Commons Sitting of 23 July 1991

Preamble
The House met at half-past Two o'clock
PRAYERS
[MR. SPEAKER in the Chair]
PRIVATE BUSINESS
  LONDON REGIONAL TRANSPORT (PENALTY FARES) BILL
  Read the Third time and passed.

PRIVATE BILLS [LORDS [(SUSPENSION)
Ordered,
That so much of the Lords Messages [16th July and 18th July] as relates to the Avon Weir Bill [Lords], the British Waterways Bill [Lords], the City of Bristol (Portishead Docks) Bill [Lords], the Folkestone Harbour Bill [Lords], the Greater Manchester (Light Rapid Transit System) Bill [Lords], the Harris Tweed Bill [Lords], the River Calder (Welbeck Site) Bill [Lords], the Torquay Market Bill [Lords] and the Woodgrange Park Cemetery and Crematorium Bill [Lords] be now considered.
Ordered,
That this House doth concur with the Lords in their Resolutions.—[The Second Deputy Chairman of Ways and Means.]
Message to the Lords to acquaint them therewith.

HOOK ISLAND (POOLE BAY) BILL
Ordered,
That the Promoters of the Hook Island (Poole Bay) Bill shall have leave to suspend proceedings thereon in order to proceed with the Bill, if they think fit, in the next Session of Parliament, provided that the Agents for the Bill give notice to the Clerks in the Private Bill Office not later than the day before the close of the present Session of their intention to suspend further proceedings and that all Fees due on the Bill up that date be paid;
Ordered,
That on the fifth day on which the House sits in the next Session the Bill shall be presented to the House;
Ordered,
That there shall be deposited with the Bill a declaration, signed by the Agents for the Bill, stating that the Bill is the same, in every respect, as the Bill at the last stage of its proceedings in this House in the present Session;
Ordered,
That the Bill shall be laid upon the Table of the House by one of the Clerks in the Private Bill Office on the next meeting of the House after the day on which the Bill has been presented and, when so laid, shall be read the first and second time (and shall be recorded in the Journal of this House as having been so read) and, having been amended by the Committee in the present Session, shall be ordered to lie upon the Table;
Ordered,
That no further fees shall be charged in respect of any proceedings on the Bill in respect of which Fees have already been incurred during the present Session;
Ordered,
That these Orders be Standing Orders of the House.—[The Second Deputy Chairman of Ways and Means.]
To be communicated to the Lords, and their concurrence desired thereto.

HOOK ISLAND (POOLE BAY) BILL

  BRITISH RAILWAYS (No. 3) BILL [LORDS]
  Motion made,
  That the Promoters of the British Railways (No. 3) Bill [Lords] shall have leave to suspend proceedings thereon in order to proceed with the Bill, if they think fit, in the next Session of Parliament, provided that the Agents for the Bill give notice to the Clerks in the Private Bill Office no later than the day before the close of the present Session of their intention to suspend further proceedings and that all Fees due on the Bill up to that date be paid;
  That, if that Bill is brought from the Lords in the next Session, the Agents for the Bill shall deposit in the Private Bill Office a declaration signed by them stating that the Bill is the same, in every respect, as the Bill which was brought from the Lords in the present Session;
  That, as soon as a certificate by one of the Clerks in the Private Bill Office, that such a declaration has been so deposited, has been laid upon the Table of the House, the Bill shall he read the first and second time and committed (and shall be recorded in the Journal of this House as having been so read and committed);
  That the Petitions relating to the Bill presented in the present Session which stand referred to the Committee on the Bill shall stand referred to the Committee on the Bill in the next Session;
  That no Petitioners shall be heard before the Committee on the Bill, unless their Petition has been presented within the time limited within the present Session or deposited pursuant to paragraph (b) of Standing Order 126 relating to Private Business;
  That, in relation to the Bill, Standing Order 127 relating to Private Business shall have effect as if the words 'under Standing Order 126 (Reference to committee of petitions against Bill)' were omitted;
  That no further Fees shall be charged in respect of any proceedings on the Bill in respect of which Fees have already been incurred during the present Session;
  That these Orders be Standing Orders of the House.—[The Second Deputy Chairman of Ways and Means.]
  Hon. Members: Object.

