome the Home Secretary's decision to extend rights of appeal to all asylum seekers in this country. I also welcome his decision to allow representation before immigration appeals tribunals. But we shall want to look with great care at the proposal that that representation and advice should be provided, not through legal aid or the green card system, but by extending the work of the United Kingdom Immigrants Advisory Service. Can the Home Secretary tell us his intentions in making that change? Does he believe that by giving UKIAS the responsibility for the work he will be providing extra advice for those who need and deserve it, or is he simply cutting costs in a way that may result in advice of the right sort and advice from properly qualified people not being available?
Will the Home Secretary describe how his fast-track proposals will work in practice? He said that, in some cases, it would be clear at the outset that the applicant had no claim to protection. Will it be the adjudicator alone —a single individual—who will make that decision, and will that decision be subject to any appeal? On the whole subject of applications for asylum, may we be assured that they will be subject to judicial review? In many of the stories dealing with the subject which have recently appeared in newspapers—I suspect, preparing the House for the Home Secretary's statement today—it has been suggested that the law will specifically prevent legal review. May we have the Home Secretary's assurance that that will not be the case?
I know that the Home Secretary is anxious to convince the House that his proposals will in no way be biased by racial prejudice. Of course I accept his assurances on that point, but he will understand that our judgment must be made on the basis of the way in which the regulations work in practice; that is far more important than the Home Secretary's good intentions.
So that we may examine these matters, may we have a general assurance about the procedures by which the changes in all the arrangements governing asylum and immigration are to be made? At the moment, thanks to the European Community, the Home Secretary meets his colleagues at two meetings—in Schengen and Trevi—

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which are described as private and which are in fact secret. Home Secretaries and Interior Ministers come to collective decisions for the entire Community and present those decisions, one by one, to their national Parliaments. Will the Home Secretary assure us that he will abandon that practice—it has been abandoned in Holland under the force of law—that he will report after his meetings with colleagues, and that he will enable the House to discuss his proposals before he agrees them with colleagues in Europe only to present them to the House on a take-it-or-leave-it basis?
Mr. Baker: The right hon. Gentleman has given a less than wholehearted welcome for the proposals but none the less there was some warmth in his remarks, I think. I agree with him that it is most important to ensure that the system operates effectively for genuine asylum seekers.
The right hon. Gentleman asked about multiple applications. There have been some multiple applications and some court cases, and I will provide details of them. The right hon. Gentleman may be interested to know that other countries are also experiencing such applications. In my talks with fellow Ministers in Germany and Holland, I have discovered that both countries have experienced multiple applications. Both use photographs and fingerprinting, and other countries, too, now use those techniques.
Perhaps unintentionally, the right hon. Gentleman cast a slur on UKIAS. [HON. MEMBERS: "No".] I was generous enough to say "unintentionally". The right hon. Gentleman said that perhaps this was a method of reducing the independent and fair advice available to immigrants. That is certainly not the case.
The right hon. Gentleman asked about the fast-track procedure. The procedure for the determination of all cases is as follows. First, the decision will be taken by an official of my Department, an official of the immigration department, as it is at the moment. Then there can be an appeal to an adjudicator under the existing system. Let me tell the right hon. Gentleman what we would envisage for fast-track cases. Some of them may be obvious. Some applicants from completely safe countries make bids for asylum. We have even had some applications from countries such as America and Canada, and those cases are dealt with very promptly. Other cases are not so obvious, but it may nevertheless be clear that the applications are from a safe country. We propose that, in instances where there is a manifest and clear case, the adjudicator should not allow a normal hearing.
The right hon. Gentleman also asked about judicial review. I assure him that we are not removing judicial review. It cannot be removed by an Act of Parliament. Asylum seekers who feel aggrieved may ask for judicial review. Once the appellate system has been set up, there may well be far fewer judicial review cases, but that is not for me to decide. In deciding whether there should be judicial review, the courts may well say, "There is a process of determination and adjudication which we think is sufficient." There would, however, still be the opportunity to ask for judicial review.
On the right hon. Gentleman's question about racial bias, may I make it absolutely clear that there is no element of racism in the proposals? The procedures and measures apply equally to Africa, India, the Indian subcontinent
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and Asia, just as they apply to eastern Europe, Bulgaria, Romania and Russia. I assure the House that there is no element of racial bias in the proposals.
Several Hon. Members rose—
Mr. Speaker: Order. I remind the House that this is an Opposition Supply day, with a heavy demand from hon. Members who wish to speak in both debates and that I have no opportunity to limit speeches I shall allow questions on the statement to continue until 4.20 pm in the knowledge that there will be a debate on it later. I ask hon. Member to ask single questions and not to go into the matter in detail.
Mr. David Shaw: Further to his point about Dover, will my right hon. Friend confirm that the immigration staff there will be given further assistance and support? Will he also confirm that the ferry company personnel, who are responsible for exhaustively checking documents but who sometimes find it difficult to know whether a document is valid, will be given full support and guidance from his Department's staff to minimise the potential financial effects on ferry companies which are endeavouring to support the law but which find it difficult to do so when documents are confusing?
Mr. Baker: Yes, I give my hon. Friend the assurance that he seeks. We are prepared to give, and are giving, advice and assistance to ferry companies on this difficult matter, given that documentation can be fraudulent and disposed of easily by being thrown overboard if one wants to appear in the United Kingdom without any documentation.
Dover is an important point of entry, but all the boats arriving at Dover come from safe countries. We shall be giving clearer advice to the immigration officers at Dover and at other ports to ensure that asylum seekers can be returned to a safe country if that is what they come from —with the exception that I outlined in my statement—that is, unless the asylum seeker has a close relative here and it would be better for the asylum claim to be discussed in this country.
Mr. Robert Maclennan: I realise that there has been a sharp increase in the number of people claiming asylum in the past two years, but does the Home Secretary acknowledge that during the first 10 years of the Conservative Administration 87 per cent. of those who claimed asylum received it? Does he further acknowledge that that was a high proportion and that it would be surprising if the proportion of those who are genuine asylum seekers is greatly different today?
Does the right hon. Gentleman recognise that he must at least approach this matter with much greater caution than his statement suggested? Does he acknowledge that a civilised country does not seek to balance fundamental rights and freedoms against immigration control, and that the genuineness of asylum applicants must be allowed to come through? Does he further recognise that there will be great concern about a number of his opaque statements today—about the curtailment of opportunities for litigation, about the accelerated decision making for cases that are allegedly manifestly unfounded, and, above all, about his decision to end legal aid?
Mr. Baker: The hon. Gentleman lives in an unreal world. At the beginning of the decade, applications for

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asylum were running at about 3,000 per year and the hon. Gentleman said that about 87 per cent. were granted asylum—his figures are not quite right—but the fact is that we are now receiving 50,000 applications per year. Is he really saying that the Liberal party would allow 87 per cent. of those? I have been careful to ensure that genuine applications from political refugees should still be considered with great care and scrupulousness.
Throughout our history we have always welcomed people fleeing from persecution, torture and imprisonment, but we are now faced—not simply in this country but in every country in Europe—with a different flow altogether. We are faced with great migratory pressures resulting not from political measures and considerations but principally from economic considerations. I believe that that will be one of the great problems of the 1990s for the whole world.
The hon. Gentleman said that he was worried about the various measures that I have announced today. I have not announced any reduction of access to litigation. He could not have heard my remarks. I pointed out that we have provided the possibility of appeal for those who did not previously have the opportunity of such an appeal and will continue to provide generous assistance for applicants.
Sir John Wheeler: Does my right hon. Friend agree that, without these measures, a serious social problem would develop in the United Kingdom, just as a serious problem is developing in Italy, Germany, France and other European countries? It is essential for us to have common sense procedures to protect the genuine refugee and to ensure racial harmony in the country as a whole.
Mr. Baker: I agree with my hon. Friend. If asylum-seeking is used as a means of evading immigration control, with all that that means, social problems can be created. Indeed, the social problems in this area that exist among some of our partners in Europe are much greater than are our problems. Both parties in this country have worked hard at this problem over the last 30 years and put a high premium on racial harmony, fairness and equality in our society. That is paying off. Unfortunately, some European countries that have not given so much attention to the matter are finding that already there is unacceptable violence and tension. I believe that we have behaved responsibly. We must act in this way to ensure that the true refugee can find asylum here and that bogus applicants are sent back to where they came from.
Mr. Bernie Grant: It is clear that the Government are intent on using the numbers game, both in immigration matters and for refugee and asylum seekers, to create a racist backlash— [interruption.]—because that is going to happen. I accuse the Home Secretary and the Prime Minister of creating a racist backlash by using the numbers game. Is it a coincidence that, at the same time that Jacques Chirac, the Gaullist leader, talks about having an overdose of immigrants, the British Government begin thinking in terms of the numbers game?
Regarding legal representation for asylum seekers, does the right hon. Gentleman believe that UKIAS will be able to cope with the number of refugee representations that it will have, particularly in view of the situation surrounding the Kurdish question?
Mr. Baker: To answer the hon. Gentleman's last point first, we shall be increasing the grant to UKIAS very substantially indeed—my officials are already in discussions with it—and that will involve the recruitment of more staff by UKIAS.
In answering the hon. Gentleman's main point, I utterly reject his claim that this is a racist policy. If he can see no distinction between the number of applicants seeking asylum at the rate of 100 a week and 1,000 a week, with all the tensions and difficulties that that can create, he does not understand the situation and the problem that could arise in this country.
I reaffirm to the hon. Gentleman, because he is listened to in his community, that the policy I have announced today—and I hope that his right hon. Friend the Member for Birmingham, Sparkbrook (Mr. Hattersley) does not agree with his remarks—does not distinguish on grounds of colour or race. It applies to asylum seekers, black or white, from wherever they come.
Sir Philip Goodhart: Does my right hon. Friend appreciate that providing housing and assistance to asylum seekers is putting a great strain on some London boroughs? Does he intend to seek powers to direct asylum seekers to housing outside Greater London while they are awaiting screening?
Mr. Baker: I do not think that we shall be able to do that. It is a matter for my right hon. Friend the Secretary of State for the Environment. None the less, I accept the thrust of my hon. Friend's remarks. The number of asylum seekers is some 100,000 a week. A stream of dependants may wish to follow, so it may be an understatement of the actual number. They impose considerable strains on housing and other social service requirements. The extent to which the measure will restrain that flow will ease the pressures on local authorities.
Ms. Clare Short: It is my experience that there has been a growth in bogus applications in recent years, which has led to a hardening of the response to genuine applicants for political asylum. I blame the Home Department for the growth in bogus applications because of the increased delay and because the Department deals with corrupt agents whom it does not seek out, arrest and prosecute. I have had cause to bring to the attention of the Home Department three such agents who trade in human misery, rip off enormous sums of money from poor families, mislead them and often tangle up their cases. Will the Home Secretary give a firm assurance that his Department will give much greater priority to arresting and prosecuting the evil people who trade in misery, rather than the poor people who become tangled up with them?
Mr. Baker: I thank the hon. Lady for what she has said and also for the information that she has passed to the Department. We investigate many such cases, but we require evidence. Some prosecutions have been mounted and have proved successful. As the hon. Lady knows, some unscrupulous agents operating in the United Kingdom will provide, for between £1,000 and £5,000, tortuous stories, bogus letters from home and bogus telegrams to try to show that the applicant has a case. In several instances we have found that the cases are totally bogus.

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I assure the hon. Lady that we shall seek out and prosecute those cases. Police investigations are going on at the moment, and I hope that they will be fruitful.
Mr. Michael Shersby: Is my right hon. Friend aware that many bogus asylum seekers are coming to Britain as part of a carefully planned racket, which is having a disastrous effect on the confidence of people in this country in the whole system? Like my hon. Friend the Member for Beckenham (Sir P. Goodhart), other hon. Members who represent London constituencies are concerned about the housing problems that could flow from that problem. Will my right hon. Friend therefore take that into account in framing the legislation?
Mr. Baker: The whole purpose of my proposals is to abate the flow of asylum seekers. That flow is not unique to our country but is happening throughout Europe, which represents an attractive area for people to live in. Great concern has been expressed by my counterparts, the Ministers of the Interior in Europe, because some of their borders are difficult to police, and whenever there is strife and trouble there is a possibility of more asylum seekers. Alas, some cases of political asylum are well founded because people are fleeing from persecution. But many other people are using asylum as a means of evading immigration control because they would simply prefer to live in Europe.
Mr. Keith Vaz: Having spent June muzzling dogs, the Home Secretary now wishes to spend July muzzling the rights of asylum seekers. Is not the crisis of the Government's own making? Why has the Home Secretary failed to act on the Home Affairs Select Committee's unanimous recommendation that more resources should be made available to the Home Office and Lunar house? Does he not realise that today's announcement of meagre extra resources will do nothing to end the current delay and will cause enormous hardship and misery to those caught up in this immigration mess? If a person is coming on a direct flight from Algiers to London, what is the safest country into which he or she can parachute before arriving in Britain?
Mr. Baker: When the hon. Gentleman reviews his remarks in Hansard tomorrow, I believe that he will consider them to be trivial and silly.
We have increased substantially the resources in the Home Office. On 26 April, I announced that we shall recruit 500 more civil servants for the immigration department and that is under way. We have taken additional office accommodation in Croydon, and, as a result of my announcement today, the Lord Chancellor will recruit further adjudicators. He recruited 30 last year and will probably recruit at least 50 or 60 this year because we want to speed up the process. There is no shortage of Government resources—this is extra money. Many safe countries lie between Algiers and this country.
Mr. Jonathan Sayeed: Will my right hon. Friend confirm that these proposals in no way reduce or diminish rights to first asylum? Will he therefore agree that, although the proposals reduce the opportunities for fraudulent applications, they also consequently speed up the chances of the genuine asylum seeker?
Mr. Baker: I can certainly confirm that. The proposals in no way weaken the principle of first asylum in the first safe country. It is often easy to determine when there is a genuine case. A decision can be made in a matter of days, and in some cases it is.
Mr. William Ross: Does not the fact that so many people want to come to this country prove that, despite what some folk may say or think, the United Kingdom is still one of the most pleasant and agreeable countries in which to live? That is one reason why the people of Northern Ireland strain every nerve to stay in it.
Does the right hon. Gentleman also agree that since so many nations, not least in eastern Europe, have moved towards democracy and the rule of law there is now great hope that other nations, including even those living under the most vile regimes, will move in the same direction so that the problem will diminish? That being so, does he agree that even genuine refugees should have the right to stay in this country only until their own countries become democratic and abide by the rule of law?
Mr. Baker: Quite a few refugees go back when their countries have calmed down, but many do not because they have become established here, they have jobs here, their children have been brought up here, they have often married here, and they have a right to stay. If they are given refugee status, they can apply for residence after four years and for naturalisation after seven. On the whole, they tend to stay; relatively few go back.
As for changes in totalitarian regimes, the figures for May were encouraging: there were virtually no applications for refugee status from Poland or Czechoslovakia, but there were still applications from Bulgaria and Romania because those regimes are still basically totalitarian and represent a threat to some of their citizens.
Sir John Stokes: Is my right hon. Friend aware that I am wholly in favour of genuine refugees finding asylum in this country? Is he further aware that I am part English and part Huguenot? The Huguenots made a great contribution to the life of this country. Is he also aware that the people in my constituency, which is near that of the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley), welcome these arrangements as fair and sensible?
Mr. Baker: I am interested to learn of my hon. Friend's lineage. Clearly he comes from one immigrant refugee family that did not return to France. I very much agree with his sentiments.
The proposals that we have introduced today are a sane and sensible way of dealing with a unique problem which, unless we deal with it, will grow considerably in the next 10 years.
Mr. Andrew Faulds: Does the right hon. Gentleman realise that this negative policy can be justified or excused only if the countries of the developed world ensure that the economies of the underdeveloped world are helped to perform more satisfactorily and are relieved of the immense international debt foisted on them by us?
Mr. Baker: The hon. Gentleman knows perfectly well that we direct large amounts of our aid to some of the most troubled countries of the world. For example, the extra

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sums that we provided for the Horn of Africa during the past year showed what a troubled state that part of the world is in. A large number of asylum seekers from Somalia, Eritrea and Ethiopia are still applying to enter this country. I assure the hon. Gentleman that we shall continue to support those economies and try to make them more viable. The prospect of economic development will hold many of these people in those countries. The disparities between the third world and western Europe are likely to remain for a long time. Therefore, the magnetism of Europe will exert a strong pull for a long time.
Mr. Ivan Lawrence: I congratulate my right hon. Friend on the timely good sense of his statement. With about 50,000 people and their families waiting to come here, a high proportion of whom are bogus, the statement will have the support of the overwhelming majority of the British people. Despite the criticisms of some Opposition Members, it is clear that, however much we may tighten up the rules and make them more efficient, the British nation remains one of the world's most fair-minded and tolerant countries. The hon. Members for Tottenham (Mr. Grant) and for Leicester, East (Mr. Vaz) should recognise that fact.
Mr. Baker: Many asylum seekers wish to come here and go through our procedures because they recognise that they will be fairly treated in the process of determination and fairly treated by our courts and our social security system. I entirely agree with my hon. and learned Friend, but that does not mean that all third-world countries should regard Europe as the answer to their problems. There must he a re-establishment of balance in some parts of the world, otherwise the flow will continue.
Ms. Diane Abbott: I represent a part of London that from the turn of the century has offered a home to genuine refugees, whether they were fleeing from tsarist Russia or, as at the moment, from Somalia.
The Home Secretary has told us how he intends to criminalise people fleeing from war, torture and famine and how he intends to cut across due process. What support does he plan for communities such as those in Hackney which have welcomed genuine refugees and have faced housing and education problems as a result? He is criminalising refugees, but what will he do to help them?
Mr. Baker: Once again the hon. Lady does her cause no good by using extravagant words that make a travesty of the proposals. We already provide a great deal of assistance to refugees through the social security system. Many refugees are also housed, and many people who have been on the housing waiting list for a long time do not rejoice when they learn that a refugee who arrived a week before has been given housing before them.
Mr. Tim Janman: My right hon. Friend knows that I have long been urging him to take the sort of measures that he has announced today. I congratulate him on an excellent statement. I urge him completely to ignore the ridiculous, pathetic and, frankly, boring Opposition taunts. Does he agree that some of the people who will be most grateful for his measures are those who are already in this country and greatly resent those who seek to gain entry through what are in effect illegal and deceitful means?
Mr. Baker: This morning I spoke to a white Englishman who told me that he had married into a Pakistani family. He said that his relations in Pakistan greatly resented the extent to which people were abusing refugee status and trying to jump the queue when he was trying to get some of his relations in under our immigration laws. One hears about many such problems.
Mr. Peter Shore: The right hon. Gentleman has given overall figures, which are certainly large, of the increase in refugee applications in the past three years, but he has given no breakdown of those figures. Does he agree that, particularly in the last year, a substantial number of refugees have fled from appallingly war-torn, civil war and famine-stricken areas such as Somalia, the Sudan and Ethiopia? If that is so, we still face a great problem, but it is wrong for the Home Secretary to give the impression that we are dealing simply with the problem of people who behave criminally and cheat. These people have genuine problems, and they need help.
Mr. Baker: We have a great deal of correspondence on the problems of the right hon. Gentleman's constituency and the large numbers of immigrants there. If the proposition is that the citizens of every country that is poor, underdeveloped or going through a bit of trouble should have a right to move en masse into western Europe, I do not believe that any country, or group of countries, could sustain that.
The right hon. Gentleman asked for a breakdown of the figures. Of the 4,000 who came in May, 500 applications were from eastern Europe and China, 2,500 were from Africa, and 1,000 from the Indian subcontinent and Asia.
Dr. Ian Twinn: Does my right hon. Friend accept that the country will wholeheartedly reject the accusation of the hon. Member for Tottenham (Mr. Grant) that these are racist measures? Does he further accept that British people, of whatever colour, will warmly welcome these proposals as a genuine attempt to strengthen the rights of political asylum, and that political asylum seekers will look forward to hearing more from the Government about attempts to track down those who cynically abuse asylum seekers for their own financial gains?
Mr. Baker: There are many bogus applicants, such as people whose identities change after the examination. For example, one Angolan claimed that he had been tortured and gave all the evidence, but, after six months, said that he came from Zaire and wanted to go back there. Many people in Britain will welcome what I have said today because it is a demonstration of the openness and fairness with which we shall be guided when dealing with this problem.
Mr. Max Madden: Is the Home Secretary aware that the United Nations High Commissioner for Refugees was in Committee Room 12 this morning, and that he said that so long as war and famine existed there would be those who sought refuge, and that so long as blood-thirsty tyrannies existed there would be those who sought political asylum? Is he aware that the impression given by today's statement—I wonder what prompted him to make it today—is that he is helping

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to create a fortress Europe, the door of which will be slammed shut in the face of those seeking refuge from war, famine and political tyranny?
What safeguards will there be to ensure that those seeking political asylum are allowed to register a claim? Will people be able to apply for political asylum after entry, and will applicants in those rare cases in which judicial review is granted be able to remain in the United Kingdom until a decision is reached?
Mr. Baker: The hon. Gentleman asked whether people who make applications after they have entered the country will be allowed to remain. Of the 4,000 who applied in May —the pattern is roughly the same for the other months —about one third applied at airports and seaports and two thirds at the immigration offices in Croydon. That is to say, they entered the country as legitimate travellers—visitors, students and business people—and claimed refugee status when the time allowed for their stay had expired. In the adjudication process, there will have to be careful examination of whether the nature of a country has changed in the time that an applicant has been here, or whether he just likes the prospect of an extended stay.
Sir Timothy Raison: Can my right hon. Friend confirm that the appeals system that he announced today will apply to all who land in this country and that it fully meets all our international convention obligations?
Mr. Baker: I can give my right hon. Friend an assurance on both points. Until today, about one third of asylum seekers had no access to the appellate system under the immigration procedures. That will now be ended, and everyone will have access. If people apply within the country, the process will be finished within the country, and adjudication will take place and a decision will be reached before they are removed, if the decision is that they should be removed.
Mr. David Winnick: Is the Home Secretary aware that, despite what he said, there is bound to be concern among Labour Members that genuine cases could be harmed? We are aware that, for example, the then Tory Government treated those fleeing from Chile in 1973–74 in one way, but when the Labour Government took power they recognised the genuine refugees in a far more meaningful way.
As a former employee, and later chairman, of the United Kingdom Immigrants Advisory Service, I welcome
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the increased funding for it. I have every confidence in the organisation. While I recognise, and partly agree with, the points made by my right hon. Friend the Member for Birmingham, Sparkbrook (Mr. Hattersley), about legal aid and feel that he was right to make them, I wonder whether the Secretary of State has consulted UKIAS about his announcement. Does it accept that it can take on the increased work load, bearing in mind the obvious difficulties?
Mr. Baker: I make it clear that Ministers do not influence decisions about which countries are safe or which regimes are politically unacceptable. The process of determination is in the hands of officials in my Department and I do not interfere with that. There is also the due process of appeal in the courts of law. Unintentionally the hon. Gentleman may have given the impression that there is some influence.
We are in discussion with UKIAS and I am grateful for what the hon. Gentleman said. It is a good, respected and reliable organisation, and we shall be substantially increasing its grant so that it can increase its staff to take on the additional tasks that I have outlined today.
Mr. John Watts: Does my right hon. Friend agree that the alarming tide of bogus asylum applications to which he has referred underlines the need to retain control of immigration policy as the prerogative of the British Government and the Westminster Parliament, and that those are not powers which can safely be delegated to the European Commission or the European Parliament?
Mr. Baker: Those powers are critical. I make it clear that the proposals that we have outlined today will be exercised by our Government because of our powers and responsibilities in the matter. I shall also be discussing with our partners in Europe their plans and proposals to see whether there are certain things that we can do together. For example, there is a proposal to exchange data so that we can see who are making multiple applications or applications in other countries as opposed to here. We shall be discussing such matters with our partners in Europe later this year.
Several Hon. Members rose—
Mr. Speaker: Order. I will bear in mind those hon. Members who have not been called when we debate the matter. There are Home Office questions on Thursday, and I shall look with some sympathy on those who have not been called today if there are relevant questions on the Order Paper.

Points of Order
4.21 pm
Mrs. Joyce Quin: On a point of order, Mr. Speaker. I wish to raise a matter which should be of some concern to hon. Members and where there is a danger that the views of the House will be ignored.
Yesterday, the Government announced in a written parliamentary answer to a presumably planted question the details of the sell-off of the short-term division of the Export Credits Guarantee Department, despite the fact that the privatisation Bill has not completed its parliamentary proceedings and that this is a highly controversial matter about which many hon. Members have expressed concern, particularly because of their worries about the services that will be provided to British exporters by the preferred bidder, a Dutch company. Surely the Minister responsible should be prepared to come to the House and defend his views publicly and to answer as fully as possible the concerns and questions of hon. Members.
Mr. Rhodri Morgan: Further to that point of order, Mr. Speaker. I am a Member of Parliament for the Cardiff area where all the staff of the division of ECGD that is being privatised work. Those people are shocked that their fate has been consigned by way of a written answer, that the decision has apparently been taken by the Government even though the legislation may come back to this place in the light of the fearful hammering that it received on Second Reading in another place, and that the decision is being made that Amsterdam is the proper place for deciding the fate of the financing and reinsuring of Britain's exports. I consider that Cardiff is a proper place for insuring Britain's exports and it is open to question whether the democratic process in this House and in the other place has yet resulted in that decision.
Therefore, under what rule, other than the rule that the Government believe that it will go to Amsterdam—it is all part of the deep laid plot for the British Government to go from clogs to clogs in three generations—
Mr. Speaker: Order. We seem to be entering into the arguments of the matter. I have had no intimation from the Government that a statement is to be made on this subject, but doubtless the fact that it has been raised from the Front Bench will be borne in mind. If a statement is required, I suggest that negotiations take place through the usual channels.
Several Hon. Members rose—
Mr. Speaker: I shall take the point of order from the hon. Member for Banff and Buchan (Mr. Salmond) first, as I was given notice of it.
Mr. Alex Salmond: On a point of order, Mr. Speaker. It has emerged today that the Secretary of State for Scotland was told at a private meeting on Tuesday 4 June of the impending closure of the Dalzell platemill. At the meeting, the right hon. Gentleman told British Steel that the closure was solely a matter for the company.
On the same day, the Prime Minister sent a letter of public support to the Dalzell shop stewards. Surely the House is entitled to a statement from the Secretary of State
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for Scotland—or at least an intervention in Thursday's debate—explaining exactly why the Conservative party can say one thing publicly in Scotland, while at the same time selling the workers down the river by saying something else at a private meeting in London.
Mr. Speaker: The hon. Gentleman has answered his own question. An opportunity will arise on Thursday to probe the matter.
Mr. Tony Banks: I have two points of order, Mr. Speaker, but they are related.
Mr. Speaker: Order. I do not think so.
Mr. Banks: In that case, I shall try one.
We have just heard a long statement from the Home Secretary in which many of us have a considerable constituency interest. It is most annoying for us to see copies of such statements being distributed in the Press Gallery when none are made available to us by the Vote Office. Those of us who have not been called find ourselves in double jeopardy, as we cannot even make our own remarks on the Home Secretary's statement because copies are not in the Vote Office.
My second point concerns procedure. When a Minister seeks permission to link two parliamentary questions, I assume that you, Mr. Speaker, can deny him that permission. It strikes me as entirely inappropriate for a Minister to link questions 6 and 18 when it is clear that question 18 will not be reached, and that certain assiduous Back Benchers will not be called as a result.
Mr. Speaker: The hon. Gentleman himself is an assiduous Back Bencher, and he has asked two questions. I will answer the first.
I assume that copies of today's statement were embargoed until after it had been made. This is, however, an important point, which the hon. Member for Newham, North-West (Mr. Banks) might well put to the Procedure Committee. It has often occurred to me that it would benefit the House if copies were issued the day before statements were made, so that hon. Members could ask their questions against a background knowledge.
Mr. Kenneth Hind: On a point of order, Mr. Speaker. As you know, I asked this morning for a private notice question—
Mr. Speaker: Order. It is not in order to mention such matters in the Chamber.
Mr. Hind: Have you, Mr. Speaker, received a request from the Department of Health for permission to make a statement on the licensing of the drug RU486? Many of my colleagues have noted from The Sunday Times and yesterday's Evening Standard—
Mr. Speaker: Order. I dealt with that point of order yesterday, when I told the hon. Gentleman that I had received no notice that the Government wished to make a statement on the subject. I have nothing more to add.
Several Hon. Members rose—
Mr. Speaker: Order. Today is an Opposition day, and hon. Members are taking time out of the debate.
Mr. Dave Nellist: On a point of order, Mr. Speaker. I do not wish to go over the ground of this afternoon's statement, but I should like to know

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whether you have received a request for the Government to explain, by means of another statement, whether they have any powers to prevent the entry into the United Kingdom of an EEC national—M. Le Pen, who is due to address a conference in two days' time at the—
Mr. Speaker: Order. That is a bogus point of order if I ever heard one.
Mr. Nellist: No, it is not.
Mr. Speaker: Order. The hon. Gentleman is trying to abuse the procedure.
Mr. Jeremy Corbyn: On a point of order, Mr. Speaker. As you know, I have tabled a ten-minute Bill dealing with the question of refugees and asylum-seekers, and, like other hon. Members, I am now being asked to respond to the Home Secretary's statement. I wish to reflect accurately what the Home Secretary said.
Given that copies were not available in the Vote Office —which has just confirmed that it had no idea when the statement was coming, although I have seen journalists brandishing copies—will you make the strongest possible representations to the Home Office? Will you tell the Home Office that, if a Minister makes a statement here and copies are given to members of the Press Gallery, that is fine, but hon. Members expect to have copies as well—at the same time, if not earlier?
Several Hon. Members rose—
Mr. Speaker: Order. The hon. Gentleman has a fair point. Hon. Members should be treated equally with members of the press—[Interruption.] Order. I am trying to be helpful.
Mr. Tam Dalyell: On a point of order, Mr. Speaker. It will be within your knowledge that the Scottish Grand Committee is not sitting this week because the Secretary of State for Scotland has to accompany the Queen on royal duties in Scotland. Do you think that the Secretary of State should be at the royal garden party on Thursday or at the House of Commons answering questions on the closure of the Dalzell works?
Mr. Speaker: I do not know what is happening in Scotland on Thursday.
Several Hon. Members rose—
Mr. Speaker: Order. On the point of order raised by the hon. Member for Coventry, South-East (Mr. Nellist), if Mr. Le Pen wishes to come to Britain and he is an EC national, I judge that he will have no problems. There is no point of order for me in that matter.
Mr. Jim Sillars: On a point of order, Mr. Speaker. It arises from your comments about the distribution of statements. I am not in a position to complain about that because minority parties and the Opposition Front Bench receive copies, so I am being objective. You said, Mr. Speaker, that in your view Back-Bench Members should be treated equally with the press. Perhaps you should reconsider that because there is a significant difference between us and the press in that we are elected to represent people.
Mr. Speaker: I do not quite understand the point. But I repeat that hon. Members should be able to ask their questions against a background of knowledge. It is particularly distasteful for Members of Parliament to be asked detailed questions by the press in the Lobby when they have not seen the statement.
Mr. Nellist: On a point of order, Mr. Speaker. May I finish the point of order that I raised earlier? This place is, in a sense, the guardian of law and order in this country. I am asking for your ruling on how we seek to raise the fact that, given the nature of the individual concerned, there might be problems on Thursday with a noted racist such as Le Pen addressing a conference a few hundred yards from this building in which Sessional Orders pertain of which you are the guardian. Can something be done about it?
Mr. David Winnick: May I help on this point?
Mr. Speaker: I do not need help. The hon. Gentleman is not yet Mr. Speaker. This is a matter for the police, not for me.

Points of Order
  BILLS PRESENTED
    COMMUNITY CHARGE (DISQUALIFICATION FOR NON-PAYMENT)
    Mr. Michael Shersby, supported by Mr. John Wilkinson and Mr. Terry Dicks, presented a Bill to provide that a person who by 1st August 1991 has not paid to a charging authority the community charge owed by him in respect of the year ended 31st March 1991 shall be disqualified for a period of five years from elected membership of a charging authority or a precepting authority: And the same was read the First time; and ordered to be read a Second time on Friday 5 July and to be printed. [Bill 196.]
    LICENSING (AMENDMENT) (SCOTLAND)
    Mr. Bill Walker presented a Bill to amend the provisions of the Licensing (Scotland) Act 1976 relating to the transfer of licences; and for connected purposes: And the same was read a First time; and ordered to be read a Second time on Friday 5 July and to be printed. [Bill 198.]

  STATUTORY INSTRUMENTS, &c.
  Motion made, and Question put forthwith pursuant to Standing Order No. 101(3) (Standing Committees on Statutory Instruments, &c.),
  That the draft Motor Vehicles (International Circulation) (Amendment) (No. 2) Order 1991 be referred to a Standing Committee on Statutory Instruments, &c. —[Mr. Patnick.]
  Question agreed to.

  SCOTTISH GRAND COMMITTEE
  Motion made, and Question put forthwith pursuant to Standing Order No. 97(1) (Matters relating exclusively to Scotland),
  That the Matter of the National Health Service in Scotland, being a Matter relating exclusively to Scotland, be referred to the Scottish Grand Committee for its consideration.—[Mr. Patnick]
  Question agreed to.
  Motion made, and Question put forthwith pursuant to Standing Order No. 97(1) (Matters relating exclusively to Scotland),
  That the Matter of fishing and fish farming in Scotland, being a Matter relating exclusively to Scotland, be referred to the Scottish Grand Committee for its consideration.—[Mr. Patnick.]
  Question agreed to.

Ministers of the Crown (Financial Interests)
4.33 pm
Mr. Bob Cryer: I beg to move,
That leave be given to bring in a Bill to prevent Ministers of the Crown from having outside financial interests; and for connected purposes.
I hope that the Government support the Bill because it will demonstrate that they are setting their face against the prevailing greed in the boardrooms of privatised companies and that they are setting an example. So far, they have done nothing about this.
The May edition of the monthly bulletin "Labour Research" drew attention to the fact that 56 Conservative Members—it was not quite accurate because the figure is 62—are members of the Lloyd's insurance club. The 62 include 15 Ministers, among whom are four Cabinet Ministers—the Secretaries of State for Energy, for Northern Ireland, for Scotland and for Wales. On Wednesday 29 May that information appeared in a diary column in the London Evening Standard and an anonymous junior Minister was asked to comment. He said:
"There's no conceivable conflict of interest. Names are non-working members of Lloyds."
In the past, "non-working" meant that it was usual for the names to receive their profit and loss account, called a bordereau, and regularly pick up fat cheques. But losses have been incurred, so the claim of no conflict of interest for Ministers clearly did not, does not and will not hold true.
The chairman of Lloyd's sent a letter dated 17 May to members of Lloyd's making clear his attempts to influence the Government to obtain massive tax concessions for this rich elite, who, I remind the House, have to pledge £250,000, as a minimum, to join the club. Apparently, the chairman had abandoned belief in the marketplace, the unique advantages of Lloyd's and the sturdy independence and judgment of Lloyd's members—all of which were advanced as reasons for special powers and privileges to be given in a Bill which was passed by the House in 1982, against the Labour party's opposition.
The letter stated:
"I have been pursuing with the Government for some time certain aspects of the tax arrangements for Names. I had a meeting with the Chancellor last week when I received a sympathetic hearing. We discussed both reserving and the extension of a relief proposed in the Budget to Names."
The letter continued:
"The benefit to Names of such a carry-back of relief is clear. Extending the period of carry-back from one year, as at present, to three would increase the amount of income against which relief could be sought and repayment claimed. It would increase the likelihood that losses at Lloyd's would be relieved in full."
That could amount to more than £100 million. That was the claim that the chairman was seeking by attempting to influence the Government. He concluded his letter by saying:
"When I met the Chancellor I put to him in some detail the case for the provision to apply to the underwriting losses of Names. I received, as I have said, a sympathetic hearing and I hope that I shall be able to report a successful outcome to you in my June address."
In case hon. Members think that Lloyd's is at a disadvantage, it should be made clear that Lloyd's underwriters are, in effect, entitled to the same relief' for a

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trading loss as any other trader, including premiums of £3,000 a year for stop-loss policies which eradicate losses of more than £40,000.
The rules governing the conflict between Ministers' public duty and their private interests are set down in a confidential document called "Questions of Procedure for Ministers". A resume was sent to the Salmon royal commission on standards of conduct in public life, but curiously the commission did not include it as an appendix. The relevant section is paragraph 76 in the document issued by the former Prime Minister, Lord Callaghan, but the principles set out were summed up as follows:
"Ministers must so order their affairs that no conflict arises, or appears to arise, between their private interests and their public duties."
Paragraph 76, which is headed "'Names' at Lloyds", states:
"A Minister cannot properly continue to be a 'name' at Lloyds while holding office as Prime Minister, Chancellor of the Exchequer or Secretary of State for Trade … All Ministers are therefore required, on appointment whether to their first or to any subsequent Ministerial office, to obtain the permission of the Prime Minister before continuing a connection with Lloyds, however nominal, which they had established before appointment or establishing any such connection during their term of appointment."
Clearly, successive Prime Ministers have allowed the 15 Ministers to retain their holdings in Lloyd's after the Ministers had approached them under the rules.
For the avoidance of doubt, the Bill would require all Ministers to resign from Lloyd's. It may be argued that the Prime Minister's rules are adequate, but they are secret and we do not know how strictly they are applied. I have received many letters about the matter since it was raised in the House. One constituent said that he has been making a loss on the pools and if tax concessions are given to members of Lloyd's, he too deserves one.
I want to read one letter in particular which shows that the conflict of interests does not stop at the Prime Minister, the Chancellor and the Secretary of State for Trade and Industry. The writer said:
"I would only add that, if such an approach can be justified by Lloyd's in respect of current Names, then one is entitled to ask why no such effort was made on behalf of victims of the PCW scandal … who had ultimately to bear the full brunt of Cameron-Webb's dishonesty, without receiving even an expression of sympathy, let alone any form of monetary contribution, from the Government.
The whole business stinks, the more especially as it looks very much as if the Names who are Ministers are taking advantage of their political offices for their private gain. In this context I cannot forget how different was this
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Government's reaction to the Cameron-Webb affair, when the then Attorney-General not only refused to take any steps to have that criminal extradited from the United States but even threatened to enter a 'nolle prosequi' if any private person were to attempt to institute any proceedings against him."
I shall read another section of the letter in case anyone thinks that it was written by a left-wing critic of Lloyd's. The writer said:
"I am in no way a man of the far Left—I was, indeed, a Tory MP for a long time".
I leave it to the House to guess which one.
There is a long history of trying to prevent Government Ministers from legislating for their own benefit. Campbell-Bannerman made a statement in 1906, as did Neville Chamberlain in 1939 and Winston Churchill in 1952. Those statements followed conflicts of interests among Ministers.
My Bill would provide a remedy for the present conflict over Lloyds by requiring Ministers to divest themselves of membership of Lloyd's. It would incorporate the relevant rules as currently applied by the Prime Minister and would provide powers for him to extend prohibitions by the affirmative resolution. It would be public and certain and it would, I hope, ensure legally that conflicts of interest could not occur in the future.
Question put and agreed to.
Bill ordered to be brought in by Mr. Bob Cryer, Mr. Don Dixon, Mr. Dennis Skinner, Ms. Dawn Primarolo, Mrs. Alice Mahon, Mr. Bernie Grant, Mr. Dave Nellist, Mr. Ronnie Campbell, Mr. Terry Lewis, Mr. Dennis Canavan, Mr. Ken Eastham and Mr. Andrew F. Bennett.

