Commons Sitting of 3 July 1991

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

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

  HIGHLAND REGIONAL COUNCIL (HARBOURS) ORDER CONFIRMATION BILL
  Lords amendments agreed to.
Oral Answers to Questions
  TRADE AND INDUSTRY

    Foreign-based Companies
    Mr. Burns: To ask the Secretary of State for Trade and Industry if he will make a statement on the application of his policy on takeovers by foreign-based, state-owned companies.
    The Secretary of State for Trade and Industry and President of the Board of Trade (Mr. Peter Lilley): I restated the Government's policy towards mergers involving state-controlled companies, whether British or foreign, in a speech on competition policy on 12 June. I will continue to refer to the Monopolies and Mergers Commission acquisitions that I consider may lead to distortions in the market. Such distortions are most likely when an acquisition involves a large market share, a high degree of direct state control or evidence of past anti-competitive behaviour.
    Mr. Burns: Does my right hon. Friend think it right to allow foreign nationalised industries to buy up private British companies and then to use their privileged position and access to cheap capital unfairly to compete against British private companies?
    Mr. Lilley: I certainly receive representations from many people in British industry who feel exactly as my hon. Friend does. That is why I shall continue to take the degree of state ownership into account when considering whether referrals should be made to the Monopolies and Mergers Commission. That is an important aspect of national interest and improving the competitive market.
    Ms. Mowlam: If the Secretary of State is prepared to make statements about takeovers of foreign-owned and state-owned companies, why is he unwilling to make a statement about ICI? It is no good the Secretary of State saying that it is a European Economic Community issue.
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    As I went to Brussels last week, I know that the Community would welcome a statement on the Secretary of State's view on that issue.
    Mr. Lilley: The hon. Lady appears to be unaware that there has been no bid. It would be absurd for a Secretary of State to make a statement on a hypothetical bid. Nothing could be more certain to ensure that a Secretary of State has no power to intervene, even in circumstances where, at its discretion, the European Community referred a merger back to the state. If he made a statement and was then ruled by the courts to have fettered his discretion in advance, he would be utterly powerless.

    Compact Discs
    Mr. Simon Coombs: To ask the Secretary of State for Trade and Industry what is his estimate of the rate of growth in the production of compact discs in Great Britain; and if he will make a statement.
    The Parliamentary Under-Secretary of State for Industry and Consumer Affairs (Mr. Edward Leigh): Production of compact discs in the United Kingdom rose from 1.1 million in 1985 to 78.5 million in 1990.
    Mr. Coombs: The whole House will wish to congratulate a manufacturing industry of this country which has increased its output to such a remarkable extent in only six years. Will my hon. Friend take this opportunity also to congratulate the British manufacturers Nimbus and EMI on the excellence of their technology, and Chandos and Hyperion, not only on their excellent technology but on the fact that they have been pioneer recorders of British music?
    Mr. Leigh: I know that my hon. Friend speaks up effectively for industry and business in his constituency, and he is right to draw attention to the success and growth rate of the compact disc industry. Because the industry is so new, it is meaningless to talk in terms of 135 per cent. compound rate of growth from 1985 to the present day. However, if one bears in mind that between 1989 and 1990 growth was 20 per cent., that shows a very healthy industry.
    Mr. Tony Banks: The CD industry is not so new that it has not worked out how to price goods. Will the Minister examine the pricing structure within the industry, because CDs still cost an unacceptably high amount given the increased volume of manufacture? When he looks at that industry, will he have a word with the Chief Secretary to the Treasury who, I understand, has amassed a vast collection of CDs and is clearly trying to do for the price of CDs what Bunker Hunt did for silver?
    Mr. Leigh: The price of CDs in the United Kingdom—clearly the hon. Gentleman is an expert—is about £.10.99 or £11.99, which compares with about £12 in France, about £13 in Germany and about £12 in Japan. So it is not fair to say that there is overwhelming evidence that CDs are overpriced in this country. If there were evidence of a cartel, the Office of Fair Trading would be interested. It is conducting an informal inquiry into the music industry in general, but in the absence of any firm evidence of a cartel it would be inappropriate for the Department to intervene.

    Investment
    Mr. Butler: To ask the Secretary of State for Trade and Industry what proportion of(a)United States and(b)Japanese investment in the EC came to the United Kingdom in the latest available year.
    The Minister for Trade (Mr. Tim Sainsbury): It is estimated that the United Kingdom has 42 per cent. of United States investment in the European Community as at the end of 1990 and 39 per cent. of Japanese investment as at the end of March 1991.
    Mr. Butler: My hon. Friend will be aware that academic research shows that the tax regime of a country is more important for overseas investors than state handouts. Does not that prove that overseas investors have confidence in the continuation of the British tax regime under this Government and that they have greater confidence in the future of our economy than do Opposition Members?
    Mr. Sainsbury: I absolutely agree. The tax regime is important in encouraging inward investment. Last year's inward investment decisions, of which about 350 are known to my Department, will either guarantee the security of, or create, 60,000 jobs in all regions of the United Kingdom. We would be foolish to put that amount of job creation at risk.
    Dr. Kim Howells: Does the Minister agree that although we greatly welcome inward investment from Japan and America, it is still important that we retain our centres of innovation and of research and development? Are not they the real levers for determining the future security and direction of the British economy?
    Mr. Sainsbury: Indeed, and I hope that the hon. Gentleman will welcome the fact that, perhaps as a result of the Government's encouragement of a tax regime for enterprise, industry's own funding of research and development grew by more than 50 per cent. in real terms between 1983 and 1989.
    Mr. John Carlisle: My hon. Friend will be well aware of the large American investment in my constituency town of Luton by General Motors. At a time when the car manufacturing industry is very much on its knees, as evidenced by Ford's slashing prices, will he look sympathetically at any request from GM for any assistance that might be available either through funding in this country or through funding from the European Community?
    Mr. Sainsbury: My hon. Friend will recognise that although demand for cars in this country is down, the car industry is doing outstandingly well in exports. All parts of the industry deserve congratulations on that achievement.

    Recession
    Mr. McAvoy: To ask the Secretary of State for Trade and Industry if he will make a statement on the recession in industry in the United Kingdom.
    Mr. Lilley: Growth is set to resume in the second half of this year in response to lower inflation and an upturn in the world economy.
    Mr. McAvoy: Is the Secretary of State aware that since the present Prime Minister took office more than 500,000 people have been made unemployed, manufacturing jobs have been disappearing at a rate of 4,000 a week and nearly 16,000 businesses have collapsed? When will the Government stop making pathetic excuses and implement the obvious package of reform measures required to take this country out of recession, to boost skills, increase investment and reduce unemployment? How many more manufacturing jobs is the Secretary of State prepared to see lost before he stands up for British industry?
    Mr. Lilley: The Government are right to make the defeat of inflation their priority. We are succeeding in defeating inflation. It has fallen from almost 11 per cent. to 5·8 per cent. and it is heading to below 4 per cent. by the end of the year. Interest rates have come down too. That is the best way towards sustained non-inflationary growth. The Opposition have no policies and no strategy to deal with inflation, recession or unemployment.
    Mr. Riddick: Does my right hon. Friend agree that although times have been difficult in the past few months and years, manufacturing industry in the north of England has combated those difficult times by becoming more aggressive and combative in export markets, and that there are now clear signs that we have reached the bottom of the recession and that confidence is being restored to businesses in the north? Does he agree that we shall see the interesting and, from my point of view as a northern Member, encouraging phenomenon of the end of the recession starting in the north of England and spreading to the south? Will he join me in condemning the Opposition who seem to glorify in wallowing in doom and gloom about industry throughout Britain?
    Mr. Lilley: That was very much the message that I received during my recent visits to Teesside, Tyneside and county Durham. It is greatly to the credit of industry in the north of England, especially in the north-east, that it has diversified so much, has attracted inward investment and is exporting strongly. That is encouraging for the future. Like my hon. Friend, many of those industries say that they expect to come out of the recession ahead of the rest of the economy.
    Mr. Beith: Why does the Secretary of State assume that a firm anti-inflation policy must be accompanied by rising unemployment? He should resist the blandishments of Labour and Conservative Members who believe in devaluation. He could maintain a strict interest rate policy and at the same time promote measures designed to ensure the repair of hospitals and schools, and the building of houses while there are so many people out of work.
    Mr. Lilley: The hon. Gentleman is mistaken if he believes that one can fight inflation while prematurely relaxing fiscal policy.
    Sir Hal Miller: Will my right hon. Friend comment on the performance of the motor industry which on the latest figures is exporting 49 per cent. of production with totally beneficial results for the balance of payments on manufactured goods, about which we hear so much from the Opposition? That trend is likely to improve further when American and Japanese investments come on stream.
    Mr. Lilley: My hon. Friend makes an important point about an exceedingly important industry which is doing very well. Its output in the past three months was up 6 per cent. on last year, and that has largely been achieved by an excellent record of substantially increasing exports.
    Mr. Gordon Brown: With every major national and international report saying that every region and every sector of industry faces yet another summer of redundancies, closures and bankruptcies, will the Secretary of State tell the House how many more thousands of people will become unemployed, how many more businesses will go under and how much industrial capacity, skill and strength will be destroyed before the Government cut interest rates and improve investment and employment opportunities in all parts of the country?
    Mr. Lilley: The hon. Gentleman has played that recorded message endless times in the House. He has no positive policy to get out of a recession, to combat inflation or to solve unemployment. All the Opposition's policies would aggravate those problems. Increased public expenditure to the tune of £35 billion would aggravate inflation and a minimum wage would increase unemployment.
    Mr. Charles Wardle: Would not the surest way to prolong the recession be to relax the grip on inflation and allow prices and public spending to soar, which is what the Opposition advocate, thus making Britain chronically uncompetitive?
    Mr. Lilley: My hon. Friend is absolutely right, and that is why industry and the CBI have endorsed our strategy. They recognise that we have our priorities right, and they and many forecasters are confident about growth in the second half of the year.

    Banking
    Mr. McFall: To ask the Secretary of State for Trade and Industry when he next plans to meet representatives of the high street banks to discuss business bankruptcies and banking policy.
    The Minister for Corporate Affairs (Mr. John Redwood): The Chancellor of the Exchequer has met with the chairmen of the leading banks recently. The Treasury is conducting an inquiry into the relationships between banks and businesses and the Department of Trade and Industry has assisted by organising through each regional office a meeting between banks and business men passing on full information from those meetings to the Treasury. We await the Chancellor's conclusions.
    Mr. McFall: In this David and Goliath struggle between small businesses and banks, what does the Secretary of State intend to do to redress the imbalance? How does he view the written contract proposal under which banks could not increase interest rates and charges without due notice? Businesses are collapsing at the rate of 1,000 a week. When, oh when, will the Government do something about small businesses?
    Mr. Redwood: I have seen the Forum of Private Business proposals, to which I believe the hon. Gentleman is referring. They have been passed to the banks for comment, and will be one of the matters on which the Chancellor may touch when he produces his conclusions.
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    [HON. MEMBERS: "When?"] The Chancellor will produce his conclusions as soon as he finishes his review. I am sure that hon. Members will want this to be a good review that takes into account all the evidence that the forum and others have passed to the Treasury. We all await the outcome of those findings with interest. The hon. Gentleman may also have noticed that the Forum of Private Business did not want to see the matter referred to the competition authorities because it thought that that would take too long.
    Sir Robert McCrindle: Irrespective of the lack of sensitivity with which banks have sometimes been prone to deal with their small business customers, does my hon. Friend agree that so far there has been no evidence of a cartel among the banks? Would it not have been on that basis, and that basis alone, that the Government could have been asked to intervene?
    Mr. Redwood: My hon. Friend is right in that, for the competition authorities to intervene, there would have to be evidence of cartel collusion or anti-competitive practices. That is a matter for the Director General of Fair Trading. He has not completed his review. He made a preliminary statement the other day, in which he said that at that date he did not have sufficient evidence to instigate an inquiry, but his preliminary inquiries are continuing. We have sent him other evidence and we await his findings, which will be made public in some form or other after the Chancellor has presented his conclusions.
    Mrs. Mahon: Given that the Machine Tools Technologies Association recently told a group of Labour Members of Parliament that the industry could be wiped out in the next six or nine months, is not the Minister worried that industry has so little confidence in his Department? The association went further and said that it lacked confidence that the DTI could do anything to help small and medium-sized businesses, and that it was easier to get an audience with the Pope or Gorbachev than with a Minister in his Department. Does not that reflect a complete lack of confidence in what the Government have done for the past 12 years?
    Mr. Redwood: Ministers in the DTI are ready and willing to meet business, and do so regularly. Many such meetings occur, day after day and week after week, with Ministers and officials in the Department because we are interested in and concerned about what the business community is saying, as we are its voice in Whitehall. As for the industry to which the hon. Lady refers, it has reported great success in exporting in recent months and in the past year. The DTI will do all that it can, with my hon. Friend the Minister for Trade in the lead, to promote its exports abroad and to work closely with it. I recommend that its representatives get in touch with the Minister for Trade if they are concerned mainly about exports and orders. The Government want to see banks supporting all good, viable businesses and I am sure that banks will listen to that message.

    European Free Trade Association
    Sir Michael McNair-Wilson: To ask the Secretary of State for Trade and Industry whether he will make a statement on the progress of the talks between the members of the European Community and the European Free Trade Association.
    Mr. Sainsbury: Good progress has been made towards the creation of a European economic area in the talks between the Community and the European Free Trade Association.
    Sir Michael McNair-Wilson: By how much have British exports to the Community increased over the past 10 years? Can my hon. Friend give similar figures for our trade with EFTA?
    Mr. Sainsbury: I shall write to my hon. Friend with the details, but he will be aware that our exports to the Community have grown substantially, as have our exports to EFTA. Even in a difficult world trading environment, with a recession in EFTA countries such as Sweden, our exports this year are well ahead of those for last year by volume.
    Mr. Cohen: When will the Minister do something about the rotten COCOM agreement, which is contrary to free trade in Europe? Has he not had correspondence from me and OPT Optical Fibres in my constituency, which wants to export sub-standard fibres to the Soviet Union, but cannot because it is blocked by the agreement and the Government? That is affecting its business, and jobs are going to the wall. Has not the managing director written to the Minister to say that the DTI is letting down British industry in this respect? When will the Minister do something about this rotten agreement instead of living in the cold war?
    Mr. Sainsbury: The hon. Gentleman has, as on other occasions, introduced a subject that I find hard to relate to the negotiations between the EEC and EFTA. He will know that the COCOM arrangements are important for the security of our country. Therefore, I hope that he will have due regard to them.
    Mr. Donald Thompson: When my hon. Friend conducts these talks, will he refer to the seemingly endless stream of Chinese textile goods coming through Denmark to be dumped in this country, sometimes as cheap as 17p a pair?
    Mr. Sainsbury: The matter to which my hon. Friend refers is being considered, although it would not be directly affected by the negotiations which are the subject of the original question. However, bringing EFTA countries into a European economic area will improve trading opportunities for British industry throughout Europe.

    West Midlands Manufacturing Output
    Mr. Geoffrey Robinson: To ask the Secretary of State for Trade and Industry what plans he has to boost manufacturing output in the west midlands.
    Mr. Lilley: Manufacturing output in the west midlands, as elsewhere, will be helped by our policies of fostering a competitive environment, encouraging innovation, restoring incentives and, above all, defeating inflation.
    Mr. Robinson: Is the Secretary of State aware that every answer that we have heard from him today on manufacturing industry shows him to be totally out of touch with the difficult and deteriorating circumstances under which it must operate? Is not he aware that he is embarked no longer on the defeat of inflation but on the annihilation of British industry? Since the Government came to power, we in the west midlands have lost 33 per
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    cent. of our capacity and 32,000 jobs in manufacturing and, according to the CBI, 80 per cent. of the plants in the west midlands are working below capacity. In those circumstances, what does the right hon. Gentleman intend to do to dispel the clear impression of total incompetence and suspended inactivity on the part of his Department?
    Mr. Lilley: That is a bit of a cheek from someone who has played his distinguished part in undermining British industry. The fact is that in the west midlands, which is heavily dependent on the motor car industry, the motor car industry has increased production. In the past few months Rover's production has risen by 4 per cent. and Land-Rover's by 8 per cent. They are exporting a record proportion of their output. I recently visited firms in the west midlands, one of which was exporting 95 per cent. and capturing the world market in its areas. The future for the west midlands, which is a great source of entrepreneurship in Britain, is rosy so long as we pursue the policies that the Government advocate and do not return to policies of nationalisation, intervention and high taxation which the hon. Gentleman advocates.
    Mr. Roger King: My right hon. Friend is well known for his open mind in discussing and considering future aspects of policy. Has he heard one single policy from the Opposition which he thinks would help west midlands industry boost its productive capacity?
    Mr. Lilley: I must say, having considered the matter with an open mind, that I have not heard a single proposal that is in any way constructive. Indeed, to hide their intellectual vacuum, the Opposition simply retail bad news with relish.
    Mr. Henderson: With car sales down 25 per cent., truck sales down 40 per cent. and bus sales down 40 per cent., I do not know who the Secretary of State has been talking to when he visits the west midlands and the car industry. Does not he agree with Mr. Colin Hope, the president of the Society of Motor Manufacturers and Traders, that the British motor car industry has been seriously damaged by the recession and that it cannot operate sensibly in the boom or bust environment created by the Government?
    Mr. Lilley: The hon. Gentleman exemplifies exactly what I was referring to. He takes an industry which has increased its output and investment and tries to find statistics suggesting its decline. Longbridge in the west midlands has the most advanced manufacturing assembly line in the motor car industry in the world and the highest efficiency in Europe, yet he has nothing but ill to say of it.

    Funeral Services
    Mr. Bowis: To ask the Secretary of State for Trade and Industry what reports on funeral services he has commissioned or received in the course of the last year.
    Mr. Leigh: I have commissioned no such reports. The Director General of Fair Trading published a report on funeral services in January 1989.
    Mr. Bowis: Does my hon. Friend agree that although there is some public concern about the pricing of funerals, there is much greater public concern about the threat to their provision in some Labour areas, such as Liverpool, where politically motivated men see the services of crematoria and cemeteries as fit for their political

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    activities? Is it not high time that my hon. Friend talked to his right hon. and learned Friend the Secretary of State for Employment about ways of protecting people at what is, inevitably, a sad time, but which can become a harrowing time as a result of the withdrawal of those services by people who should be providing them for the public?
    Mr. Leigh: Suffice it to say that it is sad that a political climate where such threats can be made should be able to grow up anywhere. Funerals are an intensely personal and sad business for families; I shall therefore forbear to say any more, and will let the public be the judge.
    Mr. Foulkes: What is the Minister doing to encourage all funeral directors to join the National Association of Funeral Directors and to accept the association's code of practice, as do all Co-operative societies throughout the United Kingdom?
    Mr. Leigh: The association has issued a code of practice, in co-operation with the Director General of Fair Trading. That code of practice is now a year old.
    I have given the matter considerable thought. Al though the code requires funeral directors to publish the basic costs of funerals, I feel that it would help the public if the association insisted on itemising those costs. Families are in a uniquely vulnerable position at such times, and I shall approach the association on that ground.

    Inflation
    Mr. Nicholas Winterton: To ask the Secretary of State for Trade and Industry whether he will make a statement about the impact of inflation on the competitiveness of British industry.
    Mr. Sainsbury: Inflation erodes competitiveness and destroys output and jobs.
    Mr. Winterton: I am grateful to my hon. Friend for that succinct reply. Will he also pay tribute, however, to ICI plc for having invested in research and development at a much higher level than the rate of inflation? Should not the company be warmly congratulated on that?
    Hostile approaches to the company might well affect its magnificent performance for many years. It employs some 54,000 people and makes a major contribution to our economy. Surely it should be seen as a national asset and its operations should be recognised as being in the national interest.
    Mr. Sainsbury: I know that my hon. Friend will agree that inflation is one of the most damaging influences on our research and development spending. The increased spending that I mentioned earlier is clearly a response not only to a lower tax regime, but to a lower inflation regime. A return to the taxation and inflation levels that characterised the last Labour Government would have a disastrous effect on British industry's research and development.
    Mr. Harry Ewing: If the Minister is so convinced that inflation damages the competitiveness of British industry, why on earth did the Government allow it to increase in the first place?
    Mr. Sainsbury: I wonder whether the hon. Gentleman doubts whether inflation is damaging. If so, I am very surprised. If, however, he agrees with me that it is
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    damaging, why does he support the policies of nationalisation, high spending, high taxation and high borrowing that are espoused by his party? They would make the present position much worse.
    Mr. Michael Brown: May I hark back to the question asked by my hon. Friend the Member for Macclesfield (Mr. Winterton)? Will my hon. Friend also note that, although inflation over the past three or four years has been higher than we would have wished, SCM Chemicals in my constituency has been extremely competitive? Moreover, it is owned by the Hanson group of companies.
    Mr. Sainsbury: I know that my hon. Friend strongly supports all industry in his constituency. My Department certainly welcomes good news from industry—which we do not hear very often from the doom and gloom experts in the Labour party.

    Regional Policy
    Mr. Ron Brown: To ask the Secretary of State for Trade and Industry when he last met representatives of the European Commission to discuss regional policy.
    Mr. Leigh: On 25 April.
    Mr. Brown: Obviously, I am not a fan of the European Commission. Will the Minister tell us, however, when RECHAR funds will be used to help Britain's mining communities? Will those funds provide direct and immediate relief, and will they be separate from any additional grants that may be available from either the EEC or the United Kingdom Government?
    Mr. Leigh: I assure the hon. Gentleman that additionality will apply. What that means, in plain English, is that the funds that we receive make a real difference—that public spending is higher than it would otherwise be.
    It is true that Commissioner Milian wants more transparency in the arrangements. On 25 April, we held a very helpful and constructive dialogue with him. Our officials are proceding on the basis of those discussions, and we hope to reach a final agreement soon.
    Mr. Ian Taylor: Has my hon. Friend noted that all the contributor nations to the European Community budget have said that they would not fund more substantial structural, and therefore regional, funds to other countries in the Community that might need them if there were too rapid a move to a single currency? Although we would not eliminate the possibility that in the long term a single currency might arise, does my hon. Friend agree that that would mean that any party in Britain that advocated increased structural funds would effectively be making an extra expenditure commitment? Therefore, is that not what the Labour party is doing?
    Mr. Leigh: My hon., Friend is tempting me into dangerous territory for a junior Minister when he talks of European monetary union and so on. Being a junior Minister is a little like being a lower order batsman—the wicket is a bit difficult so perhaps I should put a dead ball on this one. However, I cannot resist saying that we give £1,800 million a year in structural funds, we receive about £900 million back in grant and we receive £600 million a year rebate under Fontainebleau. Therefore, on a Europewide basis, we give to the structural funds some

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    £300 million a year. When Opposition Members talk in facile terms about moving quickly to a single currency, they should bear it in mind that we already give £300 million a year and that an immediate single currency would result in a substantial increase in what we contribute to structural funds.
    Mr. Pike: When the Minister meets representatives in Europe, how does he explain the fact that the Government have so neglected the manufacturing regions of Britain over the past 12 years that investment, jobs and output in the north-west are, in constant terms, 30 per cent. lower than in 1979?
    Mr. Leigh: I do not know by what extraordinary statistical device the hon. Gentleman reached that result. Over the three-year public expenditure survey round the Government are giving £567 million in regional selective assistance, for which I am responsible. To argue that the Government do not care about the regions when they are giving that much money—probably as much as they would be allowed to give by the Commission—is absurd. The Opposition have to answer the question whether their regional policies would be allowed by the Commission. They would not. Investment, output and productivity are all considerably higher than in 1979.

    Mergers
    Sir Michael Neubert: To ask the Secretary of State for Trade and Industry what attention he pays to the degree of state control when deciding whether to refer mergers to the Monopolies and Mergers Commission.
    Mr. Lilley: I restated the Government's policy towards mergers, as I said earlier, on 12 June.
    Sir Michael Neubert: Does my right hon. Friend accept my assurance that, in paying close attention to the degree of state ownership or state control of foreign companies or others making takeover bids, he is seen as exercising entirely proper concern for fair competition and the need to avoid nationalisation by the back door? Will he accept that the British people have no more liking for imported socialism than they have for the home-grown variety?
    Mr. Lilley: My hon. Friend puts it very well. Our privatisation programme has proved the superiority of competitive private enterprise over state monopoly ownership. That is why we encourage the private sector and are against the extension of the state sector, whether it be from home or abroad.
    Mr. Salmond: Given the recent announcement, is the Secretary of State prepared to reconsider the case for the referral of British Steel's activities to the Monopolies and Mergers Commission? Has he discussed such a possibility with the Secretary of State for Scotland? Given that and so many other important questions that need to be asked about the Secretary of State for Scotland's role in the steel industry closures in Scotland, is not it disgraceful that that right hon. Gentleman will not be attending the debate tomorrow because he is too fully occupied having strawberries and cream at Holyrood Palace?
    Mr. Lilley: That was a typically pathetic riposte at the end of the hon. Gentleman's question. The hon. Gentleman would debilitate Scottish industry if he got the chance by subjecting it largely to state ownership. The gist
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    of this question is that we should be protected from state ownership where we can. I am sorry that the hon. Gentleman thinks that state ownership is the answer to all his problems.
    I make the decision about referrals to the MMC after taking advice from the Director General of Fair Trading. On the general well-being of British industry, when it refers to Scotland, I discuss it with my right hon. Friend the Secretary of State for Scotland and we deal with those matters together.
    Mr. Conway: Will my right hon. Friend remind the House at what level such mergers must be referred to the European Community? Does not the low level that has been set show how much sovereignty has passed from the House to the continent?
    Mr. Lilley: My hon. Friend is quite correct. We faced a dilemma. Under the treaty of Rome, the Community could intervene after we made monopoly and merger decisions. We therefore faced double jeopardy. We think that it is better for mergers of 5 becu or more to be handled by the Community and for those below that figure to be handled by national Governments. Logically, there is no need for Community interference, as a Europewide monopoly would be a monopoly in at least one member state. As we started from the position written into the treaty of Rome, the present arrangements are very much better than the double jeopardy arrangements and are a satisfactory second best.

    Local Businesses
    Mr. Matthew Taylor: To ask the Secretary of State for Trade and Industry what schemes his Department has sponsored in the Truro and St. Austell area to aid local business.
    Mr. Leigh: Business in the Truro and St. Austell area can benefit from a wide range of Department of Trade and Industry schemes.
    Mr. Taylor: The Minister will know that I have frequently pressed for the reintroduction of assisted area status for Truro and St. Austell. Many jobs are being lost at both ends of the constituency because of the economic mess that the Government have got themselves into. They have repeatedly said that they will review the boundaries only after a general election. Given that economic mess, and as the Government have postponed the election, may we at least proceed with the review to offer some hope to local businesses?
    Mr. Leigh: Most objective observers recognise that it would be unwise to tamper with the assisted area map before the general election. Some areas could be included on the map and some could be removed from it, and perhaps the St. Austell area should be included. However, it would be unwise to make boundary changes before the general election.
    I recently visited the Indian Queens estate, which is close to St. Austell and is in an assisted area. Businesses on the estate are eligible for regional selective assistance and regional enterprise grants, and a raft of other Department of Trade and Industry schemes are available to the hon. Member's constituents. As the hon. Gentleman knows well from our correspondence on the point, I am discussing with the Department of the Environment

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    derelict land grant which would be of considerable benefit to his constituency. I assure him that I am doing everything in my power to help his constituents.
    Mr. Knapman: Does my hon. Friend agree that that typical supplementary question shows why Truro urgently needs a Conservative Member of Parliament? Is not it time that the hon. Member for Truro (Mr. Taylor) realised that free trade and level playing fields are the way to bring prosperity to Truro, St. Austell and everywhere else?
    Mr. Leigh: My hon. Friend is quite right. Cornwall has led the world in free enterprise. The hon. Member for Truro (Mr. Taylor) is out of tune with his constituents, and I have no doubt that his Conservative opponent, Nick St. Aubyn, who is an excellent man, will be elected at the next election.

    Inward Investment
    Mr. Robert G. Hughes: To ask the Secretary of State for Trade and Industry if he will make a statement on Britain's recent record in attracting inward investment from the Federal Republic of Germany.
    Mr. Leigh: According to figures just published by the German economics Ministry in Bonn, direct investment in the United Kingdom by German companies in 1990 amounted to £1·9 billion.
    Mr. Hughes: Does my hon. Friend agree that that welcome figure is further proof of the enormous attractiveness of the United Kingdom's business climate, which has been achieved as a result of Government policies? Is that a one-off figure or does it represent a growing trend of inward investment from the Federal Republic? Does he agree that that figure and the performance of this part of the economy would be ruined by the destructive policies of the Labour party?
    Mr. Leigh: Figures compiled since 1952 show that German companies have invested some £7·6 billion in this country. Remarkably, half that investment has been made in the past three years. In 1990, we received no less than 18·6 per cent. of all German foreign investment. If the doom and gloom merchants on the Opposition Benches are so right in saying that the economy is in a mess, why are we the No. 1 location for inward investment in the world and the favoured nation for German investors?
    Mr. Batiste: Is it not clear that German investment in Britain merely reflects a worldwide pattern and that similar trends can be seen in America and Japan? is not the Government's record of creating stable industrial relations and low taxation over the past 11 years the essential ingredient in ensuring that that pattern continues?
    Mr. Leigh: Yes, we are indeed the preferred location for inward investors from Japan and America, and that is a two-way process. Although about £7·8 billion has been invested in this country, we have invested £16·6 billion abroad, which shows the strength of our manufacturing base.
    Mr. Skinner: Is there not another side to the issue? In the past three or four months West Germany has run into balance of payments difficulties because of its takeover of East Germany. Under the system of economic and monetary union of which we are now a part because of the
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    Common Market, shall we not end up using British taxpayers' money to bail out the East German mess that the West Germans have taken over?
    Mr. Leigh: I cannot speak for the hon. Gentleman's colleagues, but I have no intention of doing that. I am sorry to disappoint him, but investment from Germany is running at a very good level. That may be disappointing news for the hon. Gentleman, but it is the truth.
    Mr. Favell: Could I take up the point made by the hon. Member for Bolsover (Mr. Skinner) whom I just failed to beat in the 1979 election? I remind my hon. Friend that in the 1975 manifesto issued by the pro-marketeers, those voting yes were assured that the threat of a movement of the Common Market towards an economic and monetary union had been removed and that that threat, according to the manifesto, would have restricted industrial growth and would have affected jobs. Is not it now clear that fixed exchange rates do exactly that, and it is as true now as it was in 1975?
    Mr. Leigh: My hon. Friend knows my views on these matters. I have full confidence in the ability of the Chancellor and the Prime Minister to negotiate successfully.

    Tendering
    Mr. Trimble: To ask the Secretary of State for Trade and Industry whether he has made representations recently to any other EC Governments concerning tendering for supplies to the public service of such Governments.
    Mr. Redwood: The Government are very keen to see compliance with all European directives by all member states. I have not made any representations recently, but the Department of Trade and Industry has a compliance unit which is very willing to help individuals and companies with compliance problems in any of the 12 member states. If the hon. Gentleman has a specific query, we shall of course take it up for him.
    Mr. Trimble: May I draw the Minister's attention to the Irish Republic's Local Authorities (Combined Purchasing) Act 1939 under which the Government of the Irish Republic can insist that all goods supplied to the public service must be manufactured in Ireland and to the notes for tenderers which require the country of origin to be correctly described and even insist that Northern Ireland must not be described as Ireland? Does he agree that that gives suppliers in the Irish Republic an unfair advantage? Would not an appropriate temporary counter measure be to exclude it from tendering for public service contracts in the United Kingdom until it complies?
    Mr. Redwood: Such a course of action would not be right and it would be illegal under the directive that sets out the clear obligations of this country and of all the other member states. If the hon. Gentleman believes that there are cases of discrimination in the Republic of Ireland against good offers by companies from other member states he should bring them to the Government's attention and we shall make any necessary representations on behalf of his constituents or of the companies involved.
    Mr. Cash: Does my hon. Friend know that British Reinforced Concrete in my constituency was closed down

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    last week because of a massive acquisition of its market share by a German company which also contributed to the closure of and loss of jobs in the Rugby Portland Cement subsidiary? Does he also know that there was a massive £75 million contract available to put security fencing around a Ministry of Defence establishment in Germany and that the Property Services Agency suggested that the British company came to see me because it was quite clear that there was no point in its attempting to get that contract because it had been going to a German company from the beginning? Will he examine that matter, and will the Government please do something to help British industry in that respect?
    Mr. Redwood: Of course I will look into that matter for my hon. Friend. If it is a contract governed by either the works or the supplies directive, the German authorities must comply with it. The Council of Ministers recently agreed compliance directives to enforce the works and supplies directives because of the concerns of my hon. Friend and others. The Government are determined that if it is fair that it is opened up here, it is fair that it is opened up there as well. That is why we have a compliance unit and that is why we will willingly take up any case about which hon. Members have good evidence to help us.

    Manufacturing Industry
    Mr. McMaster: To ask the Secretary of State for Trade and Industry when he next expects to meet his European counterparts in the EC Industry Council to discuss support for manufacturing industry.
    Mr. Redwood: My noble Friend the Parliamentary Under-Secretary of State for Industry and Technology will be attending the meeting of the Industry Council on 18 November. The agenda for this meeting has not yet been fixed.
    Mr. McMaster: Will the Minister explain to his European counterparts why, at this time of huge trade deficit, the Government provide less support to British exporters, especially in terms of export credits, than many other European countries provide for their exporters? Is he prepared to sit back, to watch that happening and to let our trading position get worse and worse, or will he do something to help British exporters?
    Mr. Redwood: As the hon. Gentleman should know, Britain's trade position has been improving over the past year. Exports have been rising and have been at record levels in many sectors in recent months. That is welcome. There is a comprehensive series of services to exporters from the Department of Trade and Industry and the Export Credits Guarantee Department. My hon. Friend the Minister for Trade is active in promoting the interests of all our exporters.
    Mr. Forman: In all future meetings with his EC counterparts, will my hon. Friend the Minister and his right hon. Friend the Secretary of State take steps to ensure that the things that deserve protection in Britain are protected? I am thinking of the valiant stance that has already been taken to safeguard the mile, the acre and the pint.
    Mr. Redwood: Willingly I pledge that. I assure the House that Ministers in the DTI are extremely keen to stand up for British interests in the EC and we do so regularly.
    Dr. Moonie: One subject that does not appear to have exercised the Minister's mind in his discussions with his European counterparts is the Scottish steel industry. Given that he has had the report of the Select Committee for several months, given that he has done nothing in that time and given his refusal to meet hon. Members whose constituencies are affected by the closures, will he tell the House how many lost jobs in the steel industry in Scotland are acceptable to him? What does the "Department of Enterprise" intend to do about it?
    Mr. Redwood: I do not like the loss of any jobs, but I want a competitive and vigorous industry, run by people who know what they are doing—the managers and directors of that business. There will be an opportunity to discuss that issue in the House later this week when I am sure that hon. Members will be able to put their points more clearly.
    Mr. Tim Smith: When my hon. Friend meets his counterparts in the Industry Council, will he make it clear that the support that the French Government have given to their nationalised industries is totally unacceptable? Is not it time that we had an EC directive on privatisation, requiring countries to denationalise companies that have no place in the public sector?
    Mr. Redwood: That is a delightful idea, but there might be a few difficulties in negotiating it with some of our partners. As to subsidies and state involvement in nationalised industries, and the pursuit of anti-competitive practices, of course the Government regularly take up those matters with the Commission. There is an active Commissioner in Brussels who is exercised about those concerns. Indeed, recent cases have raised the issue of French intervention and subsidy for industry. The French Government are finding that some of their practices are not legal under the treaty and are being asked to roll them back.