  KING'S CROSS RAILWAYS BILL
  Motion made,
  That the Promoters of the King's Cross Railways Bill shall have leave to suspend proceedings thereon in order to proceed with the Bill, if they think fit, in the next Session of Parliament, provided that the Agents for the Bill give notice to the Clerks in the Private Bill Office not later than the day before the close of the present Session of their intention to suspend further proceedings and that all Fees due on the Bill up to that date be paid;
  That on the fifth day on which the House sits in the next Session the Bill shall be presented to the House;
  That there shall be deposited with the Bill a declaration signed by the Agents for the Bill, stating that the Bill is the same, in every respect, as the Bill at the last stage of its proceedings in this House in the present Session;
  That the Bill shall be laid upon the Table of the House by one of the Clerks in the Private Bill Office on the next meeting of the House after the day on which the Bill has been presented and, when so laid, shall be read the first and second time (and shall be recorded in the Journal of this House as having been so read) and, having been amended by the Committee in the present Session, shall be ordered to lie upon the Table;
  That no further Fees shall be charged in respect of any proceedings on the Bill in respect of which Fees have already been incurred during the present Session;
  That these Orders be Standing Orders of the House.—[The Second Deputy Chairman of Ways and Means.]
  Hon. Members: Object.

Oral Answers to Questions
  EDUCATION AND SCIENCE

    Nursery Education
    Mr. Wray: To ask the Secretary of State for Education and Science if he will list Her Majesty's Government's new measures centrally to fund nursery education.
    The Minister of State for Education and Science (Mr. Tim Eggar): We are not planning any such measures. We see no reason to change the present arrangements whereby local education authorities can determine what to spend on nursery education within the total resources available to them.
    Mr. Wray: What happened to the promises made in 1972 by the right hon. Member for Finchley (Mrs. Thatcher) when she was Secretary of State for Education and Science? She told the House that by 1982 she would provide 700,000 nursery school places. Twenty years later we are still 200,000 short of that target. How shall we cope with the projected shortage in the labour force if we do not provide the nursery places that are needed? Does the Minister agree that the private sector has let us down very bady indeed in the high cost of nursery school provision, with people having to pay perhaps £75 a week for nursery education for their children?
    Mr. Eggar: I will tell the hon. Gentleman what happened. In 1976 there were 440,000 youngsters in nursery education. By 1978 the number had fallen to 415,000. That was the priority that the Labour party gave when in power under the right hon. Member for Leeds, East (Mr. Healey), with his cuts in public expenditure, and when the hon. Member for Derby, South (Mrs. Beckett) was Parliamentary Under-Secretary of State for Education.
    Dame Jill Knight: Is my hon. Friend aware that while many people feel that there is a strong case for helping women who bring up their children alone and must go out to work to support the family, many people also feel that women who go out to quite highly paid jobs and who want their children cared for while they earn a lot of money should make a contribution and pay for the education of their children at that stage of their children's lives?
    Mr. Eggar: I believe that a large number of people agree with my hon. Friend.
    Ms. Armstrong: Does the Minister remember the advice given by his right hon. Friend the Member for Sutton Coldfield (Sir N. Fowler) that the Government had acted dishonestly by not increasing the number of nursery places? Does he realise the deep anxiety felt by parents up and down the country who do not have access to nursery education for their children? Is not it an entitlement that the Government should be building towards so that there is opportunity and choice for those families?
    Mr. Eggar: Yes, and there are 150,000 more under-fives in maintained schools in England than there were in 1979. We have increased the number of places by 150,000 and the Labour party decreased it by 25,000 over two years.
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    That is the relative record of our two parties. What is more, the hon. Lady knows that all that she can promise from the Opposition Front Bench is 50 part-time nursery places per local education authority area.

    Education Authorities (Reorganisation)
    Mr. Adley: To ask the Secretary of State for Education and Science what consideration he is giving to the structure and size of education authorities concomitant on their proposed reorganisation.
    The Secretary of State for Education and Science (Mr. Kenneth Clarke): The Government are currently considering responses to their consultation paper on the structure of local government, and will be drawing up in due course guidelines for the proposed local government commission, which will cover aspects of education.
    Mr. Adley: I thank my right hon. and learned Friend for that answer. Will he tell the House whether he has in mind any minimum size for a local education authority as a result of the changes? Does he agree that, wherever possible, the smaller the authority the better?
    Mr. Clarke: I agree with my hon. Friend that democratic accountability is improved if services are delivered on the smallest scale practicable consistent with good service. We are proposing a consultation process locally and that will not necessarily lead to a uniform national position. The Government will be issuing guidelines in due course on the impact on the education service of particular structures of local government and we shall be pointing out that a great deal has happened recently since local authorities were last reorganised. In particular, polytechnics have been taken out of local education authority control and sixth-form colleges and further education colleges are about to be taken out of local education authority control. We have moved over to a system of local management of schools so the duties of an education authority are very different from those that existed when the present authorities were set up.
    Mr. Harry Greenway: Does my right hon. and learned Friend agree that schools will be at their best if they are self-governing in every respect? It would be better for the schools, the teachers and particularly for the children. If that were to happen, would not the role of local education authorities virtually disappear?
    Mr. Clarke: I share with my hon. Friend the expectation and hope that there will be a rapid change beyond the local management of schools to grant-maintained status for most secondary schools and many primary schools. I agree that that has considerable implications for the changed role of local education authorities in the future. They will be moving over to what is known in the jargon as an enabling role because their direct management duties will have been devolved to a much more sensible local level.