Ministers of the Crown (Financial Interests)

  MINISTERS OF THE CROWN (FINANCIAL INTERESTS)
  Mr. Bob Cryer accordingly presented a Bill to prevent Ministers of the Crown from having outside financial interests; and for connected purposes: And the same was read the First time; and ordered to be read a Second time on Friday 5 July and to be printed. [Bill 199.]
  Mr. Roger King: On a point of order, Madam Deputy Speaker. I listened to the ten-minute Bill presented by the hon. Member for Bradford, South (Mr. Cryer) and I was interested in some of the evidence that he cited, especially the letters. I should like to research those letters a little further. As the hon. Gentleman read them out in the Chamber, should he allow them to be placed in the Library so that we can investigate them and find out who are the people involved?
  Madam Deputy Speaker (Miss Betty Boothroyd): Order. That is a debating point, and if the hon. Gentleman had wished to debate it, he should have raised it during the hon. Member's speech.

Opposition Day
  16TH ALLOTTED DAY

    Housing
    4.43 pm
    Mr. Bryan Gould: I beg to move,
    That this House notes the abysmal failure of the Government's housing policy which after 12 years has resulted in record mortgage levels, record homelessness, the collapse of the public and private rented sector and a crisis in the construction industry; and calls on the Government to put forward proposals for a mortgage rescue scheme, an emergency programme to deal with homelessness and a phased release of the capital receipts from the sale of council houses to fund a planned increase in housing investment.
    Madam Deputy Speaker (Miss Betty Boothroyd): I have to tell the House that Mr. Speaker has selected the amendment in the name of the Prime Minister.
    Mr. Gould: There is no mystery about housing in Britain. There is a growing housing crisis for two main and obvious reasons. First, we have failed to build enough houses and, secondly, the cost of housing has risen so fast that decent housing is now beyond the reach of a significant number of people. Those factors are a direct consequence of Government policy and there will be no improvement until there is a change of policy or, indeed, a change of Government.
    The facts can be stated simply. The number of houses built in the 1980s was the lowest in any peacetime decade in this century. The 1990s have started even less promisingly. Housing starts for 1990 totalled only 184,000 and few people doubt that there will be a still sharper fall this year.
    Mr. Conal Gregory: Will the hon. Gentleman give way?
    Mr. Gould: No, I have only just started. I shall give way very sparingly in view of the short time available.
    The total figures are bad enough. However, the real pain is felt when we consider social and affordable housing. That is the sector where there has been the most damaging decline and where it hurts most. In 1978—the last year of the Labour Government—local authorities built 92,000 houses in England and Wales. That figure had fallen to a mere 13,000 by 1990 and it will fall still further this year. Indeed, it is the deliberate aim of Government policy—so we are told—that the figure should fall to zero very soon. Presumably, the intention is for the gap to be made up by housing associations and by the private sector. That has not happened.
    Housing associations completed a mere 8,873 homes for rent in 1989—that is a welcome contribution, but nowhere near the scale required. The private sector—after a period in the mid-1980s when, it must be said, it was not social but luxury housing that was built—also suffered a sharp decline. In fact, it is gripped by the severest recession for decades.
    The latest state of trade survey conducted in March and published in May by the Building Employers Confederation shows that the steep downward trend in output continues. The balance between those reporting higher and lower output has fallen for the ninth successive
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    quarter to minus 70 per cent. That is the lowest figure on record. The industry predicts that 150,000 jobs will be lost this year. Skills will be lost, never to return. Business failures are at record levels and they include long-established family firms.
    They are the facts about the supply of new housing. The facts about the cost of housing are no less powerful. Home owners were lured into home ownership by the boom, which was helped by the shortage of supply and they were then trapped by soaring interest rates. As a result, home ownership has become an impossible dream for many and an impossible nightmare for many more.
    The number of repossessions, which stood at 46,940 in the year to March, has doubled in a year and it is predicted to double again in the coming year. Few would quarrel with that prediction. A Bank of England study which was recently published shows that 784,000—or one in 12—loans are two months or more in arrears. It is not surprising that homelessness due to arrears increased by 58 per cent. in the first quarter of 1991, and it is a major factor in the increasing burden placed on local authorities.
    Tenants have found housing costs no easier to face. Private rents have risen sharply, reinforcing the evident truth that the private sector cannot meet the demand for affordable housing. Due to a deliberate Government decision, council rents have risen by an average of 12·3 per cent., although that average conceals much more extreme rises such as the successive rises imposed in Ealing.
    It must also be remembered that it was the unfairness of the burden placed by Government policy on the housing revenue account and, therefore, on the tenants and their rents which led the Tory councillors in West Oxfordshire to resign last year. The unfair pressure requiring some tenants to pay for the subsidies payable to others continues.
    Housing associations have also had to respond to high interest rates by raising rents. In 1990, new lets were at an average rent per week for a three-bedroomed house of between £46 and £54, beyond the reach of most low-income families. That was the conclusion of the joint report by the House-Builders Federation and the Association of District Councils entitled "Bridging the Affordability Gap in 1990". The report found that fewer than half all young people under the age of 30 could afford to buy their own homes and it called, not surprisingly and with our support, for 100,000 houses to be built each year for rent or shared ownership.
    With the supply of housing drying up and the costs of housing rising sharply, it is little wonder that homelessness is increasing rapidly. No fewer than 145,790 households, or almost 400,000 people, have been accepted as homeless in the past year—a doubling of the number with which the Tory Government began the decade. Some 12,170 homeless households are in bed-and-breakfast accommodation at an average cost of £15,440 per annum. That figure was described in May by the Public Accounts Committee as "bad value for money". The average cost per year of building those families a new home would be just half the cost of bed-and-breakfast accommodation at £8,200.
    Mr. Steve Norris: On the topic of the availability of housing for families in need, will the hon. Gentleman comment on the fact that the 10 councils with

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    the highest number of vacant dwellings—incidentally also the 10 councils with the highest amount of unpaid rent arrears—are under Labour control?
    Mr. Gould: If the hon. Gentleman reads the report of the Public Accounts Committee, he will find that by far the greatest culprits in the matter—I defend no one who has a high proportion of housing stock empty—are the Government. The Public Accounts Committee want to hear the truth of the matter about the 31,000 houses that are currently empty.
    Mr. Richard Tracey: Will the hon. Gentleman give way?
    Mr. Gould: No.
    The position is worst in London. The report of Single Homeless in London estimates that 3,000 people are sleeping on London's streets. That is enough to make it difficult for even the most fastidious Minister to avoid stepping on them as he leaves the opera. The report puts the total of homeless in London—
    The Minister for Housing and Planning (Sir George Young)rose—
    Mr. Gould: I may give the Minister a chance to intervene a little later. The report puts the total of homeless in London—living in squats, in bed-and-breakfast accommodation, in hostels and on the streets —at 52,500. The Salvation Army says that 75,000 people in London are what it describes as "visibly homeless". It says that the situation is as bad as it was in 1904.
    The facts are depressing and damning and they cannot be gainsaid. The Government's excuse is that demand for housing has risen as the baby boom of the 1960s has taken effect and as a higher divorce rate has split families. That makes the failure to prevent the fall in supply even more culpable.
    The facts are the record of a decade of failure of a Government who had the huge benefit of riches from the North sea, but who have ended the decade with the shameful spectacle of young people begging on our streets by day and sleeping on our streets by night. The facts are the record of a Government who proclaimed an economic miracle, but who failed to provide the most basic of human needs—a roof over one's head—for many of their citizens. The facts are the record of a Government who have provided great benefits to some via tax cuts, capital gains and salary increases—including those that we shall debate later today—but who have left hundreds of thousands, perhaps millions, of the most vulnerable people in our society in overcrowded slums or without homes at all. The facts are potent, but they conceal more than they tell.
    The official statistics measure only the statutory definition of homelessness; they do not tell the full story. They certainly do not tell the story of the individual tragedies which are now occurring on a huge scale. Surely Conservative Members cannot be unaware of the tragedies, such as the young families divided, the young mothers driven to despair and mental illness and the fathers who have lost their families and therefore their homes, and who end up, as in the case of one of my constituents, sleeping in a car for two years. How did that happen?
    Mr. John Carlisle: Will the hon. Gentleman give way?
    Mr. Gould: No, I will press on for the time being.
    The first part of the answer lies in a fundamental mistake in Government economic policy. That assertion is hardly controversial any longer, as even Ministers now concede, in their more honest moments, that a huge consumer boom was unwisely unleashed on the basis of a surge in private sector credit which inflated property values and thereby created a new, though unstable, basis on which to construct a further edifice of credit. That tottering structure inevitably collapsed and the penal interest rates which were then put in place destroyed the private property market on which the Government had pinned all their hopes. Those who live by the market die by the market. Today's property market has killed not only the hopes of millions of families, but the illusions of the Government.
    Mistakes are one thing, but deliberate prejudices carried into policy are another. The greater part of our housing failures have arisen because we have been saddled with a Government driven not by common sense but by ideology.
    Mr. Robert G. Hughes: Will the hon. Gentleman give way?
    Mr. Gould: That is why we have had almost total reliance on the private market and when it failed, consumed by the very forces that it unleashed, the Government had nothing on which to fall back. That is why we have had the tunnel vision that meant a total and exclusive emphasis on home ownership. Ministers could not and still cannot conceive that, for many people, renting is the preferable or possibly the only option.
    Mr. Tracey rose—
    Mr. Gould: Many of those persuaded by the prospect of an endless property boom to buy their homes must now bitterly regret that choice.
    Ministers are still at it. They offer rent-into-mortgage schemes when the immediate need is to help with mortgage-into-rent schemes those for whom home ownership has become a short-cut to home loss.
    Mr. Tracey: Will the hon. Gentleman give way?
    Mr. Gould: No, I will press on in the interests of the debate as a whole.
    The ideological tunnel vision has produced the blind spot on the need for social housing and especially the need for housing for rent. The free market ideologues were content for everyone to take his or her chance in the marketplace. If that meant treating the homeless as a commodity to be traded in the marketplace and paying others to deal with them, as Westminster has tried to do, so be it. If that meant that the market created victims, it was their fault, not the Government's. If it meant that Ministers had to step on the homeless as they left the opera, what was that but a demonstration that the policy was working, however many tiny hands may have been frozen?
    Sir George Young: No one who listened objectively to what I said last week about rough sleepers could have written the article to which the hon. Gentleman has

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    referred. It was a disgraceful, biased piece of journalism, ascribing to me views on rough sleepers which I have never held.
    Mr. Gould: If the Minister claims to have been misreported, I sympathise with him. I imagine that no one was more shocked than he by the insensitive statement he was reported as making. The nature of insensitive remarks is their power to cast a spotlight on the dark places of Ministers' minds and of Government policy. The spotlight recorded a contempt for the homeless and a total lack of understanding of their plight and the Government's contribution to it.
    The Government's attitude has led to a wholly irrational antipathy to public sector provision, with local authorities forbidden to spend their own money on housing and deliberately squeezed out by Government policy from any responsibility of meeting housing need. Ministers have learnt nothing from a decade of failure in that respect. Even those such as the Minister who have a reputation for more liberal views have been content to reinforce the ludicrous injunction against local authorities using their land, their money and their political will to meet a desperately required housing need.
    We have an ideologue in action. At the conference of the Institute of Housing only last week, the Minister was at it yet again, telling local authorities that they were not to provide new housing and that they would have to put housing contracts out to compulsory competitive tender.
    That heavy burden of ideology, which has so prejudiced our housing programme, brings me to the Secretary of State—or at least it would if he were present. The right hon. Gentleman is becoming the invisible man of the Department of the Environment—the ghost at the feast, or, in the case of housing, the ghost of famine. The right hon. Gentleman seems curiously reluctant to come to the Dispatch Box to defend what his Department is doing. It is true that he popped up only last week in a Liberal Supply day debate to do a spot of electioneering, but when it comes to the hard grind, the real responsibility and the true business of the Department—the council tax or the housing crisis—he is curiously not in evidence.
    Why is the right hon. Gentleman so shy and so unwilling to face the music? On housing, the reason is not hard to find. He is, after all, a man with a record—a man with previous form. In being sent to the Department of the Environment, and to housing in particular, he is required to return to the scene of the crime. It is not only us who say that; let us see what the House-Builders Federation said in the January issue of House Builder. Mr. Roger Humber, director of the House-Builders Federation, reviewed the 1980s in the light of the Secretary of State's reappointment. He said that it was
    "a decade of muddle and myth, of one step forwards, another sideways, followed by two backwards. And central to this muddle and myth was Michael Heseltine."
    Mr. Kenneth Hind: Will the hon. Gentleman give way?
    Mr. Gould: I have not finished this interesting article.
    Mr. Hind: After that?
    Mr. Gould: I make no promises.
    Mr. Humber continues:
    "Probably the most important contribution to undermining the proper purpose of planning was Heseltine's refusal to permit any strategic evaluation of housing requirements …
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    This was quite the most catastrophic stance any Minister could possibly have taken … the outcome of the Heseltine policy was not record levels of housebuilding; just the opposite … On average, new private sector housebuilding output was around 150,000 pa; exactly the same as in the 1970s. And public housing continued to fall."
    I am delighted that the Secretary of State has arrived just in time for the coup de grace. Mr Humber says:
    "The 1980s therefore was a decade of failure in housing policy".
    The Secretary of State
    "left us with a decade at the end of which we have to start trying to deal again with the same issues he refused to face … in 1852, Marx said that history does repeat itself. The first time as tragedy, the second time as farce. We've had the tragedy: can we avoid the farce, now that he's back?"
    Mr. Gregory rose—
    Mr. Michael Latham rose—
    Mr. Hind rose—
    Mr. Gould: I am glad that the Secretary of State has so many ardent defenders.
    There can seldom have been a more savage indictment of the record of a Minister or Government, and that from a source—the House-Builders Federation— which, at the very least, is not a natural opponent of a Tory Government.
    Mr. Hind: Will the hon. Gentleman give way?
    Mr. Gould: I shall not give way at the moment.
    The way out of this mess is to escape from the ideological dead-end in which the Government have trapped themselves. First, we must acknowledge that whatever the strengths of the market the provision of social and affordable housing is a community responsibility. The homeless are not only of concern to opera-goers but a blot on all our consciences.
    Sir Michael Neubert: On a point of order, Madam Deputy Speaker. When a Minister has made a personal declaration that reported remarks attributed to him were untrue, and when it has been accepted by the Opposition's spokesman, is it in order or within the conventions of the House for that spokesman to continue to read from a prepared text and to prosecute the allegations that have been disclaimed?
    Mr. David Winnick: Further to that point of order, Madam Deputy Speaker. You heard the Minister's intervention. Not once did he deny that he used those words. What are all the complaints about? He may not like their interpretation, but he used those words about the homeless.
    Madam Deputy Speaker: Order. There are a couple of hours to go and I hope to call as many hon. Members as possible who can refute, deny or agree with those allegations.
    Mr. Gould: I make the point again: the homeless are not only of concern to opera-goers but a blot on all our consciences. If a wealthy country cannot put roofs on the heads of its citizens, that is a failure of political analysis and will. Government intervention is necessary because, as all the survey evidence shows, the market will not provide the social housing that is desperately needed. It is a question not just of money but of things that do not cost

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    money, such as the availability of land. That is why we propose, for example, a new use class for land for social and affordable housing.
    Secondly, we should forget the ridiculous dividing line between public and private-sector providers. Those who need decent accommodation at affordable rents simply do not care whether the providers are politically correct in the view of the Secretary of State or anyone else. What they need are homes. Surely all the evidence shows that if we are to meet that need the public sector must be involved. It simply does not make sense to exclude its resources, expertise and political will. What matters is that houses are built, and as local authorities have up to £5 billion in capital receipts, why not, subject to suitable safeguards, let them spend part of it? The need is too great for us to worry about picking and choosing on ideological grounds between the various instruments that are available to us. We should use every instrument that is at our disposal. That means housing associations and the private sector but also local authorities.
    Mr. Robin Squire rose—
    Mr. Gould: I give way to my neighbour.
    Mr. Squire: I am grateful to my geographical neighbour. As the hon. Gentleman is, I hope, dealing with the private sector, will he stress his party's commitment and non-ideological approach by giving its attitude to the private sector? In particular, will he confirm for how long it has not been Labour party policy to offer private tenants the right to purchase?
    Mr. Gould: My hon. Friend the Member for Hammersmith (Mr. Soley), who will wind up the debate, made an excellent speech to the Institute of Housing in which he set out extremely interesting and imaginative policies on the private sector and how we shall treat private landlords. The effect of that will be to reverse the 80,000 per year loss of private rented accommodation from the housing stock. That is our objective.
    We should be considering the possibility of collaborative partnership arrangements between local authorities and the private sector. If borrowing to build houses to meet housing need is a good idea for the private sector, why is not the same borrowing of equal benefit if done by the public sector?
    Thirdly, we should not be too preoccupied with the lawyers' consent of tenure, and I speak as a person with legal training. Home ownership appeals to many people and will continue to do so, but there will always be others who prefer to rent, and there may be many more whose preferences, for family and financial reasons, may change from one part of their lives to another.
    Instead of trying to compress everyone into the same mould, why not work on providing as much flexibility as possible and on achieving the most level playing field between different forms of tenure? We should encourage building societies and housing associations to devise, as they would like to, mortgage-into-rent schemes, part-rent, part-buy schemes and shared ownership schemes and we should provide the funding arrangements to make that possible.
    Mrs. Edwina Currie: Will the hon. Gentleman give way?
    Mr. Gould: No, I am about to finish.
    Above all, if we are serious about tackling the housing crisis, as we must be, we must build more houses. I call on the Government even now to put the unused resources, skills and capital to work—to release some of the money currently held by local authorities so that, with the help of the construction industry, they can build immediately 50,000 homes in a crash programme, so as to make a start on housing the homeless. That would be only a start, but a start already too long delayed.
    If the Minister will not commit himself to that simple, direct and humane step now, the homeless and all those whose housing needs are not met will, along with the rest of the country, draw only one conclusion: they need a Labour Government to provide them with the houses that they need. We shall do that job for them.
    5.11 pm
    The Minister for Housing and Planning (Sir George Young): I beg to move, to leave out from "House" to the end of the Question and to add instead thereof:
    `welcomes the policies being pursued by Her Majesty's Government to put a decent home within the reach of every family by promoting owner occupation, by securing greater private sector investment in housing and by directing public expenditure effectively towards those people and areas that most need support.'.
    I welcome the opportunity to set out the Government's housing strategy. I believe that our broad-based approach is right. We are maximising investment from all sources, not just the public sector. We are developing new forms of tenure, such as rent-to-mortgage and shared ownership, and new forms of social landlord, such as the housing action trusts. We are introducing new partnerships with the housing associations, and a new regime for private landlords. That approach is the right one.
    We want to work with the grain of people's aspirations and with the grain of market forces. The Government's approach is more likely to succeed than is the more narrowly based approach advocated by the Labour party, which leans more heavily on local authorities and public finance which might not be available. As we have just heard, that approach turns its back on some of the more radical conclusions that we are developing and would lose the possibility of contributions from institutional finance.
    The Labour party's approach has not changed over the years. There is an over-reliance on public expenditure, but this time it is based on public finance which will not be there. I ask the hon. Member for Dagenham (Mr. Gould), who, as I understand it, has just given a commitment to enter a crash programme for building 50,000 extra homes, whether he has the authority of the shadow Chief Secretary in making that commitment.
    Mr. Gould: That commitment has been on the record for at least a year. The Minister made a statement about private institutional finance which had no basis in anything that I have said or in any document that the Labour party has produced. As I categorically stated the opposite, I invite him to withdraw his remark.
    Sir George Young: The hon. Gentleman should examine some of his party's proposals for the private rented sector. He will find it more difficult to raise respectable institutional funds for investment in the private rented sector if he adheres to his proposals for rent control. There is a direct trade-off. We want to maximise

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    the contribution that the private sector can make. We do not have the Labour party's dogmatic approach to the private sector.
    Mr. Winnick: Will the Minister give way?
    Sir George Young: No. This is a short debate and I want to make progress.
    Not only can the Government's approach promote better housing, it can help bring down some of the barriers in our society and eliminate some of the fault lines that demarcate too many of our inner-city areas. We all know of estates designed by people who do not have to live in them and occupied by people who do not want to live in them. We want to turn those estates round, with the help of the residents and of private funds. We want the yeast of home ownership to raise the standards on those estates and transform the lives of those who live there. I should like to say a word in a moment about housing action trusts, whose potential the Labour party discounts.
    The guilty men are not those accused in the hon. Gentleman's speech. They are local councils, such as those mentioned by my hon. Friend the Member for Epping Forest (Mr. Norris), that leave properties unlet while families wait in bed and breakfast, that leave rents uncollected and plead shortage of money for maintenance. In London, the 10 least efficient local authorities had not collected £135 million in rent by the end of March 1990, and on 1 April 1991 owned 21,200 empty properties. That compares with 12,000 families in bed and breakfast at the same time. None of those authorities was controlled by my party. All but one were controlled by the Labour party. Profligacy and inefficiency are the hallmark of Labour in government. It is no response for Labour Members to refer to properties owned by the Ministry of Defence. Those properties are needed as soldiers and their families return to this country from west Germany and the middle east.
    Mr. Clive Soley: Let us get the facts right. Committees of the House have pointed out that local authorities of all political complexions have specific problems with some empty properties and have suggested, rightly, that something be done about it, including Government action. We cite not Ministry of Defence properties, but those owned by the Home Office and the Department of the Environment, 16 per cent. of whose properties are empty. Many of those properties are kept empty for sale or demolition. I challenge the Minister to make those properties available for homeless people now.
    Sir George Young: Most of the properties are owned by the Ministry of Defence and are needed for the purposes that I have just described.
    Before I tackle the problems raised by the hon. Member for Dagenham, let me put them in focus. The total housing stock has increased by nearly 2 million since we came to office. The population has risen less fast, so there are now more homes per thousand of the population than when we started. In 1979 there were 377 dwellings per thousand of the population whereas in 1990 there were 406 dwellings per thousand.
    Professor Duncan MacLennan, in a report entitled "Affordable Housing in Europe" published by the Joseph Rowntree Foundation, said:
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    "By international standards, Britain is well-housed. It has a well-developed and efficient set of private housing finance institutions and a complex, expensive set of government subsidy measures".
    Professor MacLennan outlines areas of concern to which I shall return, such as homelessness, affordability and the private rented sector, but he finished with the following warning:
    "one of the major realisations of the British Housing sector in the last two decades has been that a massive, monopolistic social housing provision can move rapidly from 'solution' to `problem'."
    I mentioned housing action trusts, which I believe are a solution that we can offer to estates such as those to which I referred. There is a growing gulf between the dogma of the Front-Bench Labour party spokesmen and the more realistic approach adopted by Labour councils in touch with reality. The Labour party is officially against housing action trusts. The housing spokesman is on the record as saying that he would wind up the Hull HAT and return it to the city council. That is an extraordinary commitment. The tenants have just voted two to one to leave Hull council control and to go to a housing action trust. The Labour party is for ever asking for local ballots on Government initiatives. It now proposes to overrule them when the results do not conform to its prejudices.
    Nor is it just Hull that backs our proposals for a HAT. The leadership in Liverpool—a regime which apparently has the full backing of the Labour party—is now actively investigating the feasibility of a HAT for its tower blocks. Other Labour-controlled local authorities are also recognising that a housing action trust may be the right solution for some of their estates. The Labour party is divided.
    Mr. Winnick: Does the Minister not recognise in any way that much of the appalling misery of so many people —not only the homeless or near-homeless and families living in bed-and-breakfast accommodation, but many of our constituents who have young children yet who have to live with their parents or their in-laws—is because since 1979 there has been an 85 per cent. reduction in local authority starts? What sort of dogma forces so many people to live in misery because the Government will not allow local authorities to do their rightful job?
    Sir George Young: That argument will not hold. The hon. Gentleman makes the same mistake as did the Labour Front-Bench spokesman, who referred to the reduction in local authority spending without mentioning the growing budget of the Housing Corporation. That budget is growing from £1·1 billion last year to £2 billion for 1993–94. One must put that fact on the table, too, and examine overall expenditure rather than focus on one part of the market.
    Mr. Tracey: I am grateful to my hon. Friend for giving way. It makes a pleasant change from the behaviour of the hon. Member for Dagenham (Mr. Gould). My hon. Friend has been talking about public funds and public housing. Instead of going round the edge, will he answer the question: when will the Government do something to force the hands of local authorities that refuse to collect rents and that keep properties empty although people are homeless? It is a public disgrace. My hon. Friend spoke of £135 million in uncollected rents and he knows as well as

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    I do that in London alone there are tens of thousands of empty properties. We must get those properties back into use, because people are on the streets.
    Sir George Young: One way in which to deal with the problem that my hon. Friend has identified is to give more power to tenants and to enable them to take responsibility for their estates, which I suspect they would run more effectively and competently than many local authorities. I assure my hon. Friend that we are considering the matters that he has raised to see whether we can protect tenants from the incompetence of their local authority landlords.
    Housing action trusts are not just about public money. They represent a fresh approach to difficult-to-let estates by setting up a single-minded agency—not encumbered with other responsibilities, and with tenants on its board —which can bring in private funding, produce a five-year strategy for modernising the properties and improving the management, and then give tenants a choice as to who manages their homes thereafter. The tenants can go back to their former landlord if they want to.
    Mr. John Battle: I served on the Committee that considered the Bill under which the trusts were set up. The Government rejected an amendment that we tabled which would have allowed those houses to return to local authority control. Are not the hon. Gentleman's officials now going round the country informing local authorities that, after the period of the trust has elapsed, the tenancies will return to them? Has not the hon. Gentleman changed the terms of the offer?
    Sir George Young: The hon. Gentleman confirms what I have just said. The trusts will then give the tenants a choice as to who manages their homes. If the tenants want to go back to the local authority landlord at the end of the period, they will be free to do so. I suspect that many of them will prefer to buy their homes after they have been improved. They may prefer to choose a housing association to manage their homes or they may want to manage their homes themselves through an estate management board. The point is that, at the end of the day, the decision will rest with the tenants.
    Estate action is another policy that is relevant to those who live on difficult estates. Some 600 schemes up and down the country have been implemented, renovating 300,000 units, improving management, diversifying tenure, providing training opportunities and making the estates places where people want to live. In the past year, we have built on our success, increasing resources from £190 million to £268 million, of which £126 million will be available for new schemes. I shall shortly be inviting local authorities to bid for estate action resources next year. I wonder how many Labour Members acknowledge that as the contribution of a Conservative Government.
    Mr. Hind: Will my hon. Friend give way?
    Sir George Young: I shall give way once more, but then, in fairness to those who wish to speak in the debate, I must make some progress.
    Mr. Hind: My hon. Friend has made a good point. He will be aware that in the new town of Skelmersdale, which has 25 Labour councillors, it took the Conservative-controlled district council to recognise the need of two of
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    the most run-down estates in Digmore and Tanhouse and produce imaginative estate action plans. The first of them has now been implemented. Before the estate action plan, there were 3,000 requests for transfers from the estate; now there is a waiting list of those who want to be housed on it. The second estate action plan, in Tanhouse, is also making good progress. That is a credit to my hon. Friend's Department and to imaginative Conservative housing policy.
    Sir George Young: I am grateful to my hon. Friend for his glowing tribute to the work of my Department. I hope that local authorities will realise the potential of estate action and put in bids when we invite them for next year.
    Mrs. Elizabeth Peacock: Will my hon. Friend give way?
    Sir George Young: For the last time.
    Mrs. Peacock: My hon. Friend will be aware that my local authority, Kirklees, took a long time to be shamed into using the estate action programme. When my hon. Friend the Under-Secretary visited the area recently, he saw that the authority had not made such a good job of it. The authority is now saying that it is almost too much trouble to bother with estate action, thus condemning its tenants to a future without help. Is that not a disgrace?
    Sir George Young: I very much regret that the authority has taken that narrow approach. My hon. Friend the Under-Secretary and I would like to take a further look to see how we can rescue the tenants from their plight.
    One strand of our efforts to improve the quality of life on run-down estates is an initiative, under the auspices of Professor Coleman, in which the impact of the physical redesign of such estates is tested. I am pleased to announce today the seventh scheme to be included in the experiment, which is on the Durham estate in Sandwell. Some £2·9 million of Government resources are being devoted to the scheme which will ensure the transformation of 261 homes.
    The hon. Member for Dagenham did not touch on the policy of large-scale voluntary transfer. That policy is releasing resources tied up in council housing, part of which can then be reinvested. Sixteen local authorities, none of them Labour, have balloted their tenants and subsequently transferred their stock to a housing association. That has brought in more than £1 billion of entirely private-sector finance. It has enabled repairs to be carried out more quickly than if the stock had remained in council ownership.
    Independent research into the results of the first transfers has revealed a high level of satisfaction with the new landlord and greater tenant participation in management. In the two years since the first transfer, the New Chiltern housing association has succeeded in reducing both rent arrears and the volume of empty dwellings. At the same time, part of the capital receipt has been used to finance a substantial new-build programme carried out by the association. That shows how local authorities, tenants, housing associations and private investors can come together to fund better homes and more homes without increasing public expenditure. It is an approach that Labour, with its slavish adherence to the drab policy of municipalisation, has so far rejected.
    Mrs. Currie: Will my hon. Friend give way?
    Sir George Young: For the last, last time.
    Mrs. Currie: Does my hon. Friend agree that housing associations deserve tremendous congratulations on the first class way in which they are now running a great deal of the country's private rented housing? Is my hon. Friend aware that housing associations take over property not only from councils? Not long ago, housing associations in my constituency took over a substantial number of properties that used to belong to British Coal. They have modernised the properties and are looking after tenants much better than the previous landlord. I should, therefore, like to put on record my appreciation of the housing associations concerned.
    Sir George Young: My hon. Friend is absolutely right. The key point about resourcing housing associations, as opposed to local authorities, is that housing associations can go to the City. They can top up the resources that the Government make available to provide more units. A local authority cannot do that. The direction of funds in that way not only helps the housing association movement; it ensures that there are more houses for people who need them.
    I should like to press the Labour party on the question of capital receipts. Labour housing spokesmen seem to think that they can increase spending on housing, without incurring the displeasure of the shadow Chief Secretary, by spending capital receipts. That will not do. Capital receipts are used to reduce the level of debt. Under the new regime, we have allocated part of the spending power from those areas with receipts to those without receipts. If capital receipts are to be spent again, the money will have to be borrowed—as is the case with any spending commitment not covered by higher taxes—with the usual impact on interest rates and the PSBR.
    The key question in the debate on housing is not the rather narrow one that the hon. Member for Dagenham asked: how many rented houses can the local councils build? The debate should be much broader than that. We should ask ourselves how we can maximise total investment in housing of all tenures. The question does not revolve around public investment alone. As I have said, the housing associations are increasingly borrowing from the City to complement what we allocate. That does not score as public expenditure. Private builders are building low-cost homes on land owned by councils or on land secured by the exceptions policy.
    Home ownership is the ambition of most people, and we have enabled 1·5 million former local authority tenants to buy their homes. Our recent research has shown that 96 per cent. of them felt that, taking everything into account, they were pleased to have bought. Few of those people would have achieved that ambition if the Labour party had had its way. Of those who bought between 1985 and 1987, 90 per cent. carried out significant repairs and improvements.
    Not only has the policy helped those who bought; it has helped those who have not. The local authorities have been relieved of the burden of maintaining and managing these homes, and the amount spent on capital renovation and on management and maintenance of the remaining stock has increased. Spending on capital renovation increased from £150 per dwelling in 1980–81 to £450 this year—a real increase of more than 50 per cent. Spending on management and maintenance increased from less than
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    £300 per dwelling to £800 per dwelling—a real increase of 40 per cent. There is scope for promoting home ownership yet further, perhaps by building more properties for shared ownership—for those who can afford a council rent but cannot afford the full costs of home ownership.
    Mr. Allen McKay rose—
    Sir George Young: I give way for the last, last, last time.
    Mr. McKay: I am grateful to the Minister for giving way—I had been waiting to intervene. My authority does everything that the Minister has been talking about. It uses every means to finance its housing but now, for the first time in its history, its housing policy is ruined. That is the result of the Government's policies. Furthermore, for the first time in its history, it now has homeless people.
    On home ownership, will the Minister consider a problem that is occurring in my area? I refer to the people who bought council houses but who can no longer afford them. Those people have found that they cannot get out and that there is nowhere for them to go. They have to rely on the local authority, which no longer has any houses for rent. Could not a scheme be introduced to allow local authorities to buy back such properties from those who can no longer afford them?
    Sir George Young: That brings me straight on to the problem of repossessions, which has already been referred to. It is untrue to claim that the Government are doing nothing to help those who face difficulties with their mortgage. In 1989–90, £350 million was paid in income support to help people who were eligible to pay their mortgage. There has been some comment, in the light of one case, that the system is too generous, rather than too tight.
    Nor do I accept the gloomy forecasts that are made of future repossessions. Over the past three years, people have had difficulty maintaining payments, as interest rates rose faster than their incomes. This put pressure on their budgets, leading in some cases to greater arrears. But, with base rates falling 3·5 per cent. in less than a year, and incomes for those in work rising by 4·5 per cent., that source of pressure is clearly reducing. Those who coped during the period of rising interest rates should be able to cope as they fall. I would, therefore, hope to see fewer repossessions because of that imbalance.
    The pressure in future may come from rising unemployment, but it is important to understand that redundancy or long-term illness no longer means the loss of a home. If there is an entitlement to income support, that will pay half the reasonable mortgage interest for the first 16 weeks and all the interest thereafter, including any interest on any arrears that have accrued during the 16 weeks. So if someone loses his or her job, claims income support, contacts his or her building society to put it in the picture, and then pays over the income support to the building society, the building society would be most unlikely to contemplate possession proceedings. So although I am, of course, concerned at the information coming through—there are many repossessions in the pipeline—the changing circumstances to which I have referred may mean that some forecasts are too gloomy.
    Other options are available to minimise the trauma of repossession. I understand that, through a housing association, Mole Valley council is offering shared

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    ownership to owner-occupiers who cannot afford the full cost, leaving them in their homes as part-owners, part-renters. The hon. Member for Barnsley, West and Penistone (Mr. McKay) may find that point relevant. Some building societies may be willing to allow owners to rent out their homes for a while or to roll up some interest until things improve. Surprisingly, only a minority of mortgage payers with repayments set annually have taken advantage of the chance to have their repayments reviewed to reflect the recent cuts in mortgage rates.
    I had intended to say something about the private rented sector and our plans for it but, out of respect to the many hon. Members who wish to speak, I shall skip that and turn finally to rough sleeping. In the past six months, we have witnessed in our capital city the most concerted and best resourced attempt ever to help rough sleepers. The front-line agencies, whose work I applaud, have in the first six months reduced by about half the number of people sleeping rough in central London. The programme of investing £96 million in direct access hostels and move-on accommodation is only one third of the way through—with about 1,000 of the planned 3,300 places available. The Bull-Ring, by Waterloo station, known as "cardboard city", is closed, with all of those who were sleeping there being offered alternative accommodation— although some have refused it.
    I recognise that we have some way to go. I am concerned about the numbers of people in Lincolns Inn Fields, but we have plans for more hostels nearby which should be open this autumn. I also welcome the help from the Department of Health, which is providing high-care hostels and outreach teams with medical skills to help those rough sleepers who suffer from mental illness and drug and alcohol problems. I am determined that the momentum we have built should be maintained and the policy seen through.
    I have recently spoken critically not of rough sleepers but of professional, aggressive beggars, who prey on passers-by, tourists in the west end and young homeless people, who, when arrested, turn out to have fixed addresses and substantial sums of money on them. That group would like us to confuse them with young vulnerable people with no homes. We must make sure that we do not.
    In conclusion, our policy is based not on a massive municipal expansion programme, but on diversity of provision, on encouraging the public sector to work closely with the private sector, on bringing in fresh funds to deal with the worst of the problems, and on offering choice and diversity to as many people as possible. Old prejudices and preconceptions must be overturned. The best local authorities are already working with housing associations, using their urban renewal powers and their planning powers, working up proposals for city challenge, estate action, priority estates projects, housing action trusts, large-scale voluntary transfer, and promoting rural trusts in our smaller villages. I ask the House to endorse that approach by voting for the amendment.
    Several Hon. Members rose—
    Madam Deputy Speaker: Order. The Minister was absolutely right: many hon. Members wish to participate in the debate, so brief speeches would be appreciated by all of us.
    5.35 pm
    Mr. Keith Bradley: Thank you for calling me so early in the debate, Madam Deputy Speaker. It is an outrage that the Government should have sought to make a statement today, thus leaving less than an hour for Back-Bench Members to speak on this important topic. However, I shall be brief, as you have requested, Madam Deputy Speaker, because many of my hon. Friends wish to speak in this important debate.
    The motion encapsulates the Government's abject failure throughout the 12 years of their administration to provide a coherent and meaningful policy that would give everyone in this country the right to a decent home. Listening to the Minister's speech was like hearing an echo from the past. He simply rehearsed all the arguments that were advanced by one of his predecessors during the Second Reading of the Housing Act 1988. The Minister rehashed those earlier policies although any objective analysis and the panic measures that the Government have recently undertaken on homelessness prove that the Government have no real understanding of people's need and right to live in a decent home.
    In that Second Reading debate in 1987, the Government outlined what they viewed as their flagship policies for housing in the 1990s. The Government were proud of their Bill and its main initiatives, some of which the Minister referred to, such as the housing action trusts, the ability of local tenants to opt out of local authority control of housing, the market rent system and the introduction of assured tenancies. As my hon. Friend the Member for Leeds, West (Mr. Battle) has already said, ably led by our spokesman on housing, the hon. Member for Hammersmith (Mr. Soley), the Opposition Members who served on the Standing Committee that considered the Bill made it clear then that the Government's policies had no relevance to people's needs and that they would not work.
    If we look at the way in which those policies have affected my city of Manchester during the past four years, we can see that we were right to oppose them and that we are right to say today that they still do not have any relevance to or meet the housing needs of cities such as Manchester. First, how many housing action trusts have been welcomed and introduced throughout the country? Very few. One of the first to be suggested in the first tranche of housing action trusts for Manchester was rejected out of hand by the people of Manchester.
    Secondly, how many council tenants in Manchester have requested a ballot because they want to leave local authority control, and how many ballots have taken place? There has been not one ballot and not a single request for one because the people of Manchester know that their landlord—the council—is trying to deliver a service and that the only reason that it cannot is that it has been starved of resources.
    Thirdly, in the Government's terms, have market rents in the private rented sector delivered a massive expansion in the number of homes that people can afford? Again, the answer is no because, although there has been an increase in the private rented sector in Manchester, it has been only