    Telecommunications
    Mr. Hain: To ask the Secretary of State for Trade and Industry what estimate has been made of the United Kingdom's share of the European and world telecommunications markets and of the prospects until the end of the decade.
    Mr. Lilley: In 1989, the United Kingdom's share of the western European and world markets for telecommunications equipment was approximately 13 per cent. and 3 per cent. respectively. No specific projections are available for the rest of the decade, but United Kingdom exports have more than doubled over the past five years. That trend should continue.
    Mr. Hain: I am not surprised that the Secretary of State is unable to give any forecasts, because he has effectively given a blank cheque to American-dominated cable television companies to compete on the local loop of the telecommunications network, while denying British Telecom and other United Kingdom telecommunications operators equivalent access to the American network.

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    Why is he not insisting on reciprocity, or is he willing to perpetuate that discrimination and allow Britain to fall from the first to the second division of the world telecommunications market?
    Mr.Lilley: I have pressed the American authorities vigorously for complete liberalisation, to allow our companies to bring their skills and expertise to the benefit of the American telecommunications network. Meanwhile, I am not prepared to cut off our nose to spite our face by shutting the door on investment from overseas.
    The hon. Member may be referring to today's announcement by Sir Bryan Carsberg, which I fully support, that he seeks to ensure that new providers of local telephone services will not be impeded by the access deficit contribution, and that the terms of British Telecom's licence will be changed to enable new companies to come in and provide local services—with the extra competition, newer services and lower prices which that has always meant. We entirely reject the Labour party's policy of renationalisation.
    Mr. Wells: After that welcome announcement, can my right hon. Friend tell me how an increase in competition will result from what the Director General of Oftel has told us today?
    Mr. Lilley: Yes. Sir Bryan has said that he will seek a change in BT's licences so that he will have the right to waive the contribution that might otherwise be required from companies competing in the introduction of new telephone services, such as local calls, cable television services, PCN—personal communication network—services, and other mobile services. That will enable companies to build up in the early stages without the adverse effect that the charge might have had. When companies are fully established they will have to pay the charge and the contribution to the existing BT network. This will be widely welcomed by all those who value competition, who want to see choice and who welcome lower prices.

    Footwear and Textiles
    Mr. Vaz: To ask the Secretary of State for Trade and Industry if he will make a further statement on Government assistance to the footwear and textile industries.
    Mr. Sainsbury: Companies in the footwear and textile industries are eligible for, and have received, assistance under a range of Government schemes.
    Mr. Vaz: Does the Minister realise that his answer will give no comfort to those who run our textile and footwear industries, or to those who work in them? Is he aware of the huge job losses that have occurred in those two industries in the past six months, and that cities such as Leicester—and, indeed, the rest of the east midlands—have been badly hit by the recession? Is the Minister aware that many of those job losses are directly due to Government policies—high interest rates, and Government failure to provide the same kind of assistance as is provided by other Governments to their textile and footwear industries? When will the hon. Gentleman get off his hands and start doing something legitimate to protect the interests of those two vital British industries?
    Mr. Sainsbury: I am aware of the job losses to which the hon. Gentleman refers and those are, of course, always a matter for regret. The textile industry, like other industries, has been suffering from recession, but the hon. Gentleman will also be aware that some job losses are attributable to investment in the industry, which is increasing the productivity and competitiveness of the industry and, indeed, has contributed to a successful export record. Exports of textiles and clothing increased by 12 per cent. to £4·6 billion worth in 1990. The industry deserves congratulation on that performance.
    Several Hon. Members rose—
    Mr. Speaker: Order. If the hon. Member for Winchester (Mr. Browne) will take that hat off I shall call him.
    Mr. John Browne: Does my hon. Friend accept that the best assistance that he could give to the footwear and textile industry would be to ensure that customers, especially big notorious late paying customers, pay their bills on time? Rather than castigating the banks for not piling up more imprudent debt for British industry, would he not be better advised to call on companies to pay their bills to the footwear and textile industries more promptly?
    Mr. Sainsbury: I hope that all purchasers in British industry, whether large or small, follow good practice and pay their suppliers at least in accordance with the contract conditions.
    Mr. Cryer: Will the Minister tell us what representations he is making to the European Community to ensure that unfair subsidies such as those given to the textile industry in the Prato region of Italy are brought to an end? The problem has lasted for several years. The Government and the EC seem unwilling to tackle those unfair subsidies in other EC countries. The British textile industry is prepared to compete with any country on equal terms, but that is simply not happening. The situation is extremely unfair and is leading directly to job losses in cities such as Bradford, which I represent, where 14,000 jobs are still directly dependent on the textile industry.
    Mr. Sainsbury: I share the hon. Gentleman's view that the British textile industry is well able to compete on that celebrated level playing field. We energetically pursue any allegations of unfair trading practices through the European Community and we are happy to listen to and follow up any submissions from the industry on those grounds. We also hope that, as a result of a successful outcome of the Uruguay round, there will be stricter rules and disciplines in which the textile industry and, indeed, all industries will have to operate.

    Product Safety
    Mr. Flynn: To ask the Secretary of State for Trade and Industry what discussion he has had with the National Consumer Council about product safety.
    Mr. Leigh: I have met the National Consumer Council and its representatives on several occasions to discuss a wide range of consumer affairs, but product safety has not been raised.
    Mr. Flynn: Is not it curious that some products that are meant to improve health destroy the health of thousands

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    of people? Will the Minister convey to the industry our concern at the deaths that occur every year—not only suicides but many accidental deaths among people who take drugs—especially paracetamol—that are inadequately labelled? The labels are often misleading and in microscopic print. Is that a matter which the Minister could take up, in the interests of saving many lives?
    Mr. Leigh: I know of the hon. Gentleman's concern. He did not say, however, that it is an offence to supply unsafe goods and that, after 1992, all members states will be required to apply high standards of safety. I am prepared to discuss the matter with consumer groups and I should add that we fund consumer groups to the tune of about £19 million a year and take their representations very seriously.
    Mr. Nicholas Winterton: On a point of order, Mr. Speaker.
    Mr. Speaker: No. I will take it later, after the statements.
    Mr. Winterton: I cannot do it after the statements.
    Mr. Speaker: That is bad luck, I am afraid.
    Mr. Winterton rose—
    Mr. Speaker: Order. Will the hon. Gentleman sit down? He is a senior member of the Chairmen's Panel and he knows as well as any hon. Member that points of order are taken after statements. I ask him not to persist.
    Mr. Winterton: Further to the point of order, Mr. Speaker.
    Mr. Speaker: There can be nothing further to it.
    Mr. Winterton rose—
    Mr. Speaker: I ask the hon. Gentleman please to resume his seat.

Northern Ireland (Talks)
3.31 pm
The Secretary of State for Northern Ireland (Mr. Peter Brooke): The political talks which have been taking place at Parliament buildings, Stormont have been brought to a conclusion. I should like to take this opportunity to explain to the House the background to that decision, to describe what has been achieved during the talks and to set out the Government's hopes for the future.
Hon. Members will recall that my statement to the House on 26 March was accepted as a basis for political talks which would address, as part of the same process, relationships within Northern Ireland, including the relationship between any new institutions there and the Westminster Parliament; relationships among the people of the island of Ireland; and relationships between the two Governments. I announced that talks would take place in three strands corresponding to those three main sets of relationships. To allow an opportunity for the wider political dialogue which the four main constitutional political parties in Northern Ireland and the two Governments envisaged, the two Governments had agreed not to hold a meeting of the Anglo-Irish Conference between two pre-specified dates, subsequently confirmed as being 26 April and 16 July. This interval, allowing some time at each end for the Anglo-Irish secretariat to complete the business of servicing one conference meeting and to make preparations to service the next, provided 10 clear weeks for substantive political exchanges. The talks began on 30 April.
It became clear that it would not be possible to launch the other strands of the talks and thus to complete the process as a whole before the end of that interval, and that that was beginning to inhibit our ability to make further substantive progress. After consultation with the leaders of the political parties, I concluded that the talks should therefore be brought to an end. I have also been in touch with the Irish Government to recount my conclusion.
I should now like to take stock of what has been achieved during the talks and of the further prospects for securing constructive political development in relation to Northern Ireland. As the House knows, it did not prove possible to move as rapidly as we had hoped to plenary sessions of the first strand of the talks. A range of new procedural issues had to be resolved. A series of bilateral exchanges succeeded in determining the venues for meetings in the second strand of the talks, arrangements for chairing that strand of discussion, the identity of the chairman and the procedural guidelines which would be observed.
Plenary sessions started on 17 June. After my opening statement, the parties presented their initial position papers, after which the papers were discussed, examined and clarified. Subsequently, during a more intensive schedule of meetings, there was a debate on themes that had emerged from the initial presentations.
The commitment and seriousness of purpose shown by all the parties in these talks is a source of encouragement for the future. The plenary sessions provided the forum for some significant and constructive exchanges among the parties and with Her Majesty's Government on a range of fundamental issues. The nature of those exchanges served to confirm the judgment involved in initiating the talks process that the time is ripe for political talks in relation to
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Northern Ireland that address all the relevant relationships; that the process is of value and has potentially even greater value; that a degree of common ground exists; and that there is a good prospect that a comprehensive political accommodation can be reached. I would like to express my appreciation of the commitment shown by all the participants.
To those who would say, "I told you so—it would never work," I offer the reality of the past few weeks. While I am naturally disappointed at this moment that the current process has to end, foundations have been laid for progress in the future which neither cynics nor the men of violence will be able to undermine.
For myself, I hope that it will prove possible in due course to have further exchanges with the parties, and with the Irish Government, to explore, initially on a bilateral basis, whether we can establish terms on which fresh discussions could be held.
Mr. Kevin McNamara: The whole House will have listened with regret to the statement that the Secretary of State felt that he had to make today. That regret will also be felt by the peoples of these islands and more particularly by the people in Northern Ireland. The only people who will get any sort of consolation from the Secretary of State's statement will be the paramilitaries and, as the Secretary said, the cynics.
I pay tribute to the Secretary of State for the great determination of purpose that he has shown in keeping the talks going in the face of what at times appeared to be insurmountable obstacles. I pay tribute also to the other participants in the talks who were prepared to re-examine cherished positions in order to get the talks going.
At this point the Secretary of State clearly feels that there is little prospect of further progress. Nevertheless, his statement errs on the side of optimism and offers some encouragement for the future. We in the Labour party endorse the Secretary of State's last paragraph.
Despite the optimistic note, the Secretary of State must feel intensely disappointed that, yet again, an opportunity has been lost to secure an internal political settlement in the Province that is acceptable to both communities in Northern Ireland and to the British and Irish Governments. I make it clear on behalf of the Labour party that we have supported and will continue to support the three-strand approach to the talks whatever refinements may have to be made to that. Our view is that this represents the best possible avenue for a lasting and peaceful political settlement within the Province. There is an increasing desire and hope among the people of Northern Ireland, not least among many of those to whom I spoke this morning who were saddened by the fact that I was leaving Ireland to come here to hear the statement, that in the not-too-distant future the Northern Ireland politicians will again feel sufficiently confident and able to reach a settlement.
There are a number of specific questions that I should like to ask the Secretary of State. First, will Sir Ninian Stephen, who manfully agreed to chair the second strand, now be stood down or will he be put on hold for a period of time? Secondly, will the Secretary of State give the House an indication of the positive achievements to come out of the talks so far?
Thirdly, what change in circumstances will lead the right hon. Gentleman to reconvene the talks? Fourthly, will he assure the House that the two Governments will

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maintain the highest possible co-operation in security and other areas in which the two parts of the island of Ireland have a mutual interest and common approach, and that the Anglo-Irish Agreement must still remain the basis of the relationship between the two parts of Ireland, this island and the island of Ireland?
Mr. Brooke: I am most grateful to the hon. Gentleman for his opening remarks and for his remarks about myself and about those colleagues from other parties who participated in the talks and who, as I said when we concluded the talks at Stormont this morning, showed great courage in coming to the talks. The hon. Gentleman referred to the paramilitaries. Throughout the talks, the commitment of all those taking part to carrying forward the talks was noticeable, despite the actions of the paramilitaries.
Although I understand why the hon. Gentleman refers to an opportunity lost, in the time that we eventually had it would not have been possible to do the job with the thoroughness with which everyone would wish to see it done. As I have said, I hope that foundations have been laid for the future.
The hon. Gentleman referred to the three strands. The concept of conducting the talks in three strands has been wholly sustained by the frequency with which, even in the first strand of talks, colleagues wished to raise matters that belonged in the other two.
In answer to the hon. Gentleman's specific questions, Sir Ninian Stephen has, of course, been informed of the course of events. There is no immediate role for him to play in the circumstances that have developed. However, if we were able to make use of his services in the future at some stage, I hope that he would be as willing then to undertake them as he has been so far.
The hon. Gentleman asked me about the achievements of the talks. I have no hesitation in saying that, although exchanges were robust at times, there were also moments when the participants received encouragement from each other's contributions and the manner in which they were made. That was a positive development in terms of looking forward. I do not regard it as appropriate to go into the detail of what was said, not least because it is important to leave the field clear in the hope that these matters might be picked up again in the future. However, I am sure that all the participants would agree that they found good things to take away from some of the discussions.
On the question about reconvening the talks, I have said that I hope that it might be possible for fresh talks to take place, but whether they do so will be a matter for the parties themselves. Of course, I endorse what the hon. Gentleman said about security co-operation.
Mr. James Molyneaux: Is the Secretary of State aware that even in the last few critical days he has retained the confidence and respect of all who participated in the talks? Does he agree that his efforts have greatly enlarged the capacity of the party leaders in Northern Ireland to get together, as they have many times in the past to deal especially with economic and social issues, and that they have got together and co-operated in a way that could not be matched by other party leaders in the House?
Mr. Brooke: I am grateful to the right hon. Gentleman for his opening remarks and accept them on behalf of my
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hon. Friend the Minister of State who also took part in chairing the meetings. I am also grateful for what the right hon. Gentleman said about enlarging the capacity of the parties and the party leaders in Northern Ireland to get together and agree that our mutual and collective experience has enlarged that possibility.
Rev. Ian Paisley: As the right hon. Gentleman has made it clear that, in his opinion, the talks have been helpful and a degree of progress has been made, and as he has implied that if they had continued a greater degree of progress could probably have been made, will he now tell the people of Northern Ireland why, when we were making that progress, the date of 16 July suddenly became sacrosanct?
Also, why was the right hon. Gentleman not prepared to give us injury time? In any other game injury time would have been given. If he is suggesting that he can hold successful talks again by trying to suck the Unionist leaders into compliance with the Anglo-Irish Agreement, or build on a foundation that can be sabotaged, as the foundation of these talks was sabotaged by Dublin, the Unionist leaders can have no part in that.
Mr. Brooke: I understand the emotion that underlies the hon. Gentleman's question, but it would be wrong to say that 16 July was suddenly injected into the process as a firm date. The two Governments agreed earlier this year that, to enable the talks to take place, the conference would not meet between two pre-specified dates. Those dates were subsequently specified as 26 April and 16 July, leaving a clear 10 weeks for the talks. The two Governments' commitment to hold a conference on 16 July has been in the public domain since the last conference on 26 April. Therefore, the conference on 16 July is very much part of the agreed framework for the talks, which was settled before the 10-week period began and was clearly stated in my statement of 26 March.
As for what the hon. Gentleman said about injury time —I understand the nature of that question—I do not think that any of us, in the long period in which we were constructing the statement of 26 March, could have identified all the contingencies that could conceivably have arisen during that period. The hon. Gentleman implied that I was seeking to suck the Unionist leaders into a predicament. He knows, from all the contacts that we have had in the past two years, that I respect the Unionist leaders far too much to imagine that they would be misled in any way by me or would do anything other than what was governed by the principles of their party and the Province.
Mr. John Hume: May I, too, express my deep appreciation of the Secretary of State, the Minister of State and their staff for the intense efforts that they have put into these talks. The Social Democratic and Labour party very much regret that the talks have come to an end, but we recognised the inevitability of that once it became clear that certain parties could not proceed in the talks after 9 July. Once that date was set, it was obvious that the process could not be completed and that strand 2, involving the Irish Government, could not even begin. We also regret that the other parties could not accept our proposition for breaking that deadlock, which was that once we accepted one gap in Anglo-Irish Conferences between 25 April and 16 July, we should have another betweeen 16 July and some date in September or October

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to allow us to continue. I see no change in principle in that. Regrettably, for their own reasons, the other parties could not accept that proposal.
We welcome the exchanges that took place. Many of them were very valuable and differed greatly from exchanges that have taken place in the past. We hope that they can be built on in the future. However, the whole experience has underlined our consistent view that such talks should take place without preconditions of any description because, ultimately, preconditions hang people on hooks.
In the meantime, as the talks have broken down, we must face certain realities. The absence of agreement emphasises the need for both Governments to intensify their co-operation so that there are no vacuums. We wish to express our appreciation to both Governments for all the steps that they have taken to make the talks possible and we hope that they will continue to work together in the same spirit.
Mr. Brooke: I am grateful to the hon Gentleman for his remarks about me and about my hon. Friend the Minister of State. In exactly the same way as the two Governments have held to the rules set out in the statement of 26 March, it is also wholly appropriate that any other participant in the talks should honour and subscribe to those rules. If we are to regard those rules as sacrosanct in the process—it is good that they should be—I wholly understand why any party would want to be governed by them.
During the time when we have been engaged in the talks, all who have taken part agree that it has been a sufficiently supple process to enable us to make the progress that we have. I cannot prejudge what people would say if we explored the idea of resuming talks hereafter.
The hon. Gentleman referred to conducting talks without preconditions. The greater the flexibility, the better—but we shall have to deal with that issue when we come to talk to the parties.
Mr. Peter Temple-Morris: Will my right hon. Friend accept that his patient and worthy efforts have been much appreciated in all parts of the House? Does he agree that for the immediate future it is best to avoid recrimination and to keep his door open to any possibility of building on this undoubted achievement? Last but not least, will he confirm that the status quo continues and that that status quo includes the Anglo-Irish Agreement?
Mr. Brooke: I am grateful to my hon. Friend for his remarks about the talks. I wholly agree that the most likely basis for progress will lie in avoiding recrimination and rancour at this stage. My door will be open; and my hon. Friend was correct about the status quo.
Sir David Steel: It must be rare for a Minister of the Crown to come to the Dispatch Box and report a relative failure—at any rate, a relative lack of positive progress—and yet be met with such universal sympathy, because we all recognise his considerable efforts in these endeavours over the past few months. The leader of the Alliance party in the Province told me this afternoon that the talks had had some of the' positive and encouraging features that the right hon. Gentleman has outlined to the House.
As one who watched the proceedings from this side of the Irish sea, may I tell the right hon. Gentleman that the
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people of Northern Ireland must feel a deep sense of frustration? But they will have the same opportunity as the rest of us some time during the next 12 months to elect representatives to Westminster, and in so doing they will be well advised to look to those who put the urgent quest for peace and prosperity in the Province above the time-wasting and procedural trivia pursued by some.
Mr. Brooke: I very much appreciate what the right hon. Gentleman said about the manner in which the talks were conducted and I thank him for the sympathy that he offered. All who have participated in the talks have been struck and impressed by the interest in them and by the good will shown by people in the Province towards the talks.
It would not surprise me if, after this conclusion to the process, there was continuing pressure from the people of Northern Ireland to see that the talks are carried forward. But it would be quite wrong to suggest that the politicians of Northern Ireland have failed the Province thus far. 'We have been somewhat frustrated by circumstances, but I regard the fact that everyone is encouraged by the progress that we have made as a good omen.
Mr. James Kilfedder: May I urge the Ulster people to look to the future with optimism and not to dwell on the past? I agree with the Secretary of State that the talks provide a reasonable basis for future progress in Northern Ireland. Will he, as one who has shown great perseverance, continue with his efforts to bring about a political rapprochement in Northern Ireland?
Mr. Brooke: I am particularly touched by the hon. Gentleman's remarks. He was present when I made my speech in Bangor on 9 January last year. I know that he feels that I have perhaps not kept him quite as fully informed in the ensuing 18 months as I should have done. I am touched by what the hon. Gentleman said and I totally concur with his optimism.
Mr. Merlyn Rees: The Secretary of State, as ever, has persevered and I join in the congratulations. The bald fact is that the talks have concluded and, to use the expression of the hon. Member for Foyle (Mr. Hume), they have broken down. To aid those of us watching from this side of the water, will I he Secretary of State tell us about the stumbling blocks that he will have to overcome before there can be fresh talks, rather than a continuation of talks?
Mr. Brooke: I am grateful to the right hon. Gentleman for the way in which he phrased his question, because it enables me to clarify a matter.
I do not think that anybody who engaged in the talks would say that they had broken down. The talks were constructed to take place within a specific time. However, we spent much time on procedural matters relating to strands beyond the first one and that left us with inadequate time to address the matter of substance. The talks ended because we ran out of time, rather than because of frustration amongst the parties.
Sir David Mitchell: Is it not significant that each of the party leaders involved in the talks has today praised the role of the Secretary of State in helping to make them possible and in measuring their

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achievements? Has the way in which the talks ended left it possible for a further initiative to be taken later this year to see whether further progress can be made?
Mr. Brooke: I am grateful to my hon. Friend. I hope that what I said earlier makes it clear that any praise about the conduct of the talks applies to all those who participated. My hon. Friend asked whether fresh talks would be possible. It is sensible to wait a few weeks before taking any steps in that direction, but, of course, I shall listen closely for any rustling in the undergrowth.
Several Hon. Members rose—
Mr. Speaker: Order. The House knows that there is a statement on Yugoslavia after this one, and there is considerable pressure on the two debates that will follow. I shall take two more questions from each side. [HON. MEMBERS: "No."] Order. I have to balance the time that I can allow for this statement against other business of the House. [Interruption.] Order. I hope that Ulster Members will understand when I say that, as I have called the leaders of the Northern Ireland parties, I propose to give an opportunity to other Members of the Parliament of the United Kingdom to ask questions.
Mr. Tony Benn: Is the Secretary of State aware that the good will expressed to him personally does not alter the fact that his announcement is another setback in a long series of attempts to bring peace to Ireland? There has been partition, Stormont, direct rule, power sharing, internment without trial, strip searching, plastic bullets, the Diplock courts, and the Anglo-Irish Agreement, none of which has brought the peace that we were told each one of them would bring. There are 12,000 British troops, 8,000 members of the Ulster Defence Regiment and 12,000 armed policemen in Northern Ireland. We are engaged in a civil war in Ireland. We are about to hear a statement on Yugoslavia. It is time that we learned the lesson that the rest of the world knows, which is that the problem in Northern Ireland is a British one and not an Irish problem in the United Kingdom.
Mr. Brooke: The right hon. Gentleman recited a litany of past events. In the context of developments in the Province I do not take the right hon. Gentleman's apocalyptic view. Those of us who took part in the talks did not make extravagant claims about what would happen in the context of peace. We were not engaged in a peace conference. The difference between the talks in which we have been engaged and some of the past events about which the right hon. Gentleman spoke is that the parties in Northern Ireland that participated in those talks will, I hope, have been sufficiently encouraged by the course of events to contemplate carrying matters forward at some future stage. I do not regard the conclusion of the talks as a setback in the way that the right hon. Gentleman did. In passing, may I say that he exaggerated the size of the security forces?
Mr. Ivor Stanbrook: While I commiserate with my right hon. Friend on what one hopes is a suspension rather than the ending of these talks, may I ask him to confirm that no blame should be imputed to any of the political parties in Northern Ireland? After all, what other country grants to its neighbour the right to meddle
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in its domestic affairs? Is it not the case that it was within the power of the Irish Republic to lift the obstacles to the continuation of the talks—the 16 July meeting? Why did it not do so?
Mr. Brooke: I certainly concur with what my hon. Friend said about no blame attaching to any of those who participated in the talks. As to the conference on 16 July, that was a clear fixture, which was established in the minds of everybody taking part in the talks, not only when I announced them on 26 March but when I specified the date on 26 April.
Mr. Dennis Canavan: Does the Secretary of State accept that if further talks on the future of Northern Ireland are to have any chance of success, it would be better to state honestly at the outset the ultimate objective and the means of achieving it? As the choice is basically between two mutually exclusive objectives—the preservation of the unity of the United Kingdom and the restoration of the unity of Ireland—should not the means of deciding and determining the achievements of the objective be the democratic consent of the people of 32 counties rather than of six counties?
Mr. Brooke: The objective with which all those taking part in the talks were concerned was to address a series of relationships specified in my statement on 26 March. It has consistently been the view of the Government that we need to find workable and durable arrangements and, in particular, ones capable of enjoying widespread support. I have the advantage over the hon. Gentleman in having heard the exchanges among the parties, and I continue to be impressed by them, in that each of the two traditions understood the position of the other.
Mr. Michael Latham: If these talks were so robust and constructive, and made as much progress as my right hon. Friend encouragingly stated, can he explain to the House, because some of us are feeling exasperated as we listen, why the politicians locally just cannot go on talking?
Mr. Brooke: My hon. Friend will recall that, when we set out the basis for the talks in my statement of 26 March, we set out the ground rules that had been hammered out among all the parties over a considerable time and which all of them were able to endorse and sustain. I hope that if I approach the parties a little later this year about the possibility of entering talks again, of starting fresh talks, I shall receive the same warm welcome as on the previous occasion. We shall need to renegotiate the basis on which we do so. All those who have taken part in the talks so far think that we may wish to vary some of the elements of procedure.
Several Hon. Members rose—
Mr. Speaker: Order. 1 remind the House that next Thursday we shall have Northern Ireland questions, and that there may be a further opportunity on the Consolidated Fund Bill, which we shall debate before the recess, for this matter to be raised again.
Statement—Mr. Secretary Hurd.
Mr. Nicholas Budgen: On a point of order, Mr. Speaker.
Mr. Henry Bellingham: On a point of order, Mr. Speaker.
Mr. Speaker: Order. The hon. Member was here when I had my altercation with the hon. Member for Macclesfield (Mr. Winterton). I shall take points of order later.
Several Hon. Members rose—
Mr. Speaker: Please sit down.
Rev. Ian Paisley: On a point of order, Mr. Speaker.
Mr. Speaker: Order. I will take points of order after the statements. I will not take them now.

Yugoslavia
4.4 pm
The Secretary of State for Foreign and Commonwealth Affairs (Mr. Douglas Hurd): With permission, Mr. Speaker, I will make a short statement about the position in Yugoslavia, which remains dangerous. It seemed that this morning events in Slovenia and Croatia were escalating out of control, and the army is no longer under the effective control of the political authorities.
A large number of armoured vehicles left Belgrade early this morning, moving towards Croatia and Slovenia. There can be little doubt that the Yugoslav army, or at least some of its senior commanders, are intent on further military action against Slovenia. This action disregards international opinion and overturns the ceasefire agreement negotiated over the weekend by the two EC troika missions, and it undermines the efforts of the federal authorities themselves.
Yesterday afternoon, the newly appointed President of Yugoslavia, Mr. Mesic, proposed a five-point plan, consisting of an immediate ceasefire, the withdrawal of the forces on both sides to barracks, the release of prisoners, the establishment of conditions for a long-term ceasefire and the involvement of the conference on security and co-operation in Europe observers. That was accepted by the Slovene authorities.
Since earlier this morning, there has been intense further diplomatic activity to prevent further bloodshed. I have several times today spoken to the German Foreign Minister, who attempted to mediate yesterday, and I have also spoken to the Dutch Foreign Minister who holds the presidency of the EC. I have spoken to the President of Yugoslavia, President Mesic in Zagreb, and the Foreign Minister of Slovenia in Ljubljana, who urged me to mobilise all possible diplomatic pressure to prevent a further military movement against Croatia and Slovenia.
I then telephoned the Yugoslav Foreign Minister, Mr. Loncar, and told him that the use of force would bring disaster on Yugoslavia. He told me that he and the Yugloslav Prime Minister, Mr. Markovic, who are still in Belgrade, were trying to negotiate with the army and the Slovenian authorities to breathe new life into the five-point plan agreed yesterday. I have sent a message to the Yugoslav Defence Minister, calling on the armed forces to exercise restraint. We are in direct touch with the Americans, French and others, including about the possibility of an early meeting of the Security Council. Senior officials of the CSCE are meeting in Prague today to consider further steps, in particular the arrangements which would be needed to underpin a ceasefire and military disengagement, as soon as the situation on the ground permits this.
To sum up, Yugoslavia's problems cannot be resolved by force, and further military action will lead inevitably to widespread bloodshed. The army cannot hold Yugoslavia together in this way. Indeed, it has accelerated its disintegration. The old system is in an advanced state of decay and cannot survive. It may no longer be possible to hold the whole country together, though it is equally hard to see how the dismemberment of Yugoslavia could be brought about by peaceful means. In the end, the peoples of Yugoslavia, not outside powers, will decide on their relationship with one another, but certainly the necessary discussion on the country's future cannot resume until he

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military return to their barracks and place themselves once again under full civilian control, as in all democratic countries. I appeal to them to desist from a military adventure which is bound in the end to be disastrous.
Mr. Gerald Kaufman: I thank the Secretary of State for his statement and welcome the actions that he has been taking to try to help to resolve this serious crisis.
The Opposition welcome the action being taken to ensure the safe departure of United Kingdom holidaymakers and other nationals from Yugoslavia and we ask if the House could be kept informed on those actions.
Does the right hon. Gentleman agree that any solution to the crisis and any long-term solution for the aspirations of the peoples and nationalities of Yugoslavia should be based on negotiation and consent and not on unilateral action on anyone's part? There can be no justification for the Yugoslav army to take action unless in response to a clear and immediate military threat, which plainly does not exist. In any event, the army must always act under the orders of the civilian power, and not unilaterally. Unilateral action amounts to a military putsch, and cannot be labelled a restoration of order. As the right hon. Gentleman has said, it is essential that the positive proposals of the Yugoslav President, and the efforts of the Prime Minister, be given a chance to work.
I welcomed what the right hon. Gentleman said about the possibility of a meeting of the Security Council. In the light of any such meeting, would the Government consider proposing the invocation of article 34 of the United Nations charter, under which the Security Council
"can investigate a dispute which might lead to international friction … in order to determine whether the continuance of the situation is likely to endanger the maintenance of international peace and security"?
We also hope that continual efforts will be made by the European Community troika, and that something may result from the meeting in Prague today of the officials of the conference on security and co-operation in Europe.
This crisis could not only engulf Yugoslavia, but threaten the stability of the Balkans and areas well beyond that. We must stand ready to do all that we can to help to resolve it. Peaceful reform, not violence, must determine the future of Yugoslavia.
Mr. Hurd: I agree with the right hon. Gentleman's comments. British holidaymakers have now been advised to leave all parts of Yugoslavia; I think that that is in the interests of safety. I re-read article 34 this morning, and, to my untutored eye, it seems apt for the occasion. There is also a possibility that the Yugoslav President himself, Mr. Mesic, might invoke a meeting of the Security Council.
Several Hon. Members rose—
Mr. Speaker: Order. I will allow questions on the Foreign Secretary's statement to continue until 4.30; we shall then move on to the next two debates, which are time-limited.
Mr. David Howell: Can my right hon. Friend confirm the truth of a Reuters report that EC Foreign Ministers are considering recognising the
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independent status of Slovenia and Croatia—or are threatening to do so—unless the Belgrade war machine is halted?
My right hon. Friend speaks of the old system in Yugoslavia not surviving, and of its being full of decay. That is entirely right. It is absolutely vital to ensure, in all the encouragement and support that we give, that the bloodshed is at least limited. We must show that our minds are on the ability of these independent democratic republics to come together in their own freely formed confederation or federation, rather than being ruled by a bankrupt and out-of-date dictatorship.
Mr. Hurd: At the moment—I say, "at the moment" —the two republics do not satisfy our criteria for recognition, but, obviously, we keep an eye on that all the time. I entirely agree with my right hon. Friend's second point.
Sir Russell Johnston: Does the Foreign Secretary agree that we are witnessing in Slovenia the same old-style, brutal communist repression that we saw in Budapest, Prague and Berlin? Does he accept that the Minister of State was mistaken when he told me on 22 May, here in the Chamber, that the European Community really had no role in Yugoslavia? Have not both the United Kingdom and the European Community collectively failed properly to work out a democratic and effective response to events in Yugoslavia that were forecast for quite a long time?
Finally, may I take up the point made by the right hon. Member for Guildford (Mr. Howell)? Does the Foreign Secretary recall that the referendum in Slovenia produced a 90 per cent. figure in favour of independence, and that there was a similar result in Croatia? Will he promise us that he will recommend our EC partners seriously to consider directly recognising the Slovenian and Croatian claims for independence?
Mr. Hurd: I think that the hon. Gentleman has it not quite right. It is not for the European Community to do as he said and devise a political structure for Yugoslavia. It is a European country bordering on the frontiers of the Community and it—or a large part of it—is in danger of being submerged by a military force outside constitutional control. It is also in danger of settling into a period of civil conflict and bloodshed. It is perfectly right and reasonable that, in those circumstances, the European Community should see whether it can help. It has helped. It has brought together the framework of an agreement which all concerned have accepted in principle, although it has not so far worked fully on the ground. However, that is reason not for desisting but for carrying on, while not exaggerating the role that we can play.
Mr. John Biffen: I believe that, throughout the House, there will be widespread applause for the calm and prudent manner with which my right hon. Friend the Foreign Secretary is addressing this problem. The applause will be all the greater because we realise what real limitations there are on this country or our Community partners in trying to influence events within Yugoslavia. I particularly welcome my right hon. Friend's proposition that it is not within our competence to devise a political structure for that country. However, in the spirit