    Scientific Research
    Mr. Strang: To ask the Secretary of State for Education and Science what plans he has to increase Government funding of scientific research.
    The Parliamentary Under-Secretary of State for Education and Science (Mr. Alan Howarth): The size of the science budget for 1992–93 will be considered in the forthcoming public expenditure survey.
    Mr. Strang: Does the Minister accept that the level of funding for the science budget this year, including the additional funds that the Government announced last month, is wholly inadequate? For example, even with that money, the Science and Engineering Research Council is still unable to avoid closing the nuclear structure facility at Daresbury. It will have to cut its staff by 300 by 1993. When will Government give British science the money that it needs?
    Mr. Howarth: The Government have increased the science budget by no less than 23 per cent. in real terms and that increase has matched the growth of GDP. It is well known that the Government's economic strategy has been to reduce public expenditure as a proportion of GDP, but we have made an exception for basic science because we recognise the Government's inescapable and important responsibility in that regard. We also believe that it is right that judgments on scientific priorities should be taken by scientists and we believe that the arm's-length principle is important. It would not be appropriate for me as a politician or for my right hon. and learned Friend the Secretary of State to take a decision as to the priority that should be given to the nuclear structure facility at Daresbury among the range of candidates for funding through the science budget. It is entirely right that the Science and Engineering Research Council is reviewing its priorities and is seeking to improve efficiency. I recognise that these are worrying and difficult times for scientists and others who are working at Daresbury, but these choices and this prioritisation cannot be avoided.
    Mr. Donald Thompson: My hon. Friend will understand that the Opposition always choose foreign comparisons. He will also know that my constituency needs a large number of well-qualified young engineers. Do we produce more engineers than, for example, the Germans or the Americans?
    Mr. Howarth: My hon. Friend is absolutely right to draw attention to a fact that is too little known and too little appreciated. It is indeed the case that the number of young people in this country who are qualified in engineering and in scientifically based disciplines exceeds the number in France and Germany.
    Mr. Douglas: Does the Minister accept that Scotland produces proportionately a larger number of scientists and engineers than the rest of the United Kingdom? Does he also accept that there is a crisis in the funding of science in the universities, and in particular in fundamental physics and mathematics research? What does he intend to do about that?
    Mr. Howarth: We have increased the funding available for scientific work in universities. Indeed, the research councils have increased their expenditure within the universities by 78 per cent. in real terms during the Government's period in office. That is a reflection of the first-rate quality of the science that takes place in our universities, and it is enormously important to recognise that. I know that the hon. Gentleman has at heart the interests and well-being of science in the United Kingdom.
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    It is extremely important for scientists and for those who speak on their behalf to present science in this country as the winner that it undoubtedly is.