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    in the luxury private rented sector where rents are at levels that most people cannot afford. People can afford such rents only if they are rich or if the private landlord has ripped off the housing benefit system and tried to increase the rent at the expense of public subsidy. I welcome and applaud Manchester city council's initiative to drive out such landlords by saying, "We are not prepared to sanction the rent levels that those landlords are trying to charge on the back of housing benefit." The Government should condemn that practice also because that is not the way to create affordable rents in the private rented sector.
    The Minister wants us to consider public expenditure on housing in conjunction with allocations made to housing associations. More important, we must examine bids for resources made by councils such as Manchester for their housing investment programmes, because they clearly identify, both in the public and private sectors, the money that is needed to provide decent houses in their areas.
    An examination of the bid compared with the allocation finally granted shows that the Government have had no commitment to the provision of resources for decent housing in our cities. In Manchester, for example, £189 million was sought in 1988–89 and £29 million was allocated. In 1989–90, £210 million was sought and Manchester received only £19 million. There was an increase in 1990–91, because £100 million was sought and £52 million received. Even so, in that year, Manchester received only half of what it really needed to deal with its housing stock. In the current year, from a bid of £127 million, the city received £61 million.
    It is clear from the figures that the council has not been able to improve, modernise, install heating and so on for the houses that are required by Manchester families. The result is that we have a record number of homeless, with over 7,000 people in the city seeking their first decent home.
    We must examine the implications of that situation on the private sector and renovation grants. In the last year, the city of Manchester received an allocation from the Exchequer of £3·405 million, a 75 per cent. allocation, to enable the private sector to renovate its stock. Out of that sum must be funded disablement grants, to enable people with disabilities to adapt their homes, and so on. So in the last year, 1,250 applicants wanting about £8 million have had to get what they can from the paltry allocation of £3 million or a little over.
    With the rundown in the public and private sectors of housing, we are storing up problems for future generations. As our private stock of housing falls into disrepair, the people of the future will not have their housing needs met. We have heard enough about the rundown in the house building programme to know that in the future there will be greater demands on the public sector to house people, but homes will not be available for them.
    I have some suggestions for the way in which we, including the Labour party, should be examining the housing issue for the future. We can have a coherent housing policy only if we tackle root and branch the problem of housing finance and the ways in which, in the future, we fund the public and private sectors.
    I welcome the report published last week by the Rowntree trust, chaired by the Duke of Edinburgh, which advocated such a root and branch review of housing finance. Until we equalise subsidies between the different
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    sectors, and conduct a thorough examination of mortgage tax relief and the amount available through subsidy and benefits to the private rented sector, we shall not free the resources necessary to expand the different tenures in the housing market.
    That report rekindled a debate that has been going on for many years. I made a modest contribution to that debate over 12 years ago in a research project at York university with Professor Jonathon Bradshaw, in which we advocated the development of a universal housing allowance. In an article in Roof magazine entitled "Can a housing allowance work?" we examined the first stage of such an allowance, which was the integration of what was then supplementary benefit housing payments with rent rebates.
    We moved from there to look at the possibility of integrating all subsidies, whether in the owner-occupied sector through mortgage tax relief or through the public or private rented sectors, to see whether we could contribute modestly to a debate allowing for the easier transfer of people between and within tenures.
    We accept—I hope that the Labour party will examine this seriously; I appreciate that it could not be done overnight—that the phasing out of mortgage tax relief, if it became policy, would take many years. That was said by the Duke of Edinburgh's study. But unless we start heading in that direction, with a massive explosion in subsidy, £9 billion will be spent in the next couple of years on mortgage tax relief. That money would be better spent on providing decent housing.
    We must have a subsidy arrangement providing a housing allowance that can be cashed in to enable people to move into any form of tenure, at any stage, in the owner-occupied or rented sectors. Such a step would achieve greater mobility because people would not be locked into mortgages in areas from which they cannot move because of fluctuating house prices. Such a housing allowance would free the market and give people the opportunity to move and have different tenures at different times of their lives. They would do that when it suited them, instead of being financially penalised by having locked themselves into mortgages at an early stage.
    Bearing in mind the proposals of the Rowntree trust, I hope that the Government will take action along the lines that have been recommended. I feel sure that the Labour party will take the matter seriously, for unless we have a root and branch study of housing finance in Britain, and find ways to free resources to ensure the right of everyone to a decent home, we shall never make progress.
    We will tackle the problem of homelessness not by initiatives that resemble panic measures and not by examining incoherent policies, the long-term implications of which cannot be foreseen, but by accepting that a thorough examination of housing finance is the key to housing in the future. The next Labour Government will take the issue seriously because my hon. Friends and I appreciate, as the motion says, that the mark of a civilised society is the provision of decent homes for its people.
    If we do not put housing high on the political agenda, future generations will not forgive us. The citizens of Manchester understand that, and because they put housing high on the agenda, they will vote accordingly at the next general election.
    5.46 pm
    Mr. Douglas French: I am grateful for having been called early in this short debate and I wish at the outset to congratulate the Minister on the knowledgeable and constructive way in which he dealt with the subject. He is increasingly recognised among housing practitioners as a person who appreciates the difficulties that they are endeavouring to overcome, and I congratulate him on his efforts so far.
    I cannot say the same about the speech of the hon. Member for Dagenham (Mr. Gould), who wove a tale of gloom and woe. I listened in vain to that part of his speech in which I thought he might produce some constructive proposals, but what little his remarks contained was unspecific and he did not answer any questions.
    The hon. Gentleman said that his party and others should forget the ridiculous dividing line between public and private providers. I shall concentrate on that initially, particularly the question of voluntary transfers, to which the Minister referred. Regrettably, there has been no significant example of a voluntary transfer to a pre-existing independent housing association. Twenty nine specially formed housing associations have been created for specific local authority areas, of which 16 have been successful at ballot while 13 have been unsuccessful. About 70,000 houses have been transferred so far. While I do not belittle that achievement, it is a smaller number than had been hoped for, and certainly fewer than the merits of such transfers justify.
    Where there has been a willing local authority and a willing housing association, often the stumbling block has been the way in which the campaign preceding a ballot has been undertaken. There are a number of examples of how entrenched interests against a transfer taking place have been ill-informed. Arguments have often been presented to tenants in a highly distorted way and tenants have been led to believe that penalties would ensue should they support a voluntary transfer. Believing in the argument that better the devil they know than the devil they do not know, tenants have accordingly voted against the proposed transfer.
    Mrs. Peacock: Does my hon. Friend agree that local authorities such as Kirklees, which is my authority, have taken an ideological view on that matter and, over the past four years, have lost about £12 million in housing development money because of their silly socialist principles?
    Mr. French: I entirely agree with my hon. Friend. Her council is one of many where opportunities to bring more resources into the sector have been missed or rejected for ideological reasons. My constituency of Gloucester has had a similar experience. The arguments deployed against transferring to an independent housing association were grossly distorted and ill-informed. One of the difficulties is that the prospective housing association is obliged to put forward a firm proposal, with reliable figures for the projection of future rents and an explanation of how the financial package will hold together. But those who wish to oppose the proposal can refute those figures without, in turn, having to demonstrate that what they say is correct. Although they may have criticised the prospect of increased rents and argued that the local authority could secure lower rent levels over a particular period, in the
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    event it may not prove to be the case. However, by the time that becomes evident the arguments against voluntary transfer have prevailed.
    The voluntary transfer to a local housing association —one that emerges from a local authority—is akin to a management buyout. It suits some people but does not necessarily suit everyone. However, those who are unwilling to go down that route seem to me to have another option. Self-governing trusts have been introduced in respect of hospitals and the equivalent in education is grant-maintained status. By the same token there is a sound argument for local authority housing departments becoming charitable trusts. Those who are persuaded towards trust status, whether they are in schools or hospitals, are attracted to the opportunity to provide better internal management, a more productive use of resources and a better capacity to deliver the service to consumers. Those who run the services have a better opportunity to find the right solutions to solve the problems facing them.
    That principle can easily be adapted to local authority housing departments. A charitable trust emerging from a local authority housing department would be the recipient of the local authority department's assets and liabilities, but the authority would continue to act as banker and would retain the debt profile serviced by the trust and secured on the properties. Like other trusts, the trust could appoint outsiders to manage it and inject private sector expertise into its operations.
    I do not claim to be the originator of that idea. Some housing practitioners have already put it forward and explained it far more eloquently than I have. However, I urge my hon. Friend the Minister to consider the principle carefully because it has great merits.
    Other examples of ingenious housing initiatives can be drawn from international experience. One such example is rather confusingly known as the correlation insurance indemnity. Anyone who mentions the word "insurance" in a housing debate is quickly shouted down, but I refer to the experience in New South Wales—[Laughter.] The hon. Member for Monmouth (Mr. Edwards) laughs. It so happens that the housing profile in New South Wales is remarkably similar to the housing profile in a number of areas in this country. The housing department there has made an especially useful arrangement through the National Bank of Australia. Without going into the details of the system, which is complex, it boils down to a cost efficient way to obtain private finance to build substantially more houses than would otherwise be built through conventional methods. I urge my hon. Friend the Minister to consider that example as it could be adapted to the United Kingdom's experience.
    One of the difficulties has been to persuade financial institutions that housing associations are appropriate organisations in which to place funds. That was well illustrated three years ago, when North housing association endeavoured to raise money in the City. At that time, it said that the biggest two difficulties were the two words in its name—"north" and "housing"—which put off many institutions that might otherwise have been persuaded to lend money. It overcame that difficulty and convinced the financial institutions that it was a viable haven for their funds. However, housing associations have often failed to present their case effectively to financial institutions. Housing associations executives have often failed to distinguish between what the financial institutions

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    seek in terms of equity and where they would place fixed interest loans. One is suitable for risk and the other clearly is not. The packages put together by housing associations have not always recognised that.
    There is also an urgent need for housing associations to rethink how they present their accounts. Some hon. Members will know that they have a curious way of presenting them. It is largely misunderstood, or not understood at all, in the City and it puts many City institutions off. A little effort to reconsider the presentation of those accounts would go a long way.
    A viable rented sector needs willing landlords for whom renting is worth while, tenants who can afford to pay the rents, an arithmetic that stacks up, and a political framework with some continuity. Those are obvious requirements, but there are obstacles preventing their achievement. I refer in particular to housing benefit. The hon. Member for Manchester, Withington (Mr. Bradley) said that landlords—I am not sure whether he referred to "wicked" landlords but has perhaps done so on other occasions—were "ripping off" the housing benefit system. I do not believe that the blame rests exclusively with landlords. The housing benefit system does not operate as well as it might for two reasons. First, landlords and tenants cannot generally risk signing a contract until housing benefit is confirmed. Conversely, housing benefit officials often will not confirm the availability of housing benefit until the landlord and tenant have signed a contract. That is a Catch-22 situation which it should be possible to sort out. Again, I urge my hon. Friend the Minister to consider that problem.
    My second point relates to the attitude adopted by the hon. Member for Withington. Sometimes landlords provide accommodation for people in receipt of housing benefit only to discover part way through the tenancy that the eligibility for housing benefit has ceased. The landlord has no means of knowing that until he is asked by the housing benefit office to refund some of the money paid on behalf of the tenant who is no longer eligible. That is a quick and sure way of discouraging landlords from offering accommodation to recipients of housing benefit. The procedure needs tightening up; if it is not improved people will fail to find accommodation that they need.
    Finally, I urge the Minister to take another look at circular 7/91 published on 10 May, in which he announed his intention to allow public subsidy to go into shared ownership schemes even when there is some restriction on the availability of staircasing. Before the circular was issued the right to full staircasing was a strict requirement but the circular modified that requirement. The message coming from the Housing Corporation seems to contradict the contents of the circular—a matter of particular concern to people in rural areas. I urge my hon. Friend to tidy up this incompatibility.
    6.1 pm
    Mr. Ronnie Fearn: I believe that everyone should have the right to a decent and affordable home. It is a national disgrace that in 1991 thousands of people are sleeping on our streets, hundreds of thousands are registered as homeless and countless more are living in cramped and unhealthy accommodation.
    I accept that far more people now own their homes, but I cannot accept the cost at which that has been achieved. Government ideology, Government policy and the
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    legislative changes of the past decade are major contributory factors to the appalling state of the nation's housing stock. Britain's housing is in crisis. The immediate response should be the removal of restrictions on local government finance to allow the greater use of capital receipts for new build, maintenance and improvement. But that is not the whole answer, since many local authorities do not have large capital receipts or stocks of housing to sell.
    I should like some of the £23 billion that the Treasury has pocketed from the sale of council houses in the past 10 years to be reinvested in the housing market. Any Administration under our control would want substantially to increase direct public support for housing for people, however low their incomes. Our aim is to allow people maximum choice in how they house themselves and to gain maximum value for every pound of public money that we spend. This can be achieved by stimulating new investment to meet housing needs, by increasing the total amount of subsidy available and by dispensing it in a way that matches resources more closely to needs.
    We need to increase the money available for housing associations and local authorities to build, acquire, improve and maintain housing so as to provide for people on low incomes.
    We should introduce partnership housing, using a new and limited form of subsidy to enable a serious gap in the housing market to be filled—housing for people on middle incomes who for one reason or another prefer renting to buying. Measures such as these would need a new form of support, which we suggest would come from a housing cost relief, which will have the effect of making high rents more affordable and of enabling more people to cope with the difficult early years of buying a home.
    We hear a great deal about affordable housing, but what does it mean? What is affordable rented housing? There can be no precise definition of an affordable rent; each household has different incomes, needs, priorities and skills for coping with its budget. At the moment the country relies on housing benefit to implement affordable rents, but the steep withdrawal of that benefit with increasing income has a damaging effect on incentives for people on low incomes to increase their earnings.
    Ideally we should like a tax and social security system that shifts so much of the burden away from the low-paid that they can without hardship make a bigger contribution to their housing costs—
    Mr. Gregory rose—
    Mr. Fearn: I have no time to give way.
    We recognise that there would still be a need for a closely targeted housing benefit system, but we think that targeting could be less severe than it is now. Even a modest rate of withdrawal, at between 65p and 55p in the pound, should make life easier for many people.
    The pressures of the past 12 years have been in the direction of home ownership and the right to buy, but many people on average incomes would prefer to rent if rented accommodation were available and affordable. With the housing market in its present condition I understand that there is a discernible move away from buying and into renting.
    We see our proposals for housing cost relief and partnership housing as the only reasonable and economic way forward to encourage new housing for rent. Housing

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    cost relief would differ from housing benefit in three ways. It would apply to rent and mortgage payments above a certain level, say, £30 a week, and up to a ceiling of, say, £100 a week, with regional variations. It would cover only a proportion, perhaps 50 per cent., of the rent or the mortgage interest. The rate of withdrawal with increases in income would be gentle—probably about 20p in the pound. The threshold above which relief would be withdrawn would stand at about the median level of net income for a single earner: at the moment, about £150 a week.
    The introduction of such a housing cost relief would make possible the introduction of a new rented housing sector based on a lower subsidy than that applied to the provision of housing for low-income households. We call this new sector partnership housing. It would be based on a capital subsidy that would depend on market conditions of house prices relative to income. The level of subsidy would fall as land and house prices fell relative to income. The rent on a home costing £75,000 would be about £80 a week. Housing cost relief would reduce the cost to the tenant by up to £25 to a minimum of £55 a week. By this method we think that as many as 50 per cent. more dwellings could be provided through a partnership housing scheme, for a given amount of public spending.
    Mr. Den Dover: Will the hon. Gentleman give way?
    Mr. Fearn: I have not given way so far, and I will not now.
    Thus far I have spoken only about homes for rent, but if we are true to our aims of maximising choice the option to buy a home must extend down the income scale. The right-to-buy policy has made that possible for some, but it applies only to people living in council housing and we are well aware that the supply of stock is dwindling. Housing cost relief will give people on modest incomes about twice as much help as they would receive from mortgage tax relief, which is a less effective way of helping people. Indeed, I believe that many of the parties in the House are thinking again about it.
    The ceiling of £30,000 is half the cost of an average home and because of its across-the-board nature it does not target public money where it is most needed.
    Another scheme with the potential to help people on modest incomes to buy their homes is shared ownership. We welcome the arrangements for that brought in by the Government—they are not dissimilar to our partnership housing proposals. Our system of housing cost relief will offer a great deal of help and make shared ownership possible for a wider range of people.
    The provision of housing will mean little if that housing is of poor quality or if it is not maintained adequately. Investment in maintenance and repair is essential, and it makes economic and social sense to ensure that there are enough funds to maintain the existing stock. To allow property to fall into disrepair and rack and ruin merely adds to the housing and homeless crises.
    The erosion of local authority responsibility for building control must have a detrimental effect and has caused hardship to many home buyers. Full responsibility for the inspection and approval of building works should be restored to local authorities. There must be a review of
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    all aspects of building regulations and codes of practice with a view to improving the long-term durability of construction and economy in the use of energy.
    We would promote the standards that are recommended in "Homes for the Future", which was published jointly by the Institute of Housing and the Royal Institute of British Architects, and would consider legislative backing for the essential standards in that document. I favour legislation to widen the definition of unfitness. That is relevant to the private rented sector in which conditions are often appalling. People who rent in the private sector are entitled to decent, good-quality accommodation.
    In 1989, we said that we would encourage local authorities to take the initiative in developing agency schemes to help improve and maintain privately owned housing stock. We have been pleased with developments since then at national and local level, although we share doubts as to whether the £3 million allocated by the Government is enough to keep those agencies going. While we welcome the funds allocated to inner-city projects for improving estates, we would like to see all councils being able to improve the quality of life on their estates and, where necessary, being able to redevelop.
    Another issue requiring attention is the number of empty properties under local government control. When waiting lists are long, that should not be tolerated. Many of the properties are empty because councils do not have the money to bring them up to standard. Others are empty because of mismanagement and inefficiency. Councils must find ways to turn over property between lettings at a much quicker rate. One way may be to involve the tenants, and I was pleased to hear the Minister speak about that. Tenants could carry out redecorating and minor repair work. More funds should be provided to enable local authorities to bring empty properties back on to the rent market, and a relaxation of capital controls could provide some such funds.
    We advocate a regular analysis of repairs that are required and those that have been carried out, and we want to see regular monitoring of performance with contractors expected to reach high standards of tenant satisfaction. For example, the Liberal Democrat-controlled council of Berwick has a four-year rolling programme for repairs using a number of small agencies. The condition of the council's stock and the efficiency of its programme was recently given an excellent report by the Audit Commission. Our councils are committed to tackling the deterioration in the private sector by running an efficient improvement grant system and by working with agencies and the voluntary sector to ensure that those in most need are getting the assistance that they require.
    The Government's improvement grant means test is far too restrictive, and we should like to see it removed for the disabled and the elderly. The elderly are particularly relevant because they disproportionately have homes which lack basic amenities and they cannot afford repair and maintenance.
    There is an obvious need for more direct investment of public money in the grants system. That would be imperative if the definition of unfitness were broadened and standards were strictly enforced. Enforcement is rather lax at the moment. However, when providing direct funding we must look at other ways of providing incentives to save and repair.
    Private sector tenants who do not have a repair obligation in their contracts are, of course, not entitled to

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    an improvement grant, yet the private rented sector contains some of the worst disrepair. We should tackle that by giving tenants the right, with local authority approval for works and cost, to call in contractors to carry out essential repairs. In that context I am sure that there is a role for agencies. The local authority would be responsible for payment in the first place, but would be entitled to register a land charge against the property until the cost had been paid. When the repairs had been completed the landlord would be entitled to a rent increase, but that would be paid to the council until the debt was discharged. We expect that most tenants would have the extra rent increase largely covered by housing benefit.
    Local authorities should have a statutory duty to ensure that housing, public health and fire regulations are observed in all multiple occupation premises and that properties with three or more households sharing essential living accommodation should be registered with the local authority. Properties not up to standard should be priority targets for acquisition by councils, housing associations and co-operatives and, where appropriate, we would use compulsory purchase orders.
    I spoke about empty Government properties, but there are more than 600,000 empty properties in the private sector. Thousands of people are sleeping rough or in inadequate, cramped accommodation and it is obscene that so many properties are allowed to lie empty and fall into disrepair. We are willing to find ways of giving owners greater incentives to bring their properties up to standard and back on to the market, but when a property is intentionally left vacant we are prepared to introduce a new mechanism by which local authorities can serve a notice of intention to let, with appropriate right of appeal. Then, if necessary, we will extend compulsory purchase powers to enable local authorities to buy private homes which, I repeat, are intentionally left vacant for a significant time.
    I have outlined some of the policies that should have been put in place during the past 12 years. The disaster area of housing has gone on for far too long. It should be tackled now.
    6.19 pm
    Mr. Hugo Summerson: I shall concentrate on housing action trusts, not because I want to, but because of the short time that is available. There is a proposed housing action trust in the borough of Waltham Forest in my constituency, and it is greatly welcomed. If the tenants vote in favour of the trust, it will cost about £160 million to £170 million, which is a considerable investment of public money. The trust would cover four estates in the borough: Chingford hall, Boundary road, Oliver close and Cathall.
    Boundary road is in my constituency and all four estates share the same characteristics. They are 1960s designed and built tower blocks and they are horrendous. It is dreadful to think that they could ever have been conceived, and it is appalling that they were so badly built and have been disgracefully managed. Tower blocks breed unemployment, despair and misery, and the sooner that they are taken down the better. The only people who will regret their passing are the criminal fraternity, who engage in stripping stolen cars, and the owners of pit bull terriers. I do not know where those people will go when the blocks
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    are demolished, but with any luck they will all make their way to Hammersmith. I am delighted to say that, if the housing action trust goes ahead, there will be tenants on the board, which will allow their voice to be heard. This is a great improvement over the housing action trust mark 1, which did not permit tenants any say in the running of their estates.
    Safeguards are built in for the tenants on, for example, rents, which will be frozen while the housing action trust is in operation. Once the tenants have moved to their new homes, the new rents will be set at levels similar to those for comparable council properties. Moreover, tenants will have the right to choose their own landlord. Once they have moved into their new homes, under the housing action trust, if tenants wish to keep the local authority as landlord, then they have the right to do so. If, on the other hand, they choose to have a housing association as their landlord, or if they choose to set up a tenants' co-operative so that they can run their homes themselves, or if they wish to exercise their right to buy, all these options are open to them. There is no question of privatising these estates—a slanderous and disgraceful suggestion that has been made by such bodies as the Socialist Workers party. I urge the tenants to take no notice of what these people say.
    There is no doubt but that this is the way forward. It is the way to deal with dreadful estates of this type. I hope that the tenants on such estates in the London borough of Waltham Forest will turn out in great numbers for the vote on 13 July. I hope that there will be a clear-cut, decisive vote.
    6.21 pm
    Ms. Mildred Gordon: The mark of a civilised society is that it is one in which people can expect to be decently housed and clothed, to have enough to eat and to have access to health care and to education for their children. Our society fails many people in a number of these respects, but nowhere more so than in housing. Every Member of Parliament representing an inner-city area has thousands of cases of human misery, ill health and broken families—all caused by overcrowding and the impossibility of getting somewhere decent to live. Furthermore, it is a cause of racial conflict. The Government put the squeeze on local authorities and refuse to let them have money for council house building, and so communities turn against each other and fight for the meagre resources that are left. The worst part of it is the loss of hope and the depression that come from 10 years of being on the waiting list and seeing no chance of a solution.
    Tower Hamlets is fairly typical of inner-city boroughs. It has over 1,000 families accepted as homeless. Many are in bed-and-breakfast accommodation. The money that goes on bed and breakfast represents millions of pounds down the drain because it provides no permanent solution. I have visited constituents in seedy bed-and-breakfast hotels in Paddington and Earl's Court. The conditions are appalling. In a room the size of a boxroom in an average semi-detached house, there are two beds, a mother and father and two children. There is no television or a fridge. There is a coffee table at which one person can eat while the others eat on their beds. The mother comes up a steep flight of stairs from a communal kitchen with one child in her arms and the other hanging off her skirts, carrying pots of boiling food. Not only are they in danger, but, as I know

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    from my experience as a teacher, these children will have no chance of healthy development. A child needs a place to move, to run and to stretch so as to develop mentally and physically, and there is no room for them to do so. These families in bed-and-breakfast hotels are condemned to a nightmare.
    According to the community charge office, Tower Hamlets has 4,000 empty and second homes, most in the private sector. In docklands 1,500 units—the minimum admitted by the London Docklands development corporation—are luxury homes that people cannot afford to buy. We need radical solutions. The right-to-buy money must be released and used to repair empty homes so that they can be used. All unused land in public ownership must be released so that prefabs can be put on it; then we could do something within months to accommodate the vast majority of homeless families. Privately owned homes that have been empty for years must be requisitioned and let by local authorities.
    The right to buy helped many people to purchase their own homes, but it has reduced the condition of public sector housing stock. In London, one fifth of the housing stock has been sold, three quarters of it houses with gardens, because they are what everybody wants to live in. That leaves only 15 per cent. of council tenants in houses with gardens. Therefore, the worst stock is that left in municipal control.
    In docklands, we had a great opportunity to solve the housing problems because vast areas of land were left unused. When so much land is left empty, it must be zoned so that a fair proportion of it goes for affordable housing. Instead, million of square feet of office space was built, half of which is empty, and millions more are to come although they are surplus to requirements. That is not the answer that we need, in Tower Hamlets or any other city centre.
    Most people dream of owning their own homes, but for many that dream has turned sour and has become a nightmare in these days of unemployment and rising interest rates. People come to me in desperation. They have bought their homes, but they cannot pay service charges, or a big repair has to be carried out, and they do not have the money for it. Bow county court deals with more repossession cases than any other court in London. A single person needs an income of £21,000 and a family needs an income of £26,000 to be a first-time buyer. That is no answer in an area such as Tower Hamlets, one of the poorest in the country.
    The sad evidence of the failure of the Government's policy of trying to put an end to council house building can be seen all round us in London—in the people living in the streets, in the crowded rooms of the seedy bed-and-breakfast hotels and in the queues of desperate people in the surgeries of every London Member of Parliament. As I have said many times, for my constituents and those in other urban areas, the only practical answer is more affordable housing built by municipal authorities. The Government can shake their head and proffer other methods, but that method took people out of the slums and gave them decent homes and it is the only one that will work in the future.
    6.27 pm
    Mr. David Nicholson: I listened with interest to what the hon. Member for Bow and Poplar (Ms. Gordon) said about housing conditions in her constituency and other inner cities. I remind her of what a former Labour council leader said about his council, Liverpool. Mr. Keva Coombes said:
    "Tenants get an appalling service, and they know that. I think probably the fundamental cause is, frankly, we've put the interests of the providers of the service, the workforce, above the interests of the tenants."
    How true that is of so many services provided in Liverpool.
    I am sorry that my hon. Friend the Minister was not able to develop his thoughts on reviving the private rented sector. My hon. Friend the Under-Secretary of State will recall that he told me, in a written answer:
    "It is too early to assess the overall impact of the Act on private renting."—[Official Report, 14 February 1991; Vol. 185, c. 541.]
    He was referring there to the Housing Act 1988. He pointed to some hopeful signs, but we still have a long way to go before we have a revived private rented sector. In contrast, in West Germany nearly half all homes are privately rented. In this country, there are some 600,000 empty private sector homes, many of which could be used to house the homeless. Unfortunately, previous restrictions have deterred such use.
    There are hopeful signs—for example, reports in the London borough of Islington published in October 1990 show that private landlords are renting up to 30 per cent. more homes than they were two years ago. But in my constituency and in other parts of the south-west, there is no substantial scope for reviving the private rented sector. We must look to local authorities, or more particularly housing associations, as my hon. Friend the Under-Secretary knows.
    I note that my hon. Friend the Minister said earlier that the Government have reallocated capital away from areas with receipts to areas without receipts. I hope that the Government will constantly take into account local authorities' practice of keeping homes empty, not collecting the rent and not facilitating the sale of council homes. Hon. Members will recall that I have made those points before. For example, in most of the districts of the south-west, between 25 and 30 per cent. of council accommodation has been sold, whereas in parts of London less than 10 per cent. of a much larger council estate has been sold. I hope that the Government will not lean over backwards too far to help inner cities in that respect.
    An unpublished study of the housing situation and the consequences of council sales in my constituency said:
    "Family houses are more attractive to potential buyers than flats…This has clear implications for the housing section of Taunton Deane, as it displays a clear lack of available family accommodation which will either have to be met through an increased building programme, or through private rented sector property and reveals a problem which has arisen not solely, but perhaps largely as a result of the depletion of the housing stock through the promotion of the Right To Buy."
    I therefore welcome the suggestion made in a letter dated 24 April from my hon. Friend the Under-Secretary of State about the capital finance system. He said:
    "We shall keep the workings of this system under review and I do not rule out changes at some time".

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    I reiterate that some flexibility in the administration of the system would be welcome not only to me but to a number of my hon. Friends who represent local authorities which have handled their assets well.
    Finally, I wish to relate housing provision and home improvements to our present economic situation and to the needs in the coming year or so to try to revive that sector of our economy. The Building Employers Confederation, in which I declare an interest as an adviser [Interruption.] As the hon. Member for Hammersmith (Mr. Soley) will recall, I advocated these views before I became involved with the organisation and I should continue to advocate them were I not involved. It makes this point:
    "Housing output will have to be expanded in both the private and the public sectors, to meet market demand".
    It also says:
    "Capital receipts are an available source of funding for the Housing Corporation if Ministers do not wish local authorities to build. Now is a good time to get housing associations to increase output, because land and building prices are low and they can maximise 'bang for the buck'"—as builders call it—
    "at present. Rules preventing local authorities using their own land to pay for more building work should be relaxed."
    I note that when the economy was recovering from recession between 1981 and 1984 there was a significant increase in the amount of spending on home improvement grants. In the financial year 1981–82, £197 million was spent on home improvement grants. In 1983–84, when the economy was reviving, £911 million, nearly £1 billion, was spent on home improvement grants—a considerable increase at that time. I commend that to my hon. Friend the Minister. I know that he has recognised in correspondence with me the teething troubles in the system that was introduced last year and I hope that this opportunity will be taken to try to float that sector off the rocks on which it is at present.
    There is also the problem in my constituency, and I think in others, too, of owner-occupied homes which are in some difficulty because of non-traditional build. In Taunton—in the Galmington area—there are Woolaway houses which were built just after the war. They are not facing significant problems in terms of repair, but they are facing problems with regard to resale. As my constituent Mrs. Keitch says:
    "On the last sale the purchaser had an extensive structural survey carried out on the house which proved positive in confirming that it was well-constructed and well maintained, but the purchaser withdrew because of unfounded rumours and worries about resale problems."
    I have corresponded with my hon. Friend the Minister about that and I hope that he will continue to attach importance to the problem which is causing blight in parts of my constituency and no doubt other constituencies, too. Widows or elderly people occupying such homes and wanting to move to smaller, more manageable properties would release substantial three and four-bedroom houses for families in my constituency and elsewhere who are in urgent need of such accommodation.
    I commend my hon. Friend's policies and I commend these points of concern to his attention.
    6.35 pm
    Mr. Terry Rooney: It is important when discussing housing to get away from the rhetoric of simply slagging off any Labour-controlled authority and blaming everything on municipalisation. We should
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    remember that many Tory-controlled councils are public-sector landlords to many people. I also despair at Tory Members—one of whom I am glad to see returning to the Chamber, the hon. Member for Cannock and Burntwood (Mr. Howarth)—who spend their time here whingeing about their Labour-controlled authorities and then write to them asking for special treatment for people whom they see at their surgeries. That is despicable.
    It is important to remember that HIP allocations apply not simply to public sector schemes, but to new build, the modernisation of existing stock, the estate action programme allocation, statutory improvement grants, mortgages for council house buyers and support to housing associations.
    My authority in Bradford, which is a pleasant mix of inner-city and rural areas, has seen a 75 per cent. reduction during the past 10 years in its HIP allocation. In 1990–91 we saw an increse in expenditure on bed and breakfast from £20,00 to £200,000. For the first time, Bradford had a long-term bed-and-breakfast accomodation problem on its hands. Last year, 2,300 people were assessed as priority homeless. Because of the loss of housing stock during the past 12 years we were able to house only 975 of them and 1,200 people were left in bed-and-breakfast accommmodation. In addition, more than 4,000 families are trapped in flats waiting for houses that they cannot have because the majority of houses have been sold.
    As my hon. Friend the Member for Bow and Poplar (Ms. Gordon) said, bad housing affects education. We all know that substantial research has been done which shows that one of the major influences on children's educational achievement is their environment. Stress caused by poor accommodation leads to family break-up which in turn means that two units of accommodation are needed, adding to the problem. Such stress in turn makes demands on the health service. For far too long, the indirect consequences of the Government's housing strategy and the costs associated with it in other areas have never been brought together.
    Because of the ludicrous housing subsidy rules, we now have the poor subsidising the poor. In 1990, £8 million in housing subsidy was lost from the housing revenue account. This year that figure has risen to £10 million. That has produced a rent increase of £6·20 which means that housing benefit must be increased—a rising spiral in subsidy.
    In Bradford we have seen the rise of disreputable second mortgage companies which will advance money at extortionate rates of interest. At the first failure to pay they will go to the county court for a possession order.
    Last week, one of my constituents came to see me. She may have been foolish, but never mind that. She had taken out a second mortgage to the value of £19,000 and—having, perhaps, taken less than the best legal advice—had signed a document that would lead to her losing her home three years later. Meanwhile, her debt stands at £31,000. That is the legacy of the 1990s, when the present Government created the myth that it was possible to extract the equity from a property and thus dispense with all worries. Now all the chickens are coming home to roost.
    I will say little about the building societies. By and large, they are well intentioned; they have been led up the garden path by the new powers that they have been given, and now want to turn themselves into banks. We all know what that means.

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    What, then, is the solution? Both the Minister and Opposition Members have talked about housing strategy. I only wish that there were a housing strategy. We need a strategy that recognises all tenures and all agencies, and makes no excuse for bad management by local authorities, building societies or private landlords.
    We need a strategy that reflects market forces. Nine thousand people are on the waiting list in my local authority area, because they want low-cost public-sector housing. The market is there; when will supply match demand?
    In the past 10 years, the number of housing starts in West Yorkshire has fallen from 20,000 a year—both public and private—to 8,000. An indirect consequence of that pattern, which has been repeated across the country, is the fact that some 250,000 construction workers are now on the dole.
    We need that new strategy soon and we need similar strategies to deal with associated problems in, for instance, education and health.
    The Minister said that far too many people lived in estates that had been designed by people who did not live in them, and would not want to. Let me tell him that far too many local authorities' housing policies are being determined by civil servants who live in London, and are acquainted only with London problems. They have no conception of life outside the metropolis, because they venture further afield only on overseas trips.
    6.42 pm
    Mr. Clive Soley: Nothing in the debate has suggested that the Government appreciate the seriousness of the housing problem. Indeed, everything that we have heard suggests that they are as complacent as ever. If nothing that my hon. Friends have said has had the desired effect, I should perhaps remind the Government that housing investment in this country has collapsed from 6 or 7 per cent. of gross domestic product to about 2 per cent.—far lower than the proportion spent in any comparable European or western country. We see the evidence on our streets, and also in the many reports that reveal the current decay in our housing stock.
    No one listening to the debate would gain the impression that the Government, or their supporters, were even aware of the reports by the Duke of Edinburgh, the Public Accounts Committee or the Select Committee on the Environment—or, indeed, of the report by the Association of District Councils, which seems to have had no impact on the Government, although the ADC is composed of their friends and supporters.
    Listening to the hon. Member for Gloucester (Mr. French), no one would think that there was a housing problem in his constituency; yet Conservative councillors from that borough have asked me to try to persuade the Government to allow them to use capital receipts to replace housing costs in rural areas. I have received similar representations from other parts of the country. The Government are clearly prepared to ignore not only the Opposition but outside bodies. When will they start to listen to their supporters, who have also spelt out the problems?
    Mr. Gregory: Will the hon. Gentleman give way?
    Mr. Soley: I would love to give way, but, if I did, I would be taking time away from the Minister. I have eight minutes and he has 10.
    The Minister implied that the Labour party had killed off the private rented sector. In 1979, when the Conservative Government were elected on the basis of their promise to revive that sector, it represented 14 per cent. of the rented market; now it represents 7 per cent.
    Mr. Summerson rose—
    Mr. Soley: I shall not give way, unless I do so at the Minister's expense.
    That market share is now declining further, except at the upper end of the market—and it is rising at that end only because house prices are currently frozen, and landlords are letting on a short-term basis. When the housing market starts to pick up again, those short lets will come to an end, and the housing problem will recur.
    As the Duke of Edinburgh's report has pointed out—and as I have pointed out for many years—the private rented sector has declined because of our system of housing finance. Only at the margins is that decline connected with the Rent Acts—as evidence from Northern Ireland and, indeed, elsewhere will show anyone who cares to examine the details.
    The Government have fallen back on another example—empty properties. As Labour has said for some time, and as my hon. Friend the Member for Bradford, North (Mr. Rooney) has said tonight, when there is evidence that a landlord has not acted properly—whether that landlord is Labour or Tory, council or public housing association, or, indeed, private—we shall take steps to ensure that the property in question is transferred to a manager who can manage it, in the private sector if necessary.
    Let me remind the Government, however, that 16 per cent. of their houses—35,000 properties—are empty. If they have read the reports of the Public Accounts Committee and the Select Committee on the Environment, they will know that only 2·5 per cent. of local authority houses are empty. Even authorities with larger housing stocks usually have special reasons. Where that does not apply, I would suggest transfer.
    I shall issue a challenge to the Minister, which he may wish to meet when he replies to the debate. In the Government sector, 35,000 properties are empty—and I emphasise that most are not needed for defence purposes. One in five London police houses are empty; prison officers' houses have been left empty for up to 10 years. In Archway, Department of Transport properties are even now being auctioned off, while many Ministry of Defence houses are being kept empty for sale by auction. I challenge the Government to transfer those properties, here and now, to housing associations or local authorities. It is a question of, "Do it now—don't talk."
    Let me tell the Minister what really happened about housing action trusts. I understand why he does not know: historically, housing Ministers in the present Government have lasted for an average of six months. The present Minister was not involved at the time; I give him full credit for that. If he had been, he would not have said what he did say.
    In the Committee stage of the Housing Bill 1988, we argued against housing action trusts. We said that tenants would not be forced out of the council sector; we also saw problems involving rent-setting mechanisms and so forth.