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of diplomatic courtesy, will my right hon. Friend leave with the civil and military authorities in Belgrade the time-honoured words of Charles Stewart Parnell:
"No man has a right to fix the boundary of the march of a nation"?
What is sought in equity by Slovenia today will be sought by Croatia, Lithuania, Latvia, Estonia and all those who rebel against the authority of the super-state.
Mr. Hurd: As my right hon. Friend said, I am well aware of the limitations on what we can do. We are all extremely anxious about the immediate situation. I am also anxious about the prospect of Yugoslavia settling into a sort of violent anarchy, with the villages and towns in which different communities live side by side breaking out in spasmodic violence. That future would be grim indeed. Therefore, although we cannot devise a future for Yugoslavia, we can help. We have been asked by Yugoslavia—I was asked again this morning by the President of Yugoslavia—to see what we can do to help create a pause and bring together those who alone can find the answer.
Mr. Ken Maginnis: I was interested in what little content there was in the Secretary of State's statement. Will he clarify whether the Foreign and Commonwealth Office has now abandoned the shabby and duplicitous policy that he helped to contrive and implement in relation to Northern Ireland when he was Secretary of State for Northern Ireland? Will he clarify whether he now believes in the right of peoples to self-determination and the impropriety of interference from outside countries?
Mr. Hurd: I do not think that the parallels are particularly close, and I have no more reason to regret the decisions and policies that the Government followed four or five years ago than I have to regret the excellent policies now being pursued by my right hon. Friend the Secretary of State for Northern Ireland.
Sir Peter Blaker: May I add my congratulations to my right hon. Friend on the way in which he is addressing this difficult and dangerous problem? Does he see any role for the Western European Union—for example, in an observer capacity?
Mr. Hurd: One of the things that is being considered is whether, if there were a ceasefire, we could help in observing and thus to maintain it. I do not think that we can ask European observers from the Community or the WEU to go in until there is a ceasefire. Once a ceasefire were agreed, it might be perpetuated with the presence of observers, and I agree that the WEU might be the right place to organise that.
Mr. Tom Clarke: Does the Secretary of State agree that, whatever happens henceforth, human rights are of the utmost importance? He referred to the agreement about the release of prisoners. Who was involved in that agreement, and what are the circumstances, as he knows them, of the prisoners?
Mr. Hurd: The agreement was reached last night in Ljubljana by the President of Yugoslavia, Mr. Mesic, and the Slovenian authorities. One of the points under consideration was the release of prisoners. As a result of skirmishes in the past few days, I imagine that many people from either side are being held.
Mr. William Powell: May I congratulate my right hon. Friend on his bold decision to talk on the telephone this morning to the Foreign Minister of Slovenia —a state that is not recognised, either de facto or de jure, by this country? Does he recall any precedent for Her Britannic Majesty's Principal Secretary of State for Foreign and Commonwealth Affairs speaking to such an official? In the circumstances, will he continue to keep under review Britain's recognition of Slovenia and Croatia —two provinces that are western, Roman Catholic and Austrian and Venetian in origin?
Mr. Hurd: I have spoken to many interesting and admirable people who are not Foreign Ministers of countries that we recognise. I spoke to Mr. Rupel yesterday and this morning; both were useful conversations. On my hon. Friend's serious point, we keep that under review.
Mr. Ken Livingstone: Does the Foreign Secretary agree that the unsympathetic response of western Governments to Slovenia's declaration may have encouraged the Yugoslav military to think that they could proceed without resistance from the west? The right hon. Gentleman spoke of "disaster" if force were used. Is he making it clear to the House that there will be firm and total economic sanctions if the Yugoslav army proceeds into Slovenia and creates the mayhem that we all fear?
Mr. Hurd: I do not think that the hon. Gentleman can sustain the first point. We have always made it clear that, in our view, the problem cannot be solved by the use of force. Everything that Britain, the United States and other western countries have said has included and stressed that point.
The hon. Gentleman is moving ahead a bit fast in his second point. If the whole of Yugoslavia were to fall into the hands of, shall we say, colonels, that would create a different situation in which the hon. Gentleman's point would have to be considered.
Mr. John Gorst: Does my right hon. Friend agree that much of the problem in Yugoslavia relates to the intransigence of Belgrade? In view of that, will he reconsider the policy of the Foreign and Commonwealth Office on Yugoslavia and regard the federation as an unworkable proposition?
Mr. Hurd: I said in my statement that the present structure has decayed past saving. I am sure that that is true. Equally, I am reluctant to imagine that the only future for the peoples of Yugoslavia is a series of small states quarrelling with each other, trying to invoke others in their quarrels and all depending in one way or another on the west for economic support. There must be some relationship—some effective working relationship—between those peoples, but only they can work it out, and they will have to do so on a quite different basis from the one that is now disintegrating.
Mr. Peter Shore: What part does the Foreign Secretary think that the conference on security and co-operation in Europe can play in this affair? Further, has he had exchanges or contacts with the Soviet Union?
Mr. Hurd: Yes, we have had exchanges at official level with the Soviet Union, which obviously is important in this matter. The CSCE emergency meeting of senior

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officials in Prague has just finished, but I do not have an account of what occurred. It has given those concerned an opportunity to make their views known to the Yugoslays, who once again were put under the responsibility of explaining what is happening. I do not know what further can be achieved under the CSCE machinery, which is why we are not relying exclusively on it.
Sir Michael McNair-Wilson: On what terms of reference is the EC troika of Foreign Ministers operating and to whom is it answerable? Is its intervention considered to be an EC foreign policy intervention with the unanimous support of all 12 members, or have individual states the right to express a view contrary to that of the three gentlemen?
Mr. Hurd: It was agreed unanimously on Saturday in Luxembourg by the Heads of State and of Government that the three Foreign Ministers should go. Their remit was set out, discussed and agreed. They have twice achieved a bringing together in principle of the main leaders involved, but the writ or authority of those leaders does not operate fully on the ground. There is no difficulty or doubt about the remit of the EC troika which has our full support in that respect. There is no question of majority voting or of people being outvoted or disgruntled —it is something to which we all set our hands.
Dr. Kim Howells: Does the Secretary of State agree that the Yugoslav peoples, on the verge of having killed the devil of Stalinism, are now in danger of discovering the devil in themselves, and that the chief characteristic of that devil is a notoriously violent nationalism? We must be careful that we do not regard Serbian nationalism as somehow entirely different from that of Croatia and Slovenia. We must handle it with extreme care. I am glad that so far the Government have done so, but we must be aware of that characteristic of the Yugoslav area.
Mr. Hurd: We have learnt that one cannot suppress nationalist feeling or force it into a framework against which it revolts. However, we have also learnt the hard way in Europe this century that, if nationalist feeling is let rip and if there is no attempt at conciliation or no attempt to prevent that feeling getting completely out of hand, the result is continuous strife. We have solved that problem in the western part of our continent. Now that communism is out of the way, the great question for eastern and part of central Europe is whether they too can find a way of allowing nationalist feeling without permitting it to destroy societies in the way that it has in the past.
Mr. Henry Bellingham: At this time of crisis, does my right hon. Friend agree that Yugoslavia needs someone to act as a focal point and figurehead? Will he confirm that he has not overlooked the possible future role of Crown Prince Alexander of Yugoslavia?
Mr. Hurd: I do not think that it is for me to look at or to overlook the role of the Crown Prince. That must be a matter for the Yugoslays.
Mr. Jim Siliars: Can we have some honesty for the record? Does the Secretary of State acknowledge that the people of Slovenia and Croatia are
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on the record as saying that there must be a fundamental, structural adjustment in the relationships between the peoples within the present state of Yugoslavia, that they have attempted that adjustment by peaceful reform through the ballot box and that the only reason for the present violence is that the Yugoslav army prefers the bullet? Will the Secretary of State bring that to the attention of the Security Council, if it discusses the matter?
May I raise finally what the Secretary of State said earlier, to the effect that, so far, Slovenia does not accord with the criteria for recognition as an independent state by the United Kingdom? How does it fall short? It cannot be because of a failure to express its view of independence through the ballot box.
Mr. Hurd: The criteria include the effective control of territory and independence in foreign policy but, as I said to earlier questioners, we need to keep the matter under constant review. I agree broadly with the hon. Gentleman's first point. The present concern and the reason why we are considering with our friends recourse to the Security Council is precisely the danger of military action by the Yugoslav army, which my hon. Friend mentioned.
Mr. Tony Marlow: Given the level of violence that has already taken place, is it not about as fruitful to try to reassemble Yugoslavia as it would be to put a soft-boiled egg together when it has been hit on the head with a heavy spoon? If my right hon. Friend wants the two republics to hang together, might it not be better for them to hang together with Austria rather than with Serbia, on which they seem to want to turn their backs at the moment?
Mr. Hurd: As I have said, I believe that the present structure is disintegrating past recall. When we consider that Slovenia is just about the only republic in Yugoslavia which has a relatively small number of non-Slovenes inside its borders, and that every other republic, including Croatia, has very large numbers of Serbs or others inside its frontiers, it is very hard to imagine a tidy repackaging of the type about which I occasionally read in some of our newspapers. Yugoslavia may not hold together in any form. It may be that, after having looked into the abyss, the people will want to work together on a new relationship. We cannot be sure of that or impose it, but perhaps we can help to create the pause in which such thinking and discussion can take place.
Mr. Harry Ewing: Is the Foreign Secretary aware that, however restricted our ability to help in this tragedy, it is right and proper that we should do what little we can to bring an end to this appalling tragedy? Will he accept that both Slovenia and Croatia are part of the constitution of Yugoslavia, and that therein lies the problem? Its constitution cannot be changed without the unanimous support of all the republics that go to make up Yugoslavia. That problem must be overcome before we can bring about constructive change in that fine country.
Mr. Hurd: I am grateful to the hon. Gentleman for those thoughts. The immediate point is that, partly under pressure from the EC, the Yugoslavs moved to appoint Mr. Mesic as President in the past few days—something for which we have been pressing for a long time because the interruption of that appointment was one of the difficulties. Now that this President is in touch with us and

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speaking in his constitutional position as the President of Points of Order Yugoslavia, we have to pay very careful attention to what he says.

Points of Order
4.32 pm
Several Hon. Members: On a point of order, Mr. Speaker.
Mr. Speaker: Before I take points of order, I should remind hon. Members that, on 18 June, the House passed a resolution under which the two debates on estimates today would be limited—the first to three hours and the second up to 10 pm. I have had to balance the time given to the two statements against the legitimate interests of hon. Members who wish to participate in the debates about Iraqi refugees and about employment and unemployment. Let that be a balance.
Rev. Ian Paisley: On a point of order, Mr. Speaker. I seek your guidance. As you are aware, many hon. Members from Northern Ireland have spent many long hours at the talks that have now concluded. Today I saw a departure in the House from what we are supposed to do—or what I was instructed to do when I became a Member of Parliament—when a statement is made, which is to ask questions. One of the hon. Members from Northern Ireland read a lengthy statement, but I do not think that there was one question in it. As a result, other Northern Ireland Members were not called. The statement was important for all Northern Ireland Members. We feel that it would be happier for us if we knew the type of allocation that we were going to receive on statements on Northern Ireland so that we could work it accordingly.
Mr. Speaker: Today, I took the decision that the leaders of the parties would speak for their parties. I hope that that was not an unreasonable assumption to make. That is why I did not call other hon. Members from Ulster who were standing.
Mr. Greville Janner: On a point of order, Mr. Speaker. Have you had a request for a statement about the visit near to the precincts of this House tomorrow of the odious French fascist, Mr. Le Pen, who is due to address a conference of the so-called European technical right at the Queen Elizabeth II centre? Should not someone from the Home Office say whether that person is to be allowed into the country, in view of the problems that could arise under the Public Order Act 1986? As the centre is so close to the precincts of the House—and no doubt carefully chosen for that purpose—would you not think it right to give warning to those people that they should not enter the democratic precincts of the Palace of Westminster?
Mr. Speaker: I am not responsible for what goes on in the Queen Elizabeth II centre. The hon. and learned Gentleman should present his questions on entry and who has booked the centre to the Government. It is nothing to do with me.
Mr. Anthony Beaumont-Dark: On a point of order, Mr. Speaker. Very rarely are you ever misguided, and certainly you are never wrong, but surely the issue of Yugoslavia, which touches upon Britain and the rest of Europe, should have been given more time. Sometimes we have an hour for questions on

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quite trivial matters. Surely we could have spent at least an hour on such an important matter. How can it be right to cast the issue on one side after such a short time?
Mr. Speaker: The hon. Member would be the very first —indeed, he has been the very first—to complain when not called in debate.
Mr. Beaumont-Dark: Not at all, Mr. Speaker.
Mr. Speaker: Yes, the hon. Member certainly has done that. I have to balance the desire of those who wish to ask questions against the desire of those who wish to make speeches. It is a difficult decision to take—[Interruption.] Do not argue with me, please, from a sedentary position. It is exceptional to have two statements, as we did today, and I judged that I had an obligation to protect the interests of those who wished to speak in the debates which are time limited.
Mr. Beaumont-Dark: On a point of order, Mr. Speaker.
Mr. Speaker: No, the hon. Member must not argue with me.
Mr. Beaumont-Dark: On a point of order, Mr. Speaker. The occupant of the Chair should not impugn an hon. Member's honour.
Mr. Speaker: I do not impugn the hon. Gentleman's honour, but I have his letters.
Mr. Beaumont-Dark: It is quite wrong to do that.
Hon. Members: He is going.
Mr. Speaker: Every Speaker occasionally needs to be deaf, and sometimes blind.
Mr. David Winnick: On a point of order, Mr. Speaker. This country fought fascism for six years. Can you advise us what steps can be taken to bring the Home Secretary to the House to try to justify a poisonous fascist agitator like Le Pen being allowed into this country? That sort of filth should be kept out.
Mr. Speaker: That is a matter for the Government. It is not a matter for me. The meeting will not take place here.
Sir Michael McNair-Wilson rose—
Mr. Speaker: I have called the hon. Gentleman, but I will call him again.
Sir Michael McNair-Wilson: On a point of order, Mr. Speaker. May I revert to the issue of Northern Ireland? Northern Ireland is one of the few subjects that draws six political parties in the House into its business. When there are two statements, one about part of the United Kingdom —Northern Ireland—and one about Yugoslavia, where we have little involvement, it seems strange that we give equal time to them both. May I suggest—
Mr. Speaker: No, I do not think that the hon. Member may. I have to make these difficult judgments. The hon. Gentleman, too, has complained in the past about not being called to speak in debates.
Mr. Peter Robinson (Belfast, East): On a point of order, Mr. Speaker. Will you help me by clarifying your earlier
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ruling? Were you, as a defender of Back Benchers, saying that you were prepared to call Back Benchers from the Labour and Conservative parties but not from the Northern Ireland parties to ask questions on the Northern Ireland statement?
Mr. Speaker: I did not say that at all. I said, as I hope that the whole House heard, that on this matter I thought it legitimate for the leaders of the Ulster parties to express the views of their respective parties. This is a United Kingdom Parliament, and the breakdown of the talks is a matter not only for Members from Northern Ireland but for the whole House of Commons.
Rev. Martin Smyth: On a point of order, Mr. Speaker. I appreciate your difficulties, but, on the other hand, it is not strange for Members of parties in the House not to see eye to eye with their Front-Bench spokesmen. We all recognise that that happens from time to time. May I ask for your guidance? Earlier, you rather suggested that, during Northern Ireland questions and in the appropriation debate, we could deal with issues arising from the Secretary of State's statement today—which I considered rather limited. Were you suggesting that the Chair will turn a blind eye and a deaf ear if we occasionally wander on those occasions?
Mr. Speaker: I certainly was not saying that, either. The hon. Member will have to ensure that his questions are in order. However, as a Member of considerable sophistication, he has never found difficulty in doing that. Yesterday, I managed to call in defence questions almost all the Members who, because of the pressure of time, were not called in the debate the previous day. I shall do my best during Northern Ireland questions next Thursday.

Points of Order
  BILLS PRESENTED
    CARDIFF BAY BARRAGE (No. 2)
    Mr. Secretary Hunt, supported by Mr. Secretary Heseltine, Mr. David Mellor, Sir Wyn Roberts and Mr. Nicholas Bennett, presented a Bill to provide for the construction by the Cardiff Bay Development Corporation of a barrage across the mouth of Cardiff Bay with an outer harbour and of a tidal lagoon and for related works; to make provision for the acquisition and use of land for the works; to make provision about the operation and management of the barrage, the outer harbour, the water impounded by the barrage and the lagoon; to require provision to be made for dealing with property damage caused by an alteration in groundwater levels occurring in consequence of the construction of the barrage and to enable other protective provisions to be made; and for connected purposes: And the same was read the First time; and ordered to be read a Second time tomorrow and to be printed. [Bill 201.]
    RIGHTS OF ACCESS TO NEIGHBOURING LAND
    Mr. John Ward presented a Bill to make provision for obtaining access to neighbouring land for the purposes of carrying out works; 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 203.]

  STATUTORY INSTRUMENTS, &c.
  Mr. Speaker: With permission, I shall put together the motions on statutory instruments.
  Motion made, and Question put forthwith pursuant to Standing Order No. 101(3) (Standing Committees on Statutory Instruments, &c.)

  ATOMIC ENERGY AUTHORITY
  That the draft United Kingdom Atomic Energy Authority (Limit on Borrowing) Order 1991 be referred to a Standing Committee on Statutory Instruments, &c.

  BUILDING SOCIETIES
  That the draft Building Societies Act 1986 (Modifications) Order 1991 be referred to a Standing Committee on Statutory Instruments, &c.—[Mr. Neil Hamilton.]
  Question agreed to

Constitutional Reform
4.40 pm
Mr. Simon Hughes: I beg to move,
That leave be given to bring in a Bill to amend the law relating to the succession, rights and responsibilities of the Crown; and for connected purposes.
Proposals for constitutional reform regularly appear on the parliamentary agenda—and so they should. During my eight years and more in Parliament there have been proposals for both wide-ranging reform and more narrow proposals to reform the House of Commons or the House of Lords. But not since 1981 has there been a proposal dealing specifically with the constitutional position of the Crown, and it is that part of our constitution which I seek to address in the Bill. I do not pretend that this is necessarily the most important constitutional proposal or the most important matter on which Parliament should legislate. None the less, it seems apropriate that we should discuss it now.
There are two elements to the Bill. One is more radical than the other. One is to change the law; the other is to clarify it. The principal proposal is to change the law—specifically, the law of succession—so that females have the same opportunity as males to ascend the British throne. That would—self-evidently—not be retrospective and should not be controversial either.
My proposal follows a similar proposal in the Succession to the Crown Bill presented to the House in 1981 and supported by six hon. Members on both sides of the House, including the hon. Member for West Bromwich, West (Miss Boothroyd), who is now Madam Deputy Speaker, the hon. Member for Plymouth, Drake (Dame J. Fookes) and the hon. Member for Ealing, North (Mr. Greenway).
The Bill would amend the Act of Settlement and the Union with Scotland Act 1706 to deal with this one specific matter. As it happens, it will not affect the succession for the next two generations, so it has no implications for those currently alive and in the current line of succession to the throne. I hope that no hon. Member would, on reflection, oppose the application of the principle of equal opportunities to the top job in the land.
The second, subsidiary proposal is in a way more modest and is certainly less novel, although I accept that it has aroused more interest. It is not a proposal to change the law, only to clarify it. It relates to the liability of the Crown to pay taxes. Because this issue has aroused widespread interest, I shall dwell slightly longer on this proposal, although I stress that it is only the secondary purpose of the Bill.
In 1971, when a Select Committee of the House was examining the royal finances, the Treasury asserted:
"As part of the Royal Prerogative, the Queen is not liable to pay tax unless Parliament says so either explicitly or by inevitable inference. There is no distinction for this purpose between the private and public aspects of the Sovereign."
From a period in the last century, in the reign of Queen Victoria, until earlier this century, the British monarchs paid tax on their personal and private wealth. Progressively, from 1910—as Philip Hall has discovered in his researches and as was explained in the "World in Action" programme last week—a series of exemptions have been negotiated and obtained. The position now is that the monarch—as monarch and as Duke of Lancaster

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—pays no income tax, no inheritance tax, no capital gains tax, no capital transfer tax and no investment surcharges. The heir to the throne, as Duke of Cornwall, also pays no income tax on duchy income, although duchy income was also subject to tax until earlier this century. My Bill proposes a return to the previous position. It would bring all the private and personal income and assets of the monarch and the heir to the throne within the tax system.
It is no argument against the proposal to say that it is without precedent. It is not. It is, therefore, no argument against the proposal to say that it is unconstitutional. It has long been recognised that it is a constitutional fiction, at most, that taxes in a modern parliamentary democracy such as ours are paid to the Crown. They are decided by, paid to and spent by the Government, and the monarch's income is just as capable of parliamentary regulation as that of anyone else.
I must make it clear that the Bill does not apply to the civil list, which Parliament debates and votes on, or to other moneys granted to the Crown for its public duties —such as the money that Government Departments spend on maintaining the royal palaces, yacht, aeroplanes, train and the rest. They would remain untaxed, just as they are at present. [HON. MEMBERS: "Why?"] Because they raise different issues, and if we succeed in bringing in the Bill today, we shall be making progress. At another time perhaps we may be able to consider other matters as well.
I have two reasons for wanting to introduce the Bill. The first is the straightforward case for constitutional reform. The second is the desire for social, financial and constitutional justice. As the Member for Southwark and Bermondsey and as an individual, I cannot justify to people who have incomes just above the poverty line, and who pay taxes as they are required to do, the fact that the woman who, by common consent, is the richest woman in the country is exempt.
From the answers to the most precisely worded question in an opinion poll conducted by The Independent on Sunday in February, it would appear that 79 per cent. of the population support that view. I shall cite only two of the many reasons given in support of the proposal from among the letters that I have received. The first letter came from a lady in Coventry who wrote:
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"I am 78 years of age, a widow, totally disabled, my income is £86 a week pensions, and I have to pay income tax. Why should the Queen be exempt?"
Another lady in West Yorkshire wrote:
"I am not anti-royal, but I feel it is immoral that anyone who owns as much as Her Majesty, or any member of the royal family, should be exempt from paying taxes. If we were all afforded this privilege we would have a much better standard of living."
We can all say amen to that. I agree with the sentiments of the second correspondent and, like her, I am not anti-royal. But in 1991 it seems to me that a review of the position is long overdue—and that we should clarify the law and put the monarch in a private capacity in the same position as her subjects.
The Bill should be considered on its merits and, on its merits, the case for these changes seems to me to be overwhelming.
Today we are testing the parliamentary temperature for the first time in recent years. Some have said that it may be a step into hot water. My reply is that it is entirely proper for Parliament to consider the position of the monarch, as it has regularly considered the constitutional position, rights and duties of the monarch. If Parliament had not done that over the years, we should not have the constitutional democracy that we have today.
The purpose of my Bill is, therefore, to reform and modernise the monarchy, not to remove it. I—and many others who are not republicans and who think that the present monarch has done an exemplary, conscientious and admirable job—believe that none the less, on these issues, the time has come for change.
This is not a Bill motivated by the politics of envy; it is a Bill motivated by the desire for justice and for constitutional reform.
Question put and agreed to.
Bill ordered to be brought in by Mr. Simon Hughes and Mr. Peter Archer.

Constitutional Reform
  CONSTITUTIONAL REFORM
  Mr. Simon Hughes accordingly presented a Bill to amend the law relating to the succession, rights and responsibilities of the Crown; and for connected purposes: And the same was read the First time and ordered to be read a Second time upon Friday next and to be printed. [Bill 204.]
  Class II, Vote 5
  [Relevant document: The Second Report from the Foreign Affairs Committee of Session 1990–91 on Aid to Iraqi refugees (House of Commons Paper No. 528).]

  Iraqi Refugees
  Motion made, and Question proposed.
  That a further sum, not exceeding £910,873,000, be granted to Her Majesty out of the Consolidated Fund to defray the charges that will come in course of payment during the year ending on 31st March 1992 for expenditure by the Foreign and Commonwealth Office: Overseas Development Administration under the Overseas Development and Co-operation Act 1980 on the official UK aid programme; economic assistance to Eastern Europe and the USSR; and global environmental assistance; including financial and technical assistance to governments, institutions, voluntary agencies and individuals; pensions and allowances in respect of overseas service including contributions to pension funds; capital and other subscriptions and contributions, including payments under guarantee, to multilateral development banks and other international and regional bodies; emergency, refugee and other relief assistance; loans to the Commonwealth Development Corporation; and running costs, related capital expenditure and other administrative costs including for the Natural Resources Institute (an executive agency).—[Mr. Douglas Hogg.]
  Mr. Speaker: I inform the House that the debate will end in three hours, that is, at 7.50 pm. In view of the time element, I ask hon. Members who wish to participate to do so briefly please.
  4.50 pm
  Mr. David Howell: Four months after the end of the Kuwait war, millions of people in Iraq continue to live through a horrific nightmare. The human tragedy in Iraqi Kurdistan has been vividly portrayed and we have witnessed it on our television screens. However, another tragedy that is possibly more appalling has been unfolding in southern Iraq without the benefit of the television cameras. It is, therefore, appropriate that the House should have a short debate this afternoon on the Iraqi refugee issue.
  The Select Committee on Foreign Affairs is grateful that time has been made available for a discussion on the brief initial report produced by the Committee following its recent visit to nine middle east countries, including Iraq and Turkey. Some members of the Select Committee visited the Iranian refugee camps for the Shi'ite refugees and the Committee is grateful to everyone who assisted us, including the Iranian authorities, in that visit and in the associated visits in the middle east.
  As the report is merely a short initial report, it seeks to do no more than to make observations and raise questions which we hope will help the House when it examines some of the enormous and awesome issues raised by the Iraqi refugee crisis and associated upheavals in the world.
  Our report makes four main observations. The first is that, until and unless there are effective United Nations forces in both the north and south of Iraq, it would be wrong for the coalition forces which have been
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  safeguarding the Iraqi Kurds and the Turkomans in the north to leave. Between the Committee reaching that view and the publication of the document, the American and British Governments have endorsed a similar view.
  We were glad to hear the views and hopes of my right hon. Friend the Prime Minister who emphasised on 25 June that before there was any withdrawal of coalition forces there should be four conditions: clear United Nations forces on the ground, clear warnings that renewed repression would be met with the severest response, a continuing deterrent military presence in the region and, finally, the maintenance of sanctions against the Iraqi regime. In other words, my right hon. Friend the Prime Minister endorsed the view held by many of us, that while the United Nations security guard force is building up—I understand that about 400 men should be in place by mid July, which is not enough—we will have to consider new structures and ways to safeguard those people to prevent another horrific round of retreats to the hills with the associated starvation and deprivation.
  The report's second observation is that the refugee crisis is far from over. The Kurds continue to live in fear. Of course, there is hopeful talk of a deal with Saddam Hussein. However, all of us who have watched that man perform over recent months and years must reach the obvious conclusion about the value of any agreement, dealings or undertakings into which he may enter. We would place a very low value on such undertakings.
  In the south, thousands of Shia are locked in the marshes. They cannot decide where to go and constantly fear harassment from Iraqi troops. We have received reports that 800,000 people are affected, but new information from aerial photographs is that the figure may be considerably less and that perhaps 50,000 or 60,000 people are affected. We simply do not know the correct number. However, tens of thousands of people are locked in the marshes and do not know whether to go forward or back. They are living in trembling fear. It is obvious to the House, was obvious to the Select Committee, and I hope is obvious to the international community, that there will be no lasting solution to the endless fear and terror of those people while Saddam Hussein remains in power.
  Mr. David Winnick: I agree totally with the right hon. Member for Guildford (Mr. Howell) that there will be no peace in Iraq while Saddam Hussein remains in power. Does not that mean that we should be somewhat critical of the allies' decision to terminate the war when they did? I recognise the difficulties and the case is not clear cut, but within the Security Council resolutions for peace and security in the area there was undoubtedly a case to do what the allies rightly decided to do with regard to Germany in 1945.
  Mr. Howell: That is very much a matter for debate. My view is rather close to that of the hon. Member for Walsall, North (Mr. Winnick), but I must not anticipate a longer and more substantial report from the Select Committee on the security situation in the middle east following the liberation of Kuwait. I am aware that many people share the hon. Gentleman's view.
  We must bear in mind that whatever arrangements or dispositions we make for troops—be they UN security forces or whatever—to protect the refugees, those arrangements are temporary because those people will live

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  in fear whatever we do so long as there is a violent dictator in Baghdad whose habits, character and track record have been to persecute and kill.
  The Select Committee's third observation is that the great refugee crisis has placed a huge strain on the Overseas Development Administration. We have high praise for the way in which the ODA has reacted in trying to meet the crisis. We must recognise, as I am sure the ODA recognises, that the Government Department, in addition to the Iraqi refugee crisis, is meeting four other huge crises of disruption, pressure and potential disaster around the world. Although there have been the horrors of starvation, killing and dying in Iraq, such things are happening on as great a scale, even on a more evil and terrifying scale, as a result of natural forces in the Horn of Africa. There are horrors in Bangladesh, where vast storms caused the deaths of tens of thousands of people.
  Finally, the ODA is the lead Department in coping with developments and in encouraging democratic development throughout eastern Europe. That objective, is by no means yet secure and much work and effort will have to be expended on it. That objective may not be on the same scale as the tragedy of the others, but it is a major task. Let us hope that it does not become a tragedy, as it will if the trouble in the Balkans affects the rest of eastern Europe. The ODA is under enormous strain and we welcome the decision to review the way in which it can meet those huge burdens in future.
  Mr. Tam Dalyell: The right hon. Member for Guildford (Mr. Howell) has rightly underlined the huge task facing the ODA. Is there not a case for lifting sanctions, particularly in relation to electricity generating equipment? Until electricity is flowing, it will be impossible to cope with a situation in which, according to Harvard medical school, more than 170,000 children under the age of five will die this year. Whatever one thinks about sanctions, that is the root of the matter.
  Mr. Howell: I hope that the hon. Gentleman gets a chance to develop that thought during the debate because he refers to an important and difficult balance. All humanitarian instincts point us towards doing everything possible to avoid the prospects that he has described, but there is the equally terrible thought that, if Saddam Hussein is let off the hook and is allowed to use his resources, from selling oil, for example, to rearm and re-equip, he will carry on killing. One must balance one against the other. I do not pretend that the Committee has found the answer to the question of how to ensure that humanitarian considerations prevail without also ensuring that new resources fall into the hands of that man, who is still in office and apparently in total control of inner Iraq and ready to spend more money on more weapons to carry out more killings, more persecution and more harassment. That is the difficulty. We must watch the practices and policies of the Government of Iraq—that is the policy of the United Nations—when undertaking any review of the present sanctions and embargo provisions.
  Mr. Jeremy Corbyn: Will the right hon. Gentleman also consider the question of our relations with dictators such as Saddam Hussein and the Ba'ath regime over many years? After all, the British Government effectively loaned that regime £1 billion over the past 10
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  years and a great deal of Saddam Hussein's power and war machine was the product of close western support for his regine.
  Mr. Howell: The hon. Gentleman is taking us, once again, into the broader area of middle eastern security and to the question of how on earth we can secure any improvements in future, after having failed to produce them in the past. The next report of the Select Committee on Foreign Affairs will look into that. Although we do not claim to have the ultimate wisdom, that will be the opportunity to raise such points.
  The fourth observation of our immediate report on refugees was that the strains which have fallen on the ODA, which has struggled excellently to meet them, have fallen also on the international relief organisations. Our report points to ways in which the burdens and pressures on those organisations have led, despite much dedicated work by the people who work in them, to breakdowns in co-ordination and to a lack of effectiveness. We have outlined a number of suggestions and proposals about how the international relief organisations can be strengthened.
  That leads me finally to the three questions that we raised beyond our observations. First, how can the international relief structures be better organised? A number of agencies are involved, including several United Nations' agencies led by the UN Disaster Relief Office. We questioned whether that agency could perform its task in the way that it should. We welcome the idea that was suggested by my right hon. Friend the Foreign Secretary in concert with the German Foreign Minister, Hans-Dietrich Genscher, that an individual should be appointed co-ordinator for disaster relief work in the United Nations —a sort of overlord—to begin to bring together the different strands of work that some of my hon. Friends who visited the area found sadly disconnected and, in some places, disordered.
  Our second question is, can the international organisations, especially the United Nations, deliver help on the scale that is required when humanitarian disasters occur, such as the man-made or dictator-caused disaster in Iraq? The difficulty is that the United Nations is now being asked to deliver security as well as supplies, help and succour to refugees on a scale and with a prominence and effectiveness that, in its present form, it is simply not equipped to meet. The time may well have come to rethink the structure of the international relief agencies so that they can co-ordinate their efforts, work more effectively with the different donor nations and meet the now big demands of the international community more effectively.
  The third question is even bigger and leads to the edges of the refugee report and to wider political questions. It is whether it is possible to clarify the powers of the United Nations and its blessed agencies or direct agencies to intervene. That is the question at the edges of this tragic saga. The sticking point or the original base point is chapter 1, article 2, paragraph 7 of the charter of the United Nations, as qualified by chapter 7, which lays down the degree to which, if at all, there can be intervention in the domestic and internal affairs of a nation. Certain derogations are suggested relating to humanitarian aid if there is a threat of genocide or if—this is a loose definition —the peace, security and stability of the surrounding area

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  and the international order is threatened. That is not a question that we can consider fully in a report on refugees, but our report concluded:
  "if clearer rules were established"—
  in relation to intervention by the United Nations and its agencies—
  "…not only might grinding, endless and bloody conflicts all over the world be brought to an end but also the refugee relief process could be simplified."
  We hope that our views will be of use to the House. The time has come for a new agenda for looking at the key problems of disaster relief. I am sure that the whole Committee hopes that its short report will start the thinking processes and the answering of the questions, which will lead to a more effective ability to respond both nationally and internationally—despite all that has been done in tremendously difficult circumstances—to the disasters that we must realistically, if pessimistically, admit lie ahead. There have been many disasters in the present global order and it looks as though there will be more. We shall need more vigorous co-ordination and more effective means to meet them.
  5.6 pm
  Mrs. Ann Clwyd: I welcome the clear statement of the Select Committee on Foreign Affairs that, unless and until a United Nations force can provide effective safeguards for the Kurds and the other persecuted people of north and south Iraq, it would be wrong for the coalition forces to leave them to the mercy of Saddam Hussein. The Select Committee was repeatedly told by refugees that they would not return to their own country until Saddam Hussein was removed from power. I have heard that view on many occasions, and who can criticise those people for expressing that view? Many of us believe that the danger will persist so long as Saddam Hussein continues his evil and brutal tyranny in Iraq and continues to thumb his nose at the United Nations by denying its inspectors access to Iraqi nuclear equipment. He must take the consequences of such actions.
  Evidence of torture and repression is legion. On 27 May The Independent headed Robert Fisk's recent report on his visit to the cells of Iraq's secret police in Dihok:
  "A testimony to brutality written in blood".
  The article stated:
  "The last young women to be imprisoned here died in these fetid cells two months ago. The Peshmerga say they found three of their bodies, naked and with their hands bound, on the floor. One of the girls was 12 years old. Another, older woman had been gang-raped and died later. Anyone who wants to now what propelled the one and a half million Kurds to flee their homes has only to visit Dihok."
  For eight years I have chaired CARDRI, the Campaign Against Repression and for Democratic Rights in Iraq. We have continually exposed the brutality of the Baath regime and have linked up with those in Iraq who are struggling for human and democratic rights in immensely difficult and dangerous conditions. Many have since died. In 1983 an Iraqi mother told us about her son, who was typical of so many thousands of people who have died in Iraq. He was a medical student who went out one day and never returned. Many months later she was told to go to the mortuary and collect his body. She was led to the room where the body was to be found and she said:
  "When I entered and saw what was inside, I could not believe that there are people who could do such things to other human beings. I looked around and saw nine bodies. My son was in a chair. He had blood all over him, his body was eaten away and bleeding. I looked at the others stretchedout
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  on the floor … all burnt … one of them had his chest slit with a knife … another's body carried the marks of a hot domestic iron all over his head to his feet … everyone was burnt in a different way. Another one had his legs cut off with an axe. His arms were also axed. One of them had his eyes gouged out and his nose and ears cut off".
  There were so many of those chilling accounts that at times, over the years, I found them difficult to believe. But now, the horrors of Saddam's Iraq will continue to shock and astound the world. The stories of the two Britons, Doug Brand and Patrick Trigg, are yet more evidence that nothing has changed. As in the past, Saddam's policy is to intimidate, persecute and kill.
  It is therefore to the shame of this Government and others throughout the world that, even after Halabja in 1988, Saddam Hussein was still treated as a valued trading partner. The Ministry of Defence allowed the sale to Iraq of a design for a missile testing concrete bunker, even though there was a ban on arms sales to Iraq. That is yet another example of turning a blind eye to the spirit of the regulations. I hope that a valuable lesson has been learnt.
  Mr. Corbyn: Does my hon. Friend recall that she and I worked together for many years in CARDRI in support of the democratic opposition in Iraq? As early as the 1980s we asked the British Government to cease their trading practices with Iraq because they were allowing that brutal regime to develop and to attack the Kurdish people. Does my hon. Friend not think that now is the time to recognise that there must be some sanity in the arms trade and trading matters in general to protect people and human rights from Governments such as the Baath regime in Iraq?
  Mrs. Clwyd: I entirely agree with my hon. Friend. I remember well that in 1988 he, I and others argued in this House that the Government should not double export credit guarantees to Iraq. Our pleas were totally ignored and the Government went ahead and doubled export credit guarantees. Too often, one Government Department has said one thing while another has done precisely the opposite with regard to countries controlled by oppressive tyrants.
  The Select Committee highlights the problems of the refugee crisis. I saw for myself the terrible suffering of the refugees who had fled in their millions to the border between Iran and Iraq. The freezing cold, rain and mud have gone and the heat and dust have taken their place. Thankfully, most refugees now have shelter, food and safety.
  Save the Children Fund gives its observations and experiences in an interesting report on Iraq, and notes that the death rate was high in Turkey, with deaths estimated at 50,000, whereas in Iran the death rate was, by all accounts, slight. While Turkey continued to receive massive support from many Governments, including aircraft, millions of pounds of material supplies and hundreds of medical personnel, Iran—with the bulk of the refugees—received very little. Iran did not receive the assistance that it should have been given to deal with a much larger number of refugees.
  Estimates of the number of refugees who have returned to Iraq vary widely. The Iranians believe that up to 750,000 people will stay behind in Iran even if an agreement between the Kurds and the Iraq Government is reached. The remaining refugee camps now need to be equipped for the winter conditions to come. Aid