    Teacher Training
    Mr. David Porter: To ask the Secretary of State for Education and Science what proposals he has to encourage teacher training to have greater practical content.
    The Parliamentary Under-Secretary of State for Education and Science (Mr. Michael Fallon): Our criteria for the approval of teacher training courses aim to ensure that all student teachers are trained in the practical skills they need to be effective in the classroom. But we want to reinforce this by making teacher training more school-based. We are currently looking at ways of securing this.
    Mr. Porter: Further to develop the practical content of teacher training, will my hon. Friend consider a scheme whereby most classroom teachers during their careers spend at least one year at a teacher training college so that they can teach trainee teachers to teach? Would not that have a double benefit—for the trainees and for the teachers?
    Mr. Fallon: I find that a very attractive suggestion. The reverse is already true—my hon. Friend might be interested to know that as from next year a teacher at a teacher training college will spend at least one term every five years back at school.
    Mr. Andrew Smith: Is not it an indictment of the Government's record that after 12 years in office the Minister confesses that the Government have not yet got right something of such fundamental importance as the quality of teacher education and training? Is not it clear that the way to improve the practical content of courses is to put into effect the Labour party's proposals for a core curriculum for teacher education, which focuses on competence, and to overhaul the crucial induction year for newly qualified teachers? The chief inspector's reports repeatedly describe the induction year as the weakest link in the British system of teacher education, so what is the Minister going to do about that?
    Mr. Fallon: I have yet to hear any member of the Opposition suggest that there should be less theory in teacher training. We believe that there should be more subject study, more school experience and more professional training in teacher training colleges. That is what our current review aims to secure.
    Mr. Anthony Coombs: Will we support more classroom-based teacher training? In view of local management of schools, teacher assessment and the need to consider classroom practice, is not there a strong case to consider the qualifications needed by head teachers and to match their training to those qualifications?
    Mr. Fallon: Yes, indeed. We are currently considering that as part of the review. It is very important for the professional development of all teachers—heads, deputies and classroom teachers—that they receive more appropriate and practical training.

    School Budgets
    Mr. Hain: To ask the Secretary of State for Education and Science if he will make a statement on the steps he is taking to make good deficits facing schools moving towards responsibility for their own budgets.
    Mr. Fallon: Schools taking on formal delegation under the Education Reform Act should not inherit a deficit on their school accounts. Local education authorities have ample scope to cushion schools' budgets as formula funding is introduced over four years, with longer available for schools facing particular difficulties because of high inherited staffing costs.
    Mr. Hain: Does the Minister accept that many primary schools in particular have had to cut teaching posts and merge classes in order to keep within budgets based on a formula for average rather than actual teaching staff? Will he announce emergency funding to make good that shortfall in time for the next school year?
    Mr. Fallon: As I understand it, primary schools in Neath do not yet have their delegated budgets. Local education authorities in England and Wales were able to design their local management of schools schemes to protect not only schools with high inherited staff costs but, specifically, small schools and to allow generous transition arrangements from historic to pupil-led funding.
    Mrs. Currie: Is my hon. Friend aware that five of the seven secondary schools in my constituency reported worse GCSE results in 1990 than in the year before, when national average figures were improving, and when the county budget showed that the bulk of the staff employed under the education budget were not teachers? My constituents are no thicker than the Secretary of State's constituents in Nottinghamshire; the problem is that the county council retains a far higher proportion of the budget. Will the Minister explain how matters in Derbyshire can be put to rights?
    Mr. Fallon: I would not be surprised any more at anything that happened in Derbyshire. I am becoming increasingly concerned about the way in which Derbyshire allocates its schools budget. For example, it subsidised its school meals service—to the tune of £14 million last year—for every pupil in the county, and it has not increased school meal prices since 1981.
    Mr. Beggs: Will the Minister assure the House that the real motivation behind financial delegation to schools is not to obscure underfunding of the education service throughout the United Kingdom, and not to allow any failure or deficiency that may arise later to be attributed to incompetence on the part of principals and local school governors?
    Mr. Fallon: The key point to grasp is that local management of schools funds not teachers but pupils. It does not change the total amount of resources available in the schools system, but some adjustments may be necessary and desirable where successful and popular schools were deliberately underfunded by local education authorities in the past.