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    Every one of the seven housing action trust areas identified by the Government voted them down. As a result of that pressure, and as a result of my taking groups of Members of Parliament to see the then Minister—the hon. Member for Rossendale and Darwen (Mr. Trippier)—the Government began to shift their position. Now they are saying that tenants can go back to the council sector.
    Given that the tenants who voted the system down in the seven areas identified by the Government were not offered the special and favourable deals that are now being offered to Hull and Walthamstow, which I welcome, will the Minister now make the same offer to those tenants? They knew that they would be transferred. Furthermore, is he prepared to change the law, which, as it stands, is not commensurate with his offer?
    Let me say to the Minister what I have said to the Hull authority—I said it some time ago, and it is in writing. Those tenants will have the right to go back to either the local authority or another landlord of their own choosing; they need not go back to the local authority.
    Then there is the question of housing authorities. It is wonderful, is it not? Various hon. Members are falling in love with the housing association movement: terrific. I wish that it had been so throughout the 1980s, when the housing associations grant was cut time and again. Now they are only just getting back to where they were in the 1970s. What a damning indictment of the Government's policy.
    What else are the Government doing? One Minister —he is now Secretary of State for Health—promised to revive the co-ops. This year, the co-ops have had the lowest-ever allocation from the Housing Corporation—just 300 housing units. What a disastrous, incompetent measure.
    Let me make two points about ending transfers—and I address this to the hon. Member for Gloucester as well as to the Government. Can we have a guarantee that, whenever tenants are transferred, they will be given the money to take independent advice about the desirability of the deal? Some tenants have bought a pig in a poke. An example of that—it was not badly intentioned—is the Greater London council seaside homes where tenants ended up paying more than they were told that they would have to pay. It was the fault of the housing association in that it got its sums wrong, but that was not surprising in view of the circumstances of the deal. Those involved were not offered independent advice which might have warned them off. No one should be transferred without independent advice.
    I could make a success of a transfer if I were told that I could buy each unit for under £10,000, which is the maximum price for any house or flat in any total stock transfer that has taken place in Britain. Any fool could make a success of that. If one writes off all the debt, things can be improved. If it is such a good thing, why not do it for local authorities? The Minister says that we cannot have the capital receipts. He wants to do the equivalent of going home at night, finding that the roof is leaking and telling his family, "I am sorry, the roof needs to be repaired but we should pay off the mortgage." It is lunacy to use the money from capital receipts to pay off debts when there are so many homeless. It is also wicked. Therefore, the Government cannot use that excuse either.
    There is a campaign for rough sleepers. Homelessness is not just a London problem and it is nowhere near being solved. I welcome the units that the Government have
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    made available, but more homeless people will come to use them. They will come from Gloucester, Taunton, Liverpool, Manchester and Newcastle. People will come from all over the place and the homelessness problem will continue to increase because, as the Duke of Edinburgh said, we have lost 1·9 million properties from the rented sector. The aggressive begging comes from the Government, begging for an excuse for policies that have failed the nation.
    6.51 pm
    The Parliamentary Under-Secretary of State for the Environment (Mr. Tim Yeo): This has been an instructive debate on an important subject, and I welcome some of the contributions, including the eloquent plea of my hon. Friend the Member for Walthamstow (Mr. Summerson) for a housing action trust there. I hope that the tenants will take careful note of what he said. I was interested in the suggestions of my hon. Friend the Member for Gloucester (Mr. French) for encouraging voluntary transfer. I shall draw the attention of the Department of Social Security to his remarks on housing benefit. I should like him to clarify his concerns about the Housing Corporation's attitude to circular 7/91. Perhaps he will do so in a letter.
    My hon. Friend the Member for Taunton (Mr. Nicholson) made some powerful remarks about the revival of the private sector, the use of capital receipts and defective housing in his constituency. Almost all the other speeches were pleas for more money to be spent on council housing. Opposition Members ignored entirely the enormous resources that the Government are putting into the housing association movement. The hon. Member for Manchester, Withington (Mr. Bradley) is a former employee of Manchester city council. Before he asks the Government to put more taxpayers' money into that city, he should do something about collecting the £15 million of rent arrears which were outstanding at the end of 1990. The hon. Member for Bow and Poplar (Ms. Gordon) should ask why Tower Hamlets council had 1,758 empty council properties at 1 April 1990. Those were council properties built for council tenants. They were not built for policemen or hospital workers or for soldiers returning from abroad. They were meant for tenants and should be for tenants. They would be used by tenants if the Labour-controlled local authority did something about it.
    The debate has reminded the House how the Government's policies over the past 12 years have given Britain more and better housing than at any time in history. The policies have been based on expanding home ownership, which is the preferred choice of the vast majority of families and individuals. Home ownership is now at record levels and is expanding still further with the promotion of shared ownership schemes and other intiatives designed to bring owner-occupation within the reach of those for whom it was previously impossible.
    The Government's policies are also designed to improve choice and opportunity for tenants. They give all tenants more say in their own affairs. They target more resources where they are most needed and encourage the private landlord to play a bigger role in housing the homeless. The private landlord will have listened with interest to the reply of the hon. Member for Dagenham (Mr. Gould) to the intervention of my hon. Friend the Member for Hornchurch (Mr. Squire). The hon. Member for Dagenham refused to say that the Labour party would

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    abandon its crazy policy of giving private tenants the right to buy. If ever there was a sure way of ensuring that the private rented sector remained largely dormant, it was that threat of confiscation.
    The debate has also provided an opportunity for my hon. Friend the Minister for Housing and Planning to mention the hugely increased resources that we are putting into housing associations via the Housing Corporation and by making it possible for housing associations to tap private finance for the benefit of tenants. All those positive steps have been resisted in one way or another by the Labour party's dogged determination to continue living in the past. For example, the rents-to-mortgages experiment is now successfully under way in Basildon and Milton Keynes. That initiative manages to promote home ownership and extend the rights of tenants. It is sad but not surprising that no Labour Member today had a word to say in favour of that scheme. As it took so many years of proven Conservative success and overwhelming tenant enthusiasm before the Labour party replaced its obstinate hostility to the right to buy with its present grudging acceptance, it will be many more years before it gives the rents-to-mortgages scheme an unqualified endorsement.
    The debate also reminded the House of what the Labour party would inflict on tenants and landlords if it ever got the chance. We have had the usual hostility to the private landlord, thinly disguised inside the Labour party's so-called new agenda for the private rented sector. That agenda has been drawn up carefully to prevent private landlords from providing for poorer tenants. The initiative of my hon. Friend the Minister for Housing and Planning, the pilot scheme under which housing associations are invited to bid for an opportunity to manage private property on behalf of landlords and to act as an intermediary between them and homeless families, is worth while. It would have done the Labour party some good if it had thought to give that a favourable mention.
    The trouble is that at the core of the Labour party's policy is a deep-seated desire to meet every housing need by throwing huge sums of money at local authorities. The Government utterly reject that approach. Never again should tenants face the dreary monopoly of no alternative to a local council landlord. It was the excessive dependence on local authorities as the monopoly provider of subsidised housing which led directly to the dreadful conditions still found on many council estates today. That policy was utterly rejected by the Government but is still supported by the Opposition. It has given us more than 5,000 empty houses in Labour-controlled Manchester—more than one property in 20 of the total council stock. That same policy left more than £26 million of uncollected rent from tenants in Labour-controlled Southwark, almost one third of the annual rent roll.
    Labour councils cannot be bothered to collect the rents that would pay for the improvements and maintenance that we want tenants to receive, but the Labour leadership is certainly not slow in promising to spend huge sums of taxpayers' money. Exactly how much it would spend remains shrouded in some obscurity. The promises that fall glibly from the lips of the hon. Member for Dagenham may not have been approved by the hon. Member for Derby, South (Mrs. Beckett). When she was confronted with the ghastly reality that Labour's spending
    222
    commitments would require a basic rate of tax of 40p in the pound, the hon. Member for Derby, South back-pedalled furiously. The hon. Member for Dagenham told the House last year that a Labour Government would immediately set in train a scheme costing £1·85 billion as a solution to the homelessness problem. Was that commitment cleared with the hon. Member for Derby, South?
    Later in the year the hon. Member for Dagenham was at it again. He told the Chartered Builder magazine that over £8 billion was promised for construction, repair and maintenance. I doubt whether that was cleared with the hon. Member for Derby, South. Perhaps she is not such an avid reader of that magazine as I am. When we talk of £1·85 billion here and £3 billion there, we are talking about real money. Those spending pledges are either a hollow and cynical sham designed to buy votes from every pressure group that presents itself on Labour's door, or they represent a clear and unambiguous threat to every taxpayer in the country—an attempt to cripple taxpayers and wreck the economy.
    Liverpool is a supreme example of what Labour rule can do to a once proud and prosperous city. Of all the disasters caused by Labour's administration in Liverpool, its housing is supremely disgraceful. There are over 5,000 empty council properties—one in every 12 owned by the council. That is the worst record of any local authority in the country. There is 16 million of uncollected rent—more than a quarter of the total rent roll.
    However, hope exists for Liverpool's beleaguered tenants in the form of a housing action trust. Last week the city council voted to start negotiations. I warmly welcome that change of heart, but does the Labour party? Is it still firmly opposed to housing action trusts? Will it threaten Liverpool council as it threatened Hull council with the winding up of a housing action trust before it has even had a chance to get under way?
    On this crucial issue of housing action trusts, the Labour party leadership in Parliament is opposed to its whizzo new moderate Liverpool city council. So deep and rigid is the attachment of the Labour Front Bench to out-of-date dogma that it cannot utter a word in support of its councillors in Liverpool, who are belatedly attempting to redress some of the wrongs that were inflicted on them in the early 1980s.
    A year ago tomorrow, the House debated a Labour motion on housing. In that year, Labour has learned nothing and forgotten nothing. The same touchstones have been uncovered—a slavish and unquestioning enthusiasm for the local authority monopoly landlord, the same profound hostility to extensions of tenants' rights, the same resolute determination to stop the growth in the private sector. Those were the solutions of the 1960s. They were mistakes then; they are irrelevant now. The House should reject the motion.
    Question put, That the original words stand part of the Question:—
    The House divided: Ayes 194, Noes 276.

    Division No. 197]

    [at 7.00 pm

    AYES

    Abbott, Ms Diane

    Ashley, Rt Hon Jack

    Adams, Mrs Irene (Paisley,N.)

    Ashton, Joe

    Allen, Graham

    Banks, Tony (Newham NW)

    Alton, David

    Barnes, Harry (Derbyshire NE)

    Archer, Rt Hon Peter

    Barnes, Mrs Rosie (Greenwich)

    Ashdown, Rt Hon Paddy

    Battle, John

    223

    Beckett, Margaret

    Howells, Geraint

    Beith, A. J.

    Howells, Dr. Kim (Pontypridd)

    Bellotti, David

    Hughes, John (Coventry NE)

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

    Hughes, Simon (Southwark)

    Bermingham, Gerald

    Ingram, Adam

    Blair, Tony

    Janner, Greville

    Blunkett, David

    Johnston, Sir Russell

    Boateng, Paul

    Jones, Barry (Alyn & Deeside)

    Boyes, Roland

    Jones, leuan (Ynys Môn)

    Bradley, Keith

    Kaufman, Rt Hon Gerald

    Brown, Gordon (D'mline E)

    Kennedy, Charles

    Brown, Nicholas (Newcastle E)

    Kinnock, Rt Hon Neil

    Brown, Ron (Edinburgh Leith)

    Kirkwood, Archy

    Bruce, Malcolm (Gordon)

    Lambie, David

    Buckley, George J.

    Lamond, James

    Callaghan, Jim

    Leighton, Ron

    Campbell, Menzies (Fife NE)

    Lewis, Terry

    Campbell, Ron (Blyth Valley)

    Litherland, Robert

    Campbell-Savours, D. N.

    Livingstone, Ken

    Canavan, Dennis

    Lofthouse, Geoffrey

    Carr, Michael

    Loyden, Eddie

    Cartwright, John

    McAllion, John

    Clarke, Tom (Monklands W)

    McAvoy, Thomas

    Clwyd, Mrs Ann

    Macdonald, Calum A.

    Cohen, Harry

    McFall, John

    Cook, Frank (Stockton N)

    McKay, Allen (Barnsley West)

    Cook, Robin (Livingston)

    McKelvey, William

    Corbett, Robin

    McLeish, Henry

    Corbyn, Jeremy

    Maclennan, Robert

    Cousins, Jim

    McMaster, Gordon

    Crowther, Stan

    McWilliam, John

    Cryer, Bob

    Madden, Max

    Cummings, John

    Mahon, Mrs Alice

    Cunliffe, Lawrence

    Marek, Dr John

    Cunningham, Dr John

    Marshall, David (Shettleston)

    Dalyell, Tam

    Marshall, Jim (Leicester S)

    Darling, Alistair

    Martin, Michael J. (Springburn)

    Davies, Rt Hon Denzil (Llanelli)

    Martlew, Eric

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

    Maxton, John

    Dewar, Donald

    Meale, Alan

    Dixon, Don

    Michie, Bill (Sheffield Heeley)

    Dobson, Frank

    Michie, Mrs Ray (Arg'l & Bute)

    Duffy, Sir A. E. P.

    Mitchell, Austin (G't Grlmsby)

    Dunnachie, Jimmy

    Moonie, Dr Lewis

    Eadie, Alexander

    Morgan, Rhodri

    Eastham, Ken

    Morley, Elliot

    Edwards, Huw

    Morris, Rt Hon A. (W'shawe)

    Ewing, Harry (Falkirk E)

    Morris, Rt Hon J. (Aberavon)

    Ewing, Mrs Margaret (Moray)

    Mowlam, Marjorie

    Fatchett, Derek

    Mullin, Chris

    Fearn, Ronald

    Murphy, Paul

    Field, Frank (Birkenhead)

    Nellist, Dave

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

    Oakes, Rt Hon Gordon

    Fisher, Mark

    O'Brien, William

    Flynn, Paul

    Orme, Rt Hon Stanley

    Foot, Rt Hon Michael

    Owen, Rt Hon Dr David

    Foster, Derek

    Patchett, Terry

    Foulkes, George

    Pendry, Tom

    Fraser, John

    Pike, Peter L.

    Fyfe, Maria

    Powell, Ray (Ogmore)

    Garrett, Ted (Wallsend)

    Prescott, John

    George, Bruce

    Primarolo, Dawn

    Gilbert, Rt Hon Dr John

    Randall, Stuart

    Golding, Mrs Llin

    Redmond, Martin

    Gordon, Mildred

    Reid, Dr John

    Gould, Bryan

    Richardson, Jo

    Grant, Bernie (Tottenham)

    Robertson, George

    Griffiths, Nigel (Edinburgh S)

    Robinson, Geoffrey

    Hain, Peter

    Rogers, Allan

    Hardy, Peter

    Rooker, Jeff

    Harman, Ms Harriet

    Rooney, Terence

    Haynes, Frank

    Ross, Ernie (Dundee W)

    Heal, Mrs Sylvia

    Rowlands, Ted

    Healey, Rt Hon Denis

    Salmond, Alex

    Hinchliffe, David

    Sedgemore, Brian

    Hoey, Ms Kate (Vauxhall)

    Sheerman, Barry

    Hogg, N. (C'nauld & Kilsyth)

    Sheldon, Rt Hon Robert

    Home Robertson, John

    Shore, Rt Hon Peter

    Hood, Jimmy

    Short, Clare

    Howell, Rt Hon D. (S'heath)

    Sillars, Jim

    224

    Skinner, Dennis

    Welsh, Michael (Doncaster N)

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

    Williams, Rt Hon Alan

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

    Williams, Alan W. (Carm'then)

    Snape, Peter

    Wilson, Brian

    Soley, Clive

    Winnick, David

    Spearing, Nigel

    Wise, Mrs Audrey

    Steel, Rt Hon Sir David

    Worthington, Tony

    Taylor, Mrs Ann (Dewsbury)

    Wray, Jimmy

    Thomas, Dr Dafydd Elis

    Young, David (Bolton SE)

    Vaz, Keith

    Wallace, James

    Tellers for the Ayes:

    Walley, Joan

    Mr. Martyn Jones, and

    Wardell, Gareth (Gower)

    Mr. Jack Thompson.

    NOES

    Adley, Robert

    Day, Stephen

    Aitken, Jonathan

    Devlin, Tim

    Alison, Rt Hon Michael

    Dickens, Geoffrey

    Allason, Rupert

    Dicks, Terry

    Amess, David

    Dorrell, Stephen

    Amos, Alan

    Douglas-Hamilton, Lord James

    Arbuthnot, James

    Dover, Den

    Arnold, Jacques (Gravesham)

    Durant, Sir Anthony

    Arnold, Sir Thomas

    Dykes, Hugh

    Ashby, David

    Eggar, Tim

    Aspinwall, Jack

    Emery, Sir Peter

    Atkins, Robert

    Evans, David (Welwyn Hatf'd)

    Atkinson, David

    Evennett, David

    Baker, Nicholas (Dorset N)

    Fallon, Michael

    Banks, Robert (Harrogate)

    Favell, Tony

    Beaumont-Dark, Anthony

    Fenner, Dame Peggy

    Bellingham, Henry

    Field, Barry (Isle of Wight)

    Bendall, Vivian

    Fishburn, John Dudley

    Bennett, Nicholas (Pembroke)

    Fookes, Dame Janet

    Benyon, W.

    Forsyth, Michael (Stirling)

    Bevan, David Gilroy

    Fowler, Rt Hon Sir Norman

    Biffen, Rt Hon John

    Fox, Sir Marcus

    Blackburn, Dr John G.

    Franks, Cecil

    Blaker, Rt Hon Sir Peter

    Freeman, Roger

    Bonsor, Sir Nicholas

    French, Douglas

    Boscawen, Hon Robert

    Fry, Peter

    Boswell, Tim

    Gardiner, Sir George

    Bottomley, Peter

    Garel-Jones, Tristan

    Bottomley, Mrs Virginia

    Gill, Christopher

    Bowden, A. (Brighton K'pto'n)

    Gilmour, Rt Hon Sir Ian

    Bowis, John

    Glyn, Dr Sir Alan

    Boyson, Rt Hon Dr Sir Rhodes

    Goodhart, Sir Philip

    Braine, Rt Hon Sir Bernard

    Goodlad, Alastair

    Brandon-Bravo, Martin

    Goodson-Wickes, Dr Charles

    Brazier, Julian

    Gorst, John

    Bright, Graham

    Grant, Sir Anthony (CambsSW)

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

    Greenway, Harry (Ealing N)

    Browne, John (Winchester)

    Greenway, John (Ryedale)

    Bruce, Ian (Dorset South)

    Gregory, Conal

    Buck, Sir Antony

    Griffiths, Peter (Portsmouth N)

    Budgen, Nicholas

    Grist, Ian

    Burns, Simon

    Ground, Patrick

    Burt, Alistair

    Grylls, Michael

    Butler, Chris

    Gummer, Rt Hon John Selwyn

    Butterfill, John

    Hague, William

    Carlisle, John, (Luton N)

    Hamilton, Rt Hon Archie

    Carlisle, Kenneth (Lincoln)

    Hamilton, Neil (Tatton)

    Carrington, Matthew

    Hanley, Jeremy

    Carttiss, Michael

    Hannam, John

    Cash, William

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

    Channon, Rt Hon Paul

    Hargreaves, Ken (Hyndburn)

    Chope, Christopher

    Harris, David

    Churchill, Mr

    Haselhurst, Alan

    Clark, Rt Hon Sir William

    Hawkins, Christopher

    Clarke, Rt Hon K. (Rushcliffe)

    Hayward, Robert

    Colvin, Michael

    Hicks, Robert (Cornwall SE)

    Conway, Derek

    Higgins, Rt Hon Terence L.

    Coombs, Anthony (Wyre F'rest)

    Hill, James

    Coombs, Simon (Swindon)

    Hordern, Sir Peter

    Cope, Rt Hon Sir John

    Howarth, G. (Cannock & B'wd)

    Cormack, Patrick

    Howe, Rt Hon Sir Geoffrey

    Couchman, James

    Irvine, Michael

    Cran, James

    Irving, Sir Charles

    Currie, Mrs Edwina

    Janman, Tim

    Davis, David (Boothferry)

    Jessel, Toby

    225

    Johnson Smith, Sir Geoffrey

    Moynihan, Hon Colin

    Jones, Gwilym (Cardiff N)

    Mudd, David

    Kellett-Bowman, Dame Elaine

    Neale, Sir Gerrard

    Kilfedder, James

    Nelson, Anthony

    King, Roger (B'ham N'thfield)

    Neubert, Sir Michael

    Kirkhope, Timothy

    Nicholls, Patrick

    Knapman, Roger

    Nicholson, David (Taunton)

    Knight, Greg (Derby North)

    Nicholson, Emma (Devon West)

    Knight, Dame Jill (Edgbaston)

    Norris, Steve

    Knowles, Michael

    Onslow, Rt Hon Cranley

    Knox, David

    Oppenheim, Phillip

    Latham, Michael

    Page, Richard

    Lawrence, Ivan

    Paice, James

    Leigh, Edward (Gainsbor'gh)

    Patnick, Irvine

    Lennox-Boyd, Hon Mark

    Patten, Rt Hon Chris (Bath)

    Lester, Jim (Broxtowe)

    Patten, Rt Hon John

    Lightbown, David

    Pattie, Rt Hon Sir Geoffrey

    Lilley, Rt Hon Peter

    Pawsey, James

    Lord, Michael

    Peacock, Mrs Elizabeth

    Luce, Rt Hon Sir Richard

    Porter, David (Waveney)

    McCrindle, Sir Robert

    Powell, William (Corby)

    MacGregor, Rt Hon John

    Price, Sir David

    MacKay, Andrew (E Berkshire)

    Rattan, Keith

    McLoughlin, Patrick

    Raison, Rt Hon Sir Timothy

    McNair-Wilson, Sir Michael

    Rathbone, Tim

    Madel, David

    Redwood, John

    Malins, Humfrey

    Rhodes James, Sir Robert

    Maples, John

    Riddick, Graham

    Marland, Paul

    Ridley, Rt Hon Nicholas

    Marlow, Tony

    Ridsdale, Sir Julian

    Marshall, John (Hendon S)

    Rifkind, Rt Hon Malcolm

    Martin, David (Portsmouth S)

    Roberts, Rt Hon Sir Wyn

    Mates, Michael

    Roe, Mrs Marion

    Maxwell-Hyslop, Robin

    Rossi, Sir Hugh

    Mellor, Rt Hon David

    Rost, Peter

    Meyer, Sir Anthony

    Rowe, Andrew

    Miller, Sir Hal

    Ryder, Rt Hon Richard

    Mills, Iain

    Scott, Rt Hon Nicholas

    Miscampbell, Norman

    Shaw, David (Dover)

    Mitchell, Andrew (Gedling)

    Shaw, Sir Giles (Pudsey)

    Moate, Roger

    Shaw, Sir Michael (Scarb')

    Montgomery, Sir Fergus

    Shephard, Mrs G. (Norfolk SW)

    Moore, Rt Hon John

    Shepherd, Colin (Hereford)

    Morrison, Sir Charles

    Shepherd, Richard (Aldridge)

    Moss, Malcolm

    Shersby, Michael

    226

    Sims, Roger

    Townsend, Cyril D. (B'heath)

    Skeet, Sir Trevor

    Tracey, Richard

    Smith, Sir Dudley (Warwick)

    Tredinnick, David

    Smith, Tim (Beaconsfield)

    Trippier, David

    Soames, Hon Nicholas

    Trotter, Neville

    Speed, Keith

    Twinn, Dr Ian

    Spicer, Sir Jim (Dorset W)

    Vaughan, Sir Gerard

    Spicer, Michael (S Worcs)

    Viggers, Peter

    Squire, Robin

    Wakeham, Rt Hon John

    Stanbrook, Ivor

    Walden, George

    Stanley, Rt Hon Sir John

    Ward, John

    Steen, Anthony

    Wardle, Charles (Bexhill)

    Stern, Michael

    Watts, John

    Stevens, Lewis

    Wells, Bowen

    Stewart, Allan (Eastwood)

    Wheeler, Sir John

    Stewart, Andy (Sherwood)

    Whitney, Ray

    Stewart, Rt Hon Sir Ian

    Widdecombe, Ann

    Stokes, Sir John

    Wiggin, Jerry

    Sumberg, David

    Wilkinson, John

    Summerson, Hugo

    Winterton, Mrs Ann

    Tapsell, Sir Peter

    Winterton, Nicholas

    Taylor, Ian (Esher)

    Wolfson, Mark

    Taylor, John M (Solihull)

    Woodcock, Dr. Mike

    Tebbit, Rt Hon Norman

    Yeo, Tim

    Temple-Morris, Peter

    Young, Sir George (Acton)

    Thatcher, Rt Hon Margaret

    Younger, Rt Hon George

    Thompson, D. (Calder Valley)

    Thompson, Patrick (Norwich N)

    Tellers for the Noes:

    Thurnham, Peter

    Mr. Tom Sackville and

    Townend, John (Bridlington)

    Mr. Timothy Wood.

    Question accordingly negatived.
    Question, That the proposed words be there added, put forthwith pursuant to Standing Order No. 30 (Questions on amendments), and agreed to.
    MR. DEPUTY SPEAKER forthwith declared the main Question, as amended, to be agreed to.
    Resolved,
    That this House welcomes the policies being pursued by Her Majesty's Government to put a decent home within the reach of every family by promoting owner occupation, by securing greater private sector investment in housing and by directing public expenditure effectively towards those people and areas that most need support.

Electricity and Gas Industries
7.13 pm
Mr. Frank Dobson: I beg to move,
That this House deplores the abject failure of the Government to prevent unrestrained increases in the profits of the gas and electricity companies and in the pay and perks of their Directors; notes that these profits, which are being achieved at the expense of the customers, damage the long-term interests of the country and result from policies which promote energy sales rather than energy saving, harm the environment, add to the trade deficit and reduce investment in research and development; and calls upon the Government to introduce effective measures to protect the interests of customers and to use its powers as a major shareholder in National Power and PowerGen to block those policies which the Prime Minister has said he deplores.
Mr. Deputy Speaker (Sir Paul Dean): I inform the House that Mr. Speaker has selected the amendment in the name of the Prime Minister.
Mr. Dobson: The past few months have exposed the Government's electricity privatisation for the squalid racket that it has become. It is a racket that has been conducted at the expense of taxpayers and of customers. I remind Conservative Members that the electricity companies' assets were built up from the bills paid by customers, yet they were sold off at a fraction of their real value. According to the books, those assets were worth £29 billion, but they were sold for a little more than £12 billion. The Government say that they do not accept those figures and that the audited accounts count for nothing—the only real value of the companies was what the stock exchange would pay.
When the regional electricity companies were sold in December, the Government put the part-paid shares on the market at 100p each and, before the end of the day's trading, they were trading at 160p, a loss to the taxpayer of £1·2 billion in two and a half hours. No profligate Labour council can compare with that.
Nothing daunted, in February the Secretary of State put National Power and PowerGen on the market, again at 100p for a part-paid share. By the end of the first day's trading, the shares were trading at 137p—a loss to the taxpayer of another £0·4 million.
Mr. Patrick Nicholls: The hon. Gentleman is very concerned about losses to the taxpayer, but will he confirm that he stands by the pledge given by the hon. Member for Dagenham (Mr. Gould) to The Times on 14 September 1989 that dividends would be taken from taxpayers without any recompense? Is that what the hon. Gentleman calls loss to the taxpayer—confiscation by the state?
Mr. Dobson: If the hon. Gentleman can do no better than quote from the Tory party brief, of which, as usual, I managed to get a copy from the photocopier, he should not bother us.
Mr. Nicholls: Yes or no?
Mr. Dobson: Perhaps the hon. Gentleman should be breathalysed so that we can get some sense out of him.
Mr. Nicholls: On a point of order, Mr. Deputy Speaker. Labour party policy has been quoted to the hon. Gentleman, who owes the House an explanation. Will he say yes or no?
Mr. Deputy Speaker: Order. Let us get on with the debate.
Mr. Dobson: I owe the House nothing; the hon. Gentleman owes us an apology.
According to the Government's own figures, and according to the figures in the Financial Times, by 14 June this year shares in the regional electricity companies, which had gone on the market at 100p each, had at some stage traded at more than 200p. Some have fallen back since, but the Government sold the regional companies at a valuation that they have given to me—and I accept their figures for the sake of argument—of £5·2 billion. By 14 June the stock market valuation had increased to £7·4 billion, an increase of 44 per cent. During the same period, the stock market had risen by only 16 per cent.
National Power and PowerGen were sold by the Government at a valuation of £2·2 billion. They are now worth £2·7 billion on the stock market, an increase of 22 per cent. During the same period, the stock market as a whole rose by only 2·7 per cent. Those increases were at the expense of the taxpayer and were the result of the gross incompetence of the Secretary of State and, even more so, of the expensive collection of advisers from the City who advised him on the sale. In total, he has spent more than £500 million on City advice and underwriters' fees during the electricity privatisation process. If anyone dismisses that as an inconsiderable sum, I remind them that it is approximately the same amount as Lloyd's lost last year and about which there was much moaning and gnashing of teeth in the City. Of course, there was no moaning and gnashing of teeth about this £500 million because the City received it—it did not lose it.
Last year, prices to the consumers of domestic electricity were increased at a rate that was intended to be higher than the rate of inflation. As a result of the Government's incompetence, inflation soared, so the prices were not as high as inflation. However, this year, once again, prices for the domestic customer have been increased at a rate higher than the general rate of inflation.
The profits that have been announced over the past few weeks have been dramatically higher than the estimates that the Government made as recently as December last year. In the case of South Western Electricity, the profits were 48 per cent. up on the Government's estimate of December last year. What has maddened people most are the directors' pay increases which are so large that they beggar description. Since privatisation, there have been cuts in staff and further cuts are proposed. There have been cuts in research and development, and massive further cuts are proposed. There have already been cuts in training and further reductions are proposed. Coal and gas imports are being proceeded with at a rate that is becoming increasingly damaging to the balance of payments. All round the country, people are receiving reports of increasing interruptions to electricity supply. It is clear to everyone that the system of regulation is totally feeble.
All that I have described is a far cry from what the Tories promised. In their White Paper of February 1988,

229
they set out what they called "principles" governing electricity privatisation. In view of what has happened, the list looks like a sick joke. The first principle was
"Decisions … should be driven by the needs of the customer."
None of the customers who have written to me over the past few weeks has said that he needs the electricity bosses to get pay increases ranging from 50 per cent. to 200 per cent.
The White Paper went on to say:
"Competition is the best guarantee of customers' interests."
Perhaps the Tories should tell that to the domestic customers who still have to buy their electricity from a local monopoly because there is no competition for them and because only businesses can shop around.
Mr. Anthony Coombs rose—
Mr. Dobson: Business users have seen 15 per cent. reductions in the price of electricity to them, while domestic customers have seen their prices rise by more than 20 per cent.
Mr. Coombs: Will the hon. Gentleman give way?
Mr. Dobson: No, I will not give way for the moment. The White Paper went on to say:
"All who work in the industry should be offered a direct stake in their future, new career opportunities".
The words "new career opportunities" must ring strangely in the ears of the 8,000 people from the industry who will lose their jobs as a result of rationalisation. The words will ring even more rottenly in the ears of the scientists at the central electricity research laboratory, one of the leading electrical laboratories in the world, which National Power intends to close because it is not doing stuff that is of immediate benefit to the shareholders. People throughout the country are disgusted by the pay rises that the directors of the companies are giving themselves. As I have already said, there is a combination of greed and opportunity. The directors have supplied the greed and the Government have supplied the opportunity.
It is no use the Prime Minister heaping blame on the directors. The Cabinet authorised the increases and knew what would happen. It is no good the Cabinet pretending that it had nothing to do with the increases and washing its hands of the matter. It is as though Pontius Pilate were about to become the patron saint of the Tory party.
Mr. Malcolm Moss: Will the hon. Gentleman confirm to the House that, under the regulatory pricing formula, the salary increases about which he has spoken cannot be passed on to the consumer? They must be found out of operational efficiency.
Mr. Dobson: I must confess that it is not at all clear to me that that is the case. That is certainly not the response that the newspapers and the rest of the media have got when they have approached Professor Littlechild, the regulator.
In the Government's own prospectus for all the electricity companies, it is clearly stated that directors' pay will be
"increased to levels which are more appropriate to a private sector company."
In other words, the directors will get massive increases. The Cabinet must have known that when it approved the
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terms of the prospectus before the launch. It must have known when it approved the prospectus what had happened up to that point with salaries in British Telecom and British Gas. From when British Telecom was in public ownership until the point at which the Government approved the prospectus, the chairman's salary had risen by 550 per cent.—from £67,000 to £374,000. The salary of the chairman of British Gas, from when the industry was in public ownership until the point at which the prospectus was approved, had risen by 323 per cent.—from £68,000 to £220,000. Those facts must have been known to the Secretary of State and his colleagues when they approved the prospectus.
Ministers' knowledge would not have been based only on the experience of those companies. The Secretary of State was not satisfied with observing what had happened elsewhere. He sought advice from the City and, of course, the taxpayer had to pay for it. Coopers and Lybrand Deloitte advised him from 1989 until 1990 on salaries for the directors and senior executives of what were to become privately owned companies. I asked the Secretary of State to place that advice in the Library, but he refused today to do so because, he said, it was "confidential". I bet it is. If the advice was placed in the Library, it would reveal that the Secretary of State and the Prime Minister knew all about the increases that the Prime Minister now deplores. For the Prime Minister to deplore in public what he has approved in private is sheer humbug. To do so on television is mega-humbug. It is no good for Tory Members to moan on about the increases and to say that they are shameful, extreme and should not have gone ahead. They voted for the privatisation and they knew what was happening because they knew, as well as I or any of my hon. Friends did, what had happened in the other privatised industries. It is too late for them to claim that they did not know.
Mr. James Arbuthnot: Which would the hon. Gentleman prefer—high salaries for chief executives and prices going down in real terms or low salaries for chief executives and prices going up in real terms, as happened under Labour?
Mr. Dobson: Over the period in question, both gas and electricity prices have gone up in real terms, so the hon. Gentleman does not offer me a proper choice.
All the Tories here today, especially members of the Government, knew what was happening. If they genuinely deplore the increases, the question that arises is what they are going to do about them. The answer appears to be nothing. When the matter was first raised with the Prime Minister, he told the House that he condemned the increases. He said that the Government could do nothing about them, even at National Power and PowerGen, where they own 40 per cent. of the shares. He said that they had said that
"the Government had no intention of using their shareholding."—[0fficial Report, 27 June 1991: Vol. 193, c. 856.]
That statement was not quite true and certainly was not the whole truth because the prospectus actually says:
"Her Majesty's Government does not intend to use its rights as an ordinary shareholder to intervene in the commercial decisions of National Power or PowerGen. It does not expect to vote its shareholdings on resolutions moved at general meetings although it retains the power to do so."

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If the Government did not want the power to do so, they could have given up the power in the prospectus. It is no good their saying that that is not so.
Will the Secretary of State tell us whether, if another shareholder moves to block the increases at the annual general meeting, which I understand will be in September, the Government will sit on their hands? Will they show that their attitude to the increases is all words and no action? Will they perhaps remember that the people who are getting the increases are the very people who have benefited most from the massive income tax cuts at the higher levels over the past few years? Will the Government remember that they are the very people who, the Government think, should not pay national insurance on their income above £20,000? Will they think about that before deciding what to do at the annual general meeting?
Other people—admittedly, not many Conservative Members—claim that the increases are justified on the ground that they are the rate for the job. If the rate for the job of chief executive of PowerGen and National Power was right at £75,000 last year, how can it be right at £200,000 this year? These are not new and better people who have been specially recruited; it is the same old lot getting twice the money.
Sir Graham Day, the chairman of PowerGen, says that the increases are morally justified, but he is scarcely an objective judge. He has been a director of no fewer than four privatised companies. He has been chairman of three privatised companies and is still chairman of two of them. From his point of view, privatisation appears to be a game of musical chairs; every time the music stops he is sitting in the chair. In addition to being chairman of Cadbury Schweppes, of PowerGen and of the Rover Group and a director of British Aerospace, he is—God help us—on the national health service policy board. He believes that the increases are justified. No doubt he tells that to the nurses.
In an interview in the Daily Express in 1988—I always like people to give interviews to the Daily Express—Sir Graham said what he looked for in a good employee. No doubt he found it in Mr. Ed Wallis, the chief executive of PowerGen. He said that it is
"somebody who also tries to give a little more than he is paid for."
At £200,000 a year, Ed Wallis will have his work cut out satisfying Graham Day.
The directors of National Power and PowerGen, who have pocketed enormous increases, are responsible for running only two of the four companies that were created from the old Central Electricity Generating Board. The other companies are the National Grid Company and Nuclear Electric. Not only are those directors paying themselves more, but there are more directors. In 1988–89, the CEGB, running all four functions, had only 10 directors. At the latest count—it keeps increasing—the four successor companies had no fewer than 41 directors. In 1988–89, the CEGB's 10 directors, poor devils, managed on joint pay of £646,000. I have not been able to obtain the figures for the board members of Nuclear Electric, but before the new increases the directors of the other three companies that resulted from the break-up of the CEGB—National Power, PowerGen and the grid company—were getting £2 million between them, and I expect that after the current round of increases that total will rise to between £4 million and £5 million.
At the same time, those directors are urging pay restraint on staff and are keeping the staff's pay increases
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down to less than 10 per cent. Many of the staff will find that galling. The employees of East Midlands Electricity will find it particularly galling. Hon. Members will recall the blizzards in the east midlands, when those staff performed heroically in dreadful, cold, vile conditions to restore the supply. Their pay increases will be kept below 10 per cent., but the directors, who sat in their warm, air-conditioned offices will award themselves about 50 per cent.
Mr. Simon Burns: Warm and air-conditioned? Will the hon. Gentleman give way?
Mr. Dobson: No. If the hon. Gentleman cannot make a decent joke from a sedentary position, I am damned if I will let him stand up to do it.
The other regional companies all say that these big salary increases are justified because their profits have increased. When one asks why their profits have increased, they say that it is because the cost of coal has fallen and because they had higher sales in a bad winter. Those are the economics of the madhouse: a director is paid more because of bad weather. We have heard much about cold weather payments, but the idea of somebody doubling his salary as a cold weather payment is preposterous. With all this interest in the weather, you, Mr. Deputy Speaker, can see why PowerGen is sponsoring the weather forecast.
We can expect every regional electricity company to increase top salaries by about 50 per cent. Compared with the enormous increases of National Power and PowerGen, a 50 per cent. increase is beginning to seem moderate, but it will not seem so to the 6 million pensioners and poor families who cannot afford to keep warm in winter—even in an average winter—because gas and electricity cost too much. It will not seem reasonable to the growing number of people who are out of work, to people in the private sector who are taking pay cuts to help keep their firms afloat, to people whose homes are being repossesed because they cannot pay their mortgage or to people who cannot pay massively increased rents.
The salary of the chairman of British Gas has increased by 66 per cent. from £220,000 to £370,000. Last year, gas prices increased by 14 per cent. and profits and directors' pay increased. It would appear that the attitude of the bosses of British Gas to customers is "Pay up and shut up." They seem to have changed the motto from "Tell Sid" to "Sod Sid".
Who will stick up for the customer? I hope that the Secretary of State will not say that it will be the Office of Electricity Regulation. This year, despite the falling cost of coal and other costs, OFFER nodded through domestic price increases of more than 10 per cent., despite the Government's target for inflation to fall to 5 or 6 per cent. That was a good increase for the electricity companies, but people tell me that it was not the regulator's fault. They say that poor Professor Littlechild had to accept the formula that the Government had given him and that OFFER had to accept the increases. If that is true, it seems to me, if I may use an elderly phrase, that the Government have set up an OFFER that cannot refuse.
What we want is an OFFER that can refuse. My doubts about the regulatory system are not confined to the system: I have doubts about Professor Littlechild, the regulator. His friends tell me that he invented the system that he is running, so he has something to answer for. From most of his public pronouncements and documents