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  organisations are concerned that the present tent accommodation in the north-west provinces would be totally inadequate for those conditions.
  Displaced Kurdish people in the regions of Iraq bordering the north-east frontier with Iran are reported by many people to be facing dire health and nutritional conditions. It is still not clear how many Shi'ites have been displaced in southern Iraq. Aid agencies are concerned, as is the Select Committee, that between 400,000 and 600,000 people many have taken refuge in the marshes and that they have not received the same humanitarian attention.
  As the Chairman of the Select Committee said, the refugee crisis is far from over. Up to a million refugees are still in Iran and tens of thousands of others are in Iraq. They are in no man's land, camped out on the rubble of the towns destroyed by Saddam Hussein in 1987. They still need medicines and food and it is regrettable that the British Government could not provide safe havens for them because of American opposition.
  Sir Alan Glyn: If the safe areas cannot be protected by United Nations armed forces, it is useless to leave the refugees to their fate at the hands of Saddam Hussein.
  Mrs. Clwyd: Perhaps the hon. Gentleman was not here earlier when I said that I thought that it was important for the allies to stay to protect the Kurds and other groups.
  Sir Alan Glyn: The hon. Lady did not mention armed forces.
  Mrs. Clwyd: Indeed I did.
  The refugees who need medicines and food but who are not covered by any of the aid agencies should be dealt with urgently.
  As a Kurdish political leader emphasised when the offer of negotiations was first made by Saddam Hussein, the Kurdish question is not a refugee problem and should not become one. It is a political problem. Although the first stage of the refugee crisis is over, the long-term future of the Kurds and Shi'ites remains to be settled. As the Select Committee says, it leaves
  "the grim prospect of a seemingly unending refugee operation of Palestinian proportions".
  When I first told the House that Saddam Hussein wanted to negotiate with the Kurds, hon. Members laughed. That was the level of scepticism with which Saddam Hussein's words were treated. The Kurdish leaders who had to stand by and watch their people die in their thousands had no option at that time but to take up the offer and the talks have now gone on for several weeks. The agreement that was brought back to Kurdistan from Baghdad demands that the Kurds cut direct ties with the west and unite with Saddam Hussein's Baath party to crush its enemies. The agreement includes the denunciation of the United States, Iran and Zionism, and the Kurds would need the Baath party's permission to contact outside Governments and organisations. Mr. Barzani of the Democratic Party of Kurdistan and Mr. Talibani of the Patriotic Union of Kurdistan, along with the other political leaders in Kurdistan, rightly rejected those conditions as the obligations entailed in such an offer were clearly intolerable.
  Once again, strengthened by the allies' agreement to support the deployment of a rapid reaction force to protect
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  the Kurds, the Kurds are spelling out their own conditions. They stipulate that there can be no autonomy for the Kurds without democracy and human rights for Iraq as a whole. They have asked for the next stage of the negotiations to take place in Kurdistan rather than Baghdad. They have no intention of splitting off from the opposition to Saddam Hussein in Iraq because they know full well that they will have no long-term peace and stability unless there is peace and democracy in Iraq as a whole.
  Although many of the issues raised by the Select Committee were debated in the Opposition debate on 14 May I am glad that we were able to share some of its concern—for instance, about the fact that the Overseas Development Administration is strapped for cash. As the Select Committee said, the aid programme contingency reserve has been subjected to severe strain. The Committee continued:
  "this suggests that the ODA will have considerable difficulty in finding new money for further commitments entered into during the year".
  The money that might have been used for long-term development purposes will need to be drawn on for emergency relief before the Treasury will provide new money. The Select Committee might have mentioned also that the overall aid budget has been slashed since 1979. It is still 11 per cent. lower in real terms than it was then. Despite continuing claims by the Government, that budget is stagnant in real terms.
  The ODA lacks not only cash but staff, as we have continually pointed out. Each time we have pressed the Minister in the House we have created new jobs in the ODA's disaster and refugee unit. The numbers have risen from four to six, from six to nine and nine to 12, and I pay tribute to the staff of the unit, who had to deal with three major disasters at the same time.
  We made several suggestions. We dealt with the charges for the relief effort as distributed from the Ministry of Defence to the ODA. We argued that the costs should be shared, as they are in some other countries, to reflect the training value of using the military in civilian disasters. We called for a mobile emergency volunteer force with selection and co-ordination in advance of a disaster. We called for a strengthening of the ODA's disaster unit so that it would have in-house expertise on aspects of disasters apart from rapid procurement.
  We also emphasised the need to encourage a strengthening of the UN agencies most involved in responding to disasters. The UN has been criticised frequently, and often unfairly. The United Nations High Commissioner for Refugees, Mrs. Ogata, told us at a meeting at the House yesterday that she accepted some of this criticism, but she emphasised again that the UNagencies involved in emergency operations were neither financed nor staffed to be able to meet large scale crises. She said that for every emergency the UN has to issue a fresh appeal, and pledges from donor nations come in much too slowly. She said:
  "We cannot respond to emergencies on credit, or on shoestring budget living hand to mouth".
  What ought we to do if we want the UN to perform more effectively in the future? First, donors must place at the disposal of the UN a standby financial reserve to pay for a response within hours of a recognised emergency. Stockpiles of basic relief items should be set up in locations easily accessible to air transport. A central databank

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  should be set up on a range of goods and services that the UN can offer or mobilise. A pool of international experts is needed to respond immediately to any emergency and could be linked with civil disaster relief groups of member Governments. In other words, we need a system that gives the UN the money, the goods and the people to respond rapidly and effectively to disasters.
  UN agencies, especially the UN disaster relief organisation, already exist. We should strengthen that organisation before inventing new ones or dreaming up new supremos. We should give it the means to perform its proper role. Once the UN agencies are assured of enough cash and clout to operate effectively, it will be worth reviewing their mandates to strengthen their roles. We must ensure they can meet the emergency needs of people displaced in their own countries as well as the needs of refugees who flee across borders into others.
  This debate is about Iraqi refugees, but according to the UN and many other observers all of Iraq is threatened by increasing malnutrition and disease. Unfortunately, it is doubtful whether the ending of sanctions, for which some argue, would much improve the lot of ordinary Iraqis, given the inflation in that country and Saddam Hussein's priorities.
  Humanitarian relief is of course exempt from sanctions, but one of the problems is that the UN does not have enough people on the ground to monitor where the relief is going. A recent example involved 12 food lorries sent into Kurdistan to feed the Kurdish refugees. Six of them ended up feeding Iraqi military personnel and the other six ended up feeding Government supporters. Unless we can guarantee that this sort of relief does not fall into the wrong hands it will be difficult to ensure that humanitarian aid goes to the people for whom it is meant.
  In April, questions were asked in the House about what steps the Government were taking to secure Saddam Hussein's trial under international law on charges of war crimes. The Prime Minister told my hon. Friend the Member for Liverpool, West Derby (Mr. Wareing) that he was awaiting legal advice in the matter. Earlier, the Foreign Ministers of the European Community had called on the United Nations to consider putting Saddam Hussein and his senior aides on trial before an international court. A similar demand was made by the United States Senate foreign relations committee on 18 April. The United Nations secretary-general promised to refer the request to a special committee before taking a decision. That committee is apparently still deliberating. Why is it taking so long?
  The world still has great expectations of the United Nations as a global institution which can provide the vision and the mechanism for reducing global tensions and promoting peace, for protecting human rights and promoting economic development in the third world. The debate about the future of the United Nations is now focusing around questions about the reform of its charter, the make-up of the Security Council and the role of the secretary-general. The Select Committee rightly asked whether the United Nation's power to intervene in the internal conflicts of nations ought to be clarified, and rightly suggested that if clearer rules were established for such intervention, it would mean that grinding, endless and bloody conflicts all over the world could be brought to an end.
  I doubt whether anyone can argue convincingly any longer against the right of the world body to move in and
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  interfere in what used to be regarded as internal national affairs so as to protect the human rights of oppressed minorities. One thing is certain: the world can never again sit on its hands and idly watch brutal dictators killing hundreds of thousands of their own people in cold blood.
  Several Hon. Members rose—
  Mr. Deputy Speaker (Mr. Harold Walker): I remind the House of Mr. Speaker's injunction that this is a short debate and that short speeches would therefore be appropriate. Sir Michael Jopling.
  5.27 pm
  Mr. Michael Jopling: I may have misheard you, Mr. Deputy Speaker, but that day has not yet arrived, so I fear that you have addressed me wrongly.
  Six weeks ago, I visited Iran as a member of the Foreign Affairs Select Committee, with a number of my colleagues —my hon. and learned Friend the Member for Burton (Mr. Lawrence), and the hon. Members for Falkirk, West (Mr. Canavan), for Merthyr Tydfil and Rhymney (Mr. Rowlands) and for Doncaster, North (Mr. Welsh). We were able to see for ourselves some of the refugee camps, and we visited two of the Kurdish camps in north-west Iran—near Orumiyeh—and one Shi'ite camp in the south close to the ancient city of Shush.
  I warmly support the Government's reaction to the Iraqi refugee crisis of recent months. I strongly support the Prime Minister's initiative on safe havens, and strongly welcome the recent assurances that coalition troops will not be withdrawn while a risk remains, especially in the north of Iraq.
  The Iranian authorities at the camps warmly supported the United Kingdom's efforts to bring relief to the unfortunate people in the camps. The authorities greatly welcomed the fact that Britain was the third largest donor of assistance. I have no reason to suppose that we are not still the third largest. That aid greatly relieved the agony of the Kurdish and Shi'ite people.
  My impression of the three camps was that things were going reasonably well. The Iranians seemed to be dealing adequately with the massive crisis which confronted them. I did not see obvious signs of starvation or disease. Conditions were primitive, but people seemed to have enough food and we were assured that the refugees in the camps had been vaccinated against the diseases which were thought to present the main dangers.
  The hon. Member for Cynon Valley (Mrs. Clwyd) spoke about the accommodation. Most people in the camps are housed in tents, and some are housed in disused buildings, some of which had been damaged in the Iran-Iraq war. We shall soon have to think about what will happen to the people in those camps during the winter. One rather good sign from the refugees to whom we spoke was that they were beginning to question the facilities. That showed that the first crisis was over. They rightly complained about the quality of the water and said that the clothes sent by the relief agencies were second-hand. They viewed that as insulting. They also complained about the quality of some of their food, especially the high-protein biscuits. However good those biscuits might have been for them, they did not like their taste.
  At one of the camps, we were delighted to see that the Austrian military had set up what appeared to be an

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  efficient tented hospital. Three of my colleagues on that delegation are in their places, and I am sure that they will agree that, as British people, we were received with much enthusiasm in those refugee camps. Perhaps that was because Britain had played a major part in throwing Saddam Hussein out of Kuwait. We asked them when they expected to go home to Iraq. The unanimous response from Kurds and Shi'ites alike was that under no circumstances would they return to their homes and villages until Saddam Hussein had been deposed. There was universal distrust and loathing for that man. As long as Saddam Hussein reigns in Iraq, the refugee problem will continue. If he launches an attack on the Shi'ites in the south, up to 800,000 more refugees could make a dash for the border.
  If winter arrives before the refugees are prepared to return to their homes there will be another serious crisis. Urgent action is needed to prepare for winter, because there are many signs that at that time Saddam Hussein may still be in control in Baghdad. I hope that steps are being taken to prepare those camps for a dreadful winter, because people cannot face such weather in tents. Because of the shortage of time, we did not visit refugee camps in Turkey.
  I think that all members of the group share my concern about the way in which such crises are handled. I came away with much admiration for the way in which the people employed by the aid agencies do their best with facilities that are to hand. They often receive a rush of emergency aid from well-wishers all over the world who want to make a contribution regardless of the quality or the need for the equipment and facilities that they send. That presents a serious problem.
  In the face of emergencies, all developed countries ship out the nearest materials, whether they are needed or not. Aid administrators in Teheran told us that, to assuage public opinion, well-wishing developed nations tend to send unsuitable, unnecessary and unwanted equipment and manpower. We saw examples of that in Iraq.
  We were told about a country which had sent military units, I think that it was two sapper units, to build facilities for the refugees. There had not been proper agreement about bringing those troops into Iran, and they sat in buses for two days before being allowed to leave the airport. We were told of a German helicopter fleet which had been reduced by half, I think by 10, by the time we arrived because there was nothing for it to do.
  Those are examples of a lack of co-ordination. The primary need in the three camps that we visited was for specific drugs which were in extremely short supply. We asked for a list which was subsequently passed to our chargé d'affaires in Teheran. I understand that action was taken on that list. There are few ways of going through the necessary motions in the face of a crisis, such as the one faced by the Kurdish and Shi'ite refugees. The first need is to find out properly and accurately what is needed. The second need is to get agreement from the country concerned that it should be brought in, and where and when it should be brought in; the third is for the aid agencies to find whatever it is; and the fourth is to get it delivered into the country where it is needed.
  Having got agreement from the country concerned, the aid agencies are expert in discovering where they can get
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  hold of what is required and in shipping it in as quickly as possible. The Committee's report makes suggestions about this which I hope that the Government will note. I also hope that the Minister will treat this as a serious and urgent matter. I am glad that my right hon. Friend the Secretary of State referred to it.
  The technique of getting the necessary and required aid into a country in which a crisis has occurred as speedily as possible is all very well in a country such as Iran, where there is an efficient administration that knows what it wants and can find out what it is likely to want. It is a totally different matter in a country such as Mozambique, which a number of us visited in the latter part of last year. The hon. Member for Merthyr Tydfil and Rhymney was with me on that visit, when we went to the north of the country, to the area controlled by that dreadful guerrilla organisation, RENAMO.
  In that part of Mozambique, there is no administration, but there is abject poverty. We met refugees coming into the towns and villages who were cowed, hungry and impoverished people, dressed only in the bark of trees. I have never before seen such heart-searing examples of poverty. I see my hon. Friend the Member for Broxtowe (Mr. Lester) here, and he was with us on that occasion. It was a most dreadful experience. Those people were sustained by the good will of the world community, especially the United Nations and other international organisations.
  Here we come to the basic problem, which is mentioned in the report. What should the world community do in such cases? To what extent is it permissible to move into a country without the full support of its Government, however inefficient or non-existent it might be? That is a relatively simple problem in Mozambique, but it does not take much imagination for my colleagues to realise that one could easily have a situation half way between that of Mozambique and that of Iraq. Dreadfully difficult decisions would have to be made and questions would have to be asked about the extent to which we could break article 2·7 of the United Nations charter, which says that it must not intervene in matters that are essentially within the domestic jurisdiction of any state. My right hon. Friend the Secretary of State mentioned this factor.
  We have to think these problems through carefully, but we must think them through and find a better way to get emergency aid to people who need it, if possible without stepping over that most important line of domestic jurisdiction.
  Mrs. Maria Fyfe: Is it not a bit farcical to worry about intervention in the internal affairs of another nation when we have bombed that nation back into the pre-industrial age?
  Mr. Jopling: I do not remember us bombing anyone in Mozambique when I was there, and I remember no history of us doing so. That point is irrelevant to what I am saying, which is that we have to find better ways to get aid to people who need it in emergencies. This is not easy. The report of the Select Committee deals with it; I hope that the House will discuss it and that the Government will give a great deal of thought to these problems in the months that lie ahead.
  5.45 pm
  Sir David Steel: I congratulate the Select Committee on its report. As I am not a member of the Committee, I can say this to the right hon. Member for Guildford (Mr. Howell) and his colleagues: the report is short, cogent and makes a number of specific references, and I hope that my speech will follow suit.
  I am not among those who argue, with the benefit of hindsight, that the war in Iraq should have been prosecuted further. It was brilliantly conducted and stopped at the right time. However, since the end of the war I have been consistently critical of the stance adopted by the allies in the peace negotiations. I mention two incidents. One was allowing the Iraqi regime to use helicopters, and the other was what happened in the south. I was told by Iraqi eye witnesses that our troops stood by and waved through Saddam Hussein's forces on their way to the reoccupation of Basra.
  I mention those two incidents not to cry over spilt milk, but to emphasise that we have a moral responsibility for the refugees, because they need not have become refugees. There was political misjudgment, particularly by the Americans, in believing that it would be a mistake to allow Shi'ites to gain the upper hand in the south because they would then ally with the old enemy of Iran. As the hon. Member for Cynon Valley (Mrs. Clwyd) said, there is a long history of sad neglect by western Governments of the problems of the Kurds. Despite that, neither the Kurdish nor Shi'ite populations, nor their leaders whom we have met, have ever argued the secessionist case. Instead, they have argued for the creation of a democratic state in Iraq. We were all hoping for that. Because mistakes were made in the peace, the refugee problem is not just of passing concern but the direct responsibility of those nations involved in the allied operation.
  I have four points to make. First, the right hon. Member for Guildford is correct to say that the Government have already responded with a change of heart, as have the Americans, on the question of pulling out troops. It is obvious that the United Nations' forces are not adequate and that there can be no question of withdrawing allied forces until the United Nations can supply an adequate substitute.
  In that connection, I hope that the Government have listened to the recommendations of Tony Parsons, our former ambassador at the United Nations, who has been arguing ever since the war, with increasing conviction, that the United Nations needs to go beyond its tradition of creating special peacekeeping forces at the behest of nation states. His suggestion is that we should be moving on to a post-cold war development, which will give the five permanent members of the Security Council the capacity to oversee the creation of an effective, United Nations, permanent, peacekeeping force, able to act on the authority of the Security Council rather than at the request of a nation state.
  At a time when all of us, including the House of Commons and the eastern powers, are having to grapple with the problem of reduced defence budgets, here is a role for some of those whom I shall call redundant soldiers, both east and west, of the cold war line, who could be allocated to just such a UN, permanent, peace-keeping force.
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  Secondly, the report rightly refers to—disorganization is too strong a word, but I forget the word that was used —the fact that so many different UN agencies deal with the refugee problem. The reports that we have received from the Quakers and the Save the Children Fund underline the fact that the United Nations High Commissioner for Refugees has been disappointed with the response to her voluntary appeal for funds. My complaint is that it is not right that that office should be dependent on voluntary appeals for funds. I hope that in the review of UN mechanisms some thought will be given to bringing the UNHCR's operations much more directly under the immediate responsibility of the UN machinery.
  Mr. Jim Lester: On that critical point, would it not be a good idea if, as we said in the Select Committee's report, instead of waiting until things happen and then making an appeal, standby credits were automatically available as soon as the Security Council said that such help was necessary? In that way the UNCHR could draw on them without having to embark on the long drawn-out process of asking for funds and then getting only half of what is needed.
  Sir David Steel: The hon. Gentleman has put forward one specific way of doing what I advocate. The begging bowl approach of the UNHCR in Geneva cannot continue.
  Thirdly, I welcome what the Select Committee had to say about the relative financing of ODA funds both by the Ministry of Defence—a point some of us made after the war when the MOD kept sending the ODA bills for its activities, which the Select Committee rightly said should be sorted out—and by the Treasury. The hon. Member for Cynon Valley was correct on that point. Given the decline in the ODA budget during the past 10 years and, at the same time, the increased demands that have been placed on it by a series of international disasters, the Treasury should now be more forthcoming with funds for the ODA. The ODA funding sections of the report are important and we are entitled to press the Minister to give an instant reply to the thoughts of the Select Committee at the end of the debate rather than to take the traditional three months to reply. At any rate I prod him and entice him into doing so.
  I said that I had four points. The fourth does not arise out of the report and the Select Committee's Chairman would no doubt argue that it falls outside the remit of the report. Hon. Members should be alarmed about the resumption of arms sales to the middle east by Britain, the United States, Korea, the Soviet Union—all manner of powers. It is interesting that on 20 June the House of Representatives passed a foreign aid authorisation Bill, unilaterally halting the sale of weapons to middle east countries until and unless some other major arms supplier resumes shipments, or until the recipient countries establish an arms control regime for themselves. That Bill is going to the Senate. It may be objected to by the Administration, but there is something deeply disturbing about the political rhetoric from President Bush, our Prime Minister and everybody that we must learn the lessons of the war and hold off in the arms race, while we have specific examples of arms contracts already being negotiated with different powers in the middle east.
  I notice the strong contrast between the swift reaction of President Bush and his security advisers to the possible concealment of a nuclear capability by Saddam Hussein's

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  forces and the threat to engage in pinpoint bombing to destroy it, and the relatively lax approach to the acquisition of ordinary weapons by countries in the middle east. A double standard seems to be developing whereby western powers are prepared to stop the development and acquisition of sophisiticated weaponry by powers in the middle east, but are happy to sell them anything short of weapon systems that could be widely destructive to the rest of the world. That must stop. At a time when our defence industries are shrinking there is surely scope for turning some of those resources to the necessary construction and engineering work associated with the refugee problems.
  5.54 pm
  Mr. Ivan Lawrence: The right hon. Member for Tweeddale, Ettrick and Lauderdale (Sir D. Steel) has made some exceedingly good points on which we can all agree across party lines, particularly his last point about the need for arms control in the region, which the Foreign Affairs Select Committee will address in its forthcoming report which should be before the House in the next two or three weeks before it rises. When we took evidence we were appalled by the speed with which countries in the region are building up their arms. In particular, a number of the countries seem to have Scud C missiles, against which the Patriot missile provides no defence. That is an extraordinary worrying aspect of the problem to which we shall come in due course.
  In the interests of comparative brevity and so as not to be too repetitive of remarks which have already been so excellently made by my colleagues whom I was privileged to be with when we visited the camps in Iran, let me select two points. First, the appalling problem of the Iraqi refugees is the result of the international community's failure to respond adequately to the evil of Saddam Hussein. Yes, of course there was the magnificent response of the United States forces with the British and other members of the coalition to the invasion of Kuwait and the remarkable success of the war aim, and yes, the United Nations—I believe for the first time—provided the cover of lawful authority for the coalition to use force to drive Saddam Hussein out of Kuwait but no further.
  There could hardly have been greater international justification for going to war with Saddam Hussein, and there could hardly have been less sense in starting a war which did not finish him off along with his aggressive capability. Therefore, is there not something wrong with a United Nations process which could authorise a war so limited that the evil aggressor survives, mostly intact, to continue his aggression, to threaten the other nations in the region and to cause fear and terror to the refugees within his own country whom we are now considering?
  If there is one major lesson that must be learnt from the whole tragic episode, it is surely that, if the power to deal with the breakdown of international law and order by the enforcement of its resolutions, particularly when occasioned by the invasion of one country by another in breach of those resolutions, is to remain vested in the United Nations itself, that power must be greatly strengthened. If the United Nations imposes sanctions upon any country for the breach of international laws, it must have at its command the effective power to enforce those laws.
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  It is said that the reason why the United Nations resolutions went no further than to authorise the driving of Saddam Hussein out of Kuwait is that, under chapter 1, article 2·7 of the UN charter, that august body is prevented from interfering in the domestic jurisdiction of any state, and that China was too concerned about a precedent for United Nations interference in Tibet and the Soviet Union was too concerned about the precedent for United Nations interference in its problems with the states within the union to allow more to be done.
  In that case, if the United Nations is not to be a paper tiger or a toothless guard dog and thereby encourage aggression, either the UN must give up enforcement authority to NATO or some similar grouping or to action by the United States in a peacekeeping capacity, or it must change its rules to prevent China and the Soviet Union or any other permanent member of the Security Council in the future putting its concerns before the world order or the humanitarian needs of the moment.
  In my view, the United Nations should draw some encouragement from its first hesitant military action in Kuwait, and should go on boldly to develop internal rules to allow intervention to end aggression—both the kind of action that was taken by Saddam Hussein when he invaded a neighbouring country, and the kind represented by his turning on ethnic groupings of his own people. In particular, such intervention should be permitted if genocide would otherwise be likely to occur.
  Mr. D. N. Campbell-Savours: Is there not a possible halfway house which would avoid the wholesale breach of the principle of article 2·7? Could not that article be amended to allow the United Nations to interfere in a state's internal affairs if such interference arose from previous authorised actions taken by the Security Council?
  Such an arrangement would have overcome the difficulty in Iraq. It was the intervention of the United Nations—through the authorising resolution, 678—that led to the conflict within the country.
  Mr. Lawrence: That is an interesting suggestion; however, it would not cover circumstances in which a country that had not previously offended against the international rule of law did so for the first time.
  What we are now discussing is precisely how such an extension of the United Nations' effective power can be achieved. It has already been asked in this debate whether a change in article 2·7 is necessary, or whether it is sufficient for the general authority of the United Nations declaration on human rights—which is there among other things to prevent genocide—to prevail over that article. Should any such United Nations involvement proceed by way of separate resolutions, specifying the need to ensure peace and stability in the region concerned? Such a resolution was adopted at the time of the Gulf war.
  Let me state the obvious: in that instance, the use of the resolution did not prevent Saddam Hussein's withdrawal from Kuwait with much of his republican guard and goodness knows how many divisions of his army intact; with hundreds of tanks; with 150 aeroplanes and 500 helicopters; with the capacity for nuclear, chemical and biological warfare; and with 100 Scud missiles.
  Equally disturbing are the impertinent—but none the less deeply worrying—repeated Iraqi declarations of intent to reoccupy Kuwait, Iraq's refusal to allow inspections of its potential nuclear sites and the continuous broadcasts

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  on a number of radio stations throughout the region, telling their Arabic audience that the war had really been won by Saddam Hussein and that all declarations to the contrary were merely United States propaganda following that nation's defeat. All those developments have merely followed the adoption of the separate resolution: clearly, it did not solve the problem.
  It would be presumptuous and impertinent of me to suggest at this stage that I had the answers, and I make no such suggestion. Surely, however, we can all agree that the UN's powers must be strengthened, and that this is a good time to do so. When the Select Committee on Foreign Affairs saw UN officials in Washington, we gained the strong impression that they were apologising for the fact that any military support had been necessary.
  At a moment when the UN had just risen like a new born foal standing up for the first time—at a moment when the world should have been looking to that organisation for greater purpose and determination, and a wish to strengthen its approach—we were hearing apologies. We should watch that tendency carefully, and do what we can to strengthen the resolve of whoever succeeds Mr. Perez de Cuellar as UN Secretary-General.
  My second point concerns the plight of more than 2 million refugees—mainly the Kurds in the north and the Shi'ites in the south—who have fled in terror from Saddam Hussein. It is time that the international community united to provide a more effective, more efficient and therefore more life-saving system to deal with humanitarian disasters of this kind, and also with national disasters. It was satisfying to hear from the mouths of the Iranians that the quality of the United Kingdom's response had been perceived as good, and also that, in terms of the quantity of emergency relief to Iran, we ranked third in the list of donors. I believe that we have contributed more than £80 million in humanitarian relief alone.
  The hon. Member for Cynon Valley (Mrs. Clwyd) said that the Government's aid contribution had fallen below the gross national product level at which we are aiming. Let me tell the hon. Lady not only that we were thanked and praised for the amount of financial aid that we were providing, but that, throughout our visit, I heard no one say, "If only the British Government could provide more money." As further disasters occur, we may well have to find more money because we have given so much to the Iraqi refugees; but we are here debating aid for those refugees. [Interruption.] Let me assure the hon. Member for Cynon Valley, and any other doubters on the Opposition Front Bench, that no one else has brought to our attention any such complaint.
  There can be little doubt that hundreds—perhaps thousands—of Iraqi lives have been saved by the Prime Minister's initiative in establishing safe havens where Iraqi citizens can be protected from attacks by the military forces, and by the deployment of between 3,000 and 5,000 British troops. Thousands of people, some of them starving, have been brought down from the mountains, fed and sheltered and provided with life-saving medicines.
  Outside those havens, in the Iranian refugee camps, we found great cause for concern. What will happen when the bad weather comes—and, indeed, when boredom strikes, if it has not done so already? Tens of thousands of people are living in impossibly cramped conditions with nothing to do—many of them people of action, former members of the Peshmerga guerrilla group. If confidence does not
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  return—sadly, the Select Committee did not think that it would, given the existing circumstances—action will be urgently needed.
  What is needed, if efficiency is to be improved, and what is barely available in the case of the Iraqi refugees, is a United Nations force of sufficient strength to deter an aggressor from further action against his victims. The United States does not want its troops to stay in the Gulf, where they believe that they are not welcome and where they are terrified of developing a long-term commitment of the Vietnam kind. The British and the other coalition forces are similarly unenthusiastic, and feel unable to take on such a commitment. It is possible that the Turkish army, the Syrian army, another army or a combination of all those will have to provide for the protection of ethnic minorities in the region; certainly, a Gulf security system will have to be worked out. The next report of the Foreign Affairs Select Committee, which is due shortly, will address that issue.
  No one can deny that it is regrettable that comparatively few of the intended 500 United Nations field service officers have materialised. There are about 135 United Nations staff in Iraq, plus 70 seconded from Nordic non-governmental organisations and Governments, but there are only 48 field officers, of whom nine have now left.
  That has meant that the coalition forces will have to remain, perhaps indefinitely, to provide reassurance for the Kurds so that they will return to their homes without fear. As we say in our report, it would be wrong for the coalition forces to leave them to the mercy of Saddam Hussein's troops. Something more must be done urgently for the United Nations to get its enforcement powers together.
  The second element required is a far more efficient system of organising and distributing aid. Those of us who saw the Kurdish camps in Ziveh and the Shi'ite camp in Shush were most impressed by the work done by the NGOs to feed, shelter and provide medical treatment for the refugees. However, we heard stories about total lack of co-ordination, some of which have been mentioned in the debate. We hear such stories repeated in disaster after disaster.
  We heard that sometimes the wrong type of tent or the wrong sort of food supplies are sent. Supplies that are surplus to requirements in one camp are sometimes not available in another camp where they are desperately needed. We heard about the duplication of medicines and sometimes the wrong sort of medicine, the sending of a large number of unnecessary helicopters and second-hand unserviceable equipment. We heard of the sending of high-energy biscuits when the need for them had passed and the only use for them was to use the wrappers to provide shelter and warmth.
  We heard of dedicated NGOs duplicating each other's efforts and nearly getting in each other's way. One NGO group—I think that it was a French group—returned home in pique and disgust. We have heard of hesitancy from some sources in providing financial assistance because of uncertainty about the use to which it would be put. We understand that there are pressures against efficiency.
  Mr. Campbell-Savours: Is it not time to let somebody else speak?
  Mr. Lawrence: There will be plenty of time. The hon. Member for Workington (Mr. Campbell-Savours) takes up an enormous amount of the House's time by asking all sorts of impenetrable questions. It would be much more helpful if he were to remain silent.
  There is a desire for democratic Parliaments clearly to identify visible aid projects, like so many tonnes of wheat or so many helicopters, and they desire not to have their money disappear into book-keeping or be wasted because the distribution system from the ports is inadequate or wasteful.
  All that points to a desperate need to have somebody or some groups to co-ordinate all the aid activities. It is astonishing that, in this electronic age, there seems not to have existed in this disaster a computerised information system to identify the places of urgent need, the sort of aid on offer and the areas where no offers of the right type of aid have yet been made. Such a system could co-ordinate the offers of aid with the correct areas. It is almost incredible that no computer appears to be planning the routes available for distribution and delivery vehicles.
  We need a blueprint for future responses to international disasters. We need rules about when the Government of the disaster-riven country take control and when they do not. We need rules about who takes control when the Government of the country is incapable. We need a rule book of actions that can speedily bring together, co-ordinate and redirect the substantial aid that is available from the world at times of heartbreaking disaster, whether natural or manmade. It should not be necessary to start from scratch with every new disaster, learning the same lessons again.
  The British Government, in co-operation with the British people, have acquitted themselves well in providing resources, assisting our NGOs, helping to co-ordinate European Community assistance, bringing about safe havens, in getting resolutions past the Security Council, pursuing an initiative with the Germans for the appointment of a senior United Nations co-ordinator and, of course, providing the military assistance necessary to end the instability and anarchy in the region. If the Government could convene a conference in the near future of all those involved in the recent emergency planning and field work to draw up a blueprint for the future, they will have made an outstanding contribution to the cause of humanity.
  6.14 pm
  Mr. Ted Rowlands: Like many of my colleagues who visited the camps, I came away with a number of impressions. Many observations have been made by hon. Members who visited the camps and I do not want to repeat them.
  I should like to draw to the attention of my hon. Friends and the Minister one or two observations about the position of the refugees before dealing with the broader issue, which is that the Kurdish and Shi'ite refugee problem is not only an aid problem but, as my hon. Friend the Member for Cynon Valley (Mrs. Clwyd) said, a political problem. It is a problem of international order and political decision.
  We must not let the House forget that the potential for a further huge influx of refugees is considerable. The Iran-Iraq border was heavily fortified during the eight-year war and, ironically, the bombing of all the
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  bridges made movement of people across that border almost impossible. That has meant that the refugee problem in the south could be understated.
  It is sickening to realise when one visits the camps that every refugee crisis, even if it is three quarters solved, leaves behind yet another residue of permanent refugees. In one of the camps that we went to see there were many thousands of Kurdish refugees who had been there since 1975. The Iranian authorities reminded us—I had forgotten but I am sure that other hon. Members have not —that they are permanently maintaining under their refugee programme 2·5 million refugees from the Afghan war. We have had many quarrels and differences with the Iranian regime, but we must compliment the Iranian authorities on their work in refugee camps. The Iranian Red Crescent is one of the most efficient and compassionate organisations. Iran opens its borders to large numbers of people.
  It was pointed out to us by people representing United Nations agencies that, curiously, national Governments now feel a desperate need to respond to crises in a macho and virile way. There is almost an aid race in which every Government want to show their electorate that they are responding to the latest crisis. As a consequence, there is often a lack of co-ordination, duplication and considerable waste.
  In an eloquent appeal, my hon. Friend the Member for Cynon Valley said that we need a form of investment in United Nations agencies so that we can co-ordinate our activities through the United Nations rather than conducting the aid race in a macho and virile way while Governments are attempting to prove that their aid programme is bigger, better and more effective than anybody else's.
  The plight of the Kurds and the Shi'ites represents a broader political issue. We must admit that until we saw on our television screens the plight of the Kurds on the mountains there had been remarkably little interest in their dilemma. They have been a mild embarrassment to the international community for generations because they do not fit into an easy, tidy, nation-state pattern. They have been a special embarrassment to Iranian, Turkish and Iraqi Governments for some time. I must say—I hope that I do not enter a jarring note into a consensual debate—that that attitude was exemplified by the Minister of State, Foreign and Commonwealth Office. When he appeared before the Select Committee on Foreign Affairs on 30 January, I pressed him on the Government's attitude to autonomy for the Kurds and he could barely conceal his impatience. At the end of our exchange, the Chairman said:
  "I think the Minister is telling us we have enough on our Plate!"
  On 30 January, the Kurdish issue was not of great ministerial concern.
  The Minister of State, Foreign and Commonwealth Office (Mr. Douglas Hogg): I do not have a record of our exchange, but I recall that the hon. Gentleman was suggesting that we should support a policy of creating an independent Kurdistan.
  Mr. Rowlands: I have the record. I asked the Minister:
  "Is there not a case for championing some particular autonomy which would recognise the very distinctive … characteristics of the Kurdish people?"