    Grant-maintained Schools
    Mr. Brandon-Bravo: To ask the Secretary of State for Education and Science whether he will bring forward proposals to limit the amount of money an individual local education authority can spend in a campaign against a particular school seeking grant-maintained status.
    Mr. Kenneth Clarke: As my right hon. Friend the Prime Minister announced on 3 July, we intend to legislate to limit the amount of taxpayers' money an education authority can spend on campaigns against applications for grant-maintained status, and to reimburse governing bodies up to the same limit for their own campaign expenses.
    Mr. Brandon-Bravo: I am grateful for that reassurance. Is my right hon. and learned Friend aware of the almost pathological hatred of any movement that takes control away from Nottinghamshire county council and gives it to schools? So great is that hatred that I believe that the chairman of my local education authority would do anything, say anything and spend anything to keep his empire intact. Other hon. Members who represent Nottinghamshire seats are aware of that tyranny—the authority has sought to deny Members access to schools in case they say something wrong to boards of governors.
    Mr. Clarke: I am as familiar as my hon. Friend with the extraordinary extent to which Nottinghamshire county council will go in its hostility towards schools that are not under its control. At the moment, it is distributing large amounts of leaflets to parents involved in ballots in respect of grant-maintained status in the north of the county. We believe that there is a case for factual information to be given to parents when such ballots are held and that it should be in the form of a simple leaflet on each side. We are taking steps to ensure that large amounts of charge payers' money are not spent on defending bureaucratic empires, and, I hope, to improve the quality and accuracy of some of the information put out by the local authorities.
    Mr. Tony Banks: I am more concerned about the money that the Government have spent on schools that have opted out. For example, the Secretary of State knows very well that Stratford school in my constituency was due to close as part of the reorganisation but that, to serve their ideological purposes, the Government allowed it grant-maintained status. That makes no sense, given that when Walsingham school in Wandsworth wanted to go for grant-maintained status as part of the reorganisation, the right hon. and learned Gentleman refused its application. We now have to pay £6,000 for every student at Stratford and we get only £3,000 for students in the rest of Newham. The Secretary of State should stop playing politics with the kids of Newham.
    Mr. Clarke: The hon. Gentleman displays all the spiteful fury that was shown by his local education authority against the wishes of the parents of Stratford school who voted for grant-maintained status. Not only were large sums spent on pressurising people to reject the application for grant-maintained status; the authority went to huge lengths to try to stop the school opening, including barring all the future governors and anyone else concerned with grant-maintained status from the school until the legitimate date, attempting to take away equipment, and a large number of other steps. I recall that

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    that was the school at which some of the staff who intended to leave asked children who were intending to stay at the school to stand up. When those children identified themselves, they were made to stand in front of the class to be berated.
    Mr. Banks: It is a lie.
    Hon. Members: Oh!
    Mr. Speaker: Order. Fortunately, I did not hear that.
    Mr. Clarke: We are organising ballots to determine the parents' wishes about whether schools should be governed by the local authority or by their own governors. There is a case for common sense and for a sensible level of information on both sides so that parents can reach an objective and non-pressurised view.
    Mrs. Peacock: Is my right hon. and learned Friend aware just how much many local authorities spend on their campaigns—often outrageously political campaigns, such as that in Kirklees—to persuade parents and school governors that it is not right for schools to apply for grant-maintained status? The campaigns that they run are quite outrageous.
    Mr. Clarke: What is called for is a straightforward factual leaflet produced by one side and a straightforward factual leaflet produced by the promoters. The ballots can then be carried out in a sensible atmosphere and parents can make their own choice.
    Mr. Fatchett: The Department's own propaganda budget has increased by more than 300 per cent. since the last general election and the Government are spending more than £250,000 of taxpayers' money on Grant-Maintained Schools Ltd.—a Conservative party front organisation. Is not it about time that the Government introduced powers to stop the use of taxpayers' money for party-political purposes? Or are the Secretary of State and the Government so worried about the weak nature of their own policies that they have to use taxpayers' money to get their cheap propaganda arguments across?
    Mr. Clarke: It is totally false to claim that the Government are increasing spending on propaganda. The hon. Gentleman describes as propaganda activities that are certainly not party political, such as the advertising campaign to recruit teachers. The hon. Gentleman has merely taken a bit of briefing from the hon. Member for Holborn and St. Pancras (Mr. Dobson), who always does these things, and who cites as examples of political propaganda all the Government's health education leaflets, including those in connection with the AIDS campaign.
    In respect of ballots for grant-maintained status, we propose that there should be a simple leaflet on one side and a simple leaflet on the other. Labour authorities in particular are spending a fortune on campaigning, and the money is not theirs but the charge payers'. They are also making some extremely misleading claims in what they say about the consequences of opting out.

    School Budgets
    Sir Fergus Montgomery: To ask the Secretary of State for Education and Science how many secondary schools currently manage their own budgets under the system of local management of schools; and if he will make a statement.
    Mr. Fallon: Of the 3,853 secondary schools in England, 3,015—or 78 per cent.—have fully delegated budgets now. The remainder must have them by April 1993 or, in the case of schools in inner London, April 1994.
    Sir Fergus Montgomery: Were not many people wary of local management of schools when it was first announced, but now see the benefits of it? Does my hon. Friend agree that we should encourage more schools to look after their own affairs locally instead of their being dominated by left-wing, Labour-controlled authorities?
    Mr. Fallon: Yes, I have yet to hear of a school that wants to hand its budget back. However, I must tell my hon. Friend the Member for Altrincham and Sale (Sir F. Montgomery) that his local education authority of Trafford has chosen to delegate less to schools this year than last year and to spend a higher proportion of its school budget on central administration. That means that every school in Trafford this year will lose out because classroom money is being spent on the bureaucracy at Trafford town hall.
    Mr. O'Hara: Did the Minister read in the press about the extraordinary events a couple of weeks ago in the royal festival hall when Simon Rattle conducted 2,000 youth musicians and 300 youth choristers to draw attention to the damage being caused to instrumental music teaching in schools by LMS because local authorities can no longer sustain central support for youth orchestras and the instrumental peripatetic music budgets of schools are being cut to the point at which they are not worth having? In the case of school instrumental music LMS means divide and destroy.
    Mr. Fallon: There is no evidence for that kind of assertion with regard to school meals.
    Mr. Straw: Music!
    Mr. Fallon: The plain fact is that local education authorities have plenty of scope to reduce their administration and bureaucracy. For example, Waltham Forest is spending 7 per cent. of the schools budget on central administration while other LEAs are spending between 1 and 2 per cent. If Waltham Forest did not do that, it would have a lot more to spend on music.