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he seems to be more of an ideologue than a public servant. He seems to be one of those people, rather like Ministers, who recite the words "Competition is good for customers" and think that once they have said that everything is settled. The only problem is that competition has been good for moderate-sized business customers who have been able to shop around, but domestic customers cannot shop around and continue to be faced with a local monopoly that is shoving up its prices far quicker and higher than its costs.
The regulators for the electricity, gas, water and telecom industries are not working well enough and most people recognise that they need to be substantially improved. We have been promised improvements in the Prime Minister's citizens charter. If the documents leaked to my hon. Friend the Member for Dunfermline, East (Mr. Brown) are correct—they usually are—it does not appear that the citizens charter will strike fear into the hearts of the directors of those utilities.
I understand from other sources that the Department of Energy has said in the review that it does not want changes to be made because it is satisfied with the regulatory system already in place. All that I can say is that if it is satisfied with that, it will be satisfied with anything. Almost everybody in the country and in the business realises that there are things wrong with the regulatory system. It is far too feeble and is not doing the job that is necessary.
Mr. Richard Page: Clearly, the hon. Gentleman is convinced that his party will win the next general election. I hope that in the tail of his speech he will come to the Labour party's policy. I understand that part of that policy is to renationalise the grid. How much does the hon. Gentleman think that that will cost and how soon after the general election will it occur? Will he elucidate Labour party policy for us?
Mr. Dobson: I hope that if the hon. Gentleman waits a "page" or two he will be satisfied.
One of the problems about everybody's legitimate concern about top pay is that it has covered up many other developments which have been revealed in the interim results and which will damage the country and the customers. National Power has made it clear that it is about to make savage cuts in research and development spending. The central electricity research laboratories are threatened with closure. The company said in a letter to my hon. Friend the Member for Cardiff, West (Mr. Morgan) that it would no longer carry out research into what it described as national problems. If National Power will not carry out research on national problems, who will? If no one in this country does research on those major problems, the research that we—
Mr. Andrew Hargreaves: Is this another priority commitment?
Mr. Dobson: We now have someone apparently so cloth-eared that he can predict what we will say.
If the research is not done here, it will be done in Germany, Sweden, France and the United States, and we shall have to buy the equipment that we need from those countries instead of making it here.
National Power has also said that it wants to burn gas, whatever effect that may have on our limited gas reserves.
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The company recognises that those reserves are not enough, so it is already setting about importing more gas from Norway, whatever impact that may have on our balance of payments. National Power says that importing foreign coal is a "central plank" of its fuel strategy, whatever its impact may be on the balance of payments and on Britain's coal industry.
National Power has also said that it intends to burn orimulsion, which is undoubtedly the filthiest fuel in the world. Why will it do that? It will do all those things because they are in the short-term interests of the people running the company and in what those people believe to be the short-term, popular interests of the shareholders. That is their first and only consideration. They do not consider the long-term interests of customers or of this country.
We believe that privatisation is a shambles. We can amply demonstrate that it has damaged the interests of customers. It has outraged most people by the levels of pay given to its bosses. We do not believe that most people are satisfied with the profits accrued so rapidly—profits which are so much greater than those which the Secretary of State was responsible for predicting in December. We do not believe that the great experiment is succeeding, or that the electricity industry should have been subjected to a giant experiment. We believe that the people working in the industry deserve the minimum of change and disturbance, if they are to be allowed to do their work. We have said all along that we will bring the National Grid Company—[Interruption]—back into public ownership. [HON. MEMBERS: "A priority."] It will be a high priority, I assure hon. Members.
Mr. Phillip Oppenheim: Will the hon. Gentleman give way?
Mr. Dobson: If the hon. Gentleman will give way to me, I shall continue.
We will bring the grid company back into public ownership and give it additional duties and powers. For a start, it will have a duty to maintain security of supply—a duty that no one has at present—and a duty to consider the impact of the industry on the balance of payments, on the environment and on our fuel reserves. We shall also change the rules for the regional electricity companies and oblige them under their licences to invest some of the profits in energy conservation and efficiency.
The system that the Government have established encourages more and more sales of electricity. Almost everyone apart from the Government recognises that energy saving, not energy sales, must be the priority for the future and that is the priority that the industry will have after the next general election, when we implement our policy.
Mr. Oppenheim: On a point of order, Mr. Deputy Speaker. Is it in order for me to ask whether it is in order for the Labour Front-Bench spokesman to say that he would give the House an idea of how much it would cost to buy back the industry and then totally fail to do so?
Mr. Deputy Speaker (Mr. Harold Walker): Order. Let us get on with the debate.
7.46 pm
The Secretary of State for Energy (Mr. John Wakeham): I beg to move, to leave out from "House" to the end of the Question and to add instead thereof:
"congratulates the Government on continuing with its successful policy of privatising nationalised industries; notes the recent successful privatisation of the electricity supply industry in Great Britain; and welcomes the benefits that privatisation of the electricity and gas industries has brought and will bring to consumers, taxpayers and employees.".
It is less than six months since the House held a debate on electricity privatization—at the Opposition's instigation—under the shadow of the then imminent Gulf War. The privatisation has now been completed with outstanding success.
The hon. Member for Holborn and St. Pancras (Mr. Dobson) has expressed great indignation about a great many related issues, which I will deal with in due course, without anywhere acknowledging or seeming to recognise that the points that he raises are dwarfed in importance by the continuing impact of privatisation, which is already serving the interests of customers, the taxpayer and employees far more effectively than any form of Government intervention.
Let me refer the House again to the principles underlying the privatisation of the gas and electricity industries, and the transformations that they have already brought about within the energy market.
First, for the customer, privatisation has introduced guaranteed standards of performance. Only yesterday, guaranteed standards for electricity were introduced. Offer—the Office of Electricity Regulation—has set standards for restoring supplies after faults, repairing company fuses, providing a meter and many other services. If those standards are not met, the electricity consumer is entitled to compensation. Domestic customers can get £10 if an appointment is not kept and £20 if supply is not restored on target. The regulator has made it clear that he will examine standards of service when he resets the price formulae.
For gas, the resetting of the price formula will shortly be accompanied by a package of standards of service. I expect those to include obtaining a supply, continuity of supply, meter reading, billing and appointments. The setting of those standards will be a significant step forward in customers' rights.
If customers are not served properly by privatised utilities, for the first time there is a proper means of independent redress. We have set up independent regulators. They have extensive powers to put matters right. If the existing terms of the licence are not strong enough, the regulators can refer the matter to the Monopolies and Mergers Commission. New, tougher licensing conditions can he created where they are needed.
Not only are standards of service set and guaranteed but prices are kept down by regulation.
Mr. Rhodri Morgan: The Secretary of State said that all this was happening for the first time. Will he take it from me that the East Midlands electricity board introduced guaranteed service standards, with refunds, back in 1985?
Mr. Wakeham: This is the first time that such standards have been set right across the industry, and the important point is that the regulators will be independent of the industries.
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Since privatisation, domestic gas prices have fallen by 11 per cent. in real terms and standing charges by 20 per cent. in real terms. Price control provides a strong incentive to efficiency. It has been remarkably successful in producing efficiencies in gas supply which have enabled British Gas to increase its profits as well as to pass the benefit of real price reductions to the consumer. As a result, for the future, the price formula is being tightened still further. From next year, British Gas must meet the price target of RPI minus 5 rather than RPI minus 2. Restraining profits, as the Opposition's motion advocates, is a recipe for inefficiency.
Electricity prices for domestic consumers have fallen by about 2·5 per cent. in real terms over the past seven years. What a contrast to the position under Labour, when prices rose by 22 per cent. in real terms—up 2 per cent. every six weeks. In future, regulations will protect consumers from unjustifiable increases. For a three-year period, prices are regulated by reference to the retail prices index.
Mr. Burns: I have been listening carefully to my right hon. Friend, but may I check that I heard him aright? Did he really say that electricity prices for domestic users have fallen by 2·5 per cent. over the past seven years whereas under the Labour Government they increased by 22 per cent. in real terms, and that pensioners, the disabled, those on low incomes and the unemployed faced price increases in their electricity bills every six weeks?
Mr. Wakeham: That is correct. My hon. Friend is listening very carefully to what I am saying, and I am grateful to him for it.
Of course, competition is the best guarantee of customer service, efficiency and keen pricing, so we have taken steps to ensure that competition is introduced wherever possible in the electricity industry. Already competition is working for the customer. Thousands of industrial and commercial companies have had to pay lower prices for electricity. Professor Littlechild said in his director general's report for 1990 that some customers had achieved as much as 15 per cent. savings as a result of competition. Competition in generation will keep the costs of electricity down in the future as new generating projects come forward.
It would be nonsense to return to the days of nationalisation when Governments intervened in an arbitrary fashion, when customers had no real means of redress and when it was not even worth complaining. Now we have real incentives for efficiency and customer service. That is why the privatised industries are leading the way. That is why we want to extend such benefits to the public sector through the citizens charter.
Those are the benefits for the customer. For the taxpayer, the privatisation of the electricity industry will raise proceeds of more than £14 billion. The privatisation of gas raised proceeds of £8 billion. Given that the Labour party's policy proposals imply increases in public expenditure of some £35 billion, the proceeds from privatisation should not be dismissed by them in such cavalier fashion.
Growing profits brought about by efficiencies unlocked by privatisation, even at a time of falling real prices, mean greater tax receipts for the Treasury. It is nonsense to say that growing profits damage the long-term interests of the country; growing profits are needed to finance the requirements for capital investment to maintain and

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expand the electricity and gas supply systems. In addition, the taxpayer is no longer left to finance a poor record of mismanaged investment in massive projects, not finished on time or to cost, and poor profitability.
Improving prospects, rising share prices, cost-cutting and greater efficiency in all the companies should be welcomed. They represent a clear gain to the nation in contrast to the old order of rising prices to consumers with no means of redress, and very little incentive for improved efficiency. Those were very real costs and burdens on the nation.
What are the benefits for employees? For the first time they are able to own a real stake in their industries. They were also able to participate directly in the benefits of the flotation itself. Ninety-eight per cent. of employees in the electricity industry took up shares. Four and a half years after privatisation, 87 per cent. of employees of British Gas hold shares in their company. Those employees have much to fear from the return of a Labour Government. The hon. Member for Dagenham (Mr. Gould) has made it clear that shareholders in privatised industries would be punished by a Labour Government.
For the future, under our policies employees can participate in the growing success and growth in their companies through share save schemes.
Mr. Jack Thompson: What would the Secretary of State say to the 250 employees at a power station in my constituency who now face redundancy? What about their share in the industry? Their jobs have gone, and the few shares that they may have bought before they realised that there was a prospect of losing their jobs will not keep them for the rest of their lives.
Mr. Wakeham: Everyone is unhappy about anyone who is made redundant, in whichever part of the country it may be. A whole range of overmanning problems and inefficiencies existed and privatisation has been directed to try to improve matters. One regrets redundancies for whatever purpose. I know that the companies concerned are seeking to do what they have to do by voluntary means if at all possible, although that is strictly a matter for them.
Mr. Peter Hardy: On the same point, is the Secretary of State aware that, before the Electricity Bill was presented to the House, I asked his predecessor whether it was not clear that privatisation was liable to result in redundancies and a reduction in the size of the labour force in the electricity supply industry? The right hon. Gentleman's predecessor said in the House that, so far from there being redundancies, privatisation would lead to more employment in the industry. That hardly bears out the experience of my hon. Friend the Member for Wansbeck (Mr. Thompson).
Mr. Wakeham: An efficient electricity industry producing low-cost electricity is an important factor in our industrial growth, and will certainly improve the number of jobs.
Mr. Anthony Coombs: My right hon. Friend rightly emphasised the improvements in efficiency, competitiveness and accountability that privatisation has brought with it. He also mentioned the benefits to the taxpayer as a result of privatisation proceeds. My right hon. Friend will have heard the hon. Member for Holborn and St.
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Pancras (Mr. Dobson), the shadow Secretary of State for Energy, say that a high priority of any future Labour Government would be to spend money on renationalising the national grid. Will my right hon. Friend take the opportunity of asking the hon. Gentleman again what that would cost? Last week, Labour's spending policies were costed at an extra £35 billion—15p on the lowest rate of income tax—and renationalisation costs were not included in that. The hon. Member for Holborn and St. Pancras says that renationalisation is a high priority, so he should tell us what the effects of that policy would be.
Mr. Wakeham: My hon. Friend is absolutely right in saying that the Labour party's proposals were costed at some £35 billion extra. That is worth repeating because it is important that people in Britain should know what the Labour party's policies imply. Moreover, that figure does not include the cost of renationalisations conducted under those policies. Having said that, I think that the most serious question about the renationalisation of the national grid is how the grid would operate in relation to the private sector part of the industry—the part that the Labour party does not intend to renationalise, if I understand its policies correctly. I think that we would find that many of the inefficiencies inherent in the old system would be brought back by the bureaucrats who would then be running the national grid. That is a serious matter.
In the past few years, the services offered by these privatised industries to customers have been transformed. There are now guaranteed standards of service, backed up through our regulatory regime by tough financial penalties for failure to meet them.
When Labour was in office, no such guarantees existed: customers were subjected to unaccountable, inefficient and unregulated monopolies. Little wonder, then, that disconnections for debt in both industries have plummeted to half the intolerable level we inherited from Labour.
On every count—prices, services, standards, disconnections, investment—the privatised record beats the nationalised record hands down. That is the background against which the hon. Member for Holborn and St. Pancras has criticised the recently reported board pay levels.
Let me state clearly our policy on directors' pay. The Government's view is that salaries should be sufficient to recruit, retain and motivate. Most companies in the private sector have a remuneration committee consisting of non-executive directors. It is their task to determine the pay of the chief executive and senior directors.
The same now applies to the companies we have privatised. The current salary levels are a matter for those companies. Government approval was not sought—nor was it required.
The first point is that increasing directors' salaries has no effect on prices to consumers. The price formula is intended to exert downward pressure on costs. It does that by regulating prices without regard to any subsequent increase in costs which, like directors' salaries, are within the control of the company.
It is not for the Government to second-guess the views of the companies. But that does not mean we should not express a view about salary levels. We have done so. The Government believe that it is essential that pay at all levels reflects the economic facts of life and the importance of beating inflation. The rate at which salary levels for

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directors in privatised companies move to private sector levels needs to be moderated to take this into account. Directors need to exercise both leadership and restraint.
Secondly, the salary levels are not out of line for companies of comparable size. The companies themselves have pointed out that British Gas ranks amongst the six largest and most profitable United Kingdom companies, whereas the chairman's basic salary ranks 38th in a survey of the United Kingdom's top companies. Similarly, PowerGen ranks 60th in the United Kingdom list of top companies and the chief executive's pay is ranked 97th.
Mr. Anthony Beaumont-Dark: None of us wants to go in for spurious statistics. However, referring to the link that Sir Graham Day has made between the pay of the chief executive of PowerGen and that company's ranking in the FT100 index, does my right hon. Friend really accept the balderdash that running a privatised monopoly is as difficult as running an industry such as GKN or any other company that has to withstand the heat of the day and losing money? If we are arguing that the position of the privatised monopolies is the same as that of a company that has to earn its money the hard way, we are on hard and stony ground.
Mr. Wakeham: It is not for the Government to second-guess the salaries that companies pay—[Interruption.] I have expressed my views about some of the salary levels and the rate of increase and would simply add that it is not correct to say that PowerGen is a monopoly—
Mr. Beaumont-Dark: It is 85 per cent. a monopoly.
Mr. Wakeham: It is nothing approaching that—it is more like 30 per cent. A good many other companies are in the business.
Mr. Dobson: I can understand why the right hon. Gentleman is saying that the Government do not want to second-guess the companies, but if that is of no consequence to the Government, why did they spend taxpayers' money on getting advice from Coopers and Lybrand Deloitte about the salaries that should be paid to those people?
Mr. Wakeham: As the hon. Gentleman has not read the report and does not know what is in it, I do not know whether he knows that that is the position—
Mr. Harry Barnes: Does the right hon. Gentleman?
Mr. Wakeham: I am not prepared to refer off the cuff to a report that I told the hon. Member for Holborn and St. Pancras earlier that I was not prepared to reveal to the House.
Mr. Simon Hughes: In two consecutive sentences the Secretary of State has said that he is unhappy about the increases that have been awarded—paradoxically, to the executive directors by the non-executive directors and to the non-executive directors by the executive directors; and that their relative pay was lower given their importance in the British industrial sector. That does not lead us to any clear conclusion. Is it his view that the increases should be reduced before the annual general meetings, and what is he going to do about it? The Chancellor invited the heads of the banks to see
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him because they were over-charging. Will the right hon. Gentleman invite the heads of the privatised industries to see him so that he can tell them to reduce their salaries?
Mr. Wakeham: The important point is that the salary increases—and it is the increases of which I disapprove—do not affect the price to the consumer—[Interruption.] That is an important point. It is absolutely right.
The purpose of privatising the industries was to allow the directors and shareholders to make those decisions. The public interest is protected by the regulator because of the price of the product. Therefore, it is not appropriate for the Government to intervene in such cases. We have no grounds on which to intervene in the case of the companies that are 100 per cent. privatised because we have no shares. We retain a 40 per cent. shareholding in National Power and PowerGen. We made our position quite clear in the prospectus. The hon. Member for Holborn and St. Pancras read it out correctly. I am amazed that he thinks that breaking our word would be a small matter. That view reflects more on a potential Labour Government than on anything else. The Government do not accept that it is a small matter to break our word.
Mr. Dobson: Just to clarify a point about the next Labour Government, will the right hon. Gentleman confirm that the Government's own prospectus makes it clear that, on entering Government, Her Majesty's Opposition intend to appoint directors and to exercise the powers of a 40 per cent. shareholder?
Mr. Wakeham: If that should ever arise, I strongly suggest that the hon. Gentleman takes legal advice on his powers as a shareholder and on the way in which he should operate. If he does, he will find that he has to operate within certain constraints. The hon. Gentleman would be well advised to consider such matters carefully.
Mr. Christopher Hawkins rose—
Mr. Wakeham: I shall give way, but this will be the last time.
Mr. Hawkins: If the Government do not intend long term to exercise the shareholders' duties of restraint in such matters, should they not consider relinquishing their shares so that others can fulfil those duties and act as a restraint? There is something exceedingly curious about the British. When really high incomes are paid to pop singers, tennis players, top footballers and television presenters, that does not seem to worry the British; but as soon as somebody in industry starts to earn a high salary, there are screams and shouts of abuse. That is an odd priority for a nation. Does my right hon. Friend agree that it is not the pay levels that are objectionable as much as the speed of the increases, their timing and the example that is being set to workers at a time when many other people are losing their jobs? Does he agree that the scale, timing and example are beyond belief?
Mr. Wakeham: My hon. Friend heard what I said, and what he has said is not very different—although I have not expressed any views about pop stars and tennis players.
Mr. Michael Grylls: Does my right hon. Friend agree that the consumers' interest—we are here to represent the consumers, as we no longer run the companies—is better served when directors are paid a market salary, as they can now be paid under

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privatisation, than was the case under nationalisation, when the salaries were set by Parliament so low that the best people could not be recruited?
Mr. Wakeham: My hon. Friend is absolutely right. Not only are the people not the same, but they are not doing the same job. Indeed, they are doing extremely different jobs and a number of them have been recruited in the market—
Mr. Geoffrey Lofthouse rose—
Mr. Wakeham: I said that I had given way for the last time.
What is the Labour party's position on this matter? Its most recent policy review document, "Opportunity Britain", gives the distinct impression that the private sector has nothing to fear from the unlikely prospect of a Labour Government. It states that,
"more than ever before British industry now needs a long-term commitment from Government, but not in the form of indiscriminate subsidies or second guessing industry".
That was only three months ago, but, as we have seen today, those words are at best hollow and at worst totally misleading.
The reality of Labour's policy is distinctly different from the rhetoric, for what the hon. Member for Holborn and St. Pancras has done today—in sharp contradiction of his party's policy statement—is to propose a series of policies precisely to second-guess successful British industries by seeking to control pay and profits and to interfere in the decisions of management.
Indeed, I wonder whether the right hon. and learned Member for Monklands, East (Mr. Smith) is aware of the line that the hon. Gentleman is taking. But, as is often the case, as soon as Labour's policy is challenged, it falls apart at the seams. Labour Members' policy on industry has not changed. They think they know better than industry how industry should be run, in spite of all the evidence since the second world war that that is not so.
That is true of the issue of pay, about which the hon. Member for Holborn and St. Pancras made great play. On that subject, too, Labour's divided and muddled position lacks credibility. How would Labour Members seek to control pay? The answer is not clear. Their party leader believes that the trade unions can simply be persuaded to moderate their pay claims at the same time as a minimum wage is introduced.
"If you're a Government that acts in a way that stimulates the economy properly … the moderation of wage claims is something a Government can really ask for",
he says. But as the leader of one big union admitted, any idea that the unions could be so persuaded is "deranged".
The truth is that Labour's plans for a minimum wage would, at the same time as destroying hundreds of thousands of jobs, lead to a pay explosion throughout the economy. Labour would have no way of controlling it without resorting to the sort of statutory controls that failed dismally in the 1970s.
That is precisely what Labour offers—a return to the corporatism that should have died its death during the winter of discontent, a return to pay policies and credit controls and a return to the failures of nationalisation, red
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tape and bureaucratic interference. The hon. Member for Holborn and St. Pancras let the cat out of the bag. Labour has not changed, and never will.
Unlike our opponents, we believe in free enterprise and in the private sector. Our privatisation programme—now being copied throughout the world—has transformed vast sectors of British industry, bringing extensive benefits to customers, to the taxpayer and to the employees of those industries. Throughout the rest of the 1990s it will continue to do so.
I commend the amendment to the House.
8.13 pm
Mr. Geoffrey Lofthouse: I am glad to have this opportunity to put a point to the Secretary of State that I would have raised had he given way to me a few moments ago. While he clearly disapproves of the colossal increases that members of senior management of the electricity companies have received, he defends those increases. Indeed, he spent several minutes of his speech defending them.
It is clear that the Secretary of State and his Department have become impotent in the dealings with privatised industries. That being so, one wonders why we need a Secretary of State for Energy. He spoke at length about the inefficiency of those industries when they were in the public sector. Is he suggesting that those who were running them at that time were inefficient because their salaries were fixed by Government? In other words, is he suggesting that they did not do their best in their jobs because they were not satisfied with their salaries?
Would the right hon. Gentleman suggest, for example, that Sir Walter Marshall was inefficient because he was dissatisfied with his salary? Has the right hon. Gentleman forgotten that Mr. Baker and Mr. Wallis were members of the teams who were running the so-called inefficient electricity industry of those days? Are we to believe that the new people, because of their much higher salaries, will work that much harder?
Either deliberately or inadvertently, the Secretary of State did not comment on what is likely to happen as a result of the decisions that are currently being made by the new, highly paid executives who are responsible to no one, not even to the right hon. Gentleman and his Department. Is he aware that those decisions will have a great bearing on the energy needs and supplies of the country? For example, their decisions will result in thousands of miners being thrown out of work and the sterilisation of millions of tonnes of British coal because British Coal is unable at present to meet foreign competition.
Mr. Baker, with his £200,000 a year salary, said recently that he intends to import 50 per cent. of the coal he needs. If that happens, our mining industry—as a result of decisions taken by people who are not democratically responsible to anyone—will be wiped out. Not only will thousands of jobs go, but, more importantly, our ability to meet our energy needs in the future will also disappear. Once our millions of tonnes of coal have been sterilised, that resource will never be retrieved.
After the medium term, perhaps after the longer term, we shall be at the mercy of supplies from abroad. For how long will their prices remain low? Supplies of gas and oil are finite and while we are using—in my view, wasting

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—gas for the generation of electricity and sterilising our coal, we must consider what we shall do to meet our energy needs in the very long term.
In a few moments from now, contracts will probably be agreed between British Coal and the electricity supply industry. Those contracts will involve the use of much smaller tonnages of coal than are now being used. If that is so, the coal industry will be so run down that only a dozen pits and 10,000 to 12,000 men will be left. An industry of that size will never again be able to meet the demands of the electricity supply industry. Is that wise policy? The effect on the balance of payments will show that it cannot be wise policy but simply to meet short-term market fluctuations or political dogma.
The Government say that if—God forbid—they win the next election, which is unlikely, they will privatise the coal industry. I hope that the Minister will answer these questions seriously. Does the Secretary of State or any of his colleagues really believe that, once they have slaughtered and butchered the coal industry, right down to the decisions by Mr. Baker and Mr. Wallis, the industry will be saleable? If British Coal cannot meet competition and win contracts now, what chance has a small private coal industry? Who will want to buy it? That is the problem facing the Government.
I regret, and I believe that the country will live to regret, the decisions taken, simply on a commercial basis, to wipe out what this country has always been privileged to have—a major source of energy supplied by coal. The action to wipe out that energy supply is nothing short of criminal. I hope that the Government have at least some control or persuasive powers over the negotiations to take place shortly. I hope that they will be based not purely on commercial factors but on security of supply. That is a major aspect and if we do not bear that in mind the country will regret the day that the Government implemented that foolish policy.
8.22 pm
Mr. John Hannam: This is another of Labour's groan and grumble half days. Give them a few headlines showing success by private industry and away we go with a whingeing and whining debate. It usually starts with the prospectus and launch of a newly privatised company. If the share price is right and the issue is successful, we hear cries of foul on the basis that the public has been denied the right return. If the issue flops because the share price has been set too high, we hear the same yells of derision. Luckily the Government have been so successful with their privatisations that the flops have not occurred. Labour Members cannot have it both ways.
The next stage of the groan and grumble campaign occurs when the new companies produce extremely satisfactory results at the end of their year's trading. Labour Members then squeal that the consumer is being ripped off. They would like to see poor results at the end of the first year so that they could point to the failure of privatisation.
The privatisation programme has brought higher standards from the private sector into the energy supply industry. The results show in improved profitability, lower prices in real terms and the introduction of competition. In the past five years, electricity and gas prices have fallen in real terms for industrial and domestic consumers. As my
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right hon. Friend said, what a contrast with Labour's record in the 1970s, when electricity prices rose by 2 per cent. every six weeks.
The Opposition motion refers to the Government paying more regard to the sale than the saving of energy. Although GDP has increased by 25 per cent. in real terms under this Government, energy consumption has remained virtually unchanged. Privatisation has put a downward pressure on prices under the regulatory regime and brought greater efficiency, greater flexibility in energy generation and greater consumer protection. For example, British Gas, which announced record profits of £ 1·3 billion despite bringing down gas tariff prices by some 14 per cent. in real terms since privatisation, has now brought gas costs down to about the lowest level in the whole of Europe.
Why has there been such a dramatic improvement? Since privatisation, British Gas has attracted a million new customers and productivity has leapt from 160 to 221 customers for each employee. Investment has dramatically increased. Last year, capital expenditure rose by over 50 per cent. to £1·2 billion. That amount was close to the total profits announced by that company and represents future security of supply for the British people.
The one element that has been lacking in the gas sector is competition, but a 90 per cent. limit has now been set on the sale of North sea gas to British Gas. It enables producers like Agas, BP, Mobil and Quadrant to supply gas to industrial customers in competition with British Gas. The role of Ofgas, the regulator of British Gas, has been steadily strengthened thanks to the diligence and perseverance of James McKinnon, its chairman. His new pricing structure means that domestic charges should fall by 5 per cent. a year over the next five years, with a further fall of 15 per cent. over the following five years. I look to Mr. McKinnon to devise a consumer repayment system on similar lines to those drawn up by the electricity regulator. He must also sort out the problem of the British Gas contract price increase of 30 per cent. for some of the United Kingdom's industrial users of gas, whom we want to enter electricity generation. I have great confidence in Mr. McKinnon and his ability to find a solution to that problem.
I am convinced that the electricity privatisation will be the biggest and most successful of all the Government's privatisations. The four new companies and 12 regional companies have all produced immensely popular flotations, followed by higher-than-expected profits in their first year. It is a success story and it should not be decried by the Labour party. Increased sales due to the colder spring and apprehension last year about the Gulf war have resulted in better-than-expected yields in the first year's profits. It is anticipated that, as the competiton in the electricity market hots up, with independent generators coming forward, downward pressure on prices will also increase.
It should be made clear that, under the price mechanism control written into the regime, the large pay increases that are causing such a stir cannot be passed on to the consumer. Consumers of electricity can benefit from a unique set of compensation payments available as from yesterday if the electricity companies fail to fulfil their obligations. They will receive £10 if an appointment on a specific day is broken; £20 if, within 24 hours of a fault occurring the supply is not restored; £20 if a meter is not supplied within five days of an order; and £10 if supply is

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interrupted through the fault of the company and is not restored within four hours. Other compensation payments are also available.
All those measures add up to an era of increased protection for consumers of gas and electricity, a new and environmentally protective supply and use of energy, and a reduction in costs. I forecast that during the next decade the new companies will produce even better results. They will be reflected not necessarily in higher profits but in higher investment and lower prices.
As for the recent spate of huge salary increases in the newly privatised industry, I asked for information from the Library on the relative position of those salaries compared to the salaries of heads of similar sized companies. The Guardian list shows that they are obviously still on the low side.
The hon. Member for Holborn and St. Pancras (Mr. Dobson) mentioned research going to Germany, so I asked for comparisons with equivalent chief executives abroad. Recently produced figures show that the executives in leading power generating companies in Germany still earn, on average, up to 50 per cent. more that Mr. Baker of National Power. The average pay of the seven-person executive body of the VEW generating plant in Dortmund is £213,000. In STEAG of Essen the average pay of the five-person executive body is £216,000; and the chief executive of Florida Power and Light in the United States earns £395,000. As The Independent quoted on 5 June
"British bosses lag in pay stakes despite big rises".
These examples give a slightly clearer picture of the pay levels of our chief executives than do the statements by the Opposition spokesman. I agree with my right hon. Friend the Secretary of State that in this time of recession the improvements in their salary levels should have been phased in over a longer period, but I expect that the same row would have erupted among the Opposition even if that had occurred.
I reject the Opposition motion, which shows that the Labour party still does not have much clue about the workings of industry. All that Opposition Members want to do is to try to score short-term party political points. I urge the House to reject the motion.
8.31 pm
Mr. John McAllion: It is part of the survival plan of this Government to try to choose the moment of the next general election when their prospects of winning it are at their highest. That has involved them in trying to create an image that can be sold to the voters. Part of the image-making process has involved trying to persuade voters that the Tories can create a fairer Britain—an opportunity Britain, a phrase that they borrowed from somewhere else—and a Britain of decent public services and of equal citizens led by citizen John himself. The Prime Minister has even boasted that he will deliver what the communists have been struggling unsuccessfully to achieve for more than 100 years: the classless society.
We now know the sort of classless society that the Prime Minister had in mind. It is a society in which the bosses of the privatised industries, from National Power and PowerGen through British Telecom to British Gas, have awarded themselves five and six-figure salary
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increases—£50,000 here, £150,000 there and £160,000 in one case. Those are merely the increases in salary; the salaries themselves are much higher again—in the case of the chief executive of British Gas, £370,000 a year. We are expected to accept that these increases are fair, even though we know that these are the same men who have thrown thousands of their own workers on to the dole and told them to get by on £41·40 a week dole money and, if they cannot find a job within a year, on £39·65 income support. The Prime Minister, who claims to believe in the classless society, is the same Prime Minister who condones this sort of grotesque inequality and unfairness.
One of the excuses trotted out in defence of the privatised bosses' pay hikes is that the increases are necessary to raise the salaries to a level appropriate for a private sector company. On breakfast television this morning a spokesman for the Institute of Directors with all due solemnity assured anyone watching at that time of the morning that the average company director of a private sector company earns just £40,000 a year. He said that the sort of increases that the privatised bosses were awarding themselves were not typical of the private sector. So becoming a private sector company cannot in itself explain why at National Power the boss had to award himself £50,000 over and above the £85,000 that he was already receiving. Nor does it explain why the boss at PowerGen had to award himself another £124,000 over and above the £76,000 that he was already earning. It certainly does not explain the extra £150,000 awarded to the chief of British Gas, which was already a private company when he was earning £220,000 last year.
So there must be some other explanation for these huge hikes in salary. The spokesman for the Institute of Directors stumbled on this morning, trying to patch together some sort of defence. He said that being in the private sector meant running greater risks, which in turn deserved higher rewards. He gave a few examples, mentioning that the new bosses can now be declared bankrupt, which they could not be before. But then, all the directors who are paid only £40,000 a year can be declared bankrupt. The argument does not stand up or justify people awarding themselves an extra £150,000 a year.
On went the spokesman as best he could, trying to defend the indefensible. He said that these directors can now go to gaol: they could not before. Some might argue that they should go to gaol for having awarded themselves such huge salary increases, but if they do not commit fraud or break the law, for which they should go to gaol anyway, where is the risk? How many bosses are there behind bars in Britain, banged up because they took risks in the free market? That shows the complete nonsense of the argument and it exposes the useless arguments in defence of these increases that we have heard from Conservative Members.
The truth is that these greedy bosses are using privatisation to cash in and to line their own pockets. No one, least of all Tory Members, should be at all surprised by that development. Tory Members have blindly supported, for more than a decade, a philosophy based on the pursuit of financial gain. I can well remember being told by Tory Members that there was no such thing as society, that the good Samaritan was a sap and that it is all about, "What I want at a time when I want it and at the place I want it." That was their creed and it has now become the creed of their creation, the privatised bosses.

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It was those same Ministers who, under the spell of the right hon. Member for Finchley (Mrs. Thatcher), created the very situation which they and the Prime Minister now condemn but do nothing about. That would be laughable were it not so tragic for the rest of us.
We are told that profit-related pay goes some way to explaining how all this has come about. When the right hon. Member for Blaby (Mr. Lawson) introduced profit-related pay in one of his early Budgets he claimed that it was designed to achieve a level of pay that would enable workers to be priced into jobs instead of being priced out of them. He warned that in a free economy it is the responsibility of employers and management to control industry's costs, and its wage costs in particular. He went on to warn that there can be no excuse for failure to discharge that responsibility—yet failing to discharge it is precisely what these privatised bosses have done. They have put themselves first with no thought of the impact on the cost structure of their industries.
These huge pay hikes are bound to bring about a deep sense of unfairness among the workers in the electricity industry and elsewhere in the economy. If workers are told that they have to accept lower pay rises to keep their pay increases as low as or even lower than the rate of inflation, they will look up and see the bosses awarding themselves increases sometimes of 20 times the rate of inflation. How can anyone tell them to accept that as fair? It will not work. The workers will rightly conclude that what is good enough for the bosses should be good enough for them, too.
These huge increases will achieve a wages spiral—massive rises at the top will create a demand for similar rises all the way down to the shop floor. What chance is there of economic recovery or of pulling out of the recession if we are all paying ourselves more than we produce, just like the privatised bosses in the electricity industry do?
Privatisation was recently described as selling people what they already own at less than its true value. In other words, it was a con, a rip-off and a fraud perpetrated on the people of this country. So, too, are the pay increases that these privatised bosses have awarded themselves. They are a disgrace, and so are the Prime Minister and the Government to have allowed them to get away with it.
8.39 pm
Mr. Malcolm Moss: This is Labour's choice of debate on its Supply day and the public might be forgiven for thinking that the Opposition might have taken the opportunity to praise the work force in the electricity supply industry for their tremendous and remarkable efforts in the past three years to turn an industry under state control into three important and profitable privatised industries. The Opposition could have welcomed the price reductions for electricity and gas and the injection of competition into generation. Some 20 new schemes have already been put forward and there are great hopes for renewables and combined heat and power. They could also have congratulated the National Grid Company on its expert handling of the pooling of prices which the Opposition said would not work. It is working brilliantly. They could have congratulated the 12 regional electricity companies and the two generating companies on exceeding the profit forecasts that were set out in their prospectuses.
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The Opposition denigrated the efforts of all those who work in the power industries. They dismissed price reductions as fairly irrelevant and whipped themselves into a fury of sham indignation about the salaries of a few key managers and directors while totally ignoring the benefits of privatisation to the consumer. They did that because of misplaced allegiance to the dogma of nationalisation.
Mr. Dobson: The hon. Gentleman says that everyone in the electricity industry should take credit for what the hon. Gentleman regards as the transformation of the industry. Why did only the directors receive a 12·5 per cent. bonus on privatisation? None of the staff received such a bonus.
Mr. Moss: As the hon. Gentleman knows, the staff participated in the shareholding at the time of privatisation. The percentages are 95 for gas, 98 for the regional electricity companies and 98 for the generating companies. Those people will have benefited from the share profits and high dividends.
The Opposition confirmed that a Labour Government would give high priority to the renationalisation of the national grid. Obviously, that is to be Labour's vehicle for controlling and dominating the electricity supply industry. The grid controls the pricing pool and distribution and would give Labour Ministers maximum opportunity to interfere at will. That is Labour's hidden agenda and no doubt we shall see more of it.
Labour's interventionist policy is tantamount to blackmail and seeks to bring the regional electricity companies and the generating companies into line with what Labour thinks is best for industry. It is a knife at the jugular vein of the electricity supply industry. We were not told the time over which such events would take place, and we were certainly not told about the costs. How are shareholders in the regional electricity companies to be compensated for the proportion of their shareholding in the national grid company? The motion refers to,
"unrestrained increases in the profits … pay and perks of … Directors".
There are three essential questions about the salary increases. First, are the structure and operational objectives of the privatised companies and the two generating companies different from when they made up the CEGB? The answer is yes, because they are now competing with each other, with nuclear electricity and with the newcomers in the generating industry. They have new responsibilities to shareholders and have to contend with a regulatory framework which seeks to protect consumer interests. They are not the same commercial operations as before.
Secondly, are the jobs of the senior managers materially different? The answer is yes. Their performance now is ultimately measured by the City institutions, the regulatory authority and the director general. That measurement is precise and is devastatingly effective, as many managing directors have found to their cost. Decision-making is fully exposed to public scrutiny because the evidence of decisions is shown in yearly accounts and balance sheets. Senior management is also scrutinised by the regulatory authority in terms of the quality of customer service and on environmental matters, which are now extremely important.
Thirdly, are not National Power and PowerGen among the top 100 largest companies in the United Kingdom economy, and does not that inevitably mean that they will have to pay the United Kingdom market price for quality

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labour at managing director or any other level? I reiterate the evidence quoted by my hon. Friend the Member for Exeter (Mr. Hannam). The Guardian of 13 June compared the salaries of the managing directors of National Power and PowerGen with the salaries in the United Kingdom's major companies. The results were surprising. The salaries quoted for the managing directors of National Power and PowerGen are tiny compared with some of the salaries being paid to the captains of industry.
The director general of the CBI said that the executive pay of the leading private power generators in Germany is, on average, 50 per cent. more than the salaries paid to the managing directors of Britain's two generating companies.
Further evidence on executive pay parity is contained in the table produced by P-E International which shows that United Kingdom executive pay ranks seventh in the 11 European countries that were measured, even when adjusted for the relative cost of living. It was 10th in the league table on absolute figures. Switzerland was on top followed by Germany, Spain, France, Italy, Portugal and the United Kingdom. That evidence shows that pay in the energy industry is not excessive when measured against other executive pay in the United Kingdom, against other energy utilities in Europe and against average executive pay in the EC countries.
I understand that Labour is in favour of the single market and convergence of salaries and wages. Would it oppose a convergence of salaries for top executives to bring them into line with our European competitors? The pay rises came to light as a result of the publication of preliminary results for the year ending 31 March 1991. The salaries have already been paid. The decisions about increases—labelled insensitive and embarrassing by some Opposition Members—were taken in the previous financial year, that is, before 31 March 1990. With hindsight, that can be seen as an attempt at equalisation with salaries in comparable United Kingdom industries of similar size. The gap must be made up. We can question the phasing, but if these men were to be replaced tomorrow salary levels of the current order would have to be offered to attract the right calibre of applicant.
The Opposition accuse the Government of promoting these large increases as the price for compliance with the privatisation process. That overlooks the benefit of privatisation not only to consumers but to shareholders. Privatisation raised £12 billion for the taxpayer—£8 billion from the regional electricity companies and about £4·3 billion from the two generating companies. It reduced Government subsidies and reduced any requirement on the PSBR in future years. By holding back 40 per cent. of the privatisation of the generating companies the Government will be able to benefit the taxpayer as a result of the growth of future profits.
As I have said, employee share ownership is high and has led to strong motivation of the work force to bring about the significant changes of the past few years. Profits are good for employees, shareholders and taxpayers. The year-end accounts that have just been published for PowerGen show that this year PowerGen will pay £92·5 million in corporation tax. The taxpayer would not like to lose that money, which would be available for investment. The report and account goes on to say:
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"The capital programme includes the two CCGT power stations at Killingholme and at Rye House."
The Opposition opposed the private Bill on Killingholme all the way. These cost approximately £290 million and £240 million respectively at current price levels. The company is already committed to flue gas desulphurisation refitting at Ratcliffe at a cost of £250 million.
"In addition, PowerGen is investing significant sums at existing major power stations in order to secure their continued profit-making potential for the future."
We then come to the crux of the report, where it says:
"It is expected that this substantial expenditure will be financed from internal resources".
There we have another advantage of privatisation. This is money not from the taxpayer or from the Government. This capital investment is made as a result of profits.
The utilities are regulated for consumer protection on a scale hitherto never envisaged. Just one example of the impact of the director general can be seen in the case of gas. Mr. McKinnon of Ofgas has negotiated for the coming year a change in the RPI minus X formula for pricing, which will mean approximately 15 per cent. lower prices over the next five years. The accusation that the directors general are toothless is misplaced. Labour's motion is misguided and prompted by outmoded conceptions of state control and interference in industry. Shareholders in the privatised state industries have been warned: beware the Labour hidden agenda.
8.51 pm
Mr. Simon Hughes: I will take up two of the invitations extended by the hon. Member for Cambridgeshire, North-East (Mr. Moss). I pay tribute to the staff of the two industries concerned which supply us with a crucial element of our national economy. Secondly, it is right to acknowledge that the cost of electricity and gas to the domestic consumer has gone down.
The hour and a half of the debate so far has largely been a dialogue of the deaf. The Government have pretended that there is nothing wrong with their new model privatised gas and electricity industries and the Labour party has protested that there is nothing right about them. Neither is right. When the Bills that privatised the two industries went through the House, my hon. Friend the Member for Gordon (Mr. Bruce) was the spokesman for our party. We have argued a consistent position throughout the decade of debate on privatisation. It is that the Government's proposals would not achieve real competition, although we were not opposed to the privatisation of either industry. We regarded proper competition in a privatised industry as an acceptable way forward because it would give consumers power and benefits.
However, what has gone wrong has manifested the weakness of the non-competitive element of what are now private monopolies, as has been mentioned before, and not private sector competing companies, apart from a few exceptions. Our argument was that if we were to go down the road of privatisation, it could be done in certain sectors on a trial basis to test the market and, secondly, it should be done while giving far greater powers to the consumer and ensuring greater regulation thereafter. After half a decade or more of privatised gas, and a year or so of privatised electricity, our predictions have been proved right.