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  I was not pressing for a Kurdish state; I was questioning whether the Kurds would be a problem. The Minister rightly said that we must maintain territorial integrity and national boundaries, but in January the general attitude was that the Kurds were a problem and an embarrassment. They became a global embarrassment only when we saw their suffering on our television screens.
  Hon. Members have said that the Kurds and Shi'ites represent a new challenge to the way in which we conduct international affairs and to the new international order that may emerge in the wake of the Gulf war, but the United Nations seems to recognise international disorder only when there is an act of aggression by one state against another. Experience of Yugoslavia and Iraq shows that international regional disorder occurs not only when one state attacks another but when the inherent structural problems of the societies on which we base international order—the notion that nation states are inviolate—are not recognised by the international community. As the cement of the empire, in its broadest sense, dissolves at the end of the century, those issues will become increasingly prominent.
  That problem is demonstrated by the disintegration of the Ethiopian empire and the emergence of traditional rivalries. The dissolving of the cement of the Soviet communist empire is causing similar tension and rivalry in traditional relationships. The same is happening in Yugoslavia and will happen in the middle east.
  On our travels, I spent my time on planes reading one of the most authoritative accounts of the origins of Iraq. Everybody knew that we just drew lines on a map. Minutes of memoranda of the great debates on the birth of the artificial state of Iraq disclose chilling prophesies that now seem relevant, despite their being written 40 or 50 years ago. One internal commentator said:
  "You are flying in the face of four milleniums of history if you try to draw a line around Iraq and call it a political entity".
  At the time of the birth of Iraq, the minutes of a Foreign and Commonwealtth Office official said:
  "Almost 2 million Shi'ite Moslems in Mesopotamia would not accept domination by the minority Sunni Moslem community yet no form of government has been envisaged which does not involve Sunni domination."
  He described the nature of that domination as essentially military domination.
  Although I am not saying that we should be trapped by history—50 or 60 years later, events may have made those early judgments wrong—it is chilling to note the assessments that were being made during the artificial creation of a state such as Iraq because, in different ways, they are now manifesting themselves. We must ask ourselves the awkward and painful question whether Saddam Hussein, whom we all detest and believe must go, is not at least partly the creature of the state that was created. If the answer is yes, do we say for ever and a day that a state that was artificially created for a host of wrong motives should be the basis on which we maintain international order? I realise what a dangerous minefield one walks through when one makes such comments, but, given the dissolution of empires in the late 20th century, these issues will crop up time and again.
  I shall complete my brief historic footnote by saying that, curiously, the 1920 treaty of Sevres, which was drafted and approved but never implemented, recognized
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  that such issues would arise and tried to write in autonomy for the Kurds, the Armenians and the Azerbaijanis—areas that have now become hot spots.
  A number of hon. Members have asked to what extent the new international order will continue to uphold the principle of non-interference in nation states, especially if they are not necessarily cohesive or do not have sound bases of language, culture and national identities. That problem will not go away.
  The dilemmas of the Kurds and Shi'ites in Iraq, the fact that we have established safe havens and sent rapid deployment forces to defend them and to guarantee the rights of minorities within the inviolate nation state of Iraq point in the long term to a new international order based on, dare I say it, some form of world government. Unless we learn the lessons and realise that, I am afraid that this last episode will be a footnote in the sad history of Kurds rebelling and being betrayed.
  6.27 pm
  Mr. Jacques Arnold: I believe that we have two lessons to learn from the Kurdistan refugee crisis: first, the potential effectiveness of the European Community as a powerful forum for initiative in foreign affairs; and, secondly, the key role that is being played by my right hon. Friend the Prime Minister.
  We all watched the events of the Kuwait campaign and the 100 hours to the ceasefire. That ceasefire has left Saddam Hussein in charge, but was due, after only 100 hours, in no small part to the scars of Vietnam on the American nation. We are all aware of the reluctance of the United States to become involved in foreign adventures, and its fears of getting bogged down.
  In Europe, and in Britain in particular, the reaction was very different. The public were concerned. We were all extremely moved by scenes on our televisions of masses of civilian populations who were totally unprepared for their movement into the mountains. Rightly, in Europe there was a wave of humanitarian revulsion at what we were seeing, and a demand for immediate action.
  The initiative of my right hon. Friend the Prime Minister at the European Community summit in Luxembourg on 8 April got the bandwagon going. The agreement between European Community leaders to take action caused the United States to make an active response, which we saw on 16 April with the joint announcement by the United States, France and Britain that they would send troops to northern Iraq to co-ordinate the relief work and to establish safe encampments. We now know that it met with considerable success. Most of the Kurdish civilians have come down from the mountains. Some went into the camps and are still there, but most have been moved back to their original homes in Iraqi Kurdistan. There has also been a European initiative to transport refugees back from Iran.
  The lessons to learn are that we have a Prime Minister who has rapidly gained in international stature to give a lead in effective action on the world stage, and that the European nations, working in concert, carry a mighty diplomatic clout which can precipitate action on a world scale and can influence the United States to change its position.
  However, problems remain. We must somehow maintain the confidence of the Kurds who have returned home and persuade them to stay put in their homes and to

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  feel secure. The allied forces in the area are currently providing that security, but there is a real fear of their withdrawal. However, the sending of United Nations guards to the area is no effective solution. That is exemplified by a letter sent by the Secretary-General of the United Nations on 30 May to the president of the Security Council.
  The annex to the letter contains descriptions of the deployment of those guards. For example, it states:
  "The number of Guards in the Contingent will be kept under review as further units are dispatched, but will not exceed a total strength of 500."
  When one considers the residual strength of the Iraqi armed forces and the vast size of the Kurdish populations involved, one realises that the number is wholly inadequate.
  The annex to the letter continues:
  "The number of Guards assigned to the various regions will be decided in consultation with the Government authorities concerned"—
  which means mainly Iraq—
  "but would not exceed 150 in any one region."
  Again, that is wholly inadequate in view of the scale of the country.
  It is even more farcical that the annex continues:
  "United Nations Guards will be authorized to carry side-arms (pistols/revolvers), which will be provided by the Iraqi authorities".
  Clearly, the United Nations guards can play only a symbolic role. They are poorly funded even for the limited job that they have been sent to do. I understand that a special fund has been established within the United Nations. It is interesting that the United Kingdom is the largest contributor and is way ahead of others—notably the United States. Will the Minister confirm the leading role that we are also playing in that respect?
  To answer the question why a United Nations force has not been sent and why we are confined to the services of valiant doorkeepers, one has only to read The Economist of 22 June, which summed up the matter neatly:
  "Neither the Soviet Union nor China would approve action"—
  the dispatch of a United Nations force—
  "on the Kurds' behalf in the full glare of the Security Council. They feared the precedent such intervention could set for, say, Tibet or the Baltic republics. Other countries, standing by the clause in the UN charter that bars it from internal disputes, felt the same."
  That highlights the continuing practical limitations of the United Nations, which is, of course, bound up in the various legalities which were dealt with so well by my hon. and learned Friend the Member for Burton (Mr. Lawrence). It is tragic that the United Nations did so well with the nation of Kuwait, but is largely paralysed over the internal problems of Iraq, notably those in Kurdistan.
  It is clear that we must maintain a strong military presence until the establishment of an adequate intervention force by the allies. In particular, we must ensure that the airborne capacity is adequate for the task.
  6.36 pm
  Mr. Dennis Canavan: I was also a member of the Select Committee on Foreign Affairs which visited the refugee camps on the Iran-lraq border about six weeks ago. We had the opportunity to talk to Kurdish
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  refugees from the north and to Shi'ite refugees from the south of Iraq who had been forced to flee from the forces of Saddam Hussein.
  Despite what the hon. and learned Member for Burton (Mr. Lawrence) said about evidence of inefficiency—and I agree with at least some of what he said—I pay tribute to all the organisations over there— governmental and non-governmental—that are doing their very best to deal with difficult circumstances. I pay a special tribute to the Iranian Government and to the Iranian Red Crescent, because it is largely due to their efforts that what we observed was not nearly as bad as I had feared before I went.
  I have visited refugee camps in other parts of the world with the Select Committee. For example, a few days ago I visited refugee camps on the Sudan-Ethiopia border where the smell of death permeated the atmosphere and where sick, starving and dying children were everywhere to be seen. By contrast, the children whom we saw in the camps in west Azerbaijan and Khuzestan looked, for the most part, healthy and in very good spirits. However, I do not want to underrate the horrific experience that those children and their parents must have undergone. It must have been an ordeal for them, first, to literally run for their lives from the killing machine of Saddam Hussein and then to be faced with the threat of death from starvation on freezing mountain tops.
  When we visited the camps in late May the worst seemed to be over, at least for the time being. I emphasise the latter phrase. The reason why the worst seemed to he over at least for the time being was that the various aid agencies appeared to be getting to grips with the basic needs of the refugees. However, there is no room for complacency—there is much more to be done, bearing in mind that there are about 2·5 million refugees or displaced persons in that part of the world. Winter is approaching and, looking further ahead, we cannot and must not expect those people to live in refugee camps for ever. We must step up our efforts to find a permanent long-term solution, including a political settlement. That means trying our best to find a peaceful and democratic solution to the internal problems which still exist in Iraq and it also means going some way to meeting the legitimate aspirations of the Kurdish people for a degree of self-determination or autonomy.
  The Kurds were suffering atrocities at the hands of Saddam Hussein long before he invaded Kuwait and the Gulf war has, arguably, made things worse instead of better for them. We therefore have a duty to do everything possible to help them in their immediate plight and in the longer term.
  I want to comment on the British contribution to the crisis. By 1 May this year, the Overseas Development Administration had committed a total of £61·5 million, but it is important to point out to the House that only £30 million of that is new money from the Treasury's central reserve. In other words, more than half that money comes from the existing, over-stretched ODA budget. If we take the new money—£30 million—and divide it by the 2·5 million people involved, it works out at the princely sum of £12 a head. It is not a huge amount when considered in those terms.
  It is also worth considering that the ODA was charged by the Ministry of Defence for much of the relief operation carried out by the armed forces. I hope that the Minister will reply in his summing up to the Select Committee

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  recommendation that there should be a new arrangement between the ODA and the Ministry of Defence. I should prefer there to be no transfer payment from the aid budget to the defence budget, but if there is, it should take into account the training element for the armed forces in the refugee operations. That is an explicit recommendation in the Select Committee report.
  According to the Government, the Gulf war cost them £2·5 billion. That is probably an underestimate, but the truth will come out at the end of the day. The total ODA commitment of £61·5 million to help Iraqi refugees alone is the equivalent of three Tornado aircraft. Perhaps that brings the matter into perspective. Why are the Government's spending priorities such that they spend so much on a destructive war that cost more than 100,000 lives and yet spend relatively little on trying to help the refugees who are the victims of the aftermath of that war?
  I hope that, as a result of this debate, more priority will be given to helping not just Iraqi refugees, but the many others throughout the world who find themselves the innocent victims of disaster, whether it be famine, flood, earthquake or the ravages of war. For the sake of humanity, we owe help to those people, especially if we have been partly responsible for precipitating the action and thereby partly responsible for causing the desperate situation in which they find themselves.
  6.42 pm
  Mr. D. N. Campbell-Savours: I shall be brief and truncate my remarks. I found the speeches of my hon. Friend the Member for Merthyr Tydfil and Rhymney (Mr. Rowlands) and of the hon. and learned Member for Burton (Mr. Lawrence) most interesting, although the latter's speech was too long. They addressed the central issue arising from the Gulf conflict of how we deal with the question of article 2·7 which deals with intervention in the internal affairs of nation states. When the Select Committee on Foreign Affairs examines the matter, it should do so from a wide perspective, and it should do a lot of work because it will be making a contribution to the international debate on the matter.
  I refer to the implementation of resolution 688 by the United Nations, especially the section in paragraph 2, which deals with ending the repression. Mr. Talabani and his advisers told me and my hon. Friend the Member for Cynon Valley (Mrs. Clwyd) in Istanbul only a week and a half ago that the Kurdish leadership had had no contact with the United Nations monitors in the field. It was we who had to advise them to make contact. Even when we asked Mrs. Ogata—the United Nations High Commissioner for Refugees—yesterday whether that contact had been made, she was unable to tell us. Only when that contact is made will evidence of repression be proven to the international community and especially to the Security Council of the United Nations. Only when that evidence has been proven and reported back can any rapid action force deployed in Incerlik in southern Turkey or elsewhere be used. It is the linkage between the reporting back by the United Nations monitors to the Security Council through Mr. Van de Stoehl, the former Dutch Foreign Minister, and the threat of action by the rapid action force based in southern Turkey which will force Saddam Hussein to realise that the major powers mean business in exercising resolution 688, which refers to the need to end repression.
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  The second part of resolution 688 which is important to the debate is the part that deals with the need—I think that the word "insist" is used—for the Iraqi regime to give access to the United Nations humanitarian effort wherever in Iraq it is required. Following our meeting with Mrs. Ogata in the House yesterday, it is my view that the resolution is not being implemented. The Iraqi Government are preventing access by United Nations personnel to various parts of Iraq. Furthermore, the United Nations has simply not put in place the number of people necessary to ensure adequate coverage of the whole of Iraq in providing humanitarian relief.
  Significantly, whereas the United States was prepared, acting on the basis of paragraphs 12 and 13 of resolution 687 which deal with nuclear weapons and nuclear weapons technology, to issue the threat of foreign intervention if necessary to secure implementation of those paragraphs, to date it has not been prepared to threaten Iraq on the basis of that country's failure to permit access under paragraph 3 of resolution 688, which deals with the need for Iraq to allow passage to United Nations representatives for the purposes of humanitarian relief. I hope that my comments will be taken on board by Ministers because the debate will turn on both matters in the coming months.
  A number of my hon. Friends asked why, at the end of the war, we did not proceed to block off Saddam Hussein's forces and, as many have argued, go as far as Baghdad. The answer is simple, and the British people should understand that answer. As politicians, as Ministers, or as representatives of the American Government, we all had to give undertakings on British television and in the rest of the British media that the war aims of the coalition were confined to getting Saddam Hussein out of Kuwait. I remember the Chairman of the Select Committee on Foreign Affairs being interviewed on television and having to make the point that our war aims were restricted. He referred to the possibility of dealing with the matter in a later Select Committee report. I hope that he does not go further than his comments on British television only three months ago. He could not go further. The pressure did not come only from American public opinion, but in the House, when many of my hon. Friends—and, indeed, many Conservative Members—demanded that a restriction be placed on the war aims. Furthermore, we were conscious of the rioting in major capitals throughout the region, such as Cairo and Tangiers. There were objections even in Saudi Arabia to the way the war was going from some Shi'ite groups. In Pakistan and Iran, there were demonstrations in capital cities. There were demonstrations in Syria. People forget that we were circumscribed by international opinion. That is why we did not go further, and that is why we were correct not to go further. People should not change the debate now that the conflict is all but over—apart from these remaining matters.
  Some argue that sanctions should be removed. In my view, they should not be removed; they should stay. It is the responsibility of the United Nations to resolve the problem of humanitarian relief inside Iraq. If the United Nations officers in the field feel that they do not have what Mrs. Ogata described yesterday as "the wherewithal" to deal with the problems, they must report back to the Security Council the needs of Iraq in terms of humanitarian relief. Those arguments should take place in the United Nations. It is not for western Governments unilaterally—or, indeed, for the United Nations—to end

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  sanctions. It is for western Governments, through their United Nations relief programmes, to intervene and provide whatever is required.
  6.49 pm
  Mrs. Maria Fyfe: I am in a little difficulty, as I understood that the Front-Bench speakers wished to begin winding up the debate at 6.50 pm. I see my hon. Friend the Member for Cynon Valley (Mrs. Clwyd) shaking her head, so I shall continue quickly.
  Other hon. Members have spoken about the future possibilities for a new international order. I hope that the day will come when we have that, but it will have to be a genuine new order, with all the nations in the United Nations, not, as we have now, an order dominated by the five permanent members of the Security Council. Some of us would have believed more readily in those countries' intentions concerning the Gulf war if we had not seen the important United Nations nations, at the behest of the United States, standing back and doing little about repression in Cambodia, Palestine and Nicaragua.
  Paragraph 1 of the report of the Select Committee on Foreign Affairs says that the resources to provide aid for Iraqi refugees are "severely stretched". Many of us wonder when the day will come when the nations of the world will spend on anything like the same scale to save lives as they have spent to kill people. The coalition forces spent £100 billion on the war, yet when the United Nations sought relief support for the refugee problem it managed to get only £58 million to help what it then thought would be about 400,000 refugees. In fact, by mid-April there were 400,000 refugees on the Turkish mountains and 400,000 more in Iraq near the Turkish border, 1 million in northern Iran and 70,000 in southern Iran—a total of 1,870,000. The aid was indeed thinly spread.
  If I were to encourage people to rise up against their oppressors—for instance, by encouraging the Iraqis to rise up against Saddam Hussein—I should feel some responsibility if they took me at my word, and would have financed that uprising. People were cynically left to rise up and given practically no support. Then they were left in appalling conditions in the mountains.
  It is not true that this Government came hastily to the refugees' aid. They did so only after the British people had seen the refugees' plight on their television screens and kept complaining about the Government's lack of response. The same thing happened when the American people saw the plight of the Kurdish refugees on television. Only then did western Governments start responding to the refugees' plight.
  The huge responsibilities taken on by Iran in caring for the refugees both now and in past years put yesterday's Government statement about refugees coming into this country in a poor light. A paltry few hundred people are arriving here, yet the Government go to great lengths to resist their being allowed in. They say that those people should stop off at the first available safe country instead of heading here. What an ungenerous response in comparison with the responsibilities thrown on to the shoulders of Iraq's neighbouring countries.
  The Government dithered during April and said that they were worried about intervening in the internal affairs of Iraq, although our forces had already bombed Iraq
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  back into a pre-industrial age. People are still dying in their hundreds of thousands because of infected water, poor sanitation and lack of medicines. The Government's response was farcical.
  I should be glad if in future people recognised that we have responsibilities to each other as human beings, and did not allow the barriers presented by nation states to stop us coming to people's aid promptly and fully, with a wholehearted response that recognised human need. I should be glad if, for once, we could start working towards a system in which we were willing to spend anything like the same amount of money on saving lives as we have all been spending on destroying lives.
  6.54 pm
  Mr. John McFall: I was recently reminded of the words of David Lloyd George:
  "the most persistent sound which reverberates through men's history is the beating of the war drums. This war, like the next war, is a war to end wars."
  Those words came to mind as, making my way to Kuwait City with the Select Committee on Defence, I flew over the burning oil wells. Someone said then that if hell had a national park that would be it.
  What have we gained from the war? What have been its costs? We have 1·8 million refugees, and we have created a political problem. As paragraph 15 of the report of the Select Committee on Foreign Affairs says, it
  "raises the grim prospect of a seemingly unending refugee operation of Palestinian proportions."
  The Select Committee should be congratulated on giving us a short and cogent report on refugees and aid.
  I have looked at the British Refugee Council's report of its visit to Iran at the beginning of June. Iran was commended for the way in which it has coped with the refugees. The report said that the number of refugees in Iran will exceed 1·3 million, and that in spite of any negotiations between Saddam Hussein and the Kurds 40 per cent. of them will stay behind. As my hon. Friend the Member for Glasgow, Maryhill (Mrs. Fyfe) said, it bodes ill when we compare our own treatment of refugees with the way in which Iran has treated the 1·3 million refugees who have come to its borders. The report estimates that 400,000 to 600,000 Shi'ites have been displaced in the southern parts of Iraq.
  The Harvard team of medics referred to by my hon. Friend the Member for Linlithgow (Mr. Dalyell) has estimated some of the costs of the war. It gives chapter and verse on mortality and morbidity, but the factor that stands out is that 170,000 Iraqi children under the age of five will die in the next year if we do not do anything. To those who say that we should not lift sanctions I say, "Think of one of those 170,000 children as being your own son, your own daughter or your own niece or nephew". Could those people then stand up and say that we should not lift sanctions? The team of medics tells us that those children will have a slow and painful death because of the stone age conditions that now exist in Iraq. Those conditions exist because the coalition forces ensured that they would.
  We spent £100 billion prosecuting the war, yet to date we have spent only slightly more than £60 million on prosecuting the peace—less than 1 per cent. of the amount spent on the war. That is not good enough. The humanitarian aid has been welcomed by Iran and the Kurds, and the human effects of the Gulf war are now

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  being ameliorated by international aid, but that does not erase the effects already suffered. In many respects the immediate aftermath of the war has improved very little in the intervening four months. In terms of malnutrition and disease control the situation has deteriorated further.
  From a humanitarian point of view, I plead with the Minister to lift sanctions, in the name of humanity if for no other reason. My hon. Friend the Member for Merthyr Tydfil and Rhymney (Mr. Rowlands) explained how Saddam Hussein had been created, and that should be the lesson of the war. What will happen next—we have seen it already, with more arms sales to the middle east—is that we will get another Saddam. There will be Saddam 2 and Saddam 3. The only way to cut his legs off will be to prosecute another $100 billion war, and deliver 2 million more refugees. It is not worth it.
  We see the kernel of the problem when we consider the permanent members of the UN Security Council and the supply of arms to the middle east. That is where the solution should lie. I look forward to the report of the Select Committee on Foreign Affairs on the issue of arms control measures. We are reminded in the 20 May issue of The House magazine that the five permanent members of the UN Security Council supplied middle eastern nations with $163,200 million worth of material during the four years preceding the arms embargo against Iraq. Baghdad received the largest proportion of that—$52,800,000. Sadly, Saddam Hussein is our creature because we supplied him with those arms.
  The lesson of the war is that we should immediately convene a middle east peace conference encompassing all the issues, so that we do not find ourselves faced with a Saddam 2 or a Saddam 3 and 2 million more refugees.
  7 pm
  Mr. Tam Dalyell: Like my hon. Friend the Member for Dumbarton (Mr. McFall), I am in favour of the lifting of sanctions forthwith.
  A fortnight ago I shared a platform with the actress Vanessa Redgrave who had just come back from Iraq. Her report, which I believe was factually accurate, was along similar lines to the Harvard report, from which I must quote:
  "The study team gained the first unsupervised access to Iraq's electrical power plants and finds that Iraq today generates only about 20 per cent. as much electricity as before the Gulf War."
  The Harvard doctors write:
  "There is a link in Iraq between electrical power and public health … Without electricity, water cannot be purified, sewage cannot be treated, water-borne diseases flourish, and hospitals cannot treat curable illness."
  One of the study team's findings, which has been repeated today, was that at least 170,000 under-fives will die this year. The team also found that water purification, sewage disposal and electrical power plants have been incapacitated. Without imported parts one cannot run generators, and without generators there will be no electricity to deal with sewage and water purification.
  I realise that there are problems in lifting sanctions. I refer the Government to Aviation Week and Space Technology of 1 July, which states:
  "Estimates were received that 6 million Iraqis could have died from dispersion of stored anthrax and botulism viruses."
  Can the Minister comment on the leaking of chemicals stored at the Muthanna military complex near Samnarra?
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  They may have been badly stored, but apparently they may well be leaking as a result of bombing and poor maintenance.
  What do the Government propose to do about the recommendations of the United Nations inspection team, led by the Australian, Dr. Peter Dunn?
  As I said, I realise that there are difficulties in connection with lifting sanctions. What is the latest information about the nuclear issue, for example, and what were the results of the presentation of classified spy satellite photographs to the United Nations Security Council? Did the Iraqis remove nuclear equipment from Abu Ghurab, north of Baghdad, last Monday? Were the inspectors denied access, and what do Ministers propose to do about their statement that
  "activities which had been observed from a distance during a first visit had ceased and objects that had been seen had been removed"?
  I admit that that is part of the difficulty in lifting sanctions but—but, but, but—as my hon. Friend the Member for Dumbarton says, in humantarian terms, the public health catastrophe that is upon us simply does not bear thinking about.
  7.3 pm
  Mr. Harry Barnes: I welcome the report of the Select Committee on Foreign Affairs, although I thought that some Conservative Members who spoke in its favour showed considerable complacency, especially about the role of the Overseas Development Administration.
  On 1 April or thereabouts, we saw on our television screens the desperate situation facing the Kurds, yet even by the end of April very little had been done despite the considerable public response and their desire to assist.
  Throughout April, masses of Kurds starved, froze and died. It was evident that a huge airlift of aid should have been the first priority. The policy of safe havens made sense only if those to be defended could also survive the elements. Organisations such as the Red Cross, Oxfam and the Save The Children Fund did valiant work, given the limits of their resources, and the disaster unit of the ODA, starved of adequate funding and full logistical back up, worked beyond the call of duty.
  Why did not the Cabinet provide the resources needed for Britain to set in motion an equivalent to the Berlin airlift? For weeks, people throughout the country had been collecting blankets, groundsheets, medicines, clothing and so on. The medical goods were sent on the basis of information supplied by the Iranian embassy about the materials required. The public will be aghast to discover that much of the material was not dispatched until more than a month later.
  It is not true that the ODA sent massive assistance to Iran. To 28 April, only four 707s, carrying about 35 tonnes each, went to Iran. That is disgraceful. Later, there was a build-up in the number of aircraft sent, so it looked as though a reasonable number of them had gone, but at the time when it was needed the material was simply not being sent in in anything like the amounts that Conservative Members suggested.
  Bodies emerged in Britain such as British Aid for the Kurds, which had collected huge quantities of material and had access to much-needed supplies from numerous firms. Private truckers such as Track 29 moved their goods

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  free of charge, and Iran Air sent in high-capacity 747s to collect the supplies. The 747s can carry up to 100 tonnes, unlike the 707s used by the ODA.
  With the best will in the world, and after superhuman effort, bodies such as British Aid for the Kurds were still left with masses of materials on their hands, which presented warehousing problems, while they desperately searched for more flight opportunities. All that the ODA could do was respond ad hoc, paying for the odd movement or the storage of goods. It was at Cabinet and prime ministerial level that the decision needed to be taken to overcome the logjam and to ensure that the goods were shifted more quickly than Iran Air could shift them on its own. Throughout April, Iran Air was even paying landing charges at Heathrow airport. Only later were some landing charges lifted, but only for special flights coming to Britain —even though standard Iran Air flights were taking out full loads of material.
  I hope that, in producing its next report, the Foreign Affairs Committee will examine what happened in respect of the movement of goods. Bodies such as British Aid to the Kurds collected much-needed material—not the material rubbished by the ODA, referred to in the report. Those bodies did invaluable work, and the British public made a great response. Long before a concert was held to raise money, and long before others—who also did invaluable work—began to move in on the act, ordinary people throughout the country had collected valuable material.
  Miss Emma Nicholson: Does the hon. Gentleman agree that, although the British public's generosity in giving goods was tremendous, in times of disaster relief, it is more practical to give money? The same goods could have been purchased in Teheran. In fact, three times as much could have been purchased for the value of the goods that were piling up at London airport. It would be in everybody's interests to encourage people to give money and not goods in any future disaster.
  Mr. Barnes: The successor organisation to British Aid for the Kurds is now trying to help in the Horn of Africa and it is collecting money because of the difficulties of shifting the appropriate material. If the ODA could handle the situation properly and could draw on what has been collected in this country, that would be of benefit. After exchange rates and foreign markets are taken into account, the subsequent sum is often less than the amount that was originally collected.
  We should not decry the important work carried out by various organisations to send much-needed material to Iraq. People saw the disaster on their television screens and they knew what materials were likely to be required. They collected that valuable material and the ODA should have been able to distribute it. Organisations like British Aid for the Kurds should not be written out of the record.
  British Aid for the Kurds is a successor to Parcels for the Troops in the Gulf. When it organised those parcels, they were sent out very easily because the Ministry of Defence was sending planes and provisions to the area. The parcels were well packed, and they were sent off easily. The woman who organised those two groups, Lorraine Goodrich, has received her reward from Buckingham palace in connection with her work for Parcels for the
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  British Troops in the Gulf. However, her assistance for the Kurds is written out of the record by the ODA. I hope that British Aid for the Kurds will not be written out of the record when the Foreign Affairs Committee considers these matters further.
  7.11 pm
  The Minister of State, Foreign and Commonwealth Office (Mr. Douglas Hogg): The House will agree that few citizens have greater cause to fear their Government than do the Kurds have reason to fear and loathe Saddam Hussein. His policy towards that part of Iraq has been marked by murder, betrayal and a brutal disregard for the obligations that a Government owe to their citizens. Those essential facts explain the chaotic and distressing flight to the mountains that we witnessed earlier this year and which, following the intervention of my right hon. Friend the Prime Minister, led to the massive relief operation and the creation of safe havens that have been the focus of this debate.
  I was in Luxembourg on 8 April when my right hon. Friend the Prime Minister launched his initiative. My hon. Friend the Member for Gravesham (Mr. Arnold) was right to emphasise that my right hon. Friend the Prime Minister, by his action and the policies that were pursued thereafter, made a decisive and imaginative contribution to the relief of suffering in that part of Iraq.
  This debate was opened eloquently by my right hon. Friend the Member for Guildford (Mr. Howell) who is the Chairman of the Select Committee on Foreign Affairs. Many of the facts and considerations that are relevant to this debate can be found in the admirably succinct report that was published two days ago. My right hon. Friend the Minister for Overseas Development very much regrets not being able to be present here today. She will make a full, written report to that document later this year. For that reason, I hope that I will be forgiven if I do not deal in over-great detail with some of the specific recommendations in the Select Committee's report.
  In responding to the debate, I want to reply to particular points made by right hon. and hon. Members, to explain what we have tried to do in Iraq, in particular in north Iraq, to assess the current position in that country and to give the House my view on how policy is likely to unfold.
  The Select Committee's report emphasises the scale of the crisis that confronted the world in March and April of this year. On 10 April, as is stated in the report, there were more than 400,000 refugees camped in the mountains of Turkey. There were about 400,000 refugees in Iraq close to the Turkish border. There were about 1 million in northern Iran and about 70,000 in southern Iran. That was indeed a people in flight. It was a tragedy on a scale that is seldom seen. Since then, as the House is aware, the position has improved substantially—at least in north Iraq.
  All the refugees on the mountains within the allied controlled zone have returned to Iraq. The mountain refugee camps are closed and the transit stations are almost deserted. The towns of Zakho and Dahuk, together with most other towns and villages, are returning to normal. To be more precise, the latest information suggests that of the original 1.8 million refugees who left

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  Iraq for Turkey and Iran, 1 million have now returned to their homes with the rest dispersed in camps and United Nations' humanitarian centres.
  The relief operations in the north-east are being led by the International Committee of the Red Cross and by the United Nations High Commissioner for Refugees. The United Nations has established humanitarian centres in Arbil and Sulaymaniyah with sub-offices reporting to it. The ICRC is presently distributing food to 750,000 refugees.
  My right hon. Friend the Member for Westmorland and Lonsdale (Mr. Jopling) made an important point about winter shelters. From information that I have been given, I think that sufficient winter shelters are still available in Iraq. That should be sufficient for the kind of problem that my right hon. Friend had in mind. Most certainly in view of what he said, I propose to raise the matter further with the ODA and, if necessary, it will be raised with the United Nations' authorities and agencies.
  Miss Emma Nicholson: I am glad to hear about the winter shelters, but I am very concerned about the Shias in southern Iraq. The safety of the just under 1 million Shias there must be at the heart of our thinking in this debate. In particular we must be concerned about the safety of Grand Ayatollah Abul Kassem A1 Khoei, who is the leader of about 250 million Shias around the world. Will my hon. and learned Friend the Minister ensure that the Government do all they can, albeit from a distance, to ensure the safety of those people in the same way that we are caring for others?
  Mr. Hogg: My hon. Friend is right to draw attention to the position in south Iraq. My right hon. Friend the Member for Guildford and many other hon. Members, including the hon. Member for Merthyr Tydfil and Rhymney (Mr. Rowlands), also referred to that. The position in south Iraq is extremely worrying. Early reports that up to 500,000 people are sheltering in the marshes are probably wrong, but there are many people there—perhaps between 30,000 and 100,000.
  We have warned the Iraqi Government that repression against those people would lead to the direst consequences. We need to know more about what is happening in south Iraq and we, therefore, greatly welcome the fact that Prince Sadruddin is leading a high-level United Nations' team to Iraq to make an in-depth study of need. That report will be of the greatest value to us. It is essential that we know more about what is happening in south Iraq. I agree with the hon. Members for Workington (Mr. Campbell-Savours) and for Merthyr Tydfil and Rhymney, my right hon. Friend the Member for Guildford and others that the refugee problem in Iraq is not at an end.
  The Select Committee's report states that the quality of the United Kingdom's response to the crisis has been good. That conclusion was affirmed by hon. Members who have personal experience of that part of the world as a result of their visit there. The hon. Member for Derbyshire, North-East (Mr. Barnes) made some ungenerous remarks about aid. I suggest that a little more—
  Mr. Harry Barnes rose—
  Mr. Hogg: No, I am not giving way to the hon. Gentleman.
  Mr. Barnes: Why not?
  Mr. Hogg: Because I am not going to. If the hon. Gentleman studies paragraph 21 of the report more carefully, he may see how unfair and ungenerous his observations were.
  I very much agree with the Select Committee's conclusion that the quality of the United Kingdom's response was good. I pay tribute to all those whose efforts contributed to that result, including the armed forces, the many and various non-governmental organizations, the voluntary groups and the carer teams of volunteers. They all performed vital tasks, providing security; establishing a food distribution system; building shelters and giving health care—in short, reducing suffering and saving lives. I also agree with the point made by my right hon. Friend the Member for Westmorland and Lonsdale, which was echoed by Opposition Members, that the work of the Iranian authorities was prompt, full and admirable.
  Britain's financial contribution was prompt and generous. We are the largest single donor to the ICRC Gulf appeal. We have contributed 14 million Swiss francs to that appeal and $16 million to the United Nations' appeal. Since last August we have contributed £81 million to relief in the area, over £61 million of which has been contributed since 4 April. All of that has been done at the same time as playing our part in providing aid to Bangladesh and to alleviating the crisis in Africa.
  My right hon. Friend the Member for Guildford made some kind remarks about the functioning of the ODA, but also said—I accept this—that the ODA was placed under considerable strain during that process. My right hon. Friend the Minister for Overseas Development has authorised a review of the handling of disasters and of how we can improve the systems within the ODA. We shall focus on three issues. First, during the crisis we found that the dispatch of assessors and co-ordinators was of great value, so we shall see how we can build on that. Secondly, we need to maintain a store and inventory of basic supplies that can be rapidly dispatched. Thirdly, we need to be able to build on the contribution made by volunteers. All those areas will be the subject of the review.
  My right hon. Friend the Member for Guildford rightly referred to the United Nations. As is stated in his report, my right hon. Friend said that the crisis showed the need to improve the systems in the United Nations. We have two things in mind. The first is to appoint a senior figure who will report directly to the Secretary-General, direct all relief efforts in the United Nations and co-ordinate the efforts of agencies and Governments. My right hon. Friend the Member for Westmorland and Lonsdale, the hon. Member for Merthyr Tydfil and Rhymney and others have referred to the somewhat unco-ordinated response of agencies and Governments. That response needs to be co-ordinated. We need a register of all the relevant NGOs and agencies, together with the resources that are available to them.
  I should now like to turn to the future. Operation Haven has achieved its aim of meeting the immediate humanitarian need of the refugees who were originally on the Iraqi-Turkish border; for the most part, they have returned to their homes. We have already withdrawn some forces whose task is now complete. We do not wish those forces which remain to be there longer than necessary. We have always been clear that the deployment was temporary, but it would be pointless to withdraw forces only to have them return in future. We, therefore, wish to see credible measures in place designed to prevent the