    Local Management of Schools
    Mr. Barry Field: To ask the Secretary of State for Education and Science what is the average amount of money being held back by local education authorities in England and Wales, per pupil, under the system of local management of schools.
    Mr. Fallon: Figures for the current financial year 1991–92 are not yet complete, but I can tell my hon. Friend that the Isle of Wight local education authority is holding back 16·25 per cent. of its potential schools budget, which works out at about £280 per pupil. I shall write to my hon. Friend when the national average is available.
    Mr. Field: If local education authorities conformed to the Government's recommended 15 per cent. retention, would not there be an extra £140 million available to schools throughout the country? Have not governors, pupils, school teachers and lecturers become thoroughly fed up with the political posturing of local education authorities like the Liberal Democrats who have retained £200,000 from the college of art and technology on the Isle of Wight, a fact which came to light only when I led a delegation to my hon. Friend's Department, and who have sacked school governors, many of whom had given years of non-political service to their school boards? That was the greatest act of political spite by the Liberal Democrats ever to occur on the Isle of Wight.
    Mr. Fallon: I certainly deplore that. The Liberal Democrats on the Isle of Wight are holding back £5 million of the £30 million and that is precisely why by April 1993, hold-back will be limited to 15 per cent. so that schools' money can be spent in classrooms and not in the town halls.
    Mr. Madden: Will the Minister confirm that the amount being held by Bradford local education authority is not unreasonable? Will he also confirm that there is widespread concern in schools in Bradford about the wholly insufficient amount of capital allocation from the Minister's Department which means that crucial renovations and repairs which have been hoped for for many years are likely to be deferred yet again this year? That work will include an attack on the enormous number of temporary classrooms and schools that are literally crumbling, a point highlighted by a headmaster who does not have an office and must work in the corridor, in the playground or in his parked car?
    Mr. Fallon: Overall we were able to increase schools' capital guidelines this year by 15 per cent. to £470 million. Bradford's allocation was more than £9 million.
    Mr. Pawsey: May I congratulate my right hon. and hon. Friends on the success of their LMS policy, which releases substantial extra funds to schools? Will my hon. Friend the Minister carefully note the opposition that comes from Labour Members and their supporters? Does he agree that the success of the LMS policy helps to show the way towards grant-maintained status? I am sure that my hon. Friend will join me in hoping that more schools adopt GMS.
    Mr. Fallon: We regard local management of schools—the preparation and management of a budget—as a preliminary and important preparatory step towards full grant-maintained status. Indeed, it is difficult to see how anybody could be against local management of schools, as it ensures that schools' money is actually spent in schools. [Interruption.] If the hon. Member for Blackburn (Mr. Straw) says that he is not, why does he not deplore the practice of councils such as Newham and Waltham Forest spending so much on central administration, or is he happy to see a bureaucrats charter?
    Mr. Turner: If the Minister does not have the figures for the hon. Member for Isle of Wight (Mr. Field), how can we assess the success or otherwise of the policy? When we are moving into 1992, why does he not have the figures for 1990–91? I question whether the Department of Education and Science has published the figures for 1989–90. One of
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    our problems is that we have no up-to-date statistics on which to work. If we had, the Minister would give us the figures today.
    Mr. Fallon: I published the figures for 1990–91 last December. I gave the figures for the Isle of Wight. Whether the hon. Gentleman likes it or not, I will now give him the current year's figures for Wolverhampton. Wolverhampton holds back the fifth highest amount in England and refuses to delegate that money to its schools.