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There have been technically unrestrained increases in both profits and pay. They are not restrained by the regulatory process, although prices are. Of itself, that is not a problem, and restraint mechanisms might introduce problems. The Labour party's two proposals for controlling profits—price capping and a special lump sum tax—have major flaws. Price capping has an environmental disadvantage because by encouraging the use of energy by reducing prices artificially, one discourages conservation. A special lump sum tax offends against the regulations and the legislation that brought the industries into operation, as the Secretary of State pointed out. I should be interested to know how any Labour spokesman thinks that it would be possible to have a new form of lump sum tax without getting into difficulties over large-scale compensation for the shareholders.
A more topical and provocative recent issue is the scale of the pay increases awarded to senior executives. The Government are not being consistent on this. The hon. Members for Cambridgeshire, North-East and for Exeter (Mr. Hannam) were so keen to defend the industries that they failed to recognise the major criticism of these recent pay increases. The Prime Minister and the Secretary of State have made that criticism, but have failed to say what they will do about it. The criticism is not that these industries may have to pay people a high price to be competitive with the private sector, nor that they may have to pay a high price to be competitive with industries in Europe. I accept both those arguments. The criticism is that it is not possible to justify paying such large sudden increases at a time when the policy of the country and of those industries is to urge on their staff restraint in pay increases of between 10 and 6 per cent., when those people start off at a lower wage.
It is unacceptable and it should not be possible for people who are already at the top of their industry's income levels to award themselves whopping increases just because, they believe, it is justified by comparisons with Europe or the rest of the private sector. What offends is the level and speed of the increases at a time when we are in a recession and, as the hon. Member for Pontefract and Castleford (Mr. Lofthouse) said, jobs will suffer directly in these industries. I fail to understand how these people can look the employees whom they sack in the face when they have awarded themselves such massive pay increases.
Furthermore, it is unacceptable for the Prime Minister and the Secretary of State to say that nothing can be done. This may not be the most accurate of parallels, but it serves. If the Government can call in the heads of banks, entirely privately, to tell them that the way that their policies are impinging on other people is unacceptable, then they can surely call in the heads of companies in which they have a 40 per cent. shareholding to tell them that such pay increases are unacceptable.
As I said in my intervention to the Secretary of State, it is a pretty clear exercise in backscratching when the non-executive directors award the executive directors their salary increases, the executive directors award the non-executive directors their salary increases and they are advised by consultants who are appointed by the directors, so they cannot claim that they are getting independent consultative advice, especially when the advisers get a large fee for their consultancy and the advice is that salaries should be increased considerably. That does not wash.
The Labour party talks about the damage caused to the long-term interests of the country and the harming of the
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environment, and the industry has only begun to do what it should. It has begun to consider that energy efficiency measures are part of the remit of the regulator. It should now extend that remit to include energy conservation requirements in the gas and electricity industries. At the moment, the shareholders' interests appear to be given far greater priority than the interests of energy efficiency and conservation. We recommend that both those matters are put in the cost indices which the regulator has to establish when regulating the industry.
The argument about the increase to the trade deficit is not as clear as the Labour party suggests. I understand the argument that it has a direct impact on the coal industry. That is clear and I know that that is the genesis of the argument. But the reality is that if prices are kept down, the price to manufacturing industry goes down, therefore, the price of manufactured products such as steel goes down, the ability to export increases and the trade balance is affected beneficially rather than disadvantageously. That argument is not entirely clear. In addition, an extra tariff on fuel imports would offend against GATT and the European energy charter which we in the House debated only a couple of weeks ago and appeared, on an all-party basis, to support.
Lastly, I want to propose some suggestions for making the privatised industries more effectively responsive to the consumer interest. We must protect those on low incomes far better than we are. That means the abolition of standing charges and legislation to prevent those unjustified cut-offs which still happen. I give but one example of a disabled pensioner whose supply was disconnected and was told that it would cost £50 for it to be restored with no proof that he was the cause of the problem which caused the local electricity board, in this case in London, to disconnect the supply.
The best way to keep down bills for people on low incomes is to encourage energy efficiency and conservation to ensure that their homes do not need so much heating and are not cold and damp, and so on. It is part of a comprehensive environmental policy. Moreover, the rip-offs that private owners often impose on their tenants are unjustifiable.
Secondly, the directors general should have their terms of reference widened to include non-monopoly services such as wiring and equipment fitting. Thirdly, as has been recommended over many years but nothing has happened, we should not just take the statistics of the industry as being the statistics which determine exactly how many complaints are being made. That needs to be independently monitored.
Lastly, a point made clearly by all objective commentators, regulation is a secretive process. The regulator is not accountable in any of these cases. If we are to have effective regulation of privatised industries, we must give the regulator some power and the consumer and the consumers' representatives some teeth. At the moment, the so-called free-market industries give the consumer very little power.
9.1 pm
Mr. Anthony Beaumont-Dark: This is an interesting and important debate because we are talking about an essential element for the society in

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which we live. Profit should not be a dirty word because without profit nothing is created. There is no money to invest unless there is a profit from labour and from capital.
The privatisation of the monopolies has yielded many benefits for Britain. Some £12 billion or more has been available from the people's money to invest in the health service, education, roads and many other important things in Britain. In freeing those companies from direct state control they have been able to borrow money instead of its being part of the public sector borrowing requirement. The companies have been able to do essential and necessary things while the money has been free to use.
One of the problems of the argument that we as Conservatives have with socialists is that sometimes comments on salaries are made more from the politics of envy and malice than of common sense and justice. Many people say that if people earn more than they do it is not right or decent. We will always have people who invent something or do things which enable them to become hugely successful and we should honour them for that, whether it is the Alan Sugars of this world, who build companies such as Amstrad from nothing, making themselves worth £200 million or £300 million, or anyone else. No one in his right mind should have any argument with that. Creating with vision something from nothing is something that we should all support. Such people create real wealth, hope and opportunity for everyone.
Some people, however, have not created the companies that they run; they have merely been taken on board as managers to do a decent job. I make no secret of the fact that, had I been in charge, I would not have privatised the water industry, which strikes me as the classic example of an absolute monopoly. Unless we are willing to carry a bucket 10 miles and back, none of us can go anywhere else for our water. The same applies to the electricity and gas industries. Some of the arguments that are currently being advanced show not that the directors are underpaid, but that they lack an understanding of the real world.
Many of those directors were happy to jog along on £40,000, £50,000, £60,000 or £70,000 a year before. If people believe that, on privatisation, those same directors will rush off to other companies unless they are paid another £250,000 or £350,000, they will believe anything. Not only this country, but the whole world, experiences industrial and employment problems. Would those men really rush off to America, France and Germany because they thought that they would not be paid another £250,000 a year?
Of course, entrepreneurs must be paid. Those who are genuinely able to create growth must be paid for it. But let us consider what has happened. Between 1930 and 1950, company directors expected to earn between seven and 10 times more than their average employee; between 1950 and 1980, they expected to earn between 12 and 20 times more than that employee. Suddenly—perhaps because of the influence of a few mad entrepreneurs in America—chief executives are expecting to earn between 40 and 70 times more than their average employees.
If that were backed up by productivity, it would seem worth while. Between 1980 and 1990, however, the productivity of some of those great men—without whom industry would supposedly crumble—has risen by 150 per cent., while their salaries have risen by 320 per cent. I
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believe that it should be the other way round. I believe in the creation of wealth. That is why I mentioned Alan Sugar of Amstrad, who is worth every penny of the millions that he has made: after all, he created the company. Why do people imagine that they should be paid exorbitant sums without producing exorbitantly good results?
I accept that, for some of those people, it all becomes a macho business. They do it more for the ego and the status than for reasons of greed. There are, of course, the Sir Ralph Halperns of this world; they are good at some things, but, whatever else Sir Ralph did five times a night, he was not creating profits. With his £1 million-a-year income, he produced a company that is now almost bankrupt.
Those who lead businesses should create something before they receive their rewards, on a basis of the earnings per share on the capital employed and the creation of genuine prosperity. They should not think merely of being able to increase prices and get away with it.
I suggest three things, not just for privatised industries, but as an amendment to the Companies Act 1989 which should apply to all executive directors. First, the salaries of executive directors should have to be agreed by all the shareholders at an annual general meeting and they should be explained before they are passed. Secondly, non-executive directors who form part of the remuneration committees should be appointed for six years on a non-extendable basis so that they would be truly non-executive and truly independent. Thirdly, directors' contracts should run for three years. They should not be rolling contracts so that if they are sacked because of inefficiency they run off with £1 million so that it might be worth being sacked instead of running the company.
If we did that, and directors were worth their money, they would easily be able to find other jobs and so would cost more than the mediocre people who run many of our businesses today. It is not a way of cutting salaries but of cutting down to size people who think that, because they are lucky enough to be running privatised monopolies or other companies and the money looks so good, they should have their hand in the till. That is the way to increase productivity, prosperity and capitalism, not some of the seedy things that go on now.
9.11 pm
Mr. Peter Hardy: The previous two speakers have given the House some useful information. The hon. Member for Southwark and Bermondsey (Mr. Hughes) rightly drew attention to the need for transparency of power and capacity in the regulator. Experience makes it clear that that is the case. When we were discussing this in Committee, in regard to both gas and electricity, the hon. Member for Gordon (Mr. Bruce) and some of my hon. Friends emphasised that point. I agree also with the hon. Member for Birmingham, Selly Oak (Mr. Beaumont-Dark). He has demonstrated that there is little regard for efficiency or the principles that once inspired the Conservative party. It is an outrage that the Government have used the word "successful" twice in the amendment.
Mr. Morgan: They do not believe it.
Mr. Hardy: Of course, they do not believe it. No one in Britain in his right mind believes it.

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I have mentioned before, but it is worth mentioning again, that last year I took part in a major debate in Budapest on the economy of eastern Europe. The European Conservative group, led by Conservative Members, presented a paper that urged the east Europeans to privatise all their assets. As an example they quoted British Gas. The document said that, after substantial costs had been incurred, the British Government received £1·74 billion from the sale of British Gas. The Conservative group said that, because of the money received from the sale, Britain was helped enormously and there was greater capacity to invest. It urged eastern Europe to do the same.
I spoke in the debate immediately after them and pointed out that we had sold British Gas for one tenth of what it was worth and that the figure quoted in the document was one tenth of the asset value of British Gas. I said that I would not argue about the merits of privatisation or suggest that everything should be under state control because I believe in a mixed economy. However, I said that I did not think that British Gas was a sensible example to offer eastern Europe.
Mr. Peter Rost: Will the hon. Gentleman give way?
Mr. Hardy: No. I intend to be brief.
Interestingly, I was followed in that debate by the leader of the German equivalent of the Confederation of British Industry. That gentleman said that he had no objection to privatisation in principle, but that if the public asset was sold for markedly less than its true worth, it was a corrupt act. That was not my view—it was the view of the right wing. It was the view of the intelligent business men in Germany. I wish that the Government's economic motivation matched that which has been displayed by the growth and investment in Germany in recent years.
Instead, the position in Britain is scandalous. There is complete disregard for the fact that 20 million people are on or below the poverty line. How do they feel when they see these obscene examples? How do the captains of the wealth-producing industries feel when they see the burdens heaped on their shoulders by the pricing policies adopted by these public monopolies?
Steel has been mentioned. Under this Administration, thousands of jobs have been wiped out in my area. Our remaining industry is special steels. Investment has taken place and we have the finest plant in Europe, skilled and highly motivated work forces and traditional markets, but all that is imperilled by appalling electricity price increases.
Mr. MacKenzie and others involved in the steel industry and other heavy-energy using industries have been to see the Minister with responsibility in this matter. I took representatives of the Iron and Steel Trades Confederation to see the Minister to complain about the fact that the imposition of the latest round of price increases threatened markets and the continuation of and achievements in that vital industry.
No regard is paid to manufacturing industry. It is about time the Government began to understand the point made by my hon. Friend the Member for Pontefract and Castleford (Mr. Lofthouse) that this lot, highly paid as they are, are making us dependent on imported coal, of which there is no security of supply. This lot are determined to wipe out the British coal industry and make us dependent on overseas sources which will take us to the
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cleaners when we have wiped out our industry. This lot are completely unconcerned about the fact that, before the 1990s are over, the balance of payments implications will involve about £1 billion.
We are already in a grievous and devastating economic position. The Government must go down in history as evil in their results, stupid in their approach and utterly amoral in their character.
9.17 pm
Mr. Phillip Oppenheim: The Labour party's motion is interesting as much for what it leaves out as for what it includes. For example, there is no mention of British Telecom. Not long ago, the Labour party warned us that, if that industry were privatised, those without telephones would face bleak prospects, prices would rise faster than inflation, people in rural areas would not have access to the system and there would be a reduction in the number of call boxes. There were also horror stories about engineers being electrocuted as a result of people attaching non-BT equipment to the system.
What is the reality? The number of telephone lines has increased by 20 per cent., 4 million more people now have telephones, prices have fallen by 20 per cent. in real terms, people in rural areas now get telephones faster than ever before and the number of call boxes has increased by 11,000.
Mrs. Llin Golding: The hon. Gentleman is speaking in the wrong debate.
Mr. Oppenheim: The hon. Lady says that I am speaking in the wrong debate. I suggest that she read the Government's amendment and recall that the hon. Member for Wentworth (Mr. Hardy) gave a great diatribe about the steel industry. The Government's amendment says that this House
"congratulates the Government on continuing with its successful policy of privatising nationalised industries".
British Telecom is a privatised national industry. To continue with my points, no one has been electrocuted as a result of the installation of non-BT equipment.
The hon. Member for Wentworth told us about how awful things were in the steel industry. He said that it was in a terrible state and that what the Government were doing to the coal industry would damage our balance of payments. Under the Labour Government's tutelage, the British steel industry was the world's largest loss maker and our iron and steel trade faced a chronic deficit. Now, British Steel is one of the most successful steel manufacturers in the world—admittedly in difficult world conditions at the moment. For the first time in many years, we export far more iron and steel than we import. That is a great success.
Mr. Morgan: Tell us about Lloyd's of London.
Mr. Oppenheim: The hon. Gentleman asks me to tell him about Lloyd's of London. What would he like me to tell him? Perhaps he could be more specific. There is deafening silence.
I remind the Opposition of their attitude to British Telecom and to the steel industry because it shows the reality of Labour. Labour always supports the status quo and it always opposes change, especially if it harms the interests of their friends in the public sector unions.

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One of the main advantages of privatisation for all companies—whether or not they are utilities or semi-monopolies—is that they have the freedom to raise capital. It is worth reminding the House of what used to happen when state-run industries had to wait in the Treasury queue behind other deserving causes such as the national health service when they wanted to raise capital. The Opposition are fond of complaining about crumbling sewers, dirty beaches and polluted rivers, but that situation arose under the system of state ownership when the water industry did not have the freedom to raise its own capital on the free market. Now the water industry is at least able to raise money on the open market and to make record investment in cleaning up our rivers and beaches and restoring sewers.
A factor that is equally important as the freedom to raise capital in the privatised industries is the freedom from political interference. The Opposition want me to deal specifically with the electricity industry, so it is worth reminding ourselves of what used to happen in the electricity industry. The British electricity industry was forced to buy expensive United Kingdom coal, which protected the British coal industry. That resulted in an unproductive industry, with low-paid miners doing a difficult and dangerous job, mining uneconomic coal to produce over-priced electricity. That, in turn, resulted in job losses throughout industry because industry paid more for electricity than it should have paid.
In addition, politicians made a mess of the nuclear programme which is as classic a case of disaster caused by political meddling and interference as one could hope to find. In 1965, it was decided, for political reasons, to go ahead with advanced gas-cooled reactors instead of the cheaper, off-the-shelf, American-made pressurised water reactors, which was the technology chosen by the French. That decision was shrouded in secrecy, but the outcome was that a small, relatively weak United Kingdom consortium was chosen to build a reactor that was far more complex and expensive than the American option. By the early 1970s, all of the five AGRs which had been commissioned were in deep trouble. Even now, Dungeness operates at only a fraction of its planned output. In 1974, as a result of that debacle, Arthur Hawkins, the chairman of the Central Electricity Generating Board, called it a catastrophe and said that it must never be repeated. He argued for the purchase of the American PWRs, but what happened? He was overruled by politicians who decided to go ahead with yet another over-engineered design for the SHGWR, which was later abandoned on safety grounds after many costs had been incurred.
After all that waste, PWRs were ordered in 1979. So, the dreams of scientists, technocrats and politicians ended as 40 years of gigantic waste of talent and resources, and, after all that, United States reactors were ordered. What could that talent and those resources have achieved if directed elsewhere in the economy where they could have been best deployed and had they been directed by the market rather than by politicians? How much better would the industry have performed if it had not been lumbered with high-cost electricity in those years as a result of ill-thought-out and politically inspired nuclear programmes and as a result of the protection given to the
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United Kingdom coal industry which enabled it to sell high-cost coal to the generators who had no choice but to buy it?
It is fair to say that, although the utilities have been privatised, especially coal and gas, they do not operate in a complete market environment. They are semi-monopolies, which is precisely why the Government introduced regulation. Most people would agree that the regulation is a great advance on the old system. In the water industry, for example, the water providers' role and the pollution control role have been separated very successfully with the creation of the National Rivers Authority. The NRA is now taking aggressive action against polluters which was never taken when it was the responsibility of the state-run water boards to control pollution.
In the gas and electricity industries, regulators have powers to look into efficiency and into any excess profits that are made when agreeing to the prices that the utilities want to charge. Surely that is the point. If the regulators feel that top salaries are an unjustified burden or that they arise as a result of excess profits, they can act in their capacity to limit prices. That is why the regulators' role is extremely important. If salaries are justified in terms of the performance of the executives, there is no problem. If the salaries represent inefficiency, exploitation or excessive profits, the regulator has the power to limit the price rises in the utilities.
Some Opposition Members, especially the hon. Member for Wentworth, seemed to feel that high payments were immoral. I believe that the hon. Member for Wentworth actually used the word "immoral". Would he use that word about the very large sums earned by many well-known Labour supporters, such as Glenda Jackson, who is standing as a Labour candidate? I could quote many more examples. I cannot take seriously Labour's claim—
Mr. Dobson: There are many cinemas available.
Mr. Oppenheim: Does the hon. Gentleman want to intervene? If he does, he may go ahead.
Mr. Dobson: The unique feature about the next Member of Parliament for Hampstead and Highgate is that, when she appears at a cinema, people have a choice of cinema to attend.
Mr. Oppenheim: I do not know whether that was meant to be funny.
The hon. Member for Wentworth said that high payments were per se immoral. All I was trying to point out was that there was an element of hypocrisy because so many prominent Labour supporters earn vast sums for doing far less productive jobs than the captains of industry do. I cannot take seriously Labour's claim that we have not introduced enough competition into the system and that high salaries are due to that lack of competition when Labour has opposed every attempt by the Government to introduce more competition into the utilities.
The problem is that Labour has not yet realised that privatisation is far better for industry and for consumers than is nationalisation, even though Labour's socialist colleagues in New Zealand, Australia, Sweden and even, to an extent, France—not to mention the former socialist countries in the eastern bloc—have embraced privatisation. That means that only Labour, Cuba and North

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Korea are still in the anti-privatisation camp—the hon. Member for Holborn and St. Pancras (Mr. Dobson) and Kim Il Sung.
Labour Members are too prone to forget that the Government get a large share of the profits of privatised companies in tax and dividends. The privatised companies pay far more now to the Government than they did as nationalised industries when Labour was in power. I ask the hon. Member for Holborn and St. Pancras how many hospitals and schools Labour would have to close without that money. How many hospitals and schools would Labour have to close to fund its expensive renationalisation programme? The hon. Gentleman said that, under a future Labour Government, the renationalisation of the grid would be a high priority. A priority is born, and I was privileged to be present at its birth. Where does a "high" priority come in the order of priorities, relative to an absolute priority or a top priority? If the hon. Gentleman can tell me what the difference is, I shall happily give way. Again, there is a deafening silence.
At the root of the Opposition's attitude is their desire to meddle with and control industry. The arrogance of Opposition spokesmen in that respect is breathtaking. Few of them have had any experience of business—I except the hon. Member for Coventry, North-West (Mr. Robinson), who presided over Jaguar in its darkest days of state ownership—but, despite that, they seek to preach to successful industrialists and to tell them what to do, as they did in the 1970s.
I would take Labour Members' concern about salaries more seriously if they expressed more concern about salaries in the public sector. In the past few years, Derbyshire county council has appointed no fewer than two ex-Labour councillors and an ex-Labour Member of Parliament to jobs that pay more than £40,000 a year. The brother of the hon. Member for Bolsover (Mr. Skinner), the chairman of Derbyshire Labour party, has been appointed by the county council to a well-paid job as a minder for Japanese business men, despite the fact that he was sacked for corruption by the county council under a previous regime. His wife also has a well-paid job in the county council's public relations department—a service that it needs. Such jobs for the boys are far more damaging than paying executives the market wage that industries need to pay to keep them.
9.30 pm
Mr. Harry Barnes: I shall return to the subject—the privatised electricity and gas industries—which has little to do with Derbyshire county council.
A measure to privatise the electricity industry in Northern Ireland is going through its parliamentary stages. All the parties in Northern Ireland, apart from the almost non-existent Conservative party, oppose electricity privatisation, yet despite that consensus the Government are continuing with the measure. If there is one part of the kingdom where consensus should be observed, it is Northern Ireland. That measure should be dropped.
I have little time to develop the points that I should like to make, but I wish to mention the flotation of shares in East Midlands Electricity, which coincided with disastrous weather conditions. Those weather conditions and the
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flotation of East Midlands Electricity produced important political consequences that have not yet been considered by the Government.
Early on 8 December, there was a 14-hour severe blizzard and ice accretion throughout the east midlands, including the constituency of the hon. Member for Amber Valley (Mr. Oppenheim). It spread from Chesterfield in the north to past Coventry in the south. For an average of 34 hours, 815,000 customers, or some 2 million people, lost supplies, and many lost supplies for much longer. A week later, 14,500 customers were still without supplies.
On the third day of that emergency, East Midlands Electricity was floated. At that time, 300,000 customers still had no electricity. What was the impact of that emergency on the flotation? How did it affect the value of shares? Amazingly, it seems to have had no impact. That may be explained by the fact that the emergency was kept quiet by the Government so that people would not understand the difficulty that East Midlands Electricity was facing at its birth. No state of emergency was declared. People clearly needed a state of emergency to be declared, whereby the Government would recognise their plight.
By contrast, when there were gales in the south of England in 1987 the Minister immediately came to the Dispatch Box to explain that, because of the emergency, Bellwin moneys would be available to help local authorities to handle the crisis. Nothing like that happened at the flotation of shares in East Midlands Electricity.
The company has now produced a report on the blizzard. It makes various suggestions for technical improvements and talks of providing better communications, but it fails to raise the question why the Government did not declare at the time that a serious emergency had occurred.
The Department of Energy or the Select Committee on Energy should now investigate the matter. Clearly people were not given the emergency provisions and services that would have been available if the Government had tried to tackle the emergency by working hand in glove with East Midlands Electricity plc.
9.36 pm
Mr. Rhodri Morgan: It is a pleasure to wind up the debate, because this may be our last opportunity in this Parliament—which has been my first Parliament—to discuss what is perhaps the biggest set of measures that it has had the chance to consider.
The process of privatisation, on which we are looking back, can be said to have started in November 1987—or even earlier, in the 1987 Conservative election manifesto. In legislative terms it is three and a half years since the publication of the White Paper, the paving debate, Second Reading and so on. We now have a useful opportunity to judge whether privatisation has been the roaring success described in the Government amendment or the mess that the Opposition believe it to be.
It is fair to say that the Government used to regard electricity privatisation as the jewel in the crown of the four years of this Parliament. In the light of the Prime Minister's recent expression of concern about the top people's salaries and the perks in the electricity and gas industries, we ask the Government why the Conservatives' jewel in the crown of this Parliament has gradually become a rescue job, as it did in 1989, when the previous Secretary of State resigned and the present Secretary of State—who

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is not now in the Chamber—had to take his place. Then, from being a rescue job, why did it become the national scandal that the Prime Minister and the Secretary of State evidently now think it is, judging by their attacks on its consequences, such as the way in which the gravy train has been milked by those at the top, and the disparity between the deal given to consumers and taxpayers and that given to those running the industry?
When the present Secretary of State took over in 1989 the patient was looking very sick indeed. The right hon. Gentleman came in as the company doctor for the Government's legislation. One could say that the patient was suffering from pylons. The right hon. Gentleman took a couple of months to review the situation; then he made some changes in the legislation. If I list those changes, hon. Members will see why the present legislation is almost unrecognisable compared with what was originally proposed.
First, the right hon. Gentleman decided to take the nuclear side of the industry out of the privatisation altogether. Secondly, he cancelled the three pressurised water reactors which were in the programme but which had not yet been started. Thirdly, he delayed everything by six months.
The fourth decision was to change the whole basis of the pool arrangements, and the fifth was to sell PowerGen and National Power together instead of separately. The sixth was to retain 40 per cent. of those two companies in the public sector. The seventh change, which was perhaps not intended at the time, was that the Government managed to lose the chairmen of National Power and PowerGen in the process.
Those were fairly substantial changes and one must admit that they at least enabled the Secretary of State to take the next step forward and actually float the industries. By that time, however, there had been a severe loss of confidence, as a result of which fact the Secretary of State had to underprice the shares and overdose on perks to get them away. With the run-up to the Gulf war and privatisation running almost concurrently—with a dreadful inevitability—he decided that flotation would proceed but with a massive extension of the perks that we have come to expect from Conservative privatisations.
Just think what the Government did to ensure that the shares got away which the Government had not done in previous privatisations. They made multiple share ownership legal for the first time. People could apply, as many Tory Members did, on their own behalf, on their spouse's behalf—on behalf of Karen and Darren, grandma and grandpa and anyone else living in the same house as them. One could apply on behalf of six or seven people. Notwithstanding the fact that all those people were effectively one electricity consumer, all of them could enjoy the perk of a reduction in their next electricity bill: there could be six or seven reductions in one electricity bill. What an invitation that would have been to the former hon. Member for Ynys MÔn. If he had still been in the House, as he was at the time of the British Telecom flotation, he would have had no difficulty at all with the proposition. Many hon. Members took advantage of it. Many Tory Members will probably be able to pay for the next election campaign and for the school fees for the four
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children on whose behalf they probably applied out of the profits from the underpricing of the shares, for which they themselves had voted.
My hon. Friend the Member for Wentworth (Mr. Hardy) said that when he put the proposition to the leader of the German equivalent of the CBI at a conference, that gentleman said that it was a corrupt act for the Government deliberately to vote for the underpricing of assets of which they were to dispose. Knowing the strong leanings of the German equivalent of the CBI towards ensuring that the taxpayer gets a good deal—and taxpayers must get a good deal if the House is to be able to hold its head high on matters affecting the disposal of public assets—I could not put it better.
Having decided to allow people to apply on behalf of their children and anyone else living in their house and to receive perks for all of them, the Government decided to extend to them another perk that had never been offered before: people could sell the shares straight away without waiting for the second and third call and still keep the original perk. People were told, "Even if you are no longer a shareholder a year hence, you will still get money deducted from your electrictiy bill provided that you took part in the flotation." Previously, the Government had said, "Obviously you must keep the shares. You cannot expect to have money deducted from your electricity bill a year after you have disposed of your shares for the first-day profit." But so keen was the Secretary of State to get electricity shares away that he allowed people to buy and sell—to engage in staging—but still to get money off their electricity bills.
Is it any wonder, in that gravy-train atmosphere—an atmosphere in which multiple-share applications were legalised for the first time—that top people started to realise that the gravy train does not stop with the Secretary of State but could benefit them? It is no use the Prime Minister and the Secretary of State wringing their hands in this curious ineffectual manner at the way in which top people's salaries have rocketed. It is not so much a matter of shutting the stable door after the horses have been stolen. It is more a matter of the Prime Minister looking at the stable door, having removed the latch and lock himself, and wondering why it is swinging back and forth on its hinges while the distant sound of galloping is heard in the next field or the next county, bemoaning the fact that the top people have got away with the pay and extra perks.
An example has already been cited but it has not perhaps been put in its true context. The chairman of British Gas has had his salary increased in a remarkable way, not only in terms of the actual percentage increases that he has received. We know what a reliable organ The Sun is and, if it happens to be attacking something that a Conservative Government have done, its reports are probably true. The Sun reported that the chairman had received £28,000-worth of perks in the form of goods and work carried out at his house in Bournemouth. A British Gas workman's van had been parked outside his new house in Bournemouth for over a month before somebody finally twigged what was going on and blew the whistle by telling The Sun, which then found out that he had had £28,000-worth of free central heating, tumble dryers and other things. British Gas has lamely attempted to recover the position by saying that many British Gas employees are allowed to try out British Gas products and that that

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is one of the ways in which employees become involved in the firm. It appears, however, that the chairman is allowed to try out all British Gas's products—all at the same time.
Surely that is not necessary to provide an incentive to senior management who were doing exactly the same job before privatisation. It is an obscenity and an example of the way in which the gravy-train atmosphere has permeated the electricity and gas industries since privatisation. After all, if it is thought necessary to give £28,000-worth of perks to the chairman of British Gas to provide him with an incentive, how would one give an incentive to the chairman of the water and sewage companies?
Are we saying that we should give similar incentives to Treasury Ministers and that if they managed to price the shares of the electricity industry correctly or to get their public expenditure forecasts right we would let them off income tax for a year? Not only would the Queen and the Prince of Wales not pay income tax—the Chancellor of the Exchequer would be in the same position. That is not a principle that we should like to see established, but it is exactly what the Government have engineered for the electricity and gas industries.
Perhaps we should have asked the Secretary of State for Energy whether he would have been willing to take a pay cut or to accept a bonus if he had correctly priced the shares that he sold in the electricity industry. If we had done so, I am sure that the right hon. Gentleman would be leaving the House even sooner than he intends because he would be able to pay attention to far more exciting things, such as being a name again at Lloyd's, where such problems never arise. That would be a way of trying to provide the right hon. Gentleman with an incentive to price the shares correctly so that the taxpayer would get a reasonable bargain. If the right hon. Gentleman is not willing to do that, come the tolling of the liberty bell of democracy at the next election, the Government who will be formed by my right hon. and hon. Friends most certainly will.
9.47 pm
The Parliamentary Under-Secretary of State for Energy (Mr. Cohn Moynihan): I welcome the opportunity that has been presented by this debate and am delighted, in Opposition time, to set out the success of the privatisation programme. The Opposition lost the argument in the last debate on this subject on 16 January and they have lost it again tonight. Consumers, taxpayers and employees are not gullible. They will have seen through the rhetoric that the Opposition have used once again and instead they will listen to the facts, which are not as portrayed by the hon. Member for Holborn and St. Pancras (Mr. Dobson). They are as follows.
Fact one—the Opposition said that we would never be able to privatise the electricity industry before the election, but we did and it has been a resounding success.
Fact two—we were told that we would not be able to inject competition into the electricity industry, but we have. Competition in generating is growing all the time and it is competition, not Whitehall intervention, that is the best guarantee of efficiency and of ensuring that customers receive good service.
Fact three—consumers are benefiting: prices are controlled and they have new rights and independent
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regulators to look after their interests. The privatised industries are leading the way in consumer rights which we look to the citizens charter further to promote.
Fact four—share ownership is at a record level. Eleven million people now own shares—25 per cent. of the adult population. It is a clear recognition of the public's desire to share in the success of privatisation.
Fact five—the taxpayer has benefited from privatisation. Not only has there been a direct benefit in terms of the proceeds that have been realised, but privatisation has unlocked efficiency. Nationalised industries overall have had a poor record on profits, investment, productivity and industrial relations. They had combined borrowings of £2·5 billion in 1979. Growing profits mean a growing contribution to the national wealth.
Contrast that with the way in which matters would be on the basis of the contributions under Labour. The hon. Member for Holborn and St. Pancras said that he would renationalise the National Grid Company and give it all sorts of duties. He said that a Labour Government would use their shareholding in National Power and PowerGen to influence—though many of my hon. Friends would say "interfere in"—the running of their businesses. He also said that he would take steps on board pay.
What would that policy mean in practice? It would mean that once again a Labour Government would try to interfere in the running of a business about which they knew nothing. They would interfere in a company that is best left in the hands of those who are skilled at running it and who are accountable to their shareholders for its performance. Once again, the industry would be subject to the dead hand of Whitehall, stifling innovation and interfering in the proper operation of the market.
Electricity prices—in that context the comments of the hon. Member for Wentworth (Mr. Hardy) were rich— which rose by the equivalent of 2 per cent. every six weeks under Labour, would have to go up again to pay for the costly mistakes that would be made. All the benefits of the improvement in performance would be lost, and to no good purpose. Opposition Members have no coherent strategy on how to respond to privatisation. They have simply come before the House again tonight wanting to turn the clock back and repeat all the mistakes of nationalisation and state intervention.
They do not even understand the workings of the electricity market. Still less do they understand the workings of the financial markets. They continue, as we heard tonight—including from the hon. Member for Holborn and St. Pancras, who again is laughing, a mask of insecurity behind his ignorance of financial matters—[Interruption.] Once again he makes simplistic comparisons between assets and proceeds. Opposition Members' weekly cultivation of friends in the City, if they have any, has not resulted in the facts of the financial markets being imparted to the hon. Gentleman.
That being so, I will help the hon. Member for Holborn and St. Pancras with some figures. It is instructive to see how tonight he arrives at the loss of £29 billion. It changes by £1 billion virtually daily; but, then, so does the cost of the programme of any future Labour Government. The hon. Member for Holborn and St. Pancras aggregates, for example, the values of the various privatised companies, in some cases stretching back nearly to the beginning of the 1980s, on an irrelevant replacement cost basis, taking no account of major changes that have occurred in the companies since, and then he compares them with today's

265
market value. By those extraordinary means he arrives at a waste of £27 billion, and then apparently adds £3 billion to give the round figure of £30 billion.
Of course the reality is that the value of a business is nothing more or less than what a prospective purchaser would be prepared to pay for it. Current cost accounting simply measures the replacement cost of assets, some of which may hold little interest for a purchaser, and it is certainly not the amount the taxpayer paid for those assets. So the hon. Gentleman has again conducted a totally futile exercise.
The value of industries such as electricity is based principally on expectations of future earnings. Only by a wholly unjustified increase in prices could the Government have boosted earnings sufficiently to be able to sell the industry for a sum anywhere near the current cost evaluation.
As for the other comparison, with stock market valuations, that the hon. Gentleman made tonight, the shares are rising faster than the overall index of shares. The rising share values of privatised companies since the sale reflect the growth of confidence in the benefits of privatisation as they feed through, including renationalisation and other moves to greater efficiency which improve their prospects.
The value of British Gas, for example, has increased by nearly 80 per cent. on the stock market in the past five years, despite the fact that prices were falling in real terms under the price control formula throughout that period. An even tougher formula, starting next year, is acknowledged to be an extremely demanding target, yet the company still believes that it will be able to increase its dividends, underpinning figure share performance.
Improving prospects, rising share prices, cost-cutting and greater efficiency in all those companies should be welcomed. They represent a clear gain to the nation in contrast to the old order of rising prices to consumers with no means of redress, and little incentive for improved efficiency. Those were real costs and burdens on the nation, as opposed to the wholly fictitious £30 billion conjured up by the hon. Member for Holborn and St. Pancras.
It is remarkable that Labour Members should even mention disconnections. Under a Labour Government in the late 1970s the level of disconnections was substantially higher than at present. Those worst hit were pensioners and the poor, and Opposition Members laughed when we debated the importance of reducing the number of disconnections. The Government have attached importance to introducing a code of practice on disconnections, designed to safeguard the least well off. It provides that no pensioner's household may be cut off during the winter months and, since the introduction of the code of practice, disconnections have fallen to their lowest levels since records began.
My right hon. Friend the Secretary of State outlined clearly the benefits of privatisation as opposed to nationalisation, renationalisation or extended state control. In the 1990s there will be a renewed emphasis on quality of life issues, such as a higher standard of living, a secure and diverse energy supply with improved safety measures, and higher environmental standards. Increasing competition will remain the most effective pressure on
266
companies to deliver those objectives, act efficiently and provide customers with the service that they deserve. On that matter I agree fully with my hon. Friend the Member for Birmingham, Selly Oak (Mr. Beaumont-Dark).
The regulators in the recently privatised industry will set tight and improved standards of service, which will be well publicised so that consumers can assess the standard of service that they can reasonably expect. As my hon. Friend the Member for Exeter (Mr. Hannam) stated, we live in a generation in which everyone is a consumer, and consumer protection and choice are increasingly at the centre of policy-making in Europe. We are consumers not only in shops but when we travel to work and from the moment we arrive home. We expect standards and performance from every item and service that we purchase. Contracts that should spell out guaranteed standards of service, penalties for failure, and means of redress and complaint go hand in hand with a free market economy and an enterprise culture based on competition.
On 2 July 1991 the House of Commons should not be the place for Labour-inspired weary debates in which every contribution by Opposition Members harks back to the days of socialism and state intervention. It is clear from the debate that salaries should be sufficient to recruit, retain and motivate. It is not for the Government to second-guess remuneration. It is not intervention to question whether recent increases meet that test. All levels of pay should take account of the economic facts of life and the importance of beating inflation. Directors must show leadership, and moving to private sector levels should be moderate.
The manufacturing industry has evolved from the traditional two-tier management-work force structure—the us and them syndrome—which often undermines the effects of industrial relations by creating artificial barriers between management and work force. Those barriers are based on privilege and separation. Today, a team approach dominates in the manufacturing industry. The new style of management has contributed much to loosening the grip of the unions when the Government's industrial relations legislation has given management and the work force the tools to work as a team. However, with that new approach has come responsibility to lead by example, win respect, urge moderation in pay demands in a time of recession, and exercise restraint. That is why my right hon. Friend the Prime Minister was correct to say that he did not believe that excessive salary increases are right. That remains our view. Undoubtedly top directors in the newly privatised companies need motivation, but not, as The Times correctly stated, superleague salaries overnight.
The Government's position is clear: our privatisation programme has been good news for the taxpayer, good news for the consumer and good news for the employee. It is a shame that the Opposition still cling to the socialist principles of interference and deny the benefits of privatisation.
Question put, That the original words stand part of the Question:—
The House Divided: Ayes 176, Noes 246.