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  repetition of the events of March. That point was emphasised by my right hon. Friend the Member for Guildford and is the first recommendation in his Committee's report. Those measures were set out by my right hon. Friend the Prime Minister in the House on 25 June.
  First, we wish to see an effective United Nations presence on the ground. In addition to its humanitarian personnel, the UN has now deployed 234 security guards in Iraq. The UN is confident that some 500 will be in place by the end of July. Their role is to protect UN personnel, assets and operations. They will also monitor the security situation in Iraq and report any incidents to the Secretary-General. It would then be for the Security Council to decide what action to take.
  Secondly, Iraq will be clearly warned that any renewed repression will meet the severest response. The Iraqi Government should be in no doubt about our resolve to prevent a repetition of the events of March.
  Thirdly, in order to give weight to those warnings, we believe that there should be a continuing deterrent military presence in the area. We are discussing with our allies exactly what form that presence might take, but we see it as a multinational force ready to respond quickly to violations.
  Fourthly, we will maintain sanctions against Iraq. Iraq's behaviour over the past days has shown once again that the international community must maintain the pressure on the regime in Baghdad in order to make it comply with its international obligations and implement resolution 687.
  I very much agree with the spirit of the remarks made by the hon. Member for Workington about sanctions. I entirely agree with his explanation about why we could not go further into Iraq. We gave undertakings to the public and to the House that our purpose was limited by the Security Council and that we were operating precisely within the terms of the resolution. Moreover, we could not have held the Arab members of the coalition together if we had gone beyond those repeated public commitments. I am grateful to the hon. Gentleman for so clearly and precisely stating those facts.
  We have not taken a final decision on the withdrawal of forces, but we are working to ensure that the elements that I have outlined are largely in place before withdrawal takes place. I am grateful for the support that I have received from hon. Members tonight.
  We are also following closely the talks which have been taking place between Baghdad and the Kurdish leadership. I regret that no agreement has yet been concluded, but it must be for the Kurdish leadership to decide if and when the terms reached with Baghdad are acceptable. What we have said for our part is that we are sure that the international community will be prepared to look at any agreement that is reached to see what might be done to underpin it.
  I should now like to answer some of the points that have been raised. The hon. Member for Linlithgow (Mr. Dalyell) referred to the supply of spare parts for electricity generation. He was good enough to mention that he had an engagement that would oblige him to leave earlier than he wished. The Iraqis have established about 25 per cent. of their capacity. Provision is made for the import of
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  essential humanitarian supplies, which is covered by article 20 of resolution 687. If the Iraqis wish to import such parts, they can notify the sanctions committee and consideration will then be given to their request. The no-objection procedure agreed by the sanctions committee in March provides for the importation of some equipment, namely, water purification equipment, small generators suitable for hospitals and pumping stations, fuel for those small generators and spare parts for the pumping stations. Therefore, the United Nations has already put in place a range of measures that go some way towards meeting the hon. Gentleman's point.
  The hon. Member for Cynon Valley, supported by the hon. Member for Falkirk, West (Mr. Canavan) and the right hon. Member for Tweeddale, Ettrick and Lauderdale (Sir D. Steel), raised the important question of Ministry of Defence charges, which also appears in the Select Committee's report. Charges were last reviewed in 1990, when it was agreed that they should be raised only on additional expenditure arising from deployment, for example, supplies or foreign service pay allowances. I see the attraction of their argument and we are bound to review the matter again in the light of what has been said in this debate and in the Select Committee's report.
  Mr. George Foulkes: Is the Minister saying that he will review that matter? When I raised it in the debate on the Navy recently, the Under-Secretary of State for Defence Procurement said that it was currently the subject of discussion. Is that not the case?
  Mr. Hogg: I am not aware of that. I thought that it was prospective rather than actual. I am grateful for the correction and if I am wrong, I apologise. I shall write to the hon. Gentleman so that there is no room for error.
  The right hon. Member for Tweeddale, Ettrick and Lauderdale made an interesting point about a standing United Nations force. His remarks implied that a standing United Nations force would have powers not only to act under the authority of the permanent five but also to intervene in the internal affairs of a nation. It is an interesting concept, which is bound to be discussed from time to time, but I would be cautious about it for two reasons. First, there are substantial problems in adjusting the charter. The charter would have to be adjusted to give the Security Council the authority to act as the right hon. Gentleman suggested. Secondly, the deep-seated prejudices of permanent members of the Security Council would have to be adjusted. Those nations include China as regards Tibet, and the Soviet Union as regards the constituent republics. One cannot overlook those factors.
  Mr. Campbell-Savours: Is not this the right time to start those discussions? Although the Minister expresses reservations about the suggestion, should not the British Government take a lead in that area, especially as the Select Committee is about to report on those matters?
  Mr. Hogg: Let us await the Select Committee's report. I see problems arising from an adjustment to the charter which might not benefit this country.
  The coalition forces achieved what they set out to achieve, namely, the relief of suffering and the creation of conditions that have encouraged most of the refugees who fled to the mountains to return to their homes in Iraq. My right hon. Friend the Prime Minister played an historic

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  part in the introduction and shaping of policies that produced the results that I have just described. Although the coalition forces do not intend to stay in northern Iraq, we shall have a substantial military presence in the region. As Saddam Hussein will know full well from what has already happened, if he fails to comply with any warnings that he may receive, he exposes his force to the risk of vigorous and prompt military action. Our determination has already been tested. Coalition forces have shown a resolution, capacity and readiness to act. As a consequence, Iraqi armies in Kuwait were totally defeated. Saddam and his generals should learn from that experience.
  7.35 pm
  Mr. David Howell: With the leave of the House. I thank hon. Members and my hon. and learned Friend the Minister for the way in which they have received the Committee's report and for the sensible guidance that they have given the Committee for its future work. We shall try to respond as effectively as we can. The debate has been brief but effective, and has helped to begin to reveal some of the monstrous legacies of Saddam Hussein. Those legacies will continue as long as he remains in Baghdad and continues his policy of killing and persecution.
  As the House has recognised, there are millions of refugees not only in Iraq but swirling round the middle east, living in misery and fear due to the actions of Saddam Hussein. How we help those refugees and satisfy humanitarian aims, particularly in Iraq, without helping him to commit more monstrosities and evils, and how we combine the need to keep sanctions on him to bring him to heel while at the same time helping those to whom he has caused so much suffering, are dilemmas that face the House and the policy makers. We may not yet have solved them, but we seek to do so.
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  In the meantime, the House will be heartened by my hon. and learned Friend's firm resolve that the coalition forces will remain in place until and unless an effective UN force is developed. As my right hon. Friend the Member for Westmorland and Lonsdale (Mr. Jopling) reminded us so graphically, winter lies ahead for those suffering people, and action will be needed on the aid and relief front.
  I am grateful to the House for responding to the Committee's suggestion that the ODA, which has done extremely well, nevertheless needs to increase the speed and effectiveness of its high quality aid efforts. We also suggested that the role of the UN agencies needs to be rethought, and it is good to hear the proposal that a co-ordinator is now being seriously considered by Ministers here and overseas. I hope that the proposal will come into effect within the next few weeks.
  The hon. Members for Merthyr Tydfil and Rhymney (Mr. Rowlands) and for Workington (Mr. Campbell-Savours), my hon. and learned Friend the Member for Burton (Mr. Lawrence) and many others mentioned the fascinating question of when, in the new post-cold-war world, we can expect the UN and its agencies to intervene. How do they override reluctant host Governments when appalling humanitarian tragedies are taking place? Today, the UN is in Iraq in a way that many people thought it would never be. Our coalition forces were also dragged in. Tomorrow, it may be the Balkans—who knows? Those matters are for future debates and deliberations in Committee, and I am grateful to the House for paying attention to our report.
  The debate was concluded, and the Question necessary to dispose of the proceedings was deferred, pursuant to paragraph (4) of Standing Order No. 52 (Consideration of Estimates).

  Unemployment
  [Relevant documents: Third Report from the Employment Committee of Session 1990–91 on Future Prospects for Levels of Employment and Unemployment, House of Commons Paper No. 228 and European Community Documents Nos. 8369/89 and 8416/90 on mutual recognition of professional education and training and No. 9387190 on employment in Europe.]
  Unemployment

    Class VI, Vote 1
    Motion made, and Question proposed,
    That a further sum, not exceeding £1,150,731,000, and including a Supplementary Sum of £90,392,000, be granted to Her Majesty out of the Consolidated Fund to defray the charges that will come in course of payment during the year ending on 31st March 1992 for expenditure by the Department of Employment, including expenditure via Training and Enterprise Councils, on training, including the provision of training programmes for young people and adults and initiatives within education; on the promotion of enterprise and the encouragement of self-employment and small firms; on help for unemployed people; the improvement of industrial relations; industrial tribunals; compensation for persons disabled by certain industrial diseases; payments towards expenses of trade union ballots; on residual liabilities and disposal of the remaining assets of the former National Dock Labour Board; on the costs of maintaining and disposing of the former Skills Training Agency; administration, central and miscellaneous services including assistance on employment issues to eastern Europe in co-operation with the Foreign and Commonwealth Office—[Mr. Jackson.]
    7.38 pm
    Mr. Ron Leighton: The Select Commmittee on Employment wanted to study the prospect of employment and unemployment in the United Kingdom. Although the Government make assumptions about future levels of unemployment for planning public expenditure, they always decline to make a public forecast. Therefore, the Committee decided, according to the Confederation of British Industry, the Institute of Directors and the Trades Union Congress, to give evidence on their forecast for future levels of employment and unemployment, the causes of the present situation and the factors that will affect future levels.
    We published the report for the information of the House and to give the House the opportunity to debate a matter of the utmost importance. I intend to introduce the subject, to cite some of the evidence given to us and then to comment on it. Doubtless other members of the Select Committee will do the same.
    Large-scale unemployment represents a failure of policy and of performance. It is not just a waste of resources; every statistic of involuntary idleness is a personal tragedy. Some people can overcome redundancy, but others trapped in long-term unemployment remain stuck in grief, prolonged distress and despair and cannot find an alternative meaning or purpose in life. That in turn leads to ill health and family breakdown.
    Anyone who doubts the grief involved in losing a job might care to read the moving interview in Vanity Fair given by the right hon. Member for Finchley (Mrs. Thatcher).
    Ministers, including the Prime Minister and the Chancellor of the Exchequer, were originally reluctant to use the "R" word. They said that there would be no recession, and when it came they said that it would be short and shallow. Since then they have consistently said that good times—and "vague stirrings"—are just around
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    the corner. In March this year we took evidence from the CBI and the Institute of Directors, who told us about the depth, the seriousness and the pain of the recession. The memorandum from the CBI said:
    "Since the middle of last year, output has tumbled across the economy, falling most sharply in manufacturing, as orders have dried up."
    The CBI also told us that its survey suggested that retailers, wholesalers and financial services will, if current trends continue, also shed labour. It told us that because of improvements in productivity disappearing employers had to contain labour costs by shedding staff.
    In answer to a question the CBI said:
    "In manufacturing … business optimism is at its lowest for nearly 10 years"
    and companies have been responding to more difficult circumstances by cutting back on employment for more than a year. By contrast, the CBI told us that there are no signs of an outright recession in the European economy —it is in this country that the disaster is occurring.
    The memorandum from the Institute of Directors stated, without beating about the bush:
    "Since 1984 IOD has done its own bi-monthly survey of member opinion, including asking members what their expectations are about economic developments. The February 1991 results are the worst in the life of the survey."
    Why has this disaster occurred? Who is responsible for it? Mr. Morgan of the IOD, a blunt speaker, said:
    "In the last four years we have had a failure of economic management."
    We shall see later in the debate whether Treasury Ministers express their regret for all this and apologise to the unemployed who are paying for Ministers' failures and mistakes—or whether they repeat that mass unemployment is a price well worth paying. The CBI told us that unemployment would continue to rise this year and next. The recession is going to get far worse in the foreseeable future, certainly until the next election—
    Mr. Tim Janman rose—
    Mr. Leighton: The hon. Gentleman has a bad habit of interrupting my speeches after one or two sentences. This is a short debate and I intend to adopt a self-denying ordinance so that I do not hog too much time. I shall therefore not give way.
    Both the TUC and the CBI said that unemployment would reach at least 2·25 million this year. The TUC said that more pessimistic forecasts predicted that it would rise to 3 million in 1992–93. Since we took that evidence, unemployment has exploded even more devastatingly. It has already reached 2·25 million, although we are only half way through the year. In the six months to November 1990 the average increase in unemployment was 25,400 per month. In the past six months it has averaged 80,200 per month. Unemployment has increased for 14 consecutive months and the trend is accelerating and is set to continue.
    Not only does this cause a huge pool of human misery, but recession is expensive for the public finances. The Select Committee on Treasury and Civil Service has estimated that each additional 100,000 unemployed people cost the Exchequer a further £300 million in benefit payments—and that does not include the taxes forgone. It is no wonder that the Government's books do not balance and they are being forced to borrow billions of pounds this year and even more next year.

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    Unemployment is a lagging indicator; it is a considerable time after the economy picks up before employment improves. So when will the recession end? The Government have been claiming to see vague stirrings. They claimed that there would be a recovery in the second half of this year, but we are already in July and it is not happening. The CBI and the IOD pointed out that not only manufacturing suffers; so do clerical jobs, advertising, retailing and financial services. Only this week we learnt that disastrous conditions in the high street forced the Burton group to close 100 shops and sack 1,600 staff after making losses that will amount to £177 million in the year to August. The number of companies that have collapsed in the first half of this year has risen by 66 per cent.
    The IOD told us that the housing market is important. The total number of people living in homes on whose payments they are in arrears is now just under two million —equivalent to a population double the size of Birmingham's. The number of households more than six months in arrears rose from 87,360 in March 1990 to 209,620 in March of this year—it doubled. Property repossessions are outstripping the number of homes being built to meet social needs—primarily homelessness.
    My conclusion is that there is little comfort in prospect in the medium term. As the recession is strong in the service industries, London and the south-east are in its grip and are bearing the brunt. In London there are more than 26 people chasing every notified vacancy, unemployment in London was more than 50 per cent. higher in April this year than it was a year before, and the rate of corporate bankruptcies has tripled. The Evening Standard Investors in Industry survey for April 1991 found that 94 per cent. of companies in the capital are likely to reduce or at best maintain their work force in the coming year. The outlook is bleak and many people will suffer.
    The Committee looked into the exchange rate mechanism—
    Mr. Janman rose—
    Mr. Leighton: We asked each of the witnesses their estimate of the effects on employment of entry into the ERM. We were astonished that none of them had made such an estimate. There was a time when full employment was a national aim and when policies would be evailuated, among other things, for their effect on it. No more, apparently. One TUC witness said that the TUC did not have a forecast of the impact of entry on employment. Later he said:
    "What impact ERM will have on the economy I am afraid I do not know."
    Many might find it surprising that, despite that, the TUC was all in favour of entry, although it believed that we joined at the wrong rate—we should have joined at DM2·70 instead of DM2·95.
    Neither the CBI nor the IOD had calculated the effects of entry on employment. Although the IOD had not been in favour of entry, however, it had studied its baneful effects on Ireland and France. Our report states:
    "We believe that the full implications on employment levels of joining the ERM were not sufficiently discussed or understood before entry, and even now are not widely recognised."
    The Department of Employment does not make estimates of the effects of ERM either, but we asked the Department whether it had made any studies of ERM's effect on France and Italy. We received a letter from the
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    Secretary of State in which he quoted a memorandum from the director general of the National Economic Development Council and the November 1990 issue of the National Institute Economic Review. That was worrying because it told us that ERM membership had cost France 700,000 jobs and Italy a million jobs.
    The March issue of CBI News included an article by Professor Douglas McWilliams, the CBI's chief economic adviser. Speaking of the effect on the French economy, he said:
    "How has the French economy performed since the start of serious EMF membership of 1983? The initial effect was slow growth. French GNP rose by below trend for five consecutive years from 1983–87 with a cumulative shortfall of 4·5 per cent. of growth compared with productive potential. The main feature of this recession was that output was depressed for an unusually long period".
    The article went on to say that wages were reduced. It continued:
    "Nevertheless, reducing inflation still required rather slow growth associated with rising unemployment"
    a rise in the number of jobs lost of approximately half a million. His last paragraph is extremely revealing and worrying. He says that
    "the French experience suggests that if British membership of the ERM is successful in reducing inflation it is likely that unemployment will rise to about 500,000 above its 1990 level at some time before 1994. And if Britain is unsuccessful the rise in unemployment could be substantially more than this —perhaps as many as a million or more."
    If the French experience is anything to go by, membership of the ERM could add an extra million to the dole queue, unemployment could be very much higher over the period of the next Parliament and economic growth would be slower. That is worrying because the parties seek to finance their programmes from economic growth.
    After speaking about the DTI's 1992 awareness campaign, Mr. Morgan of the IOD said:
    "The ERM situation poses a bigger problem than 1992 did, in terms of adjustments required and the awareness required."
    Why have we not had an explanation or a debate about the matter. On the day when we interviewed the CBI, on 13 March, an article in the Financial Times said that ERM entry meant that we had
    "to change our whole way of life."
    If that is to happen, there should be an explanation. Commenting on the French experience the CBI said:
    "The French economy has been slow in responding to the discipline that ERM membership brought to French firms."
    Can we be any quicker, and what exactly is it that we have to do?
    The normal way for divergent economies to adjust to each other is by changes in their exchange rates. If that is ruled out by the ERM, the IOD told us that if Britain's inflation was higher our competitive position would deteriorate from the day after we joined. It said that British companies
    "had to start at high speed to make up for any lack of investment, and any lack of training and skill, if they are to control their unit labour costs, and stay competitive in the traded sector".
    Tying the pound to the deutschmark means that Germany is the benchmark country. If our inflation is higher than that of Germany, as it is, if our productivity is lower, as it is, if our costs rise faster, as they do, we lose competitiveness from day one and cause higher unemployment. To survive we would need, at double quick speed, German levels of inflation, investment, productivity and unit costs.

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    What is happening in the real world? Everyone says that investment, the seed corn, is vital, but investment is in reverse. In his Budget statement the Chancellor said that investment across the whole economy would fall by 10 per cent. In the key manufacturing centre it fell 20 per cent. between the first quarter of 1990 and the first quarter of 1991. All our witnesses said that productivity was the crucial deciding factor—but it is in reverse. The Department of Employment figures show that output per head in March was 1·9 per cent., nearly 2 percentage points down on the previous year and the largest decline since 1981. While we were going backwards, German productivity rose by 4·5 per cent. in the same period.
    What about wage costs? The June issue of the Employment Gazette reported that wages and salaries in the three months to March 1991 were 11 per cent. higher than in the same period last year. Average earnings in manufacturing during the same period were 9 per cent. higher than last year. It is fair enough to have a rise of 9 per cent. when productivity is rising by the same percentage, but it went down by 2 per cent. That means a unit wage cost rise of 11 per cent. How does that compare with our competitors? The CBI told us:
    "Our unit labour costs at the moment are going up … probably twice as fast as the best of our European competitors. That is not sustainable."
    Not sustainable means that British firms lose market share, factories close down, more workers are thrown on the dole, and Britain is blighted and becomes a depressed area with chronic mass unemployment. It also means that the pound cannot be maintained at DM2·95. The high interest rates required by the vain attempt to keep it there further reinforce the recession and push investment and productivity into a downward spiral. Pressure on the pound then leads to a sterling crisis which blows the pound out of its unrealistic ERM parity—but only after great damage has been caused to British industry.
    A successful ERM would mean some sort of speedy structural revolution in the British labour market, a major change in the behaviour of wage bargainers. It would also mean a cut in the real wages of British workers. According to the TUC spokesman, that is unlikely because he said that that would be,
    "unrealistic, not to say immoral."
    The pattern in Britian is for wages to shadow and compensate for the previous year's inflation. To be competitive in the ERM, however, wages would have to be linked to German—not British—inflation. That means that the real wages of British workers would have to come down. Do they know that? Have they been told? Do they agree? The future is likely to contain a great deal of industrial conflict as the attempt is made to force British wages down. We shall see many more incidents such as that at Rolls-Royce with employers unilaterally seeking to enforce a pay freeze.
    What sort of lead are British workers receiving? I asked the IOD whether it thought that the spirit on a ship was the responsibility of those on the upper deck and it said yes. I asked whether it thought that directors should set an example and again it said yes. What kind of example is being set by those at the top? We are currently witnessing a wave of blatant corporate greed with those at the top agreeing to pay each other in telephone numbers with increases of 20, 30, 40, 50, 60, 70, 80 or more per cent.
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    —one of them even gave himself a rise of 160 per cent. Those who run the privatised monopolies are leading the way.
    This week we heard about Robert Evans, the chairman of British Gas. He is not content with a 66 per cent. pay increase because in his £500,000 four-bathroom house he has had installed £28,000 worth of gas fittings, showers, dishwashers, gas fires, kitchen appliances and gas street lights, and all for free. Apparently he is testing them. Everyone would like to conduct tests like that. What is sauce for the plutocratic goose must be sauce for the low-paid gander. If the captains of industry can help themselves and fill their pockets with gold, how can they argue that their foot soldiers should take pay cuts? It is likely that those at the bottom will want to take their lead from those at the top.
    It is plain that the baneful effect of the ERM is to deepen and lengthen the recession. All the domestic arguments and the requirements of our economy cry out for a cut in interest rates and all our witnesses asked for that. The Institute of Directors wanted a 4 per cent. cut this year. However, membership of the ERM means that interest rates can no longer be used for the benefit of the domestic economy. As the Chancellor said, the overriding purpose of interest rates is to secure the pound in its ERM band. That means that interest rates stay higher than would otherwise be the case, the recession is deepened and prolonged and the unemployed pay the price.
    Since we joined the ERM in October, unemployment has risen by well over 600,000. Fixed parities can work only if economic convergence comes first. A strong currency is the reward for economic success and performance. That cannot be achieved by fiat or passing a resolution.
    The Institute of Directors drew our attention to monetary union and the introduction of a single currency before convergence in Germany. That led to the shutdown of the east German economy and the creation of mass unemployment. The same pressure, in a more modified form, would operate here.
    All the witnesses agreed that skills and training were the key to success. The CBI said:
    "We cannot get away from the fact that the UK produces fewer 16 year old school leavers with sensible qualifications, we keep fewer of our school children on beyond the age of 16 than most of our industrial competitors, we produce fewer engineers and vocationally qualified people at graduate level than most of our competitor nations. It is that sort of skills revolution which we have to make work this time before we try anything else."
    The Institute of Directors likewise said that it
    "believed that skills and training are the key factors in determining prosperity."
    The nation has to invest in its human capital. There is no representative body at national level to set targets for vocational qualifications and to oversee and monitor progress in their implementation. Here, the Committee makes a major recommendation. We believe that, in consultation with the training and enterprise councils, the local enterprise companies in Scotland, and other relevant bodies, the Government of the day should set national targets for improvements in levels of skill and qualifications. We hope that the Government will accept that recommendation and that responsibility on behalf of the nation.
    I thank hon. Members for listening so patiently and I commend our report to the House.
    8.1 pm
    Mr. Andrew Rowe: I hesitate to follow the economic guru, the hon. Member for Newham, North-East (Mr. Leighton), in the more arcane arguments on the economic basis of the present situation, because I do not have anything like his expertise in the subject. However, when he claimed that we were looking for a change in our way of life, 1 could not help feeling, as he piled gloom on gloom, that we were listening to an east London way of death. I thought that he claimed that there was no serious recession on the continent. Whether that is true or not, a number of countries on the mainland of Europe have unemployment rates that are not only a great deal higher than ours but have remained consistently higher over a number of years. France is a notable example.
    When we are talking about new ways to change our attitudes, it is encouraging to hear such a spirited defence of keeping wages and inflation under control. I will leave it to those of my hon. Friends who I know wish to follow me in the debate, and who are better qualified than Ito do so, to explore further the likely impact of the proposals for a minimum wage linked to the average wage. That fits uneasily with the hon. Gentleman's argument that we should keep wages under strict control.
    I thought that I heard the hon. Gentleman say that the Institute of Directors was looking for a 4 per cent. reduction in interest rates in a year. It is still July, and since October our interest rates have come down by 3·5 per cent., so I am not discouraged.
    Mr. Leighton: That includes last year.
    Mr. Rowe: The hon. Gentleman is correcting me. Apparently the Institute of Directors wants interest rates to come down by 4 per cent. this year. I view with some reserve this headlong rush to cut interest rates—a policy which I know is much beloved by Labour Members. Most of our present troubles stem from the over-cutting of interest rates that we went into because we were afraid of a worldwide recession. I vividly remember that the Labour party clamoured for a much bigger cut in interest rates. If we had followed that siren voice, we would be even further on the rocks than we are now.
    We are at the beginning, but far enough along the path to see that it is a solid beginning, of a serious change of climate. In 1979, there was a strong belief that training was something that one did only in the employer's time, only at the employer's expense and, best of all, if the employer could persuade the Government to pay for it. That attitude has changed for the better. We now have an understanding that training is a shared responsibility. Few people in employment today believe that what they know now will be sufficient for what they have to do for the rest of their employed life. They are aware of the need to retrain several times during their working life. They see it as a shared responsibility between the individual, the employer and the Government.
    The Government have been imaginative in, for example, the introduction of training credits. Nothing makes it clearer for an individual that he shall have control over the sort of training that he wants and the quality for which he is looking than the knowledge that he has in his hand the finance to pay for the training that he needs. I hope that, as the CBI said to the Select Committee, a will
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    be possible to enlarge the scheme rapidly. It is a good scheme which I should like to see tested, although not for so long that it cannot be expanded if it shows promise.
    The Government have been extremely imaginative in their policy of allowing people access to courses and other forms of higher and further education at a much later stage than simply that of leaving school. I share the anxiety expressed by the hon. Member for Newham, North-East. Too many youngsters still leave school inadequately educated to go straight into a job. I derive great comfort from the fact that many of them rapidly realise that they are banging their heads on a ceiling of inadequate qualifications, and take the advantage that we have provided of going into further and higher education at a later stage.
    There is a marked change of climate within universities and colleges. They are now far more entrepreneurial because they realise that if they are to survive, they will have to sell a product that students want. When I taught at a university, we taught what we were interested in and if the students did not bother to come, we went on teaching it nevertheless. Now, if the students do not come, the department closes, so departments are becoming more aware of the need to tailor what they teach to what the students want. I can give an example from my area. Few students at Kent university do not learn a foreign language at some stage, because they realise how vital that will be in the European Community.
    The hon. Member for Newham, North-East and his Committee were anxious about quality control in training. That is another aspiration which I share with the Committee, but I should not like the hon. Gentleman to underestimate the crucial significance of the national vocational qualification. As that operation spreads its net and becomes more widely used and known, it will make it much easier for individuals who may not have had a formal education to get credit for what they can do practically. Furthermore, it will show them when they get to a certain level that they have the same access to higher education that they would have had through the more traditional book learning that used to be the only way in. That is enormously important and we should not underestimate it.
    Anything that my hon. Friend the Minister can do to diminish the bureaucracy of those national vocational qualifications would be welcome. I have seen some of those NVQ demands and they extend to many pages. They have been refined and re-refined for the highest possible motives, but they do not half make it difficult for people to extract the best that they can from the system.
    There is a growing understanding among employers. The Select Committee's report suggests that employers now reckon to provide £20 billion worth of training. To give an example from my county, in Thanet the Kent training and enterprise council has helped to put together the Thanet skills initiative whereby more than 20 employers are coming together to try to influence the training that is available locally so that they get what they need rather than what the training institutions choose to provide.
    Employers are showing far more interest in anticipating needs. For example, in Dover the district council, the training and enterprise council, the chamber of commerce and other local groups are coming together to make it possible for the 2,000 or so international freight forwarders who will become redundant as a result of the

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    1992 single market to discuss and work out the sort of training that they need. We have achieved an enormous amount. The Government are right to try to create the climate and to improve the information system. They have put forward a whole range of imaginative programmes.
    I conclude by making one plea to my hon. Friend the Minister. There is a mass of evidence, which I shall be happy to provide him with if he has not already seen it, that employers are completely lunatic about the age requirement that they attach to various jobs. For example, they expect secretaries to be under 30. They are extremely reluctant to employ older people. They frequently will not even give an older person an interview. They will put up all kinds of smokescreens, the commonest one being that older people are not a good investment because they do not stay long. All the evidence that I have seen suggests that older men and women stay longer in employment than their younger counterparts. They say that older men and women are too inflexible to learn. That is rubbish and it can be demonstrated again and again.
    I know that my hon. Friend and our right hon. and learned Friend the Secretary of State believe that to some extent the market will take care of that. The market may do so up to a point but, as in many markets when there is an information gap, the Government need to take an initiative, along with employers' organisations and trade unions, to break down the walls of prejudice against the employment of the older worker. If we do not do that, how in heaven's name will older people be able to finance the 30, 40 or, in some cases, 50 years that they will have outside the labour market? That will become an enormous charge on our children and our grandchildren.
    I commend the Government for a number of imaginative initiatives. I detect a major change in Britain in the climate towards employment training and I ask the Government to take a serious look at the obstacles against the employment of older people.
    8.14 pm
    Mr. James Wallace: Once again, the House is indebted to the hon. Member for Newham, North-East (Mr. Leighton) and his Select Committee for producing a report which I am sure will give rise to some interesting debate. However, if I may be allowed to introduce a note of disappointment, the report is in some respects inconclusive. It has done the House a service in bringing together clearly the views of different bodies from which the Committee took evidence, but it is clear that it had some difficulties in coming to conclusions and making recommendations. That is no doubt because, as the hon. Gentleman said, this is an issue which gives rise to considerably heated debate and passions on both sides of the argument.
    Few if any of those who gave evidence to the Committee, and, I think, few in the House, would dispute that unemployment is rising. The Government for some time took solace from or hid behind the figleaf of the fact that the rate of unemployment in the United Kingdom was much less than that of a number of our European competitors. But they can no longer deny that the rate of increase in unemployment in Britain is faster than most, if not all, of our European competitors.
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    It is important that we regularly return to address this matter. When we hear the statistics and the monthly unemployment figures, we should not lose sight of the fact that we are dealing with people and families who are suffering the frustrations and, people often feel, the indignity of unemployment. In addition, there are those who have the threat of unemployment hanging over them, not knowing whether next week their job or the job of a member of their family will be on the line.
    The hon. Member for Newham, North-East spent some time dealing with the impact of the exchange rate mechanism on employment levels. He drew attention to the fact that there had been few if any studies of what the impact would be in the United Kingdom. It is important to remember that the current trend of increase in unemployment in Britain long pre-dates Britain's entry into the ERM. In April last year, the tables were turned and we no longer had reports of monthly decreases in unemployment but, sadly, monthly increases. That was some six months before our entry into the ERM.
    If we are looking for the causes of the current rise in unemployment to unacceptable rates, we should look to the unsustainable boom that was created by the Government not only just before the previous election but after it. Had we joined the ERM much earlier, when my right hon. and hon. Friends were advocating entry, we would not have had the high interest rates that were ultimately necessary to contain the boom created by the Government, and the problems created by that boom would have been tackled earlier within the discipline of the ERM.
    Mr. Janman: Does the hon. Gentleman agree that the main reason for interest rates being low during 1987–88 was the fact that my right hon. Friend the Member for Blaby (Mr. Lawson) was tracking the pound to the deutschmark because of his predilection, shared by the hon. Gentleman, to join the ERM sooner rather than later? It was, therefore, a desire to peg sterling to the deutschmark—a quasi-ERM environment—that caused interest rates to be reduced and the inflation which the hon. Gentleman has accepted in his analysis.
    Mr. Wallace: I could not wholly accept that argument. An important reason for the high interest rates was that the Government, through a number of measures, not least those introduced in the 1988 Budget, brought about a huge expansion in credit which they simply could not sustain. Therefore, they had to have high interest rates to bring that under control. Had we joined the ERM much earlier, in the mid-1980s, I doubt whether we would have got into the position from which we are now trying to pick up the pieces.
    What would happen if we were to leave the ERM and allow the pound to devalue? I have no doubt that initially there might well be a small boost to exports, although I fear that that would soon be eaten up by subsequent inflation. Ultimately, interest rates would go up rather than down, because the markets would have no faith in the Government's willingness to tackle inflation and maintain the value of the currency. Investors would require higher interest rates to reflect the increase in the perceived risk involved in holding sterling. I am not sure that I understood the implications of what was said by the hon. Member for Newham, North-East; I believe, however,

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    that if we came out of the exchange rate mechanism, economic policy would lose credibility and unemployment would continue to rise rather than fall.
    Politicians can no longer choose the soft option. Companies will have to face up to disciplines that will not allow the politicians to go on pretending that miracles can be worked through no more than a change in the currency. I doubt whether such pretences were effective in the past, over the long term; they are even less likely to succeed now, when economies are so closely integrated on an international basis.
    If Britain sticks by its ERM commitments—if, as the Prime Minister suggested in a recent answer to my right hon. Friend the Member for Yeovil (Mr. Ashdown), there is a move to enter the narrow currency band and to make the Bank of England independent—investors, companies and employees will know that the Government mean business. Once that is understood we shall be able to embark on a path of sustainable growth, with greater economic stability, and to generate circumstances in which unemployment can not only fall but, with any luck, remain at a lower level.
    Not surprisingly, the Select Committee was unable to reach a conclusion on the subject of the statutory minimum wage. As its report states, the TUC advocated such a system, but conceded that it was not
    "'the perfect and only answer' to the problem of low pay".
    It is also not surprising that the Institute of Directors opposed the idea. My party, too, is on record as opposing it: we do not consider that it is the right way to tackle the problem of low pay.
    In trying to rubbish the arguments for a minimum wage, the Secretary of State for Employment has said that 2 million people would lose their jobs. As can be seen from recent newspaper analysis—not least in the columns of The Independent—his figure is based on a series of flawed hypotheses. By "hyping up" the true position, the right hon. and learned Gentleman has to some extent destroyed what should have been a serious debate.
    The issue between the hon. Member for Fife, Central (Mr. McLeish) and me—and, I assume, between the Opposition and the Government—is not whether people should be condemned to low wages; we all accept that a high-wage, high-productivity economy brings benefits. The issue is the way in which that is to be achieved. My party strongly believes that the statutory minimum wage, by introducing a degree of "leap-frogging", could destroy jobs and, thus, lose the second or third income of a household, if not the first. Households could be pushed into poverty, while the objective is to free them from it.
    By all means let us strengthen the wages councils in areas of employment where there is not much international competition. Let us also, however, embark on a process of integrating the tax and benefit systems, to produce a national minimum income for households. That, surely, is a much better way of targeting the problem of poverty. I fear that, if the statutory minimum wage were introduced, thousands would lose their jobs; and, tragically, unemployment is one of the main causes of domestic poverty.
    The Select Committee agreed about the importance of skills and training. As has often been pointed out, 38 per cent. of the United Kingdom's industrial work force has received some skilled vocational training, compared with 67 per cent. in the Lander that make up what was formerly West Germany. The figure is 79 per cent. in Italy, and 80
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    per cent. in France. There is an obvious gulf between us and the countries that we shall shortly join in a single market, and with which we shall soon compete even more keenly.
    Over the years, successive Governments and employers have placed us at a competitive disadvantage by not taking training seriously enough. The hon. Member for Mid-Kent (Mr. Rowe) thinks that the climate may be changing, but I feel that the Government have their own role to play. Even after last month's announcement by the Secretary of State of further measures to promote training, including increased funding, the Government—as the Secretary of State did not deny on that occasion—are spending less on training than they were when unemployment stood at 2 million and was falling. Now it stands at 2·25 million, and is rising. That strikes me as unbelievably shortsighted.
    Earlier today, my party published its proposals for tackling unemployment. Those proposals do not shrink from the need to provide additional funding for employment training—so that we can improve quality as well as increasing the number of places—and to ensure that those who find themselves unemployed are given an opportunity to retrain and to learn new skills. We also want to give women a chance to return to work and to make a worthwhile contribution.
    We are talking about an investment in people—an investment to which the present Government have not been prepared to commit themselves wholeheartedly. The Minister says, "Tut, tut", but he knows full well that the Government's contribution is declining when it should be increasing. I know that he has a brief from which to argue, but surely, in his heart of hearts, he knows that at a time of rising unemployment the Government should be spending far more on training.
    Much, if not all, of the youth training system is now administered through training and local enterprise councils—TECs and LECs. May I give an example from my constituency? A young girl there, who was about to embark on a training course arranged through the Training Agency in Inverness, now finds that she cannot do so because the LEC that is now responsible claims that it cannot afford to pay. On further examination, I discovered that the previous arrangements for the Training Agency involved swings and roundabouts.
    In my constituency, as the Minister will appreciate, the cost of board and lodging for a young person going away to train can be considerable; the circumstances are different when the training takes place virtually on the person's doorstep. Given the geographical character of LECs, which operate in areas that are remote from the national training centres, they are bound to incur a heavy burden in funding board and lodging.
    I hope that the Minister will appreciate the difficulties in these early days. When training is provided on a national and regional basis the costs can be equalised, but that will not always be possible with LECs. The Minister may not be able to give me an answer immediately, but. I trust that he will look into the matter, because it may recur increasingly as the TECs and the LECs bed down.
    We should not merely bemoan unemployment. There seems little point in comparing the numbers who are unemployed in the various constituencies with the Conservative majorities there unless we are also prepared to say what we are going to do about the problem. My hon. Friends and I have tried to do something. I do not