    Seven-year-olds (Assessment)
    Mr. Peter Bottomley: To ask the Secretary of State for Education and Science if he will meet representative teachers of seven-year-olds to discuss appropriate assessment procedures.
    Mr. Eggar: My right hon. and learned Friend and I have met a considerable number of teachers of seven-year-olds as part of our evaluation of the recent assessments, and we will continue to do so.
    My meetings with teachers have confirmed my belief that externally designed standardised tests are a key tool for assessing pupils. In settling the design of tests for next year, we will take firm steps to keep them within manageable limits.
    Mr. Bottomley: May I say that that is welcomed by every teacher of seven-year-olds and also by parents who want the benefits of testing and reports without putting too much extra load on teachers who are doing a better job year by year?
    Mr. Eggar: I agree with my hon. Friend. The tests this year were difficult to manage in the classroom. However, a number of those tests were welcomed by both pupils and teachers. There is no doubt that they revealed a considerable amount about pupils which had not been available to teachers using teacher assessment. It is a mixed result, but the big problem has been manageability within the classroom.
    Mr. Straw: What responsibility do Ministers take for the fiasco to which testing at seven has been reduced, as a result of constant experimentation and change over the past four years? Does the Minister think that credibility in testing would be enhanced if some serving teachers were put on the School Examinations and Assessment Council, rather than turning the council into a branch of the Conservative party by appointing a right-wing ideologue, Lord Griffiths, as its chairman?
    Mr. Eggar: The tests have not been a fiasco.
    Mr. Straw: They have.
    Mr. Eggar: No, they have not been a fiasco. I am surprised that the hon. Gentleman jumps to conclusions about the results of the test without waiting for the full evaluation from Her Majesty's inspectorate and from SEAC. I do not think that that is a responsible attitude for the hon. Gentleman to take. He must be as interested as we are in ensuring that there is a proper testing regime within schools and that that testing regime responds to the need of teachers and is fair to pupils.
    The hon. Gentleman's comments about Lord Griffiths are beneath contempt.

    Grant-maintained Schools
    Mr. Janman: To ask the Secretary of State for Education and Science how many schools in Essex have applied for grant-maintained status; and if he will make a statement.
    Mr. Eggar: Parents in nine schools in Essex have voted in favour of grant-maintained status. One school is already up and running and another is approved for grant-maintained status in September. I am considering proposals from two schools, and the remaining five schools will publish their proposals in due course.
    Mr. Janman: Does my hon. Friend agree that all head teachers, boards of governors and parents of pupils at schools in Essex should be looking seriously at the option of their school becoming grant maintained? Does he also agree that the benefits of becoming a grant-maintained school should be being pushed vigorously by all Conservative county councillors in the county?
    Mr. Eggar: I agree entirely with my hon. Friend, and have one additional bit of advice. Those connected with schools that are thinking of becoming grant maintained—and they should be thinking about it—should visit Chalvedon school, which has been extremely successful as a grant-maintained school.
    Mr. Leighton: Does the Minister agree that the few schools in Essex that want to take on grant-maintained status should study the experience of Stratford school in Newham? Does he accept that despite the fact that every local head teacher and the chairman of the training and enterprise council warned against that school becoming grant maintained, the Minister allowed that for ideological reasons and the school now has only one third of the pupils that it could take, with the result that education there costs more than £6,000 per pupil, which is twice as much as anywhere else? How can the Minister justify so bizarre a situation?
    Mr. Tony Banks: Ideology. Playing politics—
    Mr. Speaker: Order.
    Mr. Eggar: The hon. Member for Newham, North-East (Mr. Leighton) and his hon. Friend the Member for Newham, North-West (Mr. Banks) should have words with the director of education for Newham council. They have just written the most disgraceful letter to parents, deliberately trying to frighten and intimidate them into withdrawing their children from Stratford school or attempting to dissuade them from taking up their option to attend Stratford. That is old-fashioned party thuggery of the kind that Opposition Front-Bench spokesmen claim to have given up.
    Mr. Tony Banks: Come outside and say that.
    Mr. Speaker: Order. The hon. Member for Newham, North-West (Mr. Banks) has already had one outburst.
    Mr. Gill: To ask the Secretary of State for Education and Science how many primary schools have achieved grant-maintained status.
    Mr. Kenneth Clarke: I have approved five primary schools for grant-maintained status and I am minded to approve one more. Fifty-four primary schools in all have
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    so far applied for grant-maintained status and a further 11 are currently balloting parents on whether to apply for such status.
    Mr. Gill: In determining applications, what weighting does my right hon. and learned Friend give to parental choice, academic achievement and the strength of lay and professional support? In answering that question, will he bear in mind the circumstances at the Down school where 85 per cent. of parents voted in favour of grant-maintained status, where the above-average academic achievement is well documented and where dedicated staff and governors are unanimously in favour of running their own affairs? What assurances can my right hon. and learned Friend give me that the decision that the Government have denied my constituents on this important policy is not a case of "Whitehall knows best"?
    Mr. Clarke: We give high regard to the expressed wishes of parents, which is why, having done just that in the case of Stratford school, my hon. Friend the Minister of State and myself are being so vigorously threatened by hon. Members representing Newham. However, we also consider the merits of each application and the likely success of the school as a grant-maintained school. My hon. Friend the Member for Ludlow (Mr. Gill) has told me how strongly he regrets our decision on the Down school, which is housed in an old Victorian building and has only two teachers, including the head teacher. I am afraid that we were driven to the conclusion that it was unlikely to succeed as a grant-maintained school. At least my hon. Friend's indignation answers the allegation that is frequently made against us that we always allow grant-maintained status in the case of closures.
    Mr. Flannery: Is it not a fact that the Government's attempt to dragoon schools into becoming grant maintained is a total failure? Is it not a fact that if all schools wanted to become grant maintained, the Government would have to increase the number of bureaucrats in Whitehall tenfold to centralise the education system? Is it not also the case that because the Government have not succeeded in encouraging schools to become grant maintained through a proper vote, they are now offering financial rewards and giving schools that accept grant-maintained status more money than is given to other schools and are not such schools usually about to be closed anyway?
    Mr. Clarke: The number of schools that have balloted has doubled in the past six months. The number of schools where that status has been approved has now risen past 100. I believe that today's count is 104. The effect of the change is to reduce bureaucracy, because more of the school's budget is placed in the hands of the governors and parents and is spent directly for the benefit of that school.
    The hon. Gentleman's allegation that we allow applications in all cases where the school is proposed for closure is belied by the case raised by my hon. Friend the Member for Ludlow (Mr. Gill). Parents in his constituency wanted a school marked for closure to become grant maintained, but we judged that case, as we judge all cases, on its merits and reluctantly decided that the application could not be allowed to proceed.