Division No. 1981

[10 pm

AYES

Abbott, Ms Diane

Ashdown, Rt Hon Paddy

Adams, Mrs Irene (Paisley, N.)

Ashton, Joe

Allen, Graham

Banks, Tony (Newham NW)

267

Barnes, Harry (Derbyshire NE)

Janner, Greville

Barnes, Mrs Rosie (Greenwich)

Jones, Barry (Alyn & Deeside)

Battle, John

Jones, Ieuan (Ynys Môn)

Beckett, Margaret

Jones, Martyn (Clwyd S W)

Beith, A. J.

Kaufman, Rt Hon Gerald

Bellotti, David

Kinnock, Rt Hon Neil

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

Kirkwood, Archy

Bermingham, Gerald

Lambie, David

Blunkett, David

Lamond, James

Boateng, Paul

Leighton, Ron

Boyes, Roland

Lewis, Terry

Bradley, Keith

Litherland, Robert

Brown, Gordon (D'mline E)

Livingstone, Ken

Brown, Nicholas (Newcastle E)

Lofthouse, Geoffrey

Brown, Ron (Edinburgh Leith)

Loyden, Eddie

Bruce, Malcolm (Gordon)

McAllion, John

Buckley, George J.

McAvoy, Thomas

Callaghan, Jim

Macdonald, Calum A.

Campbell, Menzies (Fife NE)

McFall, John

Campbell, Ron (Blyth Valley)

McKay, Allen (Barnsley West)

Campbell-Savours, D. N.

McKelvey, William

Canavan, Dennis

McLeish, Henry

Carlile, Alex (Mont'g)

McMaster, Gordon

Cartwright, John

McWilliam, John

Clarke, Tom (Monklands W)

Madden, Max

Clwyd, Mrs Ann

Mahon, Mrs Alice

Cohen, Harry

Marek, Dr John

Cook, Frank (Stockton N)

Marshall, David (Shettleston)

Cook, Robin (Livingston)

Marshall, Jim (Leicester S)

Corbett, Robin

Martin, Michael J. (Springburn)

Corbyn, Jeremy

Martlew, Eric

Cousins, Jim

Maxton, John

Crowther, Stan

Meacher, Michael

Cryer, Bob

Meale, Alan

Cummings, John

Michie, Bill (Sheffield Heeley)

Cunliffe, Lawrence

Michie, Mrs Ray (Arg'l & Bute)

Cunningham, Dr John

Mitchell, Austin (G't Grimsby)

Dalyell, Tam

Moonie, Dr Lewis

Darling, Alistair

Morgan, Rhodri

Davies, Rt Hon Denzil (Llanelli)

Morley, Elliot

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

Mowlam, Marjorie

Dewar, Donald

Mullin, Chris

Dixon, Don

Murphy, Paul

Dobson, Frank

Nellist, Dave

Duffy, Sir A. E. P.

Oakes, Rt Hon Gordon

Dunnachie, Jimmy

O'Brien, William

Eadie, Alexander

Orme, Rt Hon Stanley

Edwards, Huw

Patchett, Terry

Ewing, Harry (Falkirk E)

Pendry, Tom

Ewing, Mrs Margaret (Moray)

Pike, Peter L.

Fatchett, Derek

Powell, Ray (Ogmore)

Faulds, Andrew

Prescott, John

Fearn, Ronald

Primarolo, Dawn

Field, Frank (Birkenhead)

Radice, Giles

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

Randall, Stuart

Fisher, Mark

Redmond, Martin

Flynn, Paul

Reid, Dr John

Foot, Rt Hon Michael

Richardson, Jo

Foster, Derek

Robinson, Geoffrey

Foulkes, George

Rogers, Allan

Fraser, John

Rooker, Jeff

Fyfe, Maria

Ross, Ernie (Dundee W)

Garrett, Ted (Wallsend)

Rowlands, Ted

Golding, Mrs Llin

Sedgemore, Brian

Gordon, Mildred

Sheerman, Barry

Gould, Bryan

Short, Clare

Grant, Bernie (Tottenham)

Skinner, Dennis

Griffiths, Nigel (Edinburgh S)

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

Hain, Peter

Snape, Peter

Hardy, Peter

Soley, Clive

Heal, Mrs Sylvia

Spearing, Nigel

Hinchliffe, David

Steel, Rt Hon Sir David

Hogg, N. (C'nauld & Kilsyth)

Straw, Jack

Home Robertson, John

Taylor, Mrs Ann (Dewsbury)

Hood, Jimmy

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

Howell, Rt Hon D. (S'heath)

Taylor, Matthew (Truro)

Howells, Geraint

Thomas, Dr Dafydd Elis

Howells, Dr. Kim (Pontypridd)

Thompson, Jack (Wansbeck)

Hughes, John (Coventry NE)

Vaz, Keith

Ingram, Adam

Wallace, James

268

Walley, Joan

Worthington, Tony

Wardell, Gareth (Gower)

Wray, Jimmy

Welsh, Michael (Doncaster N)

Young, David (Bolton SE)

Williams, Alan W. (Carm'then)

Wilson, Brian

Tellers for the Ayes:

Winnick, David

Mr. Frank Haynes and

Wise, Mrs Audrey

Mr. Ken Eastham.

NOES

Adley, Robert

Evennett, David

Aitken, Jonathan

Fairbairn, Sir Nicholas

Alison, Rt Hon Michael

Fallon, Michael

Amess, David

Farr, Sir John

Amos, Alan

Favell, Tony

Arbuthnot, James

Fenner, Dame Peggy

Arnold, Jacques (Gravesham)

Field, Barry (Isle of Wight)

Arnold, Sir Thomas

Fookes, Dame Janet

Ashby, David

Forman, Nigel

Aspinwall, Jack

Forsyth, Michael (Stirling)

Atkins, Robert

Fowler, Rt Hon Sir Norman

Atkinson, David

Fox, Sir Marcus

Banks, Robert (Harrogate)

Franks, Cecil

Beaumont-Dark, Anthony

Freeman, Roger

Bellingham, Henry

French, Douglas

Bendall, Vivian

Fry, Peter

Bennett, Nicholas (Pembroke)

Garel-Jones, Tristan

Benyon, W.

Gill, Christopher

Bevan, David Gilroy

Glyn, Dr Sir Alan

Biffen, Rt Hon John

Goodlad, Alastair

Blackburn, Dr John G.

Goodson-Wickes, Dr Charles

Blaker, Rt Hon Sir Peter

Grant, Sir Anthony (CambsSW)

Bonsor, Sir Nicholas

Greenway, Harry (Eating N)

Boscawen, Hon Robert

Greenway, John (Ryedale)

Bottomley, Peter

Gregory, Conal

Bottomley, Mrs Virginia

Griffiths, Peter (Portsmouth N)

Bowden, A. (Brighton K'pto'n)

Ground, Patrick

Bowis, John

Grylls, Michael

Boyson, Rt Hon Dr Sir Rhodes

Gummer, Rt Hon John Selwyn

Brandon-Bravo, Martin

Hague, William

Brazier, Julian

Hamilton, Rt Hon Archie

Bright, Graham

Hamilton, Neil (Tatton)

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

Hannam, John

Browne, John (Winchester)

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

Bruce, Ian (Dorset South)

Harris, David

Buck, Sir Antony

Haselhurst, Alan

Budgen, Nicholas

Hawkins, Christopher

Burns, Simon

Hayward, Robert

Burt, Alistair

Hicks, Robert (Cornwall SE)

Butler, Chris

Hill, James

Butterfill, John

Howarth, G. (Cannock & B'wd)

Carlisle, John, (Luton N)

Hughes, Robert G. (Harrow W)

Carlisle, Kenneth (Lincoln)

Irvine, Michael

Carrington, Matthew

Irving, Sir Charles

Carttiss, Michael

Jack, Michael

Cash, William

Jessel, Toby

Channon, Rt Hon Paul

Jones, Gwilym (Cardiff N)

Chapman, Sydney

Kellett-Bowman, Dame Elaine

Chope, Christopher

Kilfedder, James

Clark, Rt Hon Sir William

King, Roger (B'ham N'thfield)

Colvin, Michael

Knapman, Roger

Conway, Derek

Knight, Greg (Derby North)

Coombs, Anthony (Wyre F'rest)

Knight, Dame Jill (Edgbaston)

Coombs, Simon (Swindon)

Knowles, Michael

Cope, Rt Hon Sir John

Knox, David

Cormack, Patrick

Latham, Michael

Couchman, James

Lee, John (Pendle)

Cran, James

Leigh, Edward (Gainsbor'gh)

Currie, Mrs Edwina

Lennox-Boyd, Hon Mark

Davis, David (Boothferry)

Lightbown, David

Day, Stephen

Lilley, Rt Hon Peter

Devlin, Tim

Lord, Michael

Dickens, Geoffrey

Luce, Rt Hon Sir Richard

Dicks, Terry

Lyell, Rt Hon Sir Nicholas

Dorrell, Stephen

McCrindle, Sir Robert

Douglas-Hamilton, Lord James

McLoughlin, Patrick

Dover, Den

McNair-Wilson, Sir Michael

Durant, Sir Anthony

Madel, David

Eggar, Tim

Malins, Humfrey

Emery, Sir Peter

Maples, John

Evans, David (Welwyn Hatf'd)

Marland, Paul

269

Marlow, Tony

Smith, Sir Dudley (Warwick)

Marshall, John (Hendon S)

Smith, Tim (Beaconsfield)

Martin, David (Portsmouth S)

Soames, Hon Nicholas

Maude, Hon Francis

Speed, Keith

Maxwell-Hyslop, Robin

Spicer, Sir Jim (Dorset W)

Mayhew, Rt Hon Sir Patrick

Spicer, Michael (S Worcs)

Meyer, Sir Anthony

Squire, Robin

Miller, Sir Hal

Stanbrook, Ivor

Mills, Iain

Steen, Anthony

Miscampbell, Norman

Stern, Michael

Mitchell, Andrew (Gedling)

Stevens, Lewis

Montgomery, Sir Fergus

Stewart, Allan (Eastwood)

Morrison, Sir Charles

Stewart, Andy (Sherwood)

Moss, Malcolm

Stewart, Rt Hon Sir Ian

Moynihan, Hon Colin

Stokes, Sir John

Neale, Sir Gerrard

Sumberg, David

Neubert, Sir Michael

Summerson, Hugo

Nicholls, Patrick

Tapsell, Sir Peter

Nicholson, David (Taunton)

Taylor, Ian (Esher)

Nicholson, Emma (Devon West)

Taylor, John M (Solihull)

Norris, Steve

Taylor, Sir Teddy

Oppenheim, Phillip

Tebbit, Rt Hon Norman

Page, Richard

Temple-Morris, Peter

Paice, James

Thompson, D. (Calder Valley)

Patnick, Irvine

Thompson, Patrick (Norwich N)

Patten, Rt Hon Chris (Bath)

Thurnham, Peter

Pattie, Rt Hon Sir Geoffrey

Townend, John (Bridlington)

Pawsey, James

Townsend, Cyril D. (B'heath)

Peacock, Mrs Elizabeth

Tracey, Richard

Powell, William (Corby)

Tredinnick, David

Price, Sir David

Trippier, David

Raffan, Keith

Twinn, Dr Ian

Raison, Rt Hon Sir Timothy

Vaughan, Sir Gerard

Redwood, John

Viggers, Peter

Renton, Rt Hon Tim

Wakeham, Rt Hon John

Riddick, Graham

Ward, John

Ridley, Rt Hon Nicholas

Wardle, Charles (Bexhill)

Rifkind, Rt Hon Malcolm

Watts, John

Roberts, Rt Hon Sir Wyn

Wheeler, Sir John

Roe, Mrs Marion

Whitney, Ray

Rossi, Sir Hugh

Widdecombe, Ann

Rost, Peter

Wiggin, Jerry

Rowe, Andrew

Wilkinson, John

Sackville, Hon Tom

Winterton, Mrs Ann

Scott, Rt Hon Nicholas

Winterton, Nicholas

Shaw, David (Dover)

Wood, Timothy

Shaw, Sir Michael (Scarb')

Woodcock, Dr. Mike

Shelton, Sir William

Yeo, Tim

Shephard, Mrs G. (Norfolk SW)

Young, Sir George (Acton)

Shepherd, Colin (Hereford)

Younger, Rt Hon George

Shepherd, Richard (Aldridge)

Shersby, Michael

Tellers for the Noes:

Sims, Roger

Mr. Nicholas Baker and

Skeet, Sir Trevor

Mr. Timothy Kirkhope.

Question accordingly negatived.
Question, That the proposed words be there added, put forthwith pursuant to Standing Order No.30 (Questions on amendments), and agreed to.
Mr. Speaker forthwith declared the main Question, as amended, to be agreed to.
Resolved,
That this House congratulates the Government on continuing with its successful policy of privatising nationalised industries; notes the recent successful privatisation of the electricity supply industry in Great Britain; and welcomes the benefits that privatisation of the electricity and gas industries has brought and will bring to consumers, taxpayers and employees.

Electricity and Gas Industries

  BUSINESS OF THE HOUSE
  Ordered,
  That, at this day's sitting, the Severn Bridges Bill may be proceeded with, though opposed, until any hour.—[Mr. Chapman.]

Orders of the Day
  Severn Bridges Bill
  As amended (in the Select Committee and on re-committal in the Standing Committee), considered.
  Severn Bridges Bill
    Clause 5

      POWER OF SECRETARY OF STATE TO LEVY TOLLS
      10.14 pm
      Mr. Paul Murphy: I beg to move amendment No. 2, in page 3, line 18 at end insert
      `after consultations with relevant local authorities in England and Wales'.
      The amendment would require the Secretary of State to consult relevant local authorities before raising tolls on the new bridges. It highlights the role of English and Welsh local authorities with regard to the new bridge and the tolling regime. At this stage, we do not know precisely what those local authorities will be. The Secretary of State for Wales has said that there will be a new local authority unitary structure in Wales and we assume, therefore, also on the other side of the Bristol channel.
      But whatever structure there might be, it is the view of local authorities in Wales and England that the need for a second Severn crossing is unquestionable. We have put up for too long with enormous congestion on the existing Severn bridge. We know that the economic impact of a second Severn crossing on the Welsh economy will be considerable.
      In Gwent alone, where the second Severn crossing will end up, 9·3 per cent. of the people are out of work. The European link is vital to Wales and the second Severn crossing will constitute what is known in Europe as the E30. The second bridge will also have considerable significance with regard to the general transport infrastructure throughout south Wales.
      Studies by the standing conference of local authorities in south Wales show that during the past two years, because of the problems of congestion on the present bridge, some 2,000 jobs have been lost in the county of Gwent alone.
      However, the amendment is basically about tolls and their level. The impact of tolls and their level on the local economy is considerable. When we consider that the whole of the tolling regime on the present bridge is equivalent in financial terms to what Gwent receives from the regional selective assistance grant, the regional enterprise grant and the European regional development fund we realise what a significant impact tolls can have on the economy of Gwent and south Wales.
      It is interesting that Tyne and Wear county council—before it was abolished—recently studied the tolling regime on the Tyne tunnel corridor and it came to the conclusion that, in comparison with other areas within its remit, the Tyne tunnel corridor was detrimental to other areas which had no tolls.
      One aspect of the amendment which was touched on in Committee on several occasions was the level of debt on the existing bridge which, if written off, could reduce tolls on the new bridges by 1995 by about 20 per cent. There were many arguments in Committee about whether the

      271
      Government would be prepared to write off the debt on the bridge and, in so doing, reduce the tolls on the two bridges when the new regime came into operation.
      Only yesterday, during transport questions, an hon. Member asked the Minister for Roads and Traffic what the tolling regime would be on the Humber bridge, which has been compared with the Severn bridge on more than one occasion. The Minister replied that the Government were considering the whole question of the debt on the Humber bridge with a view to writing off at least a portion of it and, in so doing, reducing the general level of tolls on the Humber bridge. I sincerely hope that the Minister will tell us whether the Government's decision to write off some of the debt on the Humber bridge is relevant to the Severn bridge.
      In our view, the local inquiries that have been held, by law, three times since the opening of the existing bridge —in 1979, 1984 and 1989—were a good idea. Local circumstances were taken into account; the local economy was monitored; and the CBI, the AA, the RAC, the Road Haulage Association and many other bodies gave evidence to the inspector about the impact of increased toll levels on the existing bridge and the south Wales economy.
      In Committee, the Government decided not to support the continuation of local inquiries under the new Severn bridge regime. We believe that, now that the Government have turned down that idea, the widest possible consultation should take place between the relevant local authorities—on both the English and the Welsh sides—when the Secretary of State is considering whether to increase toll levels on both bridges. That would be a good gesture and it would also provide the Government with a valuable source of information.
      I hope that, as well as telling us whether he considers consultation important, the Minister will say something about the information about the Humber bridge that we were given yesterday.
      Mr. Robert Adley: First, let me declare an interest: my brother-in-law, Mr. Micky Pople, is a partner in the English Stones fisheries, which has the salmon netting rights under one of the pillars of the bridge.
      The hon. Member for Torfaen (Mr. Murphy) spoke of the need to consult the relevant local authorities. The Opposition have tabled an amendment about policing services, and another about compensation for concessionaires. I wish to put it on record that my brother-in-law and his friends have had to spend many months, and much of their own money, fighting for compensation. Now, finally, they have been granted compensation, but without legal costs. I feel that that is wrong, and I have used this opportunity to state their case.
      Dr. Kim Howells: Whatever is decided this evening, it should be said that many of us in Wales welcome the bridge. At last people are getting on with building the thing.
      We all agree that many of the haulage firms are doing splendid work in taking the products of Wales across to markets in England and on the continent. Nevertheless, many of us fear that, for a long time to come, the unit costs of those products will continue to be inflated by the expense caused by traffic jams, and by the present system of road transport and the way in which vehicles currently have to use the bridge. Surely the Government should be
      272
      as concerned about other forms of transport infrastructure, in conjunction with the bridge, as they are about the building of the bridge itself.
      This bridge will stand as a great tribute to engineering in the 20th century; but will Wales be able to provide other such tributes? Will we, for example, have a road-rail infrastructure that begins to reflect the true cost—and it is an enormous cost—of road transport as it takes our products towards England and into the continent?
      The hidden costs of road transport are enormous. Not only are we now contemplating building a great piece of engineering, and a great monument to our love of road transport; we are, or should be, seriously considering how Wales can best be served by a road-rail link with the channel tunnel, the English markets and the economic market in general. Alongside the marvellous structure across the Severn I should like to see another structure, perhaps a series of loading bays or depots where there might be an interaction between road and rail transport. We might see the sort of experiments that are currently taking place in Germany, where we would contemplate not only a bridge but the means of taking away from the roads much of the heavy traffic and putting it on to rail. In that way the second crossing would not become as congested and damaged in 15 or 20 years as the present bridge has become. No matter how brilliant our planners or engineers may be, we are all fallible. We tend to get projections wrong. In a sense, we should be planning for safety to ensure that there is back-up for the second crossing. I hope to see Wales flourish. I hope that the transformation of our economy will continue so that in the future a great diversity of products will come from Wales.
      We are on the periphery of Europe. Our unit costs are important if we are to take advantage of the great new opportunities of the single market and, more importantly, if we are to tap the potential of the expanding markets in southern and eastern Europe. Wales is vulnerable in that respect. If our transport infrastructure is not right now, we will pay for it in decades to come. We must plan that far ahead. Will the Minister consider carefully the idea that the great vision of a second crossing should be accompanied by another vision—a dream form of rail transport that works alongside the roads for the betterment of Wales and a better future for us all?
      Mr. Den Dover: I was the Chairman of the Select Committee which considered this bridge. Having lived in Wales and used the Severn bridge for many years some 15 or 20 years ago, I was amazed that the cost of the original building work and the enormous cost of repairs —£70 million or £80 million in recent years—can all be repaid by the joint venture firm, Laing-Entrepose, which is the concessionaire, from the tolls that will be levied on the opening of the new bridge, the tolls on the existing bridge and the handover back to the Department. Therefore, I am delighted that there is no need to write off any debt, which the Select Committee on Transport proposed six or seven years ago when I was a member of it. Write-off is needed on the Humber bridge, which does not have the same usage and cannot recover its debt.
      I am delighted that vehicles of all sorts using the Severn bridge are able to pay tolls that are adequate to pay for the original building, the repair work and the construction of the new bridge. Therefore, I see no reason for public inquiries or detailed lengthy consultations with local

      273
      authorities. The users in both England and Wales and the Welsh people will benefit enormously from the new facility.
      I reject the amendment. The toll regime in the Bill is more than adequate and we will see a first-class facility in use as early as possible without any delays caused by public inquiries.
      Mr. Richard Livsey: I support the amendment. It is essential that local authorities are consulted, but the process need not take long. The second Severn crossing is essential and it should be completed in the shortest possible time. However, we need some consultation with local authorities. I agree with the hon. Member for Pontypridd (Dr. Howells), who spoke of the need to improve the rail infrastructure at the same time. If, in recent years, we have managed to bring about a rail-road crossing on the Britannia bridge across the Menai straits, surely we should have the wit and imagination to provide road and rail crossings at the point of the new bridge. The project should be more ambitious than is envisaged.
      We believe that local authorities should be consulted. The present tolls are a tax on Welsh business, and that fact should be taken into account. I do not entirely agree with the comments of the hon. Member for Chorley (Mr. Dover) about tolls. For those who cross the bridge frequently, they are excessive. The bridge is a lifeline for Welsh industry and tourism, so we must be careful about what we do.
      10.30 pm
      Mr. Peter Fry: Until I heard the comments of the hon. Member for Torfaen (Mr. Murphy) and the hon. Member for Pontypridd (Dr. Howells), I had not intended to take part in the debate. I, too, was a member of the Select Committee on Transport which considered toll crossings. I am amazed that any Opposition Member wants to talk about the Humber bridge, let alone in conjunction with the Severn crossing, given that that is a feasible project which will pay its way, as opposed to one which was designed purely to win a certain by-election some 25 years ago.
      The Severn crossing is intended to bring Wales closer to England. As for the Humber bridge, both parts of Humberside were taken over and want to go back into Lincolnshire as fast as they can, because they do not like the way in which they have been joined.
      I hope that my hon. Friend the Minister will not follow the path suggested by the hon. Member for Torfaen. No other scheme should be compared to the Humber bridge. Frankly, I do not think that it should have been built in the first place. The proposed bridge is needed for the good of the Welsh economy.
      The hon. Member for Brecon and Radnor (Mr. Livsey) stressed the importance of a rail connection. We want to encourage the movement of more goods by rail. My right hon. and learned Friend the Secretary of State for Transport declared that to be his policy. Let us be honest about this—whatever we do in the next few years, most freight will continue to go by road. If the Welsh economy is to expand, it will increasingly need goods to be transported on lorries across the Severn. Any attempt to delay the building of the bridge, and anything that
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      introduces more public discussion and means that it will take longer for the bridge to be built, is detrimental to the Welsh economy. I am slightly surprised that the Opposition put forward such views.
      The Minister for Public Transport (Mr. Roger Freeman): I congratulate my hon. Friend the Member for Chorley (Mr. Dover), who chaired the Select Committee so expeditiously. The House should be grateful to him and to his colleagues on the Committee. I agree with my hon. Friend that the existing Severn bridge is already a great success and that the new bridge will bring great benefits to the Welsh economy.
      My hon. Friend the Member for Wellingborough (Mr. Fry) and the hon. Member for Pontypridd (Dr. Howells) referred to rail freight. I remind the House that there will be a rail freight terminal in Cardiff to ship freight through the channel tunnel—that is a commitment for 1993—and the rail freight that will be shipped from south Wales will be able to come through the existing tunnel underneath the Severn.
      Mr. Livsey: Will the hon. Gentleman confirm that speedy links with the channel tunnel depend on electrification of the south Wales line? Is it correct that the present Severn tunnel will not accommodate an electrification scheme? Will the hon. Gentleman clarify that? It could have an adverse impact on the future of business in south Wales.
      Mr. Freeman: Rail freight shipment does not need electrified lines and, as the hon. Gentleman will know, a considerable amount of freight will be collected and hauled through the tunnel by diesel and then electric locos from the terminals in London. Although speed is important for freight, it is not as important as it is for passenger traffic. I understand that the Great Western railway can be electrified as and when it is appropriate to electrify it, all the way from London to Swansea and Cardiff.
      Mr. Adley: The Minister has raised the question of the Great Western railway—and where would we be without it? So, may I ask him for about the one hundred and seventeenth time to reconsider the line from Reading to Ashford via Guildford and Redhill about which—
      Mr. Deputy Speaker (Mr. Harold Walker): Order. We are dealing with the Severn bridge.
      Mr. Adley: The Minister referred to rail traffic crossing the Severn bridge on its way to the channel tunnel. That is precisely the line—
      Mr. Deputy Speaker: The hon. Gentleman mentioned Ashford.
      Mr. Adley: To get to the line to which the Minister referred it is necessary to travel by rail via Ashford.
      Mr. Deputy Speaker: The same could be said about travelling from Inverness.
      Mr. Adley: The Minister referred to the channel tunnel and to traffic from south Wales. I hope that I am not abusing the House by referring to the line that the Minister has just mentioned. Will he please reconsider the utilisation of the line which was built in the previous

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      century specifically to take traffic to the channel tunnel and which was not closed down by Dr. Beeching who said that one day the tunnel would be built?
      Mr. Deputy Speaker: Order. I do not see what that has to do with the amendment.
      Mr. Freeman: I feared that I should be shunted up that line. I have already had a tutorial from my hon. Friend, and I am sure that I shall have many more, on the value of a west-about-route around London to carry freight.
      The hon. Member for Torfaen (Mr. Murphy) raised a number of issues—
      Mr. Rhodri Morgan: Will the Minister say a little more about what he mentioned before the intervention of the hon. Member for Christchurch (Mr. Adley)? He said that there would be a road-rail interchange for freight traffic crossing the Severn bridge and that it would be located in Cardiff. Is that what he said? If so, where in Cardiff will that interchange be located and when will the official public announcement of investment by British Rail or by others take place?
      Mr. Freeman: A few days ago the Minister for Roads and Traffic made a statement about the terminal in Cardiff. I am happy to repeat that for all combined transport—that is, freight that is collected by road for onward trans-shipment by rail—British Rail will have a terminal in Cardiff for 1993. I am not familiar with the sidings in Cardiff, but I imagine that British Rail will use and enhance the existing facilities in Cardiff. I shall write to the hon. Gentleman specifying exactly where in Cardiff it will be.
      Mr. Peter Snape: If Speedlink is to close in Wales next week as is Speedlink in England, how much more freight will come across the new and old bridge—
      Mr. Deputy Speaker: Order. The amendment deals with consultations in respect of the levying of tolls. What has that to do with—
      Mr. Snape: If you stop interrupting for a moment, Mr. Deputy Speaker, I shall tell you. It is no good interrupting the rest of us if you allow the Minister to proceed. I am asking the Minister whether, as Speedlink in Wales is closing and as most of the traffic presently carried by rail will cross the new and old Severn bridge, how much will that cost the taxpayer in both countries?
      Mr. Freeman: The hon. Gentleman is right to refer to the consequence of the closure of Speedlink. Well over half of the volume of freight will continue to be carried by train, but some will be lost. British Rail has not disguised that fact. About 6 million tonnes in total will be hauled in the first year from the nine terminals. I cannot give him the estimate for Cardiff, but I shall write to him.
      When the hon. Member for Torfaen proposed the amendment, which I urge the House to resist, he argued —and I agree—that the need for the bridge was unquestionable because it would double the capacity for road traffic between England and Wales.
      The principle of tolling was accepted by a Labour Government about 25 years ago when the first Severn bridge was constructed. The hon. Member for Torfaen rightly argued or postulated that if the debt were written off after consultation with the local authorities—we are
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      talking about £120 million—tolls could be reduced during the period between commencement of construction of the second bridge and the opening of it, and thereafter. There would, however, be a loss to the Exchequer of about £120 million—£62 million initially and then the balance with interest at 6 per cent. in real terms at the end of the tolling period. That is a matter of judgment, and the Government have decided that the receipt of £120 million to the Exchequer, albeit involving higher tolls than would otherwise be levied, is justified. The decision will allow the money to be recycled in the form of public expenditure. I cannot give a commitment on where the money will be spent or on what mode of transport, but it will be used for the benefit of the taxpayer.
      I have been asked specific questions about the Humber bridge. Even in 1995, assuming that the tolls for cars, for example, are indexed to the rate of inflation on the Humber bridge, the one-way tolls will still be greater than those on the Severn bridge. The tolls for cars will be £2·10 on the Humber bridge, one way, and £1·90 on the Severn bridge. The same is true for two-axle heavy goods vehicles. In 1995, the tolls will be £8·60 on the Humber bridge and £5·70 on the Severn bridge. The Humber bridge is an exception, as it were. Even in 1995, the tolls will be higher on that bridge under the assumptions that I have outlined.
      My hon. Friend the Minister for Roads and Traffic did not suggest that there was a proposal to write off all the debt on the Humber bridge. In due course details will emerge of the debt that must remain that will be serviced by tolls. At that stage it will be possible to draw an exact comparison between the Severn bridge, with £120 million not written off, and the Humber bridge.
      The hon. Members for Torfaen and for Brecon and Radnor (Mr. Livsey) argued that there should be local public inquiries. There are three categories of toll increase. The first is the stepped increase on the existing bridge between next year, when I hope that construction will start, and 1995. The schedule is provided for in the Bill, and I believe that no public inquiries are necessary. Parliament will make a decision. Secondly, the increasing of the tolls, once the second bridge is completed, will be limited to the retail prices index each year. That is provided for in the Bill, and there is no need for a local public inquiry. Thirdly, there are the four exceptional events that we discussed in Committee: exceptional cases if there were a change in legislation; a major change in the tax regimé; the European investment bank withdrawing its loan; or dispute over the title to the land over which the bridge was built. If a toll increase were needed in such an event, the Government would ask the House to pass an affirmative order.
      With those reasoned arguments, as I consider them to be, I ask the House to reject the amendment.
      Mr. Murphy: An answer given yesterday during transport questions suggested that the Government's position on debts on estuarial crossings had altered considerably. Until yesterday, the Government had consistently resisted the recommendation of the Select Committee on Transport that the debts should be written off. It seems that yesterday there was a significant change in their position. Even if we are talking of only part of the debt in respect of the Humber bridge, and even though that crossing is an exceptional case, it seems that the Government's principle has been broken. We say that there is a case for reconsidering the debt on the Severn

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      bridge so that tolls can be reduced. That would mean that, when the two Severn bridges are in operation, tolls will not have an adverse impact on the economy of south Wales.
      The consultations to which the hon. Members for Chorley (Mr. Dover) and for Wellingborough (Mr. Fry) referred will not delay the construction of the second bridge. As the Minister knows, they would relate to the four exceptional events to which he referred in his reply, and well after the bridge has been built.
      If there are exceptional reasons why the Secretary of State should increase the tolls, as the law stands, public inquiries can be held, as they have been on three separate
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      occasions. Although the Severn Bridge Tolls Act 1965 said that the principle of tolling should be accepted, it laid down the principle of local public inquiries. The Government say that a debate on an order in the House is sufficient to reflect local points. We believe that it is insufficient for the House simply to debate a small order late at night, perhaps for only an hour, because that is not the same as proper consultation involving local authorities and the other bodies that have been mentioned.
      I do not see why the Government cannot accept the amendment, which would enable the local community to be involved, would place the spotlight on the local economy and would do nothing but good for the new bridges.
      Amendment negatived.
      10.45 pm
      Mr. Murphy: I beg to move amendment No. 3, in page 3, line 34, after 'services', insert `, including policing services,'.
      This is a probing amendment which follows debates in Committee on the relationship between the concessionaires, the Secretary of State and the police authorities.
      As the House is aware, Avon and Somerset constabulary is responsible for the policing arrangements of the existing bridge. It is proposed that the Gwent police force will look after the new Severn crossing. We are concerned, and I know that Gwent county council is concerned, about the extra cost of policing the new Severn crossing. The chief constable says that it would require at least nine constables and three sergeants, eight traffic patrol constables, six civilian force control room operators, one motorway patrol car, one unit beat car, one unit base station at Chepstow, one motorway console and force control room and the upgrading of two police stations. In total, a manpower cost of an extra £400,000 a year and other resource requirements amounting to £350,00 a year would fall on the relatively small police force in Gwent.
      It is feared, given the present position of local government finance and as poll tax capping will apply to all Welsh local authorities from next year, that if Gwent county council were to input that extra cost there could be implications for poll tax payers in Gwent.
      To that end, in July 1990, Gwent county council wrote to the Home Office asking whether any special arrangements will be made to fund the extra responsibilities that will fall on the Gwent police force. In reply, a Home Office official said:
      "As the responsibility for policing the bridge was requested by the Chief Constable, it seems reasonable that the cost should fall to Gwent Police Authority."
      That is highly unreasonable. The extra costs that will fall on Gwent police, especially the manpower costs, should be met by the Home Office. People in Gwent are concerned that all the extra money that will be spent on policing the new bridge will have detrimental implications for policing the county's towns and villages.
      I hope that when the Minister of State, Welsh Office replies he will reinforce the point that was made in Committee by the Minister for Roads and Traffic that special arrangements will be made and that the poll tax payers of Gwent will not have to pay more to police the second Severn crossing.
      The Minister of State, Welsh Office (Sir Wyn Roberts): I repeat the assurance that my hon. Friend the Minister for Roads and Traffic gave in Committee that the additional responsibilities for policing will be taken into account for public expenditure purposes. However, I must tell the hon. Gentleman that there is no reason to change the normal rules for meeting policing costs for the scheme, and I cannot agree to do so.
      The hon. Gentleman is one step ahead of me in that he appears to have fairly precise figures for the cost of policing the new bridge. I am not as advantaged as he is. I am told that the cost of policing the new bridge—and, indeed, the existing bridge—cannot be separated from costs incurred in normal policing not just of the bridges but of the approach roads. Be that as it may, the policing of the highways will be carried out in the normal way under the normal arrangements and there is certainly no
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      need for any special provision in the Bill, just as no such provision is made in the Severn Bridge Tolls Act 1965 or the Dartford-Thurrock Crossing Act 1988.
      The costs of policing the new bridge and its approach roads will be met in exactly the same way as those for the existing bridge and for every other stretch of motorway and trunk road. If the authorities concerned feel that they will be put to additional policing costs as a result of the Bill, they will no doubt voice those concerns to my right hon. Friends the Home Secretary and the Secretary of State for Wales.
      Mr. Paul Flynn: In a welcome moment of frankness, the Minister confessed that my hon. Friend the Member for Torfaen (Mr. Murphy) was one step ahead of the Government in his knowledge of the bridge.
      Wales has always regarded the Severn bridge as a mixed blessing and has been rightly cynical about its financing. It was the poet Harri Webb who said of the opening of the Severn bridge, with Wales and England linked for the first time,

      "Two lands at last connected

      Across the Severn wide

      But all the tolls collected

      Upon the English side."

      Although every sensible person welcomed the bridge, it has proved a mixed blessing in every possible way. As my hon. Friend the Member for Pontypridd (Dr. Howells) pointed out, there are great advantages in improving the communications system but, sadly, in this case, the effects of the improved communications have been felt in the heart of the country, not at the edges of the communications system. The advantages have flown towards centres of commerce in the west and south-east of England. With the coming of the bridge, many firms that had previously served only Wales found that they could base their headquarters in England and so both serve the west of England and continue to serve Wales, albeit from the other side.
      There have been gains and losses. The true story of the Severn bridge is not that it was inadequate in the short term but that it was shaken into early senility by lorries. The number of lorries using it increased far more rapidly than expected. The original cost of the bridge was not £62 million, as suggested, but about £14 million. [HON. MEMBERS: "£11."] It was £11 million for the Severn bridge and £14 million for the two bridges—the Wye and the Severn—and work in the surrounding areas. The costs increased because of the state of the bridge and because no controls were placed on the lorries crossing the bridge, many of them overloaded, which caused the problems with which we are still dealing today. Even today, only three of the lanes are open.
      The Gwent police have long had a sense of grievance against the Government. For many years, supported by the police committee, the local people and the chief constable, they have demanded an increase in their numbers. All six hon. Members representing Gwent constituencies have presented their case, asking for the full complement of police in Gwent. Each year, the complement has been denied by the Government.
      There can be no question but that the Bill will place an increased burden on the Gwent police. We are told that the Government will be "taking the matter into account." We are all familiar with that phrase. We have heard it many times from Governments making settlements to local

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      authorities, and it often means that the decision is invisible in the final total amount allocated to an authority—in this case Gwent—and that there is no increase in that total.
      Like all my hon. Friends, I strongly support the amendment. The new bridge and the increased policing that will be required will be an increased burden on the poll tax payers of Gwent and will mean that Gwent police will have less time to deal with their other important functions of keeping up their splendid record and splendid crime clear-up rate.
      Mr. Murphy: With one exception, I entirely agree with what my hon. Friend the Member for Newport, West (Mr. Flynn) has said. The exception is in relation to Mr. Harri Webb, whose poetry is better than his politics. Some years ago, he tried to become the Member for Parliament for my constituency and, happily, failed.
      The Minister has not reassured us because we are talking about an extra £750,000—£0·75 million—over and above the present cost of policing the county of Gwent. The second Severn bridge is a novel venture which will involve a lot of extra cost. As my hon. Friend has said, we do not want that extra money to come out of the Gwent police authority's budget for ordinary policing costs. I hope that the reassurances that we will be given in the weeks and months to come will be much firmer than those given by the Minister of State this evening.
      Sir Wyn Roberts: I do not think that I can take matters much further except to agree with the hon. Member for Torfaen (Mr. Murphy) about Harri Webb's poetic errors. This time round, the toll plaza will be on the Welsh side.
      I hear what the hon. Gentleman says about Gwent police and its duties in respect of the new bridge, but I remind him that it is expected that the Avon police force will continue to maintain the motorway leading up to the existing bridge and, on the Department's behalf, will maintain the new approach roads on the Avon side.
      Mr. Murphy: The Avon and Somerset constabulary will be policing a smaller bridge with an authority that is double the size of that in Gwent.
      Sir Wyn Roberts: I can only repeat the assurance that was given in Committee.
      Amendment negatived.