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    pretend that ours is the complete answer; indeed, we believe that the recession is too deep for it to be possible to wave a magic wand overnight and achieve full employment. We believe, however, that the Government have a duty to make an effort.
    We have identified, for instance, the capital funds that are locked up in local authority bank accounts as a result of council house sales. We believe that those accounts could be unlocked to fund a housing programme involving not only new build but renovation. School buildings could also be improved. I am sure that many of us have been asked why a local school has a leaking roof when people are on the dole. The hon. Member for Newham, North-East cited the company bankruptcy ligures; they show that, in recent months, the construction industry above all has suffered, and needs a boost.
    We have also targeted energy efficiency. We believe that that is worthwhile because it leads to proper stewardship of resources. Also, if people improve the efficiency and insulation of their houses, there will be lower fuel bills which will particularly help those on lower incomes. That sort of work tends to be job intensive and more emphasis and resources should be devoted to an energy efficiency scheme.
    We also believe that more should be done to try to stimulate small businesses. Nine out of 10 businesses going out of business employ fewer than 100 people. It is always the large redundancies that hit the headlines on "News at Ten", but the cumulative effect comes from small businesses which have to make people redundant as they go to the wall.
    The 10·9 per cent. increase in the uniform business rate this year—the maximum by which the Government could have increased it—was a criminal blow to small businesses. The Chancellor did some things in his Budget to help small businesses, but those things have been swamped by the additional revenue that businesses up and down the country will have to pay in UBR. We propose more help with the administrative costs of setting up new ventures. We should try to devise ways in which to bridge the traditional gap that has been identified in this country between those with good ideas and those who convert them into further development and production. Assistance should be given through seedcorn enterprise initiatives. We want to help businesses that suffer from the late payment of debts. That would be done by a statutory right to charge interest on outstanding debt.
    Some six weeks ago, the Chancellor said that rising unemployment was a price worth paying. I do not accept that and neither do the British people. There is a high cost of unemployment in terms of people's income, homes—there is an increased number of repossessions—and health and well-being. That is certainly not a price worth paying. The Government have to pay a crude price in terms of increased benefit. It is estimated that it costs £300 million for every 100,000 extra unemployed. There is a duty on the Government to try to do more than they have done up to now to reduce the impact of the recession. Mass unemployment is not inevitable. Other economies such as Japan, the United States, France and Germany have succeeded in having lower unemployment and lower inflation. The Government lack the political will to achieve a similar end.
    8.32 pm
    Mr. Tim Janman: The hon. Member for Orkney and Shetland (Mr. Wallace) said that Germany has had lower unemployment than Britain. For much of the past few years Germany has had higher unemployment than Britain and the new united Germany has considerably higher unemployent. Because of the existence of minimum wages in some parts of the German economy —there is not an across-the-board national minimum wage as the Labour party tries to suggest—there is a particularly acute problem with youth unemployment in Germany, which is far worse than in Britain. The hon. Member for Orkney and Shetland should do his homework before making gauche statements about German employment.
    We are debating future levels of employment and unemployment. I do not wish to discuss in great detail what was said in the Select Committee because many of those in the Chamber are members of the Select Committee and it would be somewhat incestuous to go over what we have already debated. If we are to make assessments about the future level of employment and unemployment, we must look at the factors that will affect the statistics. We have to ask who will be in government, what will be their monetary policy and will we stay in the exchange rate mechanism?
    The hon. Member for Newham, North-East (Mr. Leighton) and I are such good companions on the Select Committee that I nearly called him my hon. Friend. The fact that he would not give way to me earlier was a break in a great custom. I think that the hon. Member for Newham, North-East was exaggerating slightly when he talked about ERM membership in that—he said as much later in his speech—to all intents and purposes the die is cast for unemployment trends in the next 12 months. Membership of the ERM may mean that unemployment is slightly higher than it would otherwise have been because the Government lose a degree of economic and political freedom in how they manage the squeezing of inflation out of the system.
    The hon. Member for Orkney and Shetland did not really contradict my intervention during his speech because the credit boom that he mentioned was due to the low interest rates, which were in turn due to the desire of the then Chancellor to peg the pound to the deutschmark. He had to lower interest rates to keep the 3:1 ratio. He wanted to take us into the ERM sooner rather than later.
    I agree with the hon. Member for Newham, North-East that membership of the ERM will probably mean that for the time between entry and the next year or so unemployment will be higher than it would otherwise have been. However, I do not think that it will be much higher. It is a matter of degree and I do not think that it will make any fundamental difference to the general trend that we shall see.
    The important issue is what sort of Government we will have in the future, what monetary policy they will pursue, what the consequent level of inflation will be, and how much intervention and renationalisation of industries will occur. Will we have a Government, such as that we have now, who are making the right decisions about the fundamental structural issues in the economy and who have implemented the correct policies and philosophies over the past 10 years, or will we have a Government who go back to the bad old habits of saying that politicians and

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    bureaucrats know best and know more about how to run businesses than business men or more about running industry than industrialists? We would inevitably return to that scenario if there were a Labour Government after the next election. We would then see the distortion of resource allocation in the economy that we saw in the 1960s and 1970s. At that time one man's job may have been lost in order to keep somebody else in a job which, in any real economy, would have disappeared because of technological change or because such over-manning would not be allowed.
    What will happen in the future about the attitudes and activities of trade unions? To some extent, that will depend upon the Government. Will we return to the good old corporatist days of the 1960s and 1970s? I am not making a purely party political point because, even when my right hon. Friend the Member for Old Bexley and Sidcup (Mr. Heath) was running the country, we had the corporatist beer and sandwiches at No. 10 just as we did under a Labour Government. We do not want to return to that, but I fear that under a Labour Government we would.
    As I have said, the crucial questions involve who will be in power, what will be their monetary policy, whether they will be determined to get inflation down and keep it down and whether they will be prepared to discipline themselves not to intervene in the economy to distort where resources go. It all boils down to whether we will have stability.
    The speech of the hon. Member for Newham, North-East was one of unmitigated gloom. At least the speech of the hon. Member for Orkney and Shetland contained one optimistic phrase. I think that he understands the need to achieve, in the near future, the important objective of stability. I believe that we are well on the way to achieving that with a halving of inflation during the past six months. Then, with the discipline of the ERM or the self-imposed discipline from the Bank of England and Treasury, if we keep our monetary policy tight and ensure that people pay themselves only in line with what is being produced and keep unit labour costs competitive with Germany, the United States, Japan and our other main competitors, we will see a golden decade for Britain in manufacturing and service industries. That is how we shall return to rising employment and growth.
    Before returning to those fundamentals, a word about unemployment in my constituency. In July 1986, unemployment in the Thurrock constituency was 5,723. In June 1987, it had fallen to 4,965. In May this year, it had fallen to 3,879—21·9 per cent less than in June 1987. That is the biggest fall since June 1987 in any Essex constituency, and the 17th biggest fall among the 182 constituencies in London and the south-east. I do not pretend that things are not difficult and I hope that my hon. Friend the Minister will recognise that that is so, but I want him to know that business in my constituency is bearing up well.
    There are several reasons for that. Two or three years ago, the then Secretary of State for Employment, my right hon. Friend the Member for Sutton Coldfield (Sir N. Fowler), took the imaginative and courageous step of abolishing the dock labour scheme. Would a future Labour Government return to the bad old days of the dock labour scheme? My Labour opponent is always going on about bringing back the scheme, but I have not noticed the same enthusiasm among Labour's employment spokesmen. Perhaps he was trying to persuade my constituents to vote for him by making false promises.
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    The dock labour scheme has gone, and good riddance to it. The port of Tilbury is now competitive and in the latest financial year made a profit of £3 million. It is attracting new business and even surprises itself by continually breaking productivity records. Once the ports legislation being considered by the other place is given Royal Assent it will become a plc and more real jobs will be created.
    Lakeside shopping centre, which attracted a third of a billion pounds of private sector investment, has been completed and is the largest retail shopping centre in Europe. Once it is up and running—it takes four or five years for turnover to reach its peak in such enterprises —it will provide about 5,000 jobs.
    I say that it will provide 5,000 jobs, but that will depend who is governing the country. If a socialist Government enact phase two of their minimum wage proposals, whereby the minimum wage will be 66 per cent. of average wages, I suspect that considerably fewer than 5,000 jobs will be created. Many industrial sectors, particularly the retail sector, will employ fewer people because of the minimum wage. I see the hon. Member for Fife, Central (Mr. McLeish) squirming, so I will return to that subject later.
    The Government set only the overall environment For employment, but local authorities can make a difference to employment. Grays, which is the biggest town in my constituency, is only 23 miles from London and three miles from the M25. Sadly, unlike many other south-east councils, the local council has been in the grip of socialist control for much of the past 20 years. It has not had the imagination and vision to attract the private sector office development that many other south-east towns have been able to attract. Employment is affected not only by what is going on nationally but by what is going on locally.
    Only recently, the local council, in its wisdom, turned down planning permission for a Hilton hotel, which would have created 150 jobs. I am supporting the appeal against that decision to the Secretary of State for the Environment in order to secure those jobs.
    What will happen if the national environment changes? Every Labour Government since the mid-1920s have increased unemployment. I see no evidence to convince me, the House or the public that the track record of a future Labour Government would do any better than their predecessors. Why should a future Labour Government be different, especially as in its policy documents the Labour party of 1991 has proposed a minimum wage, which was wisely discarded in 1969 by the former Labour Secretary of State, Barbara Castle? She described a report of an inter-departmental working party on the national minimum wage as essential reading. Page 43 of the report concluded:
    "The greater cost to the national minimum, the greater the consequent adjustment in the level of employment is likely to be. Any consequential unemployment would tend to affect development areas in particular."
    The Labour party's proposals for a minimum wage are madness; it is an economic cloud cuckoo land. I have some sympathy with the suggestion of the hon. Member for Orkney and Shetland that an increase in unemployment of 2 million is an exaggeration, but it is not clear that it is definitely an exaggeration. The consequences of phase two of the Labour party's proposals, which would impose a national minimum wage not at 50 per cent. but at two thirds of the median wage, are clear. It is clear from the

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    comments of the TUC's general economic committee and of trade unionists such as Gavin Laird, Eric Hammond and Bill Jordan—I do not have time to give the many quotes to support what I am saying, but we all accept that it is true—that, all other things being equal and constant, phase two of its proposals and the full restoration of differentials would lead to a large increase in unemployment. One million jobs, 2 million jobs or more may be lost, but whatever the figure, a heck of a lot of jobs will be lost and a heck of a lot of lives will be affected and inconvenienced by the dogmatic and ideological policies of the Labour party.
    The trends for unemployment and employment in the next 12 to 18 months are already set. We have seen the unfortunate incursion of inflation into our economy, but the Government are successfully squeezing it out. We hope that that process will be over as soon as possible and that it will be as effective as possible so that we can get our economy back on an even keel and can begin to achieve the growth that we enjoyed in the mid-1980s. I believe that once the economy is stabilised, the increase in unemployment will reach a plateau and will then decrease. It is important that we have zero inflation and that unit labour costs can compete with those of our competitors. If we can achieve that—as I believe that the Government will after they are re-elected—we shall have a fine future.
    The alternative is the same as that which the electorate dismissed at the previous three general elections—a party whose polices are wholly contradictory and which involve high taxation, high public spending, high borrowing, or all three. It is a party that cannot resist the temptation to intervene, to meddle in industry and to cause resources to be wasted. It is a party that cannot resist giving in to and being governed by its paymasters, the trade unions. Its policies are a recipe for very high unemployment for a very long time.
    8.50 pm
    Mr. Ray Powell: I have sat in the Chamber on many occasions to listen to debates about employment and employment training. I listened to the hon. Member for Thurrock (Mr. Janman) who is a member of a party which since 1979 has created the highest recorded level of unemployment. I wonder whether we should be allowed —in parliamentary terms—to call members of that party the names that we should like to call them instead of having to talk to the press as happened a week or so ago when the right hon. Member for Old Bexley and Sidcup (Mr. Heath) called the right hon. Member for Finchley (Mrs. Thatcher) a liar. We are not allowed to say such things in the Chamber without being challenged, but we can say them outside. The people to whom I refer are strangers to the truth and they throw around their statistics in their replies to questions and in their arguments. Perhaps those people should sit back and listen for a little while and I shall tell them what has happened in my constituency.
    The facts are impressed on my mind because they affect my constituents who have been thrown out of work. If one reads the book by Nye Bevan called "In Place of Fear" —and I recommend that Conservative Members read it —one learns that he was blacklisted by employers in his constituency of Ebbw Vale because of his stammering and
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    because of his actions as a mineworkers' leader. He had to roam the mountains because he could not get a job. One of Nye's ideas was that if as politicians we do only one thing, it should be to ensure that everyone has a job.
    Before you call me to order, Madam Deputy Speaker, I shall refer to the supply estimates and the Department of Employment. I thought that I had better check some of the Department's figures to see whether their suggestions given in replies to questions are correct. However, page 1 of the document entitled "Supply Estimates 1991–92" states blatantly that the Government will reduce the amount of funding by more than £400 million. Therefore, when talking about employment it is no good their arguing that they will try to get us out of the present grim situation —they have no intention of doing so, as their own figures show.
    I said that I would mention my constituency and what has happened to it since 1979 because that is relevant to the debate. In 1979, my constituency had an unemployment rate of 3·7 per cent. When that figure was analysed, the Department of Employment informed me that 2 per cent. of those registered were unemployable because they were silicotic or pneumoconiotic. At that time, my constituency contained seven collieries and there were 6,500 miners. It also had 12,000 steelworkers, but within two years the Government had decided to de-man the steelworks on the ground that they were not making a profit. However, only last week we found that they are not making a profit now, despite all the cuts that the Government have made. Because of the 12,000 redundant and unemployed steelworkers and the 6,500 unemployed miners, the unemployment rate in my constituency increased within those two years to 35 per cent. Therefore, in an electorate of about 83,000, 30 per cent. became unemployed.
    As a result, some members of the Trades Union Congress in Mid Glamorgan and officers of my constituency party decided to accept the Government's proposals for unemployment training or, as it was at that time, the community programme, and to introduce an employment training scheme. We did so and it was very successful. During its 10 years, it trained 4,000 people. In fact, it not only trained them but got them jobs. However, overnight the Government decided that they would revoke employment training and introduce the training and enterprise councils. That was the biggest disaster that has ever happened in Mid Glamorgan and especially in my constituency.
    I mention that for the benefit of my hon. Friends on the Front Bench who will deal with employment when we have the next Labour Government—that will probably be in November if the Prime Minister so decides, or perhaps in June. However, the next Labour Government will in all probability also have to deal with the contentious issue of how to get people back to work. I am sure that their efforts will be sincere and that they will be directed towards getting the people who are currently out of work back into employment.
    We have listened to ex-Ministers telling people to get on their bikes. If my constituents had done so in 1981 and if they had come to the east coast, they might have found a job. They could now get on their bikes or their roller skates or start to walk—I doubt whether they would be able to afford roller skates because of the cuts in unemployment benefit. If they came on their roller skates or by foot to the east coast, there would be no chance of their finding a job.

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    I have made an effort as the chairman of an organisation called Cato—community activities and training in Ogmore. Despite the arguments used by my colleagues in the Labour party and in the trade unions, we decided to set up an organisation to train people. We not only trained people, but combined with that training a programme of community enterprise in Ogmore to ensure that we were doing something of benefit for the area. We provided training in catering and at the same time provided meals on wheels, which had been axed because of Government cuts in funding to local government. We provided a service and trained people at the same time. That went on for 10 years. However, overnight we found out that the TEC in Mid Glamorgan had decided to cut our programme, and told us that our contract would not be renewed in March. That meant immediate unemployment for 45 qualified and experienced trainers who had given 10 years of service to an organisation whose aim was to train people desperate for a job. In addition, 210 trainees were immediately put out of a training programme. They were promised that they would have a programme and a job, but 12 months after the TEC's decision to close down Cato, those trainees are still looking for a place in Ogmore in which to be trained.
    Two hours and 22 minutes is not a lot of time for the House to debate the contentious issue of unemployment. I do not want continually to bandy statistics with Conservative Members. However, I am sure that people who may be listening or who may read the report of this unemployment debate are not especially interested in statistics if they are unemployed. If one tells anyone in my constituency that more than 2 million people are unemployed, he is not especially concerned or interested —people are interested in the fact that they are unemployed and that there is no chance of a job for them. There is no mine for them to go to now. People only went down the mine in desperation, and not through choice.
    My father was a miner. The last thing he said to me was, "Whatever you do, don't go down the mine." If there were no jobs or if a person was not qualified, there was no alternative but to go down the mine. As the seven mines in my constituency have been closed, there is now no chance of a mining job. If the Government had decided to provide factories or to help the existing factories in my constituency, that might have been a help, but they did not. A number of us had to persuade foreign companies to come to the Ogmore constituency. Sony provided us with 3,000 jobs and we persuaded the Ford engine plant in Bridgend to expand its programme so that more people could be employed.
    In my constituency, and in Mid Glamorgan in general, there has been a considerable reduction in employment. With the advent of unemployment in my constituency, I decided to introduce a ten-minute Bill about the TEC in Mid Glamorgan. Having read the document that was sent to all TEC chairmen on 12 December 1990 about the first internal audit of training and enterprise councils, and as we are dealing with billions of pounds of public money, it may be of interest again to put this important matter on the record.
    The permanent secretary at the Department of Employment—Sir Geoffrey Holland KCB—sent a letter to all chairmen of the TECs asking them to ensure that they had an internal audit. One of the paragraphs of that letter explained:
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    "I do so because of the weaknesses in financial management they reveal, and the disquieting overall picture
    The Public Accounts Committee would not regard such a situation as satisfactory. I write primarily because I am anxious that you should be able to defend yourself before the Public Accounts Committee should they call you at any time."
    Sir Geoffrey continued on the subject of the weaknesses discovered by the audit in some TECs at that time:

    "(a) Claims made by the council which could not be supported by adequate documetary evidence.

    (b) Claims overstated by the inclusion of expenditure which was outside the terms of the contract.

    (c) Attendance records not being properly maintained by training providers.

    (d) Financial appraisal and monitoring of providers not being carried out, and

    (e) Excessive working capital loans and substantial cash balances being held.

    It is very probable that these same issues are occurring at other operational councils which have not yet received a visit from my internal auditors."
    Needless to say, my first action was to ask for an internal audit of the Mid Glamorgan TECs. I am still waiting for a reply from the Secretary of State for Wales on when he will have an internal audit conducted.
    I have here the Secretary of State's answers to the numerous parliamentary questions that I have tabled. There is plenty of documentary evidence, but I have been told not to speak for too long. Some Conservative Members may wish to speak, so I shall not refer to all the documents that I have, but I would have liked to have the opportunity to support my case even more thoroughly. In his replies to my questions about how many places have been cut in Mid Glamorgan, the Secretary of State says that the information is not available. When I ask why, I am given to understand that it is because the Mid Glamorgan TEC is now a public limited company and we cannot get the information direct. It is high time that that was changed. When we table questions we should be able to find out the information that we require.
    I have a lot to say, but I shall conclude by referring to the TEC operating agreement—a document of great importance to my constituents and myself in explaining to 45 trainers, some 200 trainees and some 350 people on a youth scheme why the TEC decided not to continue our agreement.
    Our agreement was concluded in a single month. The Government say that training organisations have to accept a contract with such terms before they can be registered and operate as trainers. However, the operating agreement between the Secretary of State for Employment and a training and enterprise council affords a TEC the opportunity of affecting the agreement. If the Government wish to withdraw from an agreement with a TEC six months notice must be given, yet they compel training organisations to sign contracts specifying only one month's notice.
    I have been told by the Whip that it is time to finish my speech. I am a Whip myself, so I shall do so, but I should like to have been given the opportunity to continue for some time, because I have been trying to explain to the House how the country is being deluded into accepting some of the statistics that the Government portray as representing the level of unemployment. They should have a look at the real world. They should come down to my surgery on a Saturday and speak to people who have no chance of a job and who are trying to exist on their meagre

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    unemployment benefits. They find that their houses are to be repossessed because they cannot make their mortgage payments, that they cannot continue payments on their car and that they cannot furnish their tables as they furnished them when they were in full employment. Yet we are told that the Government are making every effort to ensure that people are back in work. All I can say is that that is not happening in Ogwr, in Mid Glamorgan or in Wales generally. I do not know what is happening elsewhere, but in any case it is high time that the Government were thrown out of office to enable a Labour Government to take control and try to remedy the situation. Such a remedy is long overdue.
    9.11 pm
    Mr. Chris Butler: People come to my surgeries, too. One of them, Mrs. Lynne Fleming, came along to say that, although she was happy with her status as a self-employed secretary, as were her clients and the Inland Revenue, the Department of Social Security had intervened to classify her as employed on the basis that she did not carry her heavy word processing equipment around from job to job. As a result, she lost her clients because they were not prepared to pay the costs of her full-time employment, and she had to close her business.
    Further investigation revealed that both the Inland Revenue and the Department of Social Security were reclassifying as employed whole groups of people previously classified as self-employed on the basis of absurd and biased tests to determine their relative status. I have written evidence from many accountants that numerous people have lost their jobs as a result. One accountant writes:
    "I have countless examples in my files of the Revenue using dubious requirements to force people out of business."
    When their businesses close, we as taxpayers face a hefty bill for their state benefits—all for the sake of identifying amounts of back tax and advancing the careers of some income tax inspectors.
    I accept that, under this Government, self-employment has grown by 65 per cent., but I contend that the figure would be higher still, and that unemployment would be lower, if we revised these absurd tests, perhaps moving to some kind of self-certification system for the self-employed. That really would be the mark of a radical, free-enterprise Government.
    In the arcane jargon of the Civil Service, employment budgets are based not on forecasts of unemployment but on Treasury "assumptions" of unemployment. In the autumn statement, £305 million was cut from the employment training budget. That cut was based on the Treasury's assumption that unemployment would be at 1·75 million throughout this year—a flat figure to apply right through the year. Flatly, that was wrong.
    Unemployment began rising in April 1990 and the trend in our economy and in unemployment should have been clear by the time of the autumn statement. We entered the exchange rate mechanism in October 1990 and, as hon. Members have shown, it must have been known by then that entry would have a significant upward effect on unemployment.
    The response from the Department of Employment—in February 1991—was to put £120 million back into the employment training budget. In March 1991, the
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    Department put £38 million back in to expanding job clubs, and in June 1991 it put a further £35 million into employment training. It appears that unrealistic assumptions were made about unemployment, and that there was an apparent disregard for the effect of our membership of the ERM. I am arguing for the process of reaction to trends in unemployment to be telescoped so that we can avoid the nonsense of increasing expenditure on unemployment when it is falling and decreasing expenditure when it is rising.
    In the 1980s, it gradually became accepted among the chattering classes and the major political parties that we should join the exchange rate mechanism "when the time was right". That last phrase, which was consensual and diplomatic, even managed to keep some of the doubters on board on the basis that perhaps the time never would be right. However, no one publicised in advance the likely effects on unemployment of joining the ERM.
    The Confederation of British Industry and the TUC were great enthusiasts of the idea, but they sheepishly had to admit to us that they had made no calculations. If the major political parties knew the cost, they were not saying. It is possible that, somewhere in the bowels of the Treasury, some Gollum-like civil servant egested some gloomy predictions, but he and his figures, in advance of our joining the ERM, were not allowed to see the light of day.
    It is strange that the major organisations representing the employers and the employees could be all atwitter about the particular policies without considering the fundamental consequences. The Secretary of State for Employment made no prediction about the effect on unemployment of our joining the ERM. However, it is clear from the National Institute Economic Review that unemployment rose by 700,000 in France and by 1 million in Italy as a result of their joining the ERM.
    The hon. Member for Newham, North-East (Mr. Leighton) has already referred to the evidence of the chief economic adviser to the CBI, which was published rather late in the day in March 1991. That showed that Britain would probably suffer an extra 500,000 unemployed as a result of the ERM membership—if it works.
    I am not necessarily attacking the ERM. I voted for it as an experiment. However, at least we now know the price tag involved. In addition, some people would argue that, with the monetary indicators as they are and with unemployment as it is, we would have been able to reduce interest rates rather more quickly and more easily than we have done in the ERM. That may be the other part of the price tag.
    What is scandalous, and what beggars belief, is that the Government, the Opposition and the so-called social partners could all be gung-ho about a particular policy without telling the public about its likely effects. If we embark on other European adventures, I trust that we will have the common sense to look at the downside as well as the upside of those policies, and that we will have the guts to be open about them.
    Although I may be wrong, it appears to me that there has been a conspiracy of silence enrobing us as we have drifted gently towards the holy grail of ever closer European monetary union. But now I think at least one person may jerk us back to reality, much as that may annoy the nodding boatmen.
    9.17 pm
    Mr. Ron Brown: Let us be clear about unemployment. It is not an act of God. It does not just happen; it is made to happen. In fact, it is a direct result of the so-called market economy—in other words, of the capitalist system.1 am not talking about Adam Smith's capitalism; I am talking about monopoly capitalism and the capitalism of big business represented by the Conservative party. The Government must accept responsibility for the present situation. They must accept the blame for the fact that so many people have lost out in this country.
    Of course, the Government will no doubt protest their innocence and say, "Judge us on our overall record." I suppose that that is fair enough. Let us consider what has happened in our constituencies as plants have closed down. In my constituency, we have lost Robbs shipyard, Raimes Clark manufacturing chemists, Motherwell Bridge, the Victoria Rubber Company and, more recently, Caledonia Flour Mills and SAI. SA1 was closed down deliberately because the Government were opposed to its takeover by Kemira. Why? Because Kemira is a Finnish state-owned organisation. The Government speak about market forces, yet they allowed blind party dogma to interfere with those forces.
    There are also problems at other plants in the Leith area. Although Ferranti and NEI are still producing goods, their work forces have been much reduced. People have been paid off thanks to the so-called "recession" which the Government claim is now about to be resolved and will quickly disappear. I doubt that. Too often, people in Britain have been told to get on their bikes and to look for another job. I suppose that that explains what one sees in various parts of London. There are many Scots around Victoria. Indeed, many people from my constituency are living in cardboard city because they have nowhere else to go. They came here believing that they would get a job in this great city of London, but they could not. This country has economic refugees. They are the people who have lost because of the Government. In the past, Scotland had the highland clearances; today we have the lowland clearances, as my hon. Friends could testify.
    Unemployment is not unique to Britain, but it is rising fast here. By next year, it is estimated that 3 million people or more will be unemployed. However, that is only part of the story, because many other people will be on short time. It is estimated that 5 million people will be working part-time. In the past, the excuse always used to be, "It is the unions' fault." That was the message given out by the Conservatives. However, that is a bogus argument, because there have been very few disputes in recent years, and, sadly, union membership has declined.
    The other reason the Tories gave for things going wrong was that wage rates were too high. They do not say that to Sir Ian MacLaurin of Tesco, who gets £1·5 million a year, or to the other bigwigs, such as the judges, the generals, the police chiefs and the bosses. But that is what they say to the young lasses and laddies who work for Tesco and who receive only £5,000 per year instead of the huge sums of money that their bosses get from the exploitation of both young and older workers.
    The Tories always argued in the past that one could price oneself into or out of a job. The Tories are strong on the law, but they have ignored the wages councils. There have been repeated cases of both young and older workers
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    being underpaid simply because the number of wages council inspectors has been reduced. In 1978, there were 171 inspectors, but today there are only 71 inspectors to check on the Scrooge employers. That explains why, although the Low Pay Unit has made it clear that one third of the firms checked underpaid their employees—that is just the tip of the iceberg—there have been very few prosecutions. In 1988, only 10 firms were prosecuted, but more than 5,000 were breaking the law. That explains a lot about the Government. It explains that they are a Government of low wages and cheap labour. Their youth training scheme conscripted young workers to do menial tasks for little money. Training schemes indeed!
    If the Government could justify low wages by proving that the economy would take off, they might be acceptable, but India has not become a booming economy on the basis of low wages. Low wages are not a panacea. Unemployemnt is rising because Britain has not invested in new equipment, ideas or technology. Part of the cause is the exchange rate mechanism and the overvalued pound. Anyone who looks back to the 1920s when Britain was on the gold standard will understand the lessons of that period. We must invest in new machines, people, training, skills and education, and we can afford to do so. Despite the Government's mismanagement of the economy, we have many resources, including the talents of the people and oil. It is simply a question of using our talents and wealth to good effect. That is why we speak of a citizens' charter.
    We also need a workers' charter which will guarantee real jobs—jobs with a future, jobs that will sort out the economic mess, and jobs that will provide homes, hospitals and roads and rebuild and regenerate the economy. We need a statutory minimum wage, a 35-hour week and equal pay for equal work. However, we shall not get those unless we have a Labour Government. We need socialist policies, which will extend democracy and give power to the people who produce our wealth. The sooner we have a general election the better, because the people back home are desperate for one.
    9.27 pm
    Mr. Henry McLeish: I am not sure whether I can rise to the expectations of my hon. Friend the Member for Edinburgh, Leith (Mr. Brown) but I shall try to deal with the key issues that have emerged this evening. I congratulate the Chairman of the Select Committee on Employment on the report that his Committee has prepared. Although its conclusions may not have led us to a definitive debate, the issues are important and have formed the backdrop to our debate.
    It is important to appreciate that we are debating this issue against the background of some sombre forecasts which have been made in Europe and this country. The report of the Organisation for Economic Co-operation and Development suggests that our investment possibilities in the next year are extremely gloomy. We have the worst forecast for business investment next year compared with the United States at 6·4 per cent., Japan at 4·4 per cent., Germany at 4·8 per cent.—the United Kingdom rate is forecast at only 0·6 per cent. No other EC country is likely to do so badly. That is important to the long-term aspirations of the next Labour Government and it is extremely depressing that the present Government will leave such a legacy to us.