    Clause 19

      TERMINATION OF CONCESSION AGREEMENT
      Ms. Dawn Primarolo: I beg to move amendment No. 1, in page 12, line 16, at end insert—
      `(1A) If the concession agreement is rendered unworkable as a result of any change in legislation, and the concession agreement is thereby terminated, no compensation shall be payable by the Secretary of State to the concessionaire.'.
      The amendment seeks to remove the obligation on the Government of the day to hold an unlimited liability to underwrite the private company that is proposing to build the second Severn crossing. I shall not repeat the arguments about the inadequacies of the current Severn crossing or the importance of having a second crossing that can provide communication links across the Severn, but it is important to put on record the fact that the Government have made assumptions about transport
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      policy and especially about the amount of freight traffic that will be carried on roads in the future. Furthermore, they have built those assumptions into the concessionary agreement that they are proposing to make with the private company. That agreement sets tolls for the crossing over a specified period so that the company can meet its obligations to its financiers and, presumably, make a profit. Those assumptions, and the ability of the company to recoup the money that it had invested, could be adversely affected by an incoming Government—I hope a Labour Government—with an environmentally friendly transport policy seeking to shift road traffic on to the railways.
      11 pm
      In notes provided in Committee on the concessionary agreement, hon. Members were informed that the agreement could become invalid, with the possibility, first, of compensation being paid to the private company and, secondly, of the Government of the day becoming liable to accept all the debts and running costs of the company under certain circumstances. That might happen if the Bill was amended, if an undertaking was given to a third party during the measure's passage through Parliament or if a change occurred in United Kingdom or EC legislation which had a substantial effect on the second Severn crossing company, such as the introduction of legislation which shifted freight transport from road to rail.
      Reference was also made to a possible change in the tax regime which had a material effect on the second crossing. For example, a future Government, of whichever party, might deem it necessary to introduce a new tax regime designed to discourage excessive road traffic. That change might have an effect on the ability of the company to raise the necessary tolls to cover its costs.
      At our first Committee sitting, I asked the Minister whether a change in tax regime on an environmental basis to encourage traffic from road to rail would represent a breach of the concessionary agreement and leave the Government of the day open to a claim for compensation by the company. I also asked whether the introduction of legislation which had the effect of shifting freight from road to rail would represent such a breach.
      Those are important issues. All political parties pledge themselves to improving, and accept that excessive road traffic is detrimental to, the environment. It seems crazy, therefore, that the Government should give undertakings to a private company which would protect that company from legislation that might be introduced by a future Government to protect the environment.
      In Committee, the Minister circulated to Members his response to a number of questions that had been asked. If, whatever the cause, less traffic used the second crossing, the company's initial response would, no doubt, be to apply for an increase in tolls. If the Government of the day refused to allow that increase, the question would arise, according to the Minister, whether the concession was still viable and whether, within the permitted time, the company could recoup its investments and liabilities. If the company deemed that it could not do so, the concessionary agreement would be terminated immediately unless the Government of the day decided to meet the additional costs of the second Severn river crossing. If they failed to meet those additional costs, the entire liability of the second Severn river crossing—the debt, running costs,

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      management and everything for which the company was liable as a direct result of sponsoring the crossing—would automatically become the Government's liability.
      I disagree with that principle. It is not for the Government to commit this nation, particularly south Wales and the Avon and Wiltshire area, to suffer heavy road transport in perpetuity by locking us into an agreement which it is too expensive, or the concessions do not allow us, to get out of. If the Government believed in their ideology of a free market, they would say to the company, "This is the basis on which, as a private company on the open market, you take on a second Severn river crossing. If you fail to meet your costs and make your profits, that is your hardship as a private company." It is wrong for the Government totally to underwrtie those costs. It is also unacceptable that the Government should seek to undermine possible future legislation to protect the environment.
      The amendment would make it crystal clear that no compensation would be payable by the Secretary of State to the second Severn river crossing company should such circumstances arise as a result of a change in legislation instituted by this House or the EC.
      Mr. Morgan: I am grateful for the opportunity to reinforce what my hon. Friend the Member for Bristol, South (Ms. Primarolo) has said in her important contribution.
      It is fair to say that we are already in that possible new environment. In one of those U-turns that the Government have been making since the former Prime Minister left office and Ministers have felt freer to introduce new initiatives, the Secretary of State for Transport said that he now believes in revitalising and regenerating the railways and pushing more freight from the roads to the railways.
      Dr. Kim Howells: Does my hon. Friend agree that it would be far more enlightening if the Minister would tell us exactly where the rail freight depot is to go in south Wales? That would make the issue much clearer.
      Mr. Morgan: Yes. Since we raised that point earlier, and as a result of the previous amendment on policing, the Avon and Somerset CID and the Gwent CID are now searching Cardiff to discover the whereabouts of the new freight depot.
      Sir Wyn Roberts: I understand that the new depot will be at Pengam, but the Department has already promised to write.
      Mr. Morgan: That is undoubtedly the best place for a road-rail interchange in south Wales, and I am grateful for the information.
      If the Secretary of State for Transport meant what he said in his speech to the 1990 Conservative party conference, and has now become a believer in the railways, and if that is now part of the Government's policy, is the would-be concessionaire, GTM-Laing, already looking to the Government to underwrite what might happen when the Secretary of State gets round to transforming his speech into policies? The concessionaires are already negotiating with the Department of Transport for a change in the terms of the concession on the ground that if the Government are thinking of shifting so much freight transport from the roads to rail—by subsidy, by regulation and by policy—they will need such a change.
      Mr. Snape: Is my hon. Friend aware that whatever the Secretary of State says is merely so much rhetoric? The Government's policy is quite the reverse. Traffic is being transferred within the next week from rail to road. The amendment merely seeks guidance from the Government on whether their rhetoric will ever be translated into action to move freight from the roads to rail.
      Mr. Morgan: I agree that the Government have led the country in that direction over the past 12 years. Now we are being told—not in the House of Commons, however —that the programme is to be put into reverse, and that there will be an attempt to revitalise the railway sector. If so, are the Government actively re-examining the terms of the concession; or have the concessionaires decided that the Secretary of State's major speech, reversing 12 years of Government policy, is just so much wind and they do not need to worry about it? In that case, what did the speech mean?
      If the concessionaires have raised these questions with the Minister, in what way might the concession be altered to cover the underwriting in respect of future changes once the bridge is built? Will there be a smaller second Severn crossing because of the Government's change of policy in favour of rail? Would the bridge still be viable then?
      The Secretary of State has not discussed these matters in the House, but I hope that the Minister of State will be frank with us and will tell us what the Government have in mind in the context of this Bill.
      Mr. Dover: It ill becomes the supporters of the amendment to say that this is one of the bases on which the agreement could be terminated. Why do not they look at the other three grounds on which it could be terminated? The concessionaires have negotiated, in lengthy discussions with the Government and the Department, exactly the terms for any termination of the contract; and it is irresponsible to table such an amendment at this late stage. A slight movement of freight from road to rail will only mean that the time over which the tolls will be collected will be slightly extended. That will be to the detriment of the people of Wales who travel by road. There is enough elasticity in the agreement already and it is stupid to expect to be able suddenly to renegotiate in the House the grounds on which the agreement could be terminated.
      There is a solid agreement. We should think ourselves fortunate that these companies have stuck out their necks to the tune of hundreds of millions of pounds over decades and taken on a high degree of risk. Knowing as I do the integrity of the firms, I should be most surprised if they had come to the Department and accused it of changing the goalposts. We should chuck out the amendment forthwith.
      Mr. Livsey: I strongly support the amendment so eloquently moved by the hon. Member for Bristol, South (Ms. Primarolo). Who are we to say what the demands on the road system will be in the next century? I forecast that the M4 will be jammed with traffic by the year 2000. Between Swindon and London it already is. This plan will filter more and more traffic on to the M4. The alternative, of an efficient and fast rail freight and rail passenger service, will become an absolute necessity for the country. The hon. Member for Bristol, South said that we must not give the concessionaires a blank cheque. Modes of transport will change and trains will become a great deal faster than vehicles using the M4 or the new Severn bridge.

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      Rail will become much more attractive for goods and passengers and will be far more environmentally friendly. We need the safeguards in the amendment and are right to be forward looking.
      11.15 pm
      Mr. Snape: The amendment's aims are clear, contrary to what the hon. Member for Chorley (Mr. Dover) said in his astonishing speech. If the Secretary of State's rhetoric means anything, the Government, who we hope will not be in office for much longer, intend to transfer freight from road to rail. In two interventions I have said that within the next week there will be a substantial transfer of freight the other way because of the closure of the Speedlink network.
      The amendment seeks to establish whether the concessionaires will have a financial claim on this or any successor Government and whether the Secretary of State's rhetoric will be translated into reality. We confidently expect to form the next Government and we shall take action on the environment and see that the under-utilised rail network is boosted by the transfer of freight from road to rail.
      The amendment asks a simple question: if the happy situation outlined by the Secretary of State comes to pass, will the concessionaires have any fiscal claim on this or any other Government? Will the agreement tie the hands of this or any future Government so that if we try more sensibly to use the rail facilities compensation will have to be paid to the concessionaires? I cannot understand the complaints of the hon. Member for Chorley. He is an expert in these matters and some of us remember his distinguished service on the Greater London council.
      We seek to ascertain whether the taxpayer will be liable to pay the concessionaires a not inconsiderable sum if the environmental transfer that all hon. Members appear to want is a reasonable proposition. We did not get much of an answer in Committee and I hope that the Minister will tell us whether the Government are serious about transferring freight. If they are, how much will it cost the taxpayer under the terms of the agreement?
      Mr. Freeman: The amendment can be seen as abrogating the concession agreement before construction starts. The hon. Member for Bristol, South (Ms. Primarolo) did not touch on that, but it was raised in Committee. The hon. Member for West Bromwich, East (Mr. Snape) said that a Labour Government would not cancel the bridge or seek to abrogate the concession agreement after Royal Assent of the Bill. He said that the compensation, which is currently about £20 million—the amount spent by the concessionaires on preparing designs and other studies—would be payable by the Government if they abrogated the agreement. He felt that that would make it undesirable to cancel the concession agreement.
      The hon. Lady asked what the liabilities of the Government would be if the bridge had been constructed, and a change in the legislative ground rules had a substantial effect on the viability of the bridge and the concession were terminated. In Committee, I spelt out clearly the conditions for exceptional increases in tolls, and one was a major change in legislation that had a substantial effect on the viability of the operation. I cannot speculate as to whether our proposed Bill to privatise
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      British Rail and allow free access to all rail tracks by private sector freight operators will have that effect. It depends on when the Bill is presented, and what the effects of it will be.
      My right hon. Friend the Secretary of State for Transport has made it plain that he understands that 90 per cent. of freight is carried by road and 10 per cent. by rail. Irrespective of the short-term implications of converting wagon load Speedlink traffic into train load, which makes good, sound commercial sense—a logic that the hon. Member for West Bromwich, East understands and accepts—it will lose a modest proportion of previous wagon load traffic that should be collected by road and taken to a rail head for transhipment by train load long distances—which is where rail road has the competitive advantage.
      Mr. Snape: Will the hon. Gentleman give way?
      Mr. Freeman: I do not intend to delay the House long.
      Mr. Snape: Nor do I, but I do not wish the Minister to mislead the House. Road has the advantage because, to quote that well-used cliche, there is not a level playing field. The road haulage business does not pay its true costs, as the Minister knows. The Government insist that rail freight breaks even, taking one year with another, so there is a transfer of freight from rail to road. We still want an answer as to whether, under the terms of the concession, a sensible implementation of the policy that the Government supposedly advocate, as the Opposition do, would breach that agreement. If it does, how much will that cost the taxpayer?
      Mr. Freeman: I tried to answer that point. I said that as and when primary legislation is laid before the House to permit free access to the tracks of British Rail and other rail owners and operators, a judgment will have to be made. I shall not speculate as to whether that will be classified as a major change in the ground rules, permitting the concessionaire to ask for an increase in tolls. It is impossible to speculate because that will be a matter for the next Parliament.
      However, I can spell out the procedure. There would be an application to increase the tolls, which would come before the House on an affirmative order. If that were not passed by the House, the concession would terminate, and the Government would have to take over the assets—the bridge—and the liabilities. The hon. Lady may be concerned about that, and her amendment, which I advise the House to resist, implies that there is some doubt about the taking over of the liabilities. However, the hon. Member for Kingston upon Hull, East (Mr. Prescott), who is most anxious to bring the private sector into building the road and rail infrastructure, will not be able to tap those funds from the private sector if the amendment were passed.
      The amendment would cloud the ability of any Government to raise much-needed finance from the private sector. It is a risky business building such projects as the Severn bridge, the Dartford to Thurrock crossing or the Birmingham northern relief road. Construction and maintenance costs get out of hand, the traffic might not materialise. If the House were to change the legislative ground rules, it would only be right that, if the concession terminates, the Government should take over not only assets but the liabilities.
      Ms. Primarolo: I draw the Minister's attention to paragraph 12 of the notes that he circulated in Committee. In addition to taking over the liabilities and the running of the bridge, which we understand because it is an extension of the M4 motorway and it would be difficult to cross the river Severn without the bridge, he said:
      "SRC would be contractually entitled to a certain degree of compensation for its adverse financial effects."
      I read that to mean over and above taking on the liabilities, and that is what I was specifically asking about.
      Mr. Freeman: Perhaps I can enlighten the hon. Lady. There may be a lack of clarity in the note. It means that if there is a change in the legislative ground rules and the concessionaire's financial calculations go awry and he seeks some form of financial compensation, that would come principally from an increase in the tolls. That is how the concessionaire would seek to correct the situation. That is what is meant by compensation. If the House refused to agree to the increase in tolls and as a practical matter that meant that the concession therefore terminated, the Government would take over the bridge and the liabilities and continue to toll.
      Ms. Primarolo: In that case, the Minister is saying that the House would have no option but to accept the company's application for an increased toll if it applied to us on the basis that it needed an increased toll because changes in the Government's transport policy had adversely affected its ability to raise the finance necessary. If we refused that toll and a reduction of the concession was not feasible, we would be liable for compensation. That is what the Minister says in the note. Therefore, we have no choice but to agree to the toll increase if the company says that our legislation has adversely affected its ability to run the bridge viably.
      Mr. Freeman: If the House in its wisdom rejected the affirmative order and the concession terminated, the Government would take over the bridge, its assets and liabilities, and presumably manage and toll it until the liabilities had been discharged. That does not represent damages paid out in cash to the concessionaire, if that is what the hon. Lady thinks. It is the Government taking over the bridge, standing in the shoes of the concessionaire and then managing its completion.
      Mr. Morgan: The Minister made blood-curdling threats about possible effects on the policies of my hon. Friend the Member for Kingston upon Hull, East (Mr. Prescott) and his hopes as part of Labour's transport policy to have joint ventures with the private sector. But he did not answer my question about what the speech made by the Secretary of State for Transport means with regard to this concession. Is it that the concessionaires do not believe a word that the Secretary of State for Transport said when he announced this great reversal of years of policy favouring road over rail to a policy favouring rail over road, or do they think that it does mean something, in which case it has a bearing on the way in which they see their concession and the legislative environment which now must be in prospect if the Secretary of State's speech means anything? That is a public announcement by the Minister's Government, not by my hon. Friend the Member for Kingston upon Hull, East. What does it mean for this concession?
      Mr. Freeman: I hope that the hon. Gentleman has had a chance to read my right hon. and learned Friend's speech. He talked in part about future legislation and I shall not speculate on whether that would represent a substantial change in the ground rules. I hope that with those reasoned explanations the House will resist the amendment.
      Amendment negatived.
      Order for Third Reading read.
      Motion made, and Question proposed, That the Bill be now read the Third time.—[Mr. Freeman.]
      11.29 pm
      Mr. Murphy: The Opposition welcome the crossing, because of the problems of the present bridge and because of its vital significance to Wales's economy in particular; it is, after all, our economic lifeline. None the less, I think that the Minister should take note of what has been said this evening, because of the importance of the bridge in the context of a much wider transport policy. What happens to railways, to motorways, to roads generally and to the Severn bridge is interlinked, and is a significant aspect of both the Welsh economy and the Welsh people's quality of life.
      As my hon. Friend the Member for Bristol, South (Ms. Primarolo) pointed out, this is a novel adventure—a unique combination of private and public sector money. That is why, in Committee, we considered various vital safeguards. We examined the question of tolls, the debt problem, public inquiries and local consultation; we considered the future of the staff who are involved with the existing Severn bridge, and the environmental impact on both the English and the Welsh sides.
      The Bill will now go to the other place, where it will be considered—as it was in the House of Commons—by a special Select Committee. We hope that the Committee will look again at those safeguards, and will consider some of the doubts that we have expressed with a view to improving the Welsh economy and quality of life.
      We believe that this move is right for the Welsh economy; but we also believe that any mistakes now could cost millions in the future.
      11.31 pm
      Mr. Michael Stern: Like the hon. Member for Torfaen (Mr. Murphy), I believe that the Bill is generally welcomed. As he recognised, however, it will affect both sides of the Bristol channel, and, in particular, traffic patterns in my constituency and that of my right hon. Friend the Member for Northavon (Sir J. Cope).
      In Committee, the Government gave a number of undertakings that were very welcome to my constituents. Especially welcome was the commitment that the Department of Transport would give all possible assistance to the eventual construction of the much-needed all-directions interchange at Hallen. I am grateful to my right hon. Friend for pointing out a minor error that I made in Committee. I said, on the basis of information that I had received, that the proposed interchange would be entirely within my constituency; in fact, it also affects that of my right hon. Friend.
      My constituents still fear that, even following the construction of the desired interchange, there will be a considerable increase in traffic affecting the western end of my constituency. I hope that my right hon. and learned

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      Friend the Secretary of State will extend the undertaking that he has already given, and that the Department will not only facilitate the construction of the interchange but—perhaps more important—consider alternate traffic patterns to avert what will otherwise be a great increase in traffic in Avonmouth and its surroundings owing to the industrial development that will inevitably result from the Bill.
      11.33 pm
      Mr. Livsey: My party strongly supports the building of the second Severn crossing. However, some of what the hon. Member for Bristol, North-West (Mr. Stern) has said about traffic congestion should be noted. We need an integrated transport system, involving both roads and rail. The crossing should form part of the building bricks of a truly integrated system, bringing rail much more to the fore.
      I hope that in the future, when we see the growth in road traffic in particular, and the effect that it will have on our environment, we shall have much more enlightened policies, which will encourage investment in rail as well as roads. Cost-benefit analysis should be applied to rail investment, just as it is to road investment.
      11.34 pm
      Sir John Cope: I also welcome the construction of the second Severn bridge. However, I hope that the House will realise that many of my constituents who live in the area will suffer a great deal as a result of the building of the bridge because of the approach roads which go through, particularly, the parish of Pilning and Severn Beach.
      I should like to express my gratitude to the Minister and the Department for the help that they have given in trying to alleviate the inevitably difficult consequences of the building of the approach roads and the bridge. I hope that, as the Minister said in Committee, they will continue to be as helpful as possible in alleviating the conditions that are brought about by the bridge.
      In Committee, which the Social and Liberal Democrats did not attend, some Labour Members were dubious about the idea of tolls and some said that they were against them. The Opposition Front-Bench spokesmen have never said that they would do away with tolls or reduce them substantially. On the contrary, as with the previous
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      Labour Government, they seem to support the continuation of tolls. Some Back-Bench Members who have advocated doing away with tolls should not be allowed to get away with it.
      Question put and agreed to.
      Bill accordingly read the Third time, and passed.

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

      BUILDING SOCIETIES
      That the draft Building Societies Act 1986 (Continuance of section 41) Order 1991, which was laid before this House on 3rd June, be approved.—[Mr. Patnick.]
      Question agreed to.
      Mr. Deputy Speaker: With the leave of the House I shall put together the Questions on the motions on agriculture to approve the statutory instruments.
      Motion made, and Question put forthwith pursuant to Standing Order No. 101(5) (Standing Committees on Statutory Instruments, &c.),

      AGRICULTURE
      That the Farm Diversification Grant (Variation) (No. 2) Scheme 1991 (S.I., 1991, No. 1339), dated 6th June 1991, a copy of which was laid before this House on 10th June, be approved.
      That the Farm and Conservation Grant (Variation) Scheme 1991 (S.I., 1991, No. 1338), dated 6th June 1991, a copy of which was laid before this House on 10th June, be approved.
      That the draft Farm and Conservation Grant Regulations 1991, which were laid before this House on 10th June, be approved.
      That the draft Farm Woodland (Variation) Scheme 1991, which was laid before this House on 12th June, be approved —[Mr. Patnick.]
      Question agreed to.

    EUROPEAN COMMUNITY DOCUMENTS
    Motion made, and Question put forthwith pursuant to Standing Order No. 102(9) (European Standing Committees),
    EUROPEAN COMMUNITY DOCUMENTS

      RATES OF DUTY ON MINERAL OILS
      That this House takes note of European Community Document No. 4822/91, relating to rates of excise duty on mineral oils.—[Mr. Patnick.]
      Question agreed to.

Land Trespass (Avon)
Motion made, and Question proposed, That this House do now adjourn.—[Mr. Patnick.]
11.36 pm
Mr. Jack Aspinwall: I am grateful for the opportunity to initiate this debate, and I know that I am supported by my hon. Friend the Member for Bristol, East (Mr. Sayeed) who could not be here. I am pleased to see my right hon. Friend the Member for Northavon (Sir J. Cope) in his place, together with my hon. Friend the Member for Kingswood (Mr. Hayward). I should like to take this opportunity to congratulate my hon. Friend on the award of a well-deserved OBE.
I have had a great deal of help and support in preparing for the debate from the National Farmers Union, Kingswood borough council and Wansdyke district council. I am pleased that I have an opportunity to bring before the House examples of the distress, heartache, fear and intimidation that have been present in the Avon county area, particularly in my constituency of Wansdyke. Those problems have intensified during the past few weeks. In the area overall there have been nearly 3,000 hippies. I use that word for want of a better one, since my constituents have variously described them in more colourful language.
Last Saturday I went to see the aftermath of a hippie visitation in the beautiful village of Carlingcott, near Peasedown St. John. After travelling through the picturesque countryside to get to the village, I passed many farms and premises literally under siege. Entrances to land had been blocked with rubbish skips and farm equipment and there were earth and stone embankments across farm gates, all imposing a scar on the countryside.
Such action is generated by fear of entry of the hippies and the resulting filth and depredation left behind after their departure. The fields at Carlingcott were churned up and there were burnt-out cars, mounds of rubbish and the remains of human and animal excreta from over 2,000 people and many animals. The farmer who rented the land has lost his grass keep and the work required on the site to reinstate it is expensive. This is just one incident in many.
Wansdyke district council has partly cleaned up the roads around the village and the people of Carlingcott and a wide surrounding area have breathed a sigh of relief, having suffered a great deal of noise, intimidation and intrusion into their normally peaceful lives.
Another site in my constituency, at Charmy Down near Bath, was invaded by hippies. A similar process took place, commencing on Wednesday 29 May. The Charmy Down incident was perhaps more serious, in that human and animal pollution affected a water catchment area which partly supplied Bath, and Wessex Water was reported as having diverted the flow of springs from a reservoir in order to prevent contamination. In both areas, there were reports of theft, intimidation, damage and loud noise, which all added to the inconvenience to, and total misery of, my constituents, making normal life impossible.
I come to the core of the problem—how the law operates to deal with hippies who, unauthorised, occupy sites and exploit the law to the last minute, causing huge expense not only to private landowners and farmers but to taxpayers and community charge payers. The cost is hundreds of thousands of pounds and the effectiveness of
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the police to deal with crime is considerably weakened, because of the extra commitments imposed on them by the hippies.
There appear to be two ways of removing people from sites where an intrusion has taken place. The first is for the landowner to apply to a court for an order of possession. The second is for the police to deal with the problem under section 39 of the Public Order Act 1986.
The process to take effective, immediate action to remove hippies is a legal minefield. The hippies have an extremely good intelligence service, and the site at Carlingcott, near Peasedown St. John, is a good example. Carlingcott was originally occupied by a small number of hippies who sounded out the local scene and then there was an influx of others on to the land. It was certainly known that this legally knowledgable group, who used citizen band radios and mobile telephones and mobile fax machines, carried out a well-planned operation. In the end, it became extremely difficult to enforce the law.
Land may be identified which is the subject of a legal dispute or a complexity of byelaws and regulations. Before legal action can be initiated, extensive research may be required into byelaws, local acts and ancient charters. That all has a delaying effect on the legal process. The landowner may go to considerable expense, only to find that on the appointed day, when the bailiffs go in to evict, the hippies simply move to another site and cause similar problems somewhere else. It is impossible to get, from a group of people who live on the edge of, or above, the law, recompense for physical damage or financial loss incurred.
Section 39 of the Public Order Act gives the police the power to deal with trespassers. It must be remembered, though, that the Act does not place the police under a duty to act; it only gives them a power to direct trespassers to leave land and arrest them if they fail to do so without reasonable excuse as soon as it is reasonably practicable.
The effect is that up to 3,000 people can congregate on a site, and the police need hundreds of officers and equipment to deal with the problem. If large numbers of hippies decide that they will not move, it is an impossible situation. If, for example, 1,000 men were arrested, hundreds of women and many children would be left on the site. A duty of care would be placed on the local authorities to deal with the attendant problem of the women, children and animals.
If the men decided to plead not guilty before a court, it is likely that under the Bail Act 1976 they would be bailed and merely sent back to the site, and the trouble would continue. That cannot be allowed to continue, and there has to be a change in the law even to allow a court or a judge to visit a site and to deal swiftly with the law-breakers before large numbers of people can gather. The special procedures also take valuable time and need speeding up.
I welcome the review of section 39. I notice that my hon. Friend the Member for Westminster, North (Sir J. Wheeler) asked the Home Secretary in a parliamentary question whether he had completed his evaluation of section 39. My right hon. Friend the Home Secretary made a statement on 22 May 1991, but the problem remains and the Act fails to deal with it at its roots. All that has happened is that the powers have been defined in writing and a leaflet has been published which outlines the civil remedies open to landowners. However, that does nothing to alter the position.

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I now deal with what has become a major problem in the Labour and Liberal Democrat-controlled county of Avon—the failure of the county council to take positive steps to remove hippies, travellers, gipsies or whatever one calls the various groups of itinerants. The county has a duty of care to all the people who live in it. Many long-suffering residents and community charge payers are subject to a massive intrusion into their lives because the county council refuses to take action as a landowner to remove the itinerants from its land. I agree that the county council has not provided the necessary number of sites under the Caravan Sites Act 1968, but there is no reason why people should be subject to difficulties because of the county council's failure to act.
The hippies have different needs from those of the gipsies and tinkers whose requirements under the Caravan Sites Act are small supervised units. It cannot be beyond the bounds of possibility for the Home Office and the Departments of the Environment and Social Security to get together to consider ways and means of providing transit sites for people who could be termed hippies or travellers, who move around for part of the year and who cause tremendous problems. It should be possible to find sites away from human habitation, where proper sanitary facilities can be provided and where there will be no inconvenience to local people.
It is right that sites should be provided for the group of people known as gipsies, but it is unrealistic to believe that the occupiers of those sites can forcibly be integrated into communities of people who also have rights and who wish merely to enjoy their homes and their lives peaceably.
The duties imposed on the police and the costs involved place the police in an impossible position. I congratulate the Avon and Somerset constabulary on the way in which it has dealt with many difficult situations, taking great care to avoid confrontation which would not be to the benefit of the public but, at the same time, using whatever powers are available to it to alleviate a series of difficult incidents.
The basic problem is that of large numbers of people gathering in an uncontrolled way. There are people who live on the edge of the law and who intimidate others. The problem must be solved because innocent people should not have to bear legal costs or the costs of damage to their land and property which, in many cases, is long standing. Sanctions should be imposed, perhaps on social security benefits: no readiness for work and no co-operation mean no girocheque. There should be sanctions to prevent a large number of vehicles gathering, which would eventually become uncontrollable. Sites should be provided for pop festivals in remote parts of the country to enable young people to enjoy themselves in proper conditions with adequate facilities.
There should be a speeding up of the legal process to stop the huge waste of the resources of the police, local councils and private landowners that is created by the activities of hippies. Much can be achieved if only the difficulties that have been experienced by my constituents and other law-abiding citizens are recognised and urgent action is taken. Section 39 of the Public Order Act 1986 is not effective and consequently will not solve the extreme social problem that I have outlined.
Consideration should be given to imposing a duty on the police to act. Designation is not the answer. If such a
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duty is imposed, powers should be given to local authorities to deal with the matters that arise, such as the towing away of vehicles and caravans, the welfare of women, children and animals and the storage and disposal of chattels. People should not have an imposition placed upon them that seriously damages their quality of life.
Sir John Cope: I support my hon. Friend in all that he is saying, including his strictures on the failure of Avon county council. I am sure that he is aware that section 39 of the Public Order Act 1986 is especially difficult to interpret when common land is involved. There have been the most appalling invasions of Sodbury common in recent years, and it is difficult to express the consequences for the local inhabitants. We know that the law is broken, and the problem is how to enforce it. We need a task force comprised of the police and local authority employees that is capable of dealing with the invasions and tackling the many belligerent people who gather on the occasions that my hon. Friend has described.
Mr. Aspinwall: My right hon. Friend has outlined the serious problems in his constituency. It is unfortunate that the action that ensues is apparently slow and ponderous. Although the police have powers under section 39, those powers are used unevenly. The decision whether to act is a matter of discretion for the chief constable whose force is involved. The present state of affairs cannot continue. I know that my right hon. Friend's constituents have suffered deeply as a result of the influx of large numbers of people, many of whom are intent on causing a great deal of inconvenience and trouble.
11.52 pm
Mr. Robert Hayward rose—
Mr. Deputy Speaker (Mr. Harold Walker): Order. I take it that the hon. Member for Kingswood (Mr. Hayward) has the leave of the hon. Member for Wansdyke (Mr. Aspinwall) and that of the Parliamentary Under-Secretary of State for the Home Department to participate in the debate.
Mr. Hayward: I wish to intervene only briefly, Mr. Deputy Speaker.
I welcome the fact that my hon. Friend the Member for Wansdyke (Mr. Aspinwall) has taken the opportunity to raise matters of concern for hon. Members who represent Avon constituencies. I thank him for his comments about me.
On the border of our constituencies, as my hon. Friend well knows, is an area that is known as Firework farm. The property is owned by Avon county council, and it flatly refuses to take action to evict the people who are currently on the site. That highlights the problems that are faced by our constituents—law-abiding citizens who wish to go about their day-to-day lives unhindered by others. At present, they have virtually to nail down all their possessions. They cannot leave their houses unattended for fear that their property will be removed from washing lines, along with their front doors and the contents of their garages. It is important that the county council is encouraged to take action as and where appropriate in support of the ordinary law-abiding citizen.
I echo my hon. Friend's comments about the police, who face an appallingly difficult task. I recently witnessed the problems that they face at Firework farm. I arrived in

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the middle of a police operation in which officers were trying to arrest individuals who were believed to have stolen property from local residents. The police do a good job in the circumstances, but the law and the actions of others are not always as supportive as they might be.
11.54 pm
The Parliamentary Under-Secretary of State for the Home Department (Mr. Peter Lloyd): I congratulate my hon. Friend the Member for Wansdyke (Mr. Aspinwall) on his success in raising a sensitive issue. Trespass always gives rise to strong feelings, and I know that during the weeks of the summer solstice, especially, there are many areas, including my hon. Friend's constituency, that experience an influx of travellers and hippies. That can be distressing and troublesome to local residents. My hon. Friend described the situation graphically, and he had powerful support from my right hon. Friend the Member for Northavon (Sir J. Cope) and my hon. Friend the Member for Kingswood (Mr. Hayward).
Section 39, to which my hon. Friend the Member for Wansdyke referred, was conceived during the passage of the Public Order Bill in response to the mass invasions of land in and around Stonehenge in the summer of 1986. Although the matter at issue is the use of section 39, it must be seen in context. It is one of a number of remedies that are available to landowners for dealing with trespass on land by those who intend to stay there. The majority of cases of trespass are resolved, as they should be, either informally or in the civil courts. Trespass on land is a civil tort rather than a criminal offence.
My hon. Friend the Member for Wansdyke referred to the Caravan Sites Act 1968, which has an important role to play. It places a duty on local authorities to provide official sites for gipsies, hippies or people of nomadic habit of life, whatever their race or origin, in their area. Once a local authority has become designated under the Act, it has a quick-acting criminal law power through the magistrates courts to move gipsies, hippies or other travelling folk from an unauthorised site, whether it be owned privately or by the local authority.
My hon. Friend the Member for Wansdyke suggested that short-stay sites for hippies should be provided. That is a constructive idea, but such provision should be made not by the Home Office or the Department of the Environment but by local authorities, which must also provide gipsy sites in their area.
Section 39 gives the police the discretionary power to direct trespassers to leave land only where trespassers have entered the land as trespassers and have the common purpose of residing there, where the occupier, or someone on his behalf, has asked them to leave, where any of the trespassers has been threatening or abusive to the occupier, where they have caused damage or where they have brought 12 or more vehicles on to the land. The section does not make trespass a criminal offence, but it is an offence for a trespasser not to leave the land after a direction has been given or, having left, to return as a trespasser within three months.
Section 39 is not a substitute for normal civil procedures, nor should local authorities see it as a means of evading their statutory duty to provide official sites. It provides a limited criminal sanction to deal with aggravated trespass.
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In October 1989, the then Home Secretary announced a public evaluation of section 39 to see how its relatively new powers were working. The Home Office received 30 representations from a range of gipsy or traveller groups, local authorities and their associations and representatives of landowners. As my hon. Friend the Member for Wansdyke said, my right hon. Friend the Home Secretary announced his conclusions on 22 May this year. He concluded that more needed to be done to secure better understanding by all interested parties of the way in which the law should operate but that no change in the law was necessary.
At the same time as my right hon. Friend made his announcement, Home Office guidance was issued to the police on the application of section 39 and a leaflet was published in plain English setting out for landowners the main provisions of the law on trespass of land. A copy was placed in the Library. Additionally, it was announced that my right hon. Friend the Secretary of State for the Environment would continue to maintain the pressure on local authorities to meet their statutory duty to provide adequate numbers of sites for gipsies and travellers. The provision of sites is a vital factor in reducing the problem of trespass and in enabling the police to take the quick action that my hon. Friend is seeking.
Section 39 was intended to strike a careful balance between providing a quick and effective means of returning land to the occupier where there is aggravated trespass and not allowing the harassment of well-behaved gipsies for whom no official site provision has been made. Our review showed that there were no major gaps or weaknesses in the legislation, but that some confusion had arisen over the circumstances in which section 39 could and could not be used. The measures taken following our review of section 39, to which I have referred, should do much to remove that confusion and will, I believe, help landowners to find the most suitable remedy available to them in their particular circumstances.
The guidance to the police aims to provide a clear understanding of the matters that the police can be expected to take into account in deciding whether to give a direction to trespassers to leave land. The criteria include the consequences of giving a direction to leave to which my hon. Friend referred. For example, there might be further trespass nearby because of the lack of official sites. There is no virtue in shifting a problem from one back yard into a neighbouring back yard. They also include the consequences of not giving a direction to leave—for example, further damage or threatening behaviour or the disorder that might occur. The public order consequences of their actions are rightly to be taken into account by the police. Also to be considered are the personal circumstances of the trespassers. For example, there might be those whose well-being could be affected by an immediate move. There have been complaints about pregnant women or sick people being peremptorily removed, although that is not, I think, a factor in the sort of cases to which my hon. Friend referred. The criteria are not exhaustive and there will be local circumstances to be taken into account.
I must emphasise that, despite the issue of guidance, the decision whether to issue a direction to leave the land remains an operational one for the police. Despite what my hon. Friend has said, I do not believe that the decision how and where to use the powers that the law rightly gives

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them can be taken out of their hands. The senior officer at the scene will take his decision in the light of all the circumstances in each particular case.
I come now to the application of section 39 in the Avon area, I know that the area has a seasonal influx of large groups of travellers who arrive to attend pop festivals and to celebrate, in their own way, the summer solstice. I understand from the chief constable of Avon and Somerset that section 39 has been used on a number of occasions and has worked well. I am told that in recent months it has been used successfully to deal with occupations of travellers at Doynton, Mangotsfield and Radstock. Once the police had issued a direction to leave, the travellers moved on without any undue delay.
My hon. Friend implied that section 39 lacks teeth because it cannot be applied where there is no authorised occupier. However, the main purpose of the section is to give back to the occupier the use of land on which trespassers are residing. If there is a nuisance from noise or pollution, as in some of the cases to which my hon. Friend referred, it can be dealt with by the local authority under the Environmental Protection Act 1990. If there is criminality—and I am talking not about simple trespass but about damage and about the kind of activities that my hon. Friend had in mind—the criminal law will, of course, bite.
In the case of unoccupied common land, mentioned in particular by my right hon. Friend the Member for Northavon, I understand that action can be taken under the Commons Registration Act 1965 and that local authorities designated under the Caravan Sites Act 1968 can use the powers that they obtain under that Act to move gipsies, travellers and trespassers from such land. But the designation must be in place before they can do so. I believe that none of the local authorities in the Avon and Somerset police force area is designated under the 1968 Act and they may wish to reconsider—I put it no higher
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than that—the advantages of designation. Having heard what my hon. Friends have said, I believe that it is something to which close attention should be paid.
I do not pretend that section 39, even when seen as one of the range of remedies provided by the law to deal with the problems of trespass, will always work to the satisfaction of all parties. I can, however, say with some assurance that, since its introduction in 1986, section 39 has often proved an effective and useful addition to the legal remedies available. I am confident that the recent actions taken by the Home Office following our review of section 39 will be found helpful.
In conclusion, I remind my right hon. and hon. Friends that several different and sometimes conflicting considerations have to be brought together when approaching the problems of trespass on land. Of course, gipsies, travelling folk and hippies, separately and collectively, have a responsibility to avoid creating a nuisance. Local authorities, crucially, have a duty to provide sites under the Caravan Sites Act. Landowners have their rights under the civil law. The police have a duty to exercise reasonably the discretion given them in the circumstances set out in section 39.
The Government, I believe, have set a framework of civil and criminal law within which most continuing disputes arising from trespass can be resolved and which strikes a reasonable balance between the interests concerned. I am afraid that not all the mercifully short-term problems to which my hon. Friend the Member for Wansdyke referred can effectively be dealt with in those terms—although the criminal acts that he described certainly can be as not all anti-social behaviour can be amenable to the law. However, I have no doubt that where there is damage and abuse, such as he has described, the courts can provide a remedy if the perpetrators can be properly identified.
Question put and agreed to.
Adjourned accordingly at six minutes past Twelve o'clock.