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    The City and academic institutions have forecast the levels of unemployment that lie ahead in 1992. It is clear from those forecasts that the much hoped for reduction in unemployment will simply not emerge next year. The forecasts are extremely gloomy and range from more than 3 million to 2·3 million. The Select Committee report states in paragraph 4 that the CBI
    "expected the turning point in unemployment to arise between six and 12 months after the turning point in economic activity."
    It is salutary to remember that unemployment in that last Conservative recession started to rise in November 1979 and did not stop rising until July 1986—it rose for nearly seven years. It would be complacent to think that a short-term consumer boom such as the one being devised by the Government will have any immediate impact on rising unemployment.
    This debate is essentially about the Government's economic record—about 12 years of wasted opportunity for millions of people. It is about the Government's failure to deal with the deep-seated structural problems that were with us in 1979 and are still with us in 1991. It is also about the Government's failure to deal with unemployment as a serious economic issue. In Britain there are 2·2 million unemployed but they also have 1·8 million dependants, so unemployment is blighting the lives of almost 4 million men, women and children. That is a sad reflection on a Government who are supposed to have engineered economic miracles.
    The statistics of Government failure are stark and worth repeating. A further 10,000 people have been added to the dole queue every month since 1979—and the Government talk about economic success and lecture the Labour party about policies designed to bring down unemployment. Great claims are made about jobs. The most serious claim made by Ministers is that 1·3 million more people are in work now than in 1979. That is just not true; 460,000 of them are people with extra jobs, not more people in jobs; 411,000 training places are described as jobs. So after 12 years of Conservative Government 165,000 full-time jobs have been created—the worst employment record in Europe. That is the reality behind the rhetoric.
    Conservative Members representing the north-west must ask the Secretary of State for Employment why fewer people there and in the north are in jobs in 1991 than in June 1979. For them, the economic miracle does not stand up to objective scrutiny.
    Vacancies are also a key indicator. In January 1980, when statistics were first compiled, 193,400 vacancies were recorded at job centres, a number that slumped to 106,000 in May this year.
    Skills are another key labour market indicator. Every objective criterion shows that the skills crisis is deepening and that the skills gap between Britain and its major competitors is widening.
    If we want evidence about unemployment we need look no further than the Government's record. They have failed on the four key labour market indicators. I challenge the Minister to wish away this doubling of unemployment, this almost complete failure to create jobs, this skills crisis and this slump in vacancies.
    The labour market is singularly ill equipped to deal with the problems that lie ahead, partly because of de-skilling,
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    partly because of massive de-regulation and partly because of the destabilisation caused by so many people looking for a job. Jobs are still the fulcrum of our culture, but people are denied the chance to have one.
    I charge the Government with three accusations. First, they are the party of mass unemployment and have been instrumental in its creation by using it as a weapon of economic management. They have been indifferent to its effects and they have been instinctively unable to take unemployment seriously or to provide the positive action that the unemployed and the nation require.
    Secondly, the Tories are exacting a high price from individuals, the economy and, in particular, from taxpayers for the high level of unemployment. The Chancellor said that it was a price well worth paying. That is certainly true if the Government want to waste taxpayers' money and lives, and remove skills and capacity from an economy that badly needs them.
    Thirdly, it is quite clear that the Government knew that unemployment would rise sharply, and I shall provide evidence about that. Even though the Government were aware of that, they failed to take positive action.
    Mr. Timothy Wood: Nonsense.
    Mr. McLeish: The hon. Gentleman says nonsense, but the only action was a statement a few weeks ago by the Secretary of State for Employment in which he introduced more job clubs and some employment action. I shall deal with that later.
    I shall start unfolding this shabby tale by looking at a key minute which has been raised in the House before but which is worth mentioning again. It is a memorandum dated 15 May of a meeting between the G10 chairman and Sir Geoffrey Holland. For the first time there is documented evidence of a Government prediction about employment in the following year. It states:
    "In both London and Sheffield the forecast for the period October 90 to October 91 was for a 50 per cent. rise in the levels of unemployment. Any arguments that the Treasury therefore had for a reduction in funding were now completely eroded and in fact there was a demonstrable justification for further funds."
    Was that a minute of what the permanent secretary in the Department said at the meeting or was it the G10 chairman making a forecast that had emanated from Sheffield and London? It is clear that the Government were able to forecast in October 1990 that employment would rise by 50 per cent.—an increase of 860,000 in 12 months.
    Why was there no action in January, February, March, April or May? In June, the Secretary of State for Employment made a statement in which he unfolded some new initiatives to tackle a problem that was evident in March last year when unemployment started to rise and which was crystal clear by October when forecasts were made. Do 2·2 million people have to be unemployed before the Government find it sensible and prudent to act?
    History has a habit of repeating itself. I shall quote from a press notice dated 3 February 1983 issued by the then Secretary of State for Employment, the right hon. Member for Chingford (Mr. Tebbit). Dealing with rising unemployment, the press notice stated:
    "In the meantime the Government is already helping about 650,000 people avoid unemployment through a range of special measures costing about £1,500,000".
    That shows that unemployment is not a new issue for the Government. They must be masters at dealing with it,

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    although the outcome of their actions does not confirm that judgment. It is interesting to compare that press notice with the statement by the Secretary of State for Employment on 19 June this year. He said:
    "The Government is already providing a wide range of employment and training programmes helping 650,000 unemployed people this year".
    In both 1983 and 1991, 650,000 people were being helped and unemployment was over 2 million. If the country had done so well, why have the unemployed done so badly? Why is it that, after nearly a decade of booms and busts, we are back to the position that existed in 1983?
    Mr. Janman: Given that a future Labour Government would not take us out of the exchange rate mechanism, and that the Shadow Chancellor has said that the only public spending priorities of a future Labour Government would be child benefit and pensions because that would not create a false boom, what difference would a Labour Government make, and what would they do to change the situation?
    Mr. McLeish: I wish that I had more time to address the serious issues that the hon. Gentleman has raised. The Government do not want to give us more time to discuss unemployment because of the difficulties that they are in, but it is an important subject. If the Government persist in creating another consumer boom that is not investment led, we shall end up with the same problems that we have endured for the past 12 years. The Government have not addressed the important agenda of regional policy, industrial strategy and the supply side initiative. However, a Labour Government will address it, with resulting benefits.
    In their statement on 19 June, the Government said that they wanted to address a particular problem. It is instructive to look briefly at their response after unemployment hit 2·2 million. First, we shall have an unemployment action programme to create 30,000 jobs this year and 30,000 next year, so that by the end of next year 60,000 will have been created. The problem is that this will serve in this financial year only 30,000 people so it is a pity that the 960,000 people who have been unemployed for more than six months will not benefit. Some would describe that as a drop in the ocean, but I shall not be so uncharitable. That means that 50 people in each constituency may be helped by this dramatic new measure to tackle rising unemployment.
    Secondly, the Secretary of State now wants to give 15,000 places back to the employment training programme. It is unfortunate that he took away 80,000 places. We have heard hon. Members talk about the cuts of £360 million earlier this year. Some £120 million has been reinstated, and now those 15,000 jobs will be reinstated at a cost of £34·9 million. However, we are not back to the level of funding that we had before the cuts were instigated.
    Thirdly, we now have the greatest innovation in the Department of Employment since Lord Young of Graffham introduced Restart—executive job clubs. The Government have realised that it is not just Scotland, the north and the north-west which suffer from unemployment, and that the executive masses in the south-east are also suffering. I do not know what an executive job club will be, but I hope that it is more successful than job clubs have so far proved.
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    If there were one single issue that should excite those on the Government Benches, it is the cost of unemployment. The public know full well that the Government are not interested in unemployment as a social or regional issue, nor in its dramatic impact on the individual. This is supposed to be the Government of economic competence and sound money. If that is the case, why are they willing to spend £16·5 billion supporting unemployment? There is no dispute about the fact that £7 billion is paid out in benefits because we know it from the Government's sources and £9·5 billion is the cost of lost national insurance, income tax and indirect taxes. Are the Government seriously telling the country that they are willing to sustain 2·2 million people out of work at a cost of £16·5 billion? If they are, then they are obviously willing to play havoc with the public sector borrowing requirement as well.
    The other tragedy is that in one year the Government added £4·7 billion to the cost of keeping people out of work. And that is the party of sound money—the economically competent party which threatens Britain by saying that if a Labour Government came in jobs would be lost, unemployment would be rife and employment growth would be affected. It is stunning hypocrisy that the Government can make such comments against their own record of abject failure on every key economic issue.
    I want to give the Minister, whom I see smiling at me across the Dispatch Box, his allotted 15 minutes, so I will finish on this point. There is a yawning gap between the scale of the unemployment crisis facing Britain and the Government's pathetic response to it. When we win the next general election, we shall act; until then, it is time that the Government took unemployment seriously. If they did that, they would get more support in the country and some support in the House.
    9.44 pm
    The Parliamentary Under-Secretary of State for Employment (Mr. Robert Jackson): I join the hon. Member for Fife, Central (Mr. McLeish) in the congratulations that he offered to the hon. Member for Newham, North-East (Mr. Leighton), the Chairman of the Select Committee, on the way in which he introduced the report. It is always a pleasure to respond to the hon. Gentleman. He is always well informed and constructive, even when he is in a critical vein, as he was tonight.
    I particularly agree with the hon. Gentleman and my hon. Friend the Member for Mid-Kent (Mr. Rowe) about the importance of training in the formation of skills. That is why the Government have increased spending on training and enterprise councils threefold in real terms during the past 10 years. We believe in training and we have been putting our money where our mouth is with our commitment.
    On behalf of the Select Committee the hon. Member for Newham, North-East challenged the Government on the question of training targets, one of the three principal recommendations of the report. The Government believe in targets. It would be fair to say that we were responsible for the introduction of targets as an important managerial tool within Government. It is important to quantify the objectives of the organisations which work for the Government and within the Government.
    But we do not believe in targets simply as a matter of gesture politics, to feel good by saying the right thing. We

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    take targets seriously. We believe that they must reflect a real commitment and responsibility, that they should be capable of being attained, and that the people for whom the targets are being set can attain them and will have the commitment to deliver them.
    That means that the targets must be set by those who have a responsibility for fulfilling them. That causes a problem for the Government when it comes to setting targets for training. As the hon. Gentleman will know, most of the training done in Britain is not done by the Government, as is true in other countries. Employers are, generally speaking, the main sponsors of training. Therefore, it is employers rather than the Government who must take the responsibility for fulfilling training targets.
    The Government welcome the fact that the CBI has taken that point. It has been looking at the question of targets and is making an effort to set realistic, attainable but stretching targets on behalf of employers which employers will be able to take responsibility for meeting. We await what the CBI has to say and what targets it sets, but the Government are pleased that, on behalf of employers, the CBI has responded to that challenge. The debate is not yet concluded, so I say to the hon. Gentleman —watch this space.
    The hon. Gentleman talked about the report's second recommendation on the exchange rate mechanism. He was pessimistic about the implications of the ERM for unemployment and he was joined in that by my hon. Friends the Members for Thurrock (Mr. Janman) and for Warrington, South (Mr. Butler). As the hon. Member for Newham, North-East noted—in passing, it must be said— there is agreement between all the parties about the desirability of our membership of the ERM. It is supported by the trade unions and by business. That support includes the parity—if we are to understand accurately what has been said by the shadow Chancellor —of £1 to DM2·95.
    Nevertheless, the hon. Gentleman and my hon. Friends are perfectly entitled to reflect on the possible consequences of the policy for unemployment. It may enjoy a sustainable consensus, but it may still have consequences to which my right hon. Friends are right to refer and to be concerned about. This is a large subject, so let me simply offer a few thoughts about the experience of France, to which the hon. Member for Newham, North-East particularly referred.
    I do not necessarily agree with the basis of the hon. Gentleman's pessimism—the idea that Britain's experience of the exchange rate mechanism will parallel that of France. When we joined the ERM, inflation was lower, both in absolute terms and relative to that in the rest of Europe, than it was in France when that country joined in the early 1980s. Besides, our supply-side reforms and the labour market legislation that we have introduced have made our economy a great deal more flexible than France's economy was then.
    Moreover, in the early 1980s France had devalued its currency several times to maintain competitiveness; or, at least, that was its intention. When it committed itself to the ERM, no one believed that devaluation had been ruled out, which increased the cost of getting inflation down.
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    There is a moral in that. We must maintain the credibility of our commitment to the ERM, with the parity that we have chosen. In that regard, I strongly agree with the hon. Member for Orkney and Shetland (Mr. Wallace).
    I also agree with my hon. Friend the Member for Mid-Kent about the importance of training. He described very well the growing recognition that a sea change has taken place in that important part of our national life. One of the signs is the success of the training and enterprise councils. A huge voluntary commitment has been made by thousands of business people all over the country.
    Over the decade, the Government have substantially increased the resources devoted to training; even more important, so have employers. As I have said, they are very much in the lead in that regard. The Government should also take credit for clarifying the system of qualifications, through the National Council for Vocational Qualifications.
    As my hon. Friend the Member for Mid-Kent pointed out, a large amount of bumf seems to be inseparable from each of our education and training reforms. I shall refer what he said to the National Council for Vocational Qualifications. I think that the House will agree, however, that there has been an important breakthrough, and that we now have a coherent vocational framework—not before time.
    There have also been substantial policy innovations. I was pleased to hear what my hon. Friend said about training credits, an important development for which, again, the Government should take credit. My hon. Friend asked us to commit ourselves to spreading the system more widely across the country. I remind him that, in the White Paper that we published only a few weeks ago, we committed ourselves to the principle of a national extension of training credits from April 1993, and to completing the process during the next Parliament. We must, of course, learn from pilot schemes, but we consider that principle sound. In our view, it has already proved itself.
    Mr. Leighton: Many weeks ago, I told the Minister that hundreds of young people in the borough of Newham had no jobs or places on youth training schemes. Initially, the Minister said that I was ill informed; having re-examined the position, I discovered that I was not. Then the Minister promised to write to me. I am still waiting for his reply. When will I receive it? Why on earth does he not answer? Is it because he was embarrassed to find that what I had said was correct, and that I was not ill informed after all?
    Mr. Jackson: I am not sure that I said that the hon. Gentleman was not well informed, but, if I did, let me not compound my error.
    It is difficult to establish the position relating to a youth training guarantee in a particular part of London. I signed a letter to the hon. Gentleman today, but I do not want to arouse false expectations: it does not solve the problem. Guarantees can be delivered by a number of providers, not necessarily located in the borough of Newham. However, we are taking the hon. Gentleman's point seriously, as he would expect us to. I can give him the basic assurance that he seeks: we are entirely committed to the youth training guarantee.
    My hon. Friend the Member for Thurrock was right to argue against the establishment of a minimum wage. He was right to say that a minimum wage would not be an

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    effective weapon against poverty and that it would destroy jobs. The hon. Member for Sedgefield (Mr. Blair) is being tutored in verbosity by the Leader of the Opposition. In his latest euphemism he has conceded:
    "econometric models indicate a potential jobs impact."
    We shall continue pressing the hon. Member for Sedgefield about his "econometric models" until he comes clean with the truth to which the hon. Member for Orkney and Shetland was right to refer.
    If the hon. Member for Orkney and Shetland gets in touch with me about the constituency case involving the young lady in Inverness, I shall look at it with him and do my best to help sort it out.
    My hon. Friend the Member for Thurrock was right to remind the House of what euphemisms such as econometric models having a jobs impact might mean for job opportunities in his constituency.
    I congratulate the hon. Member for Orkney and Shetland on his willingness to make suggestions about how to handle the problem of unemployment. That is something we look for in these debates. His ideas about more spending on housing construction, education construction and energy efficiency are all worthy causes, but they all have substantial implications for public expenditure. The hon. Gentleman should consider the relationship between those proposals and his commitment to the stabilisation of exchange rates in the exchange rate mechanism. There is a tension there which I fear that the hon. Gentleman was not addressing. I draw his attention to the package of measures announced by my right hon. and learned Friend the Secretary of State—an additional £110 million this year and £230 million next year. That is a substantial addition to public expenditure to deaf with unemployment. It is in the spirit of the hon. Gentleman's suggestion. He must recognise that there are constraints on what we can do.
    Mr. Wallace rose—
    Mr. Jackson: I shall not give way because I want to continue to answer the debate.
    I was concerned by what the hon. Member for Ogmore (Mr. Powell) had to say about the training provider organisation in his constituency with which he is associated and the decision that has been made by Mid Glamorgan TEC. The local TEC is much better placed than either I or my officials in Whitehall to make judgments about value for money and quality of different training providers. The hon. Gentleman must accept that. He implied that trainees who had been displaced from that provider were not being found alternatives. I shall take that seriously and I should like to discuss it with him afterwards. We must try to ensure that that does not happen.
    My hon. Friend the Member for Warrington, South spoke about the rules defining self-employment. I have had similar experiences in my constituency and I share his concern. However, it is a matter for our honourable colleagues in the Treasury and I shall draw their attention to his remarks.
    Unemployment is serious. It is serious for the country and the individuals concerned and there is no dispute about that between the Opposition and ourselves. We are equally concerned. However, the hon. Member for Fife, Central should not be allowed to get away with exaggerating. He said—I took down his words—that we have the worst employment record in Europe. That is not
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    true. In May unemployment in Britain was 7·9 per cent. In Spain it is 15·8 per cent., in Ireland it is 15·5 per cent., in Canada it is 10·1 per cent., in Italy it is 10 per cent., in Australia it is 9·8 per cent. and in socialist France it is 9·3 per cent. Our record on unemployment is not as bad as others in the Community and the hon. Member for Fife, Central should recognise that.
    The rhetoric of the hon. Member for Fife, Central was admirably punctured by an intervention from my hon. Friend the Member for Thurrock who asked him a simple and straightforward question. He asked what the Labour party would do about unemployment within the parameters of the policies that it has promulgated on the exchange rate and public expenditure. The hon. Gentleman's rhetoric is bankrupt. I see that the hon.
    Member for Orkney and Shetland is nodding in agreement, but the same stricture applies to him, because he, too, must live within the parameters of his policy.
    There is general recognition in the House that there are no miracle cures for unemployment. We did not even hear a miracle cure from the hon. Member for Edinburgh, Leith (Mr. Brown), who gave us a mantra about socialism. No miracle cures were suggested in the report of the Select Committee and none has been advanced in the debate.
    There is much agreement between the parties that inflation must be reduced, but we must recognise that the implication of doing that is a slow down in economic activity, which can translate into rising unemployment if wages are not flexible and if they do not reflect the decline in inflation. Our problem has been that wage settlements continue to run ahead of inflation.
    It being Ten o'clock, MR. SPEAKER interrupted the proceedings, and the Question necessary to dispose of the proceedings was deferred, pursuant to paragraph (4) of Standing Order No. 52 (Consideration of estimates).
    MR. SPEAKER, pursuant to paragraph 5 of Standing Order No. 52 (Consideration of Estimates), put the deferred Questions on Estimates and Supplementary Estimates, 1991–92 (Class II, Vote 5 and Class VI, Vote 1) and the Question necessary to dispose of proceedings on the other estimate appointed for consideration this day.

    CLASS II, VOTE 5
    Resolved
    That a further sum, not exceeding £910,873,000, be granted to Her Majesty out of the Consolidated Fund to defray the charges that will come in course of payment during the year ending on 31st March 1992 for expenditure by the Foreign and Commonwealth Office: Overseas Development Administration under the Overseas Development and Co-operation Act 1980 on the official UK aid programme; economic assistance to Eastern Europe and the USSR; and global environmental assistance; including financial and technical assistance to governments, institutions, voluntary agencies and individuals; pensions and allowances in respect of overseas service including contributions to pensions funds; capital and other subscriptions and contributions, including payments under guarantee, to multilateral development banks and other international and regional bodies; emergency, refugee and other relief assistance; loans to the Commonwealth Development Corporation; and running costs, related capital expenditure and other administrative costs including for the Natural Resources Institute (an executive agency).—[Mr. Boswell.]

    Class VI, Vote 1
    Resolved,
    That a further sum, not exceeding £1,150,731,000 and including a Supplementary Sum of £90,392,000, be granted to Her Majesty out of the Consolidated Fund to defray the

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    charges that will come in course of payment during the year ending on 31st March 1992 for expenditure by the Department of Employment, including expenditure via Training and Enterprise Councils, on training, including the provision of training programmes for young people and adults and initiatives within education; on the promotion of enterprise and the encouragement of self-employment and small firms; on help for unemployed people; the improvement of industrial relations; industrial tribunals; compensation for persons disabled by certain industrial diseases; payments towards expenses of trade union ballots; on residual liabilities and disposal of the remaining assets of the former National Dock Labour Board; on the costs of maintaining and disposing of the former Skills Training Agency; administration, central and miscellaneous services including assistance on employment issues to eastern Europe in co-operation with the Foreign and Commonwealth Office.—[Mr. Boswell.]

    Class VI, Vote 2
    Resolved,
    That a further sum, not exceeding £276,560,000, and including a Supplementary Sum of £17,514,000, be granted to Her Majesty out of the Consolidated Fund to defray the charges that will come in course of payment during the year ending on 31st March 1992 for expenditure by the Employment Service of the Department of Employment on help for unemployed people, support for people with disabilities, assistance on employment issues to eastern Europe in co-operation with the Foreign and Commonwealth Office, on research, publicity and on administration.—[Mr. Boswell.]

  Kirklees Council
  10.1 pm
  Mrs. Elizabeth Peacock: I beg leave to present a petition that has been signed by more than 3,000 constituents. It asks the Secretary of State for the Environment to introduce legislation to replace Kirklees metropolitan council with at least two smaller district councils to administer the Greater Huddersfield area and Batley, Dewsbury and Spen valley.
  Many of my constituents believe that Kirklees council is remote and that it ignores their needs. They also believe that Kirklees council neglects to invest in Batley and Spen. This is the first phase of what I suggest will be a larger petition.
  To lie upon the Table

  Textile Industry (Kilmarnock)
  Motion made, and Question proposed, That this House do now adjourn.—[Mr. Boswell]
  10.2 pm
  Mr. William McKelvey: My promotion to the Front Bench follows a military-style coup by Ayrshire Members, but it is temporary. Nevertheless, I welcome the opportunity to discuss an issue that is important not only for Kilmarnock but for Scotland and beyond.
  The Minister is probably aware that Kilmarnock and Loudoun has the second highest number of textile and clothing employees of any constituency in Scotland. Therefore, you, Mr. Speaker, and the Minister will understand my deep concern for the industry's future and for the well-being not only of my constituents but of those in Scotland who work in the textile and knitwear industry and associated industries. Their futures have prompted the debate. As Kilmarnock is often described as a microcosm of Scottish industry, its case is indeed Scotland's case. I hope that the Minister will understand and accept that.
  If the Minister has done his homework—I am sure that he has—he will know that the multi-fibre arrangement ends on 31 July. That date was chosen when talks commenced on the Uruguay round of the GATT negotiations in 1986. Those negotiations were expected to be successfully concluded by Christmas 1990 and, sensibly, a seven-month overlap was allowed for Governments to change their practices in line with GATT.
  Inevitably, as the Minister will understand, problems arose and the Uruguay round of talks was halted. Those problems have now been overcome, and talks recommenced last month. However, the negotiations are months behind, and for that reason it is essential that the multi-fibre arrangement is extended for a further 17 months or until the results of the Uruguay round are ready to be implemented.
  Our—and by that I mean Scotland's—lace, textile knitwear and clothing manufacture is of a high quality; I do not think that anyone in the House would dispute that. Therefore, it could easily hold its own in the world markets if the way were clear for it to do so and if the playing field were level. Even with the multi-fibre arrangement, there are many distortions which make fair competition extremely difficult—distortions such as South Korea's latest £2·5 billion subsidy scheme for its textile and clothing industry. 0 that the Minister were able to give one tenth of that to Kilmarnock and one half to Scotland.
  Subsidies are also given by the Turkish, Belgian, French, Spanish and Italian Governments. Other countries employ other means to protect their homegrown textile industries, including excessive tariff rates, excessive import duties and even the prohibition of imports of textiles and clothing if similar goods are produced domestically. There is even a fraud facilitated by countries such as Taiwan and Japan to allow the registration of brand names, falsely implying a United Kingdom origin.
  That list is by no means comprehensive, because we have only a short time to debate it, but it is a taster of the difficulties faced by the Scottish and, indeed, the British textile, lace and knitwear industries.
  The hope of the industry, of my constituents and, I trust, of the Minister—
  The Parliamentary Under-Secretary of State for Scotland (Mr. Allan Stewart)indicated assent.
  Mr. McKelvey: —is that the Uruguay round of talks will remove the distortions which have led to many job losses and to many closures not only in my constituency, but in others in Scotland and in the United Kingdom as a whole.
  Those losses and closures are evident from the fact that, in 1978, there were about 1,300 manual jobs in Kilmarnock's textile industry. In March this year, there were about 800. If one adds to those figures the clerical and external support and management jobs, hon. Members will understand why the industry believes that it has at best been ignored by the Government and at worst decimated by their inactivity.
  Recently, two textile companies in my constituency closed with a loss of 200 jobs. We often hear of a mega-loss of jobs, so hon. Members might wonder why we should be concerned about the loss of 200 jobs. I am talking about small townships, where the loss of 100 or 200 jobs can decimate the economy because there are no alternative jobs. In some parts of my constituency, the loss of 100 or 200 jobs is equal to the mega-loss of jobs in other constituencies. Therefore, it is not surprising that the industry and its workers are highly nervous about the ending of the multi-fibre arrangement, the further distortions and frauds which could be unleashed and the subsequent effects in job losses.
  The Minister for Trade has agreed to argue for a 17-month extension of the multi-fibre arrangement. I welcome that, and applaud his decision. However, it is feared that there could be a relaxation of the present arrangements, and I ask the Minister to use his good offices for such a good cause and to ensure that there is no relaxation. I invite the Minister to restate, if he can, the Government's commitment to the extension of the multi-fibre arrangement for either a further 17 months, as he has stated, or until the results of the Uruguay round are ready for implementation, whichever is the longer.
  I also invite the Minister to support the current multi-fibre arrangement and to assure my constituents, the people of Scotland and the British textile industry as a whole that our negotiations will not allow any relaxation of the present arrangements. Furthermore, I would be pleased to hear the Minister's commitment to the extension of bilateral agreements with the European Community for a further 12 months after their current term has finished. I know that the Minister does not have responsibility for negotiating that, but his commitment to act from the Scottish Office on our behalf would be much welcomed by the Scottish people.
  The existence of so many inequalities—despite the multi-fibre arrangement, which all of us support and which we so desperately require—has led to many job losses in my constituency. The manufacturers, the unions and the district council have tried for some time to seek interim solutions. Almost exactly one year ago, on 4 July 1990, I met the Secretary of State for Scotland. I was accompanied by Kilmarnock and Loudoun district council's economic development officer, Miss Jaqueline Cullen, the provost, Jim Mills, and Mr. McChristie, an officer of the General, Municipal and Boilermakers Union.
  The Secretary of State said that a survey by the Scottish Development Agency was under way, and, although there had been some delay, he assured us that he would
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  investigate to see whether the survey had taken place and that he would report back to us soon. I know that that is not the responsibility of the Minister, but the previous incumbent of the job said that he would report back to us.
  However, in one year we have heard not a cheep about the seriousness of the situation in Kilmarnock, about the fact that the SDA was supposed to undertake that survey, or about what has happened since then. All we have heard about, through the auspices of Enterprise Ayrshire, was the recent launch of the Scottish lace brand logo. The lace industry's manufacturers got together to form themselves into an association. That is to be welcomed, but it involves a restricted group of people.
  Since that time, my constituents in the industry have not stood still. Tom Smith, the managing director of the Loudoun Valley Manufacturing Company, said to me only today:
  "As one of the principal manufacturers of the local valley for the past 30 years, I have never known trade to be so bad. The apparent lack of understanding shown by the present Government in not giving assistance and also the fact that cheap imports are coming into Britain is destroying the textile trade."
  Mr. George Foulkes: I endorse every word that my hon. Friend has said so far. As he knows, my constituency used to be principally a mining constituency, but the largest sector of employment is now textiles, knitwear and clothing. That includes Kyle Knitwear and Cumnock Knitwear, which makes knitwear cards, Glenafton Textiles, which makes socks, Saracen, which makes nightdresses and other similar things, and Falmers, which makes the well-known jeans.
  They are being squeezed by the MFA and unfair competition, with socks from countries such as Turkey, which is not an underdeveloped country, and knitwear from Korea and similar countries. They are also being squeezed by the recession, which is dampening down demand in the high street.
  Would my hon. Friend urge the Minister, as well as dealing with Kilmarnock in his reply, to deal with Carrick, Cumnock and Doon Valley and the problems of the knitwear and textile industry there, as he has been briefed to do? It would be useful if he could include that in his reply.
  Mr. McKelvey: As usual, I am indebted to my hon. Friend the Member for Carrick, Cumnock and Doon Valley (Mr. Foulkes) for a helpful intervention. What he has said is correct. I have already told the Minister that I am not speaking only on behalf of Kilmarnock and all nny colleagues from Ayrshire, including the right hon. Member for Ayr (Mr. Younger). In reality, the debate not only extends to Scotland, but affects the textile industry throughout the United Kingdom.
  Mr. Smith said that this was a trade that had existed in the Irvine valley throughout Kilmarnock for well over 100 years. He concluded:
  "If there is not some help or assistance given in the very near future there could be no textile industry in this district."
  We are now about the only manufacturers of lace in the United Kingdom, and we would not under any circumstances want to lose part of our somewhat recent heritage. The heritage of the knitwear industry in Scotland goes back rather further. We could afford to lose neither our heritage, nor the jobs, nor that part of the income of our economy.

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  Kilmarnock and Loudoun district council is now setting up a textile forum in my constituency, at my request. It will comprise representatives of textile industry management, trade union officers, representative councillors and council officers. The forum's aim is to seek some defence for the future of that worthwhile industry. It has already invited the European Commissioner for regional policy, Bruce Milan, to a meeting to discuss the problems and to ask if there is any possibility of European help either now, in the short term, or perhaps in the long term —in 1993, when the regulations change. It is hoped that some EC funds will be available to provide short-term pump priming for an industry that needs and deserves it.
  If that were achieved, consumers would be able to compare like with like, and I have no doubt that the quality of the textiles, lace and knitwear not only from Kilmarnock but from the whole of Ayrshire, to Scotland and beyond, will secure the jobs and perhaps even allow the industry to expand and to gain back its lost jobs and its market position.
  I hope that the Minister will support the initiative. I do not want promises such as those I received from his predecessor. To give someone a promise and then sit back and do nothing for a year is not acceptable. In fairness to the Minister, I have not encountered in my recent dealings with him such a laissez-faire attitude. I hope that he understands the seriousness of the problem. I shall look for total and enthusiastic support not only from the Minister but from his right hon. and hon. Friends in government, and an insistence on ensuring the survival of the textile, lace and knitwear industry not only in Kilmarnock, Ayrshire and the rest of Scotland, but throughout the United Kingdom.
  We in Kilmarnock have set the ball rolling. The Minister has the ball at his feet. I want him to imagine a Hampden scenario. Will he seize the initiative? Will he rise to the challenge for which all Scotland is waiting? It is Scotland versus the rest of the world and the Minister has the ball at his feet. Will he take it in control? Will he swerve past the midfield, nutmeg the centre half, draw the goalie and slam the ball into the net to score the winning goal for Scotland? Will he bring the textile championship back where it belongs—north of the border? If he does that, he will have the support not only of my colleagues and myself, but perhaps of the whole of Scotland.
  10.18 pm
  The Parliamentary Under-Secretary of State for Scotland (Mr. Allan Stewart): Seldom have I received a more alluring invitation than that extended to me by the hon. Member for Kilmarnock and Loudoun (Mr. McKelvey). I hope that I shall not completely disappoint him.
  I offer my genuine congratulations to him on securing this Adjournment debate and on making an extremely well-informed speech. The fact that it was well informed came as no surprise to anyone who knows of the hon. Gentleman's interest in the textile industry in his constituency.
  I congratulate the hon. Gentleman, too, on his temporary elevation to the Front Bench. I am sure that my fellow Under-Secretary of State, my hon. Friend the
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  Member for Edinburgh, West (Lord James Douglas-Hamilton), will agree with me that we in the Scottish Office have never seen such a formidable Opposition Front Bench team as we see in the House this evening.
  I also pay tribute to the hon. Member for Carrick, Cumnock and Doon Valley (Mr. Foulkes)—
  Mr. Foulkes: On the Back Benches.
  Mr. Stewart: The hon. Gentleman is on the Back Benches on this occasion, although not always. His interest in and knowledge of the industry are well established.
  The hon. Member for Kilmarnock and Loudoun was right to begin by recognising the importance of the industry not just for Ayrshire but for Scotland as a whole. It is one of our longest established manufacturing industries. The hon. Gentleman was also right to refer to its importance in terms of employment and output. According to the latest estimates available to me, its total work force is about 27,000 people and it represents about 5 per cent. of the value of the total output of Scottish manufacturing industry.
  Many people do not realise the industry's importance as a major exporter ranking sixth, by value, in the league table of Scotland's export-oriented industries. The hon. Gentleman rightly told the House that the industry is as long established in Ayrshire as anywhere else—including Dundee—and it remains the most important manufacturing industry in the whole area. Approximately 16 per cent. of all manufacturing jobs in Ayrshire are in the textile industry. The figure is higher in some localities—in the hon. Gentleman's constituency, for instance, it is about 33 per cent.
  As all Ayrshire Members frequently remind the House, Ayrshire is a large and varied area, and the textile industry is almost as diverse as the area. It comprises a multifarious group of industries engaged in the manufacture of lace, knitwear and hosiery, warp knitted goods, woollen and worsted goods and carpets, and in textile finishing and the manufacture of clothing. Diverse though it is, the textile industry in Ayrshire is characterised by two general features. The first is its success in exporting, to which I have already referred, and the second, to which the hon. Member for Kilmarnock and Loudoun rightly referred, is the high quality of its products.
  I recognise that there has been some contraction and loss of employment, but Ayrshire has not suffered so badly as most other textile manufacturing areas. I would go further—there are some real success stories in the Ayrshire textile industry, as I am sure Opposition Members would be the first to acknowledge. One of them is the Unitex company, a garment maker and manufacturer of knitted fabric which opened a factory in Irvine in 1989 and is about to occupy a second factory. It is a far eastern company whose decision to come to Ayrshire was influenced by an offer of Government assistance made through Locate in Scotland.
  The hon. Member for Kilmarnock and Loudoun was right to emphasise the fact that, among the long-established indigenous companies, the Ayrshire lace manufacturers deserve a special mention. The industry has managed to achieve a significant increase in output and employement over the past five years, and the recent formation of the Scottish Lace Guild augurs well for the future of the industry. It was initially funded and

  419
  supported by Enterprise Ayrshire, and was launched on 21 May. If the hon. Gentleman looks carefully at my tie, he will see that the Scottish Lace label bears a thistle and a Celtic-style cross. [Interruption.] I can inform the hon. Member for Cunninghame, North (Mr. Wilson) that when I launched Scottish Lace I was given a tie but not a matching shirt. It is a significant and important initiative.
  In that context, I will reply to the remarks of the hon. Member for Kilmarnock and Loudoun about what happened following his meeting last July with my right hon. Friend the Secretary of State, then Minister of State. I have a copy of the letter which was sent to the hon. Gentleman on 8 August as a follow-up to the meeting, explaining the position on the surveys to which he referred. If that letter has gone astray, as seems to be the case, I will of course let the hon. Gentleman have a copy for his record of the response following the meeting.
  Mr. McKelvey: So that there is no mystery about this, if there was to be a survey and it was undertaken, what would happen to it? That is the mystery.
  Mr. Stewart: I am glad that the hon. Gentleman has recognised that my right hon. Friend the Secretary of State responded to the point about the survey. Inevitably, the survey was substantially of a commercially confidential nature and was therefore discussed with the Scottish Development Agency. Discussions with the companies concerned led to the formation of the Scottish Lace Guild, to which I have referred.
  With regard to assistance to the industry, the hon. Member for Kilmarnock and Loudoun will be aware that Ayrshire is an assisted area. Twenty four Ayrshire textile companies have received offers of grant totalling £2·6 million over the past five years. Ayrshire companies can of course also apply for help through the enterprise initiative consultancies, through a number of other Government-run schemes and through the Scottish exports office which is another ready source of advice.
  I want to respond to the hon. Gentleman's questions about the work of Scottish Enterprise and Enterprise Ayrshire in the textiles sector. Scottish Enterprise has a team of people addressing the needs of the textile industry in Scotland. They are currently undertaking a review of the industry in association with all the local enterprise companies. It is hoped that the review will lead to a strategy that will help Scottish Enterprise to make the Scottish textiles industry more aware of the demands of the market, more design conscious, more adaptable to changes in fashion, and better trained. For its part, Enterprise Ayrshire is giving a high priority to helping the Ayrshire textiles industry in technology, marketing,
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  training and environmental improvement. On the marketing front, Enterprise Ayrshire has already earned praise by helping to establish the Scottish Lace Guild to which I referred earlier.
  The hon. Member for Kilmarnock and Loudoun was right to refer to the important question of the international trade in textiles. My hon. Friend the Minister for Trade will study very carefully the detailed points that the hon. Gentleman made tonight. There are currently two main issues to be decided multilaterally. The first is the negotiation to turn the textiles trade to normal GATT rules as part of the wider Uruguay round.
  It is worth recording that that sector has enjoyed protection for many years. In the case of the United Kingdom, the 1989 study by Professor Silberston commissioned by the Department of Trade and Industry estimated that that cost consumers about £1 billion every year. All parties in the negotiation are agreed on the need to phase out the multi-fibre arrangement and we were close to agreement, as the hon. Gentleman recognised, last December on the terms for doing that over about 10 years.
  Rightly, however, hon. Members and industry representatives lay much stress on the other side of the coin —that is, the need to strengthen GATT rules and disciplines and to improve market access to provide, among other things, fairer conditions for trade in textiles. The hon. Gentleman was right to raise that point. I can assure him that Britain and the European Community have consistently made it clear that all countries must accept adequate commitments in those areas.
  That is a compelling reason for seeking to achieve the liberalisation of trade and textiles as part of a successful overall conclusion to the Uruguay round. Such an outcome would provide for improved access to others' markets, more satisfactory rules governing unfair trade practices, such as dumping and subsidies, and improved intellectual property protection. A satisfactory settlement was beginning to emerge last December.
  The second issue follows directly from the failure to conclude the Uruguay round last year—that is, the need to extend the MFA for an interim period when it expires at the end of this month. I confirm that the European Community has proposed an extension until the end of 1992—the 17 months to which the hon. Gentleman referred—which would give our industry, our importers and our retailers the certainty that they seek. Agreement has not been reached on that, but I can give the hon. Gentleman the absolute assurance that the Government share his and the industry's desire that that issue should be settled as soon as possible.
  Question put and agreed to.
  Adjourned accordingly at half-past Ten o'clock.