    Further Education Colleges
    Mrs. Maureen Hicks: To ask the Secretary of State for Education and Science what communications he has received from the directors of further education colleges concerning his statement on 21 March; and if he will make a statement.
    Mr. Kenneth Clarke: My Department has received a substantial number of responses from principals of further education colleges about our proposals to remove colleges from local authority control. Their comments have been overwhelmingly favourable.
    Mrs. Hicks: Does it come as a surprise to my right hon. and learned Friend to hear that when I recently met a group of directors of polytechnics, not one of them wanted to go back to local authority control? Would not that be the same for further education colleges once they have freedom from the political Labour local authorities which constrained them and the opportunity to manage their own affairs? In my own area of Wolverhampton can it be right that the chairman was not only a Labour councillor but is now the prospective Labour parliamentary candidate? Is not that political bias of the worst sort?
    Mr. Clarke: Like my hon. Friend, I have never met a director of a polytechnic who wanted to return to local authority control; I have never met a head teacher of a grant-maintained school who wanted to return to local authority control; I have never met a head teacher of a school with a fully delegated LMS budget who wanted all the money to be placed in the hands of the local authority. Yet the Labour party in Wolverhampton and elsewhere defends bureaucratic local government control of all education to the last ditch.

  PRIME MINISTER

    Engagements
    Mr. Haynes: To ask the Prime Minister if he will list his official engagements for Tuesday 23 July.
    The Prime Minister (Mr. John Major): This morning I presided at a meeting of the Cabinet and had meetings with ministerial colleagues and others. In addition to my duties in the House, I shall be having further meetings later today.
    Mr. Haynes: The Prime Minister will be aware that we came into this place together and that we have been friends ever since. However, when my right hon. Friend the Leader of the Opposition asked him a question yesterday on the Bank of Credit and Commerce International, I wondered where Honest John was. Will he tell me please?
    The Prime Minister: The hon. Gentleman is perfectly correct that we entered the House on the same day. I, too, am proud to have been his friend during that period and I hope that that will continue. I made it clear to his right hon. Friend yesterday that I had no knowledge of the fraud at the BCCI until 28 June. I have set up an inquiry that will have open access to all the information that is available and all the people who are concerned, up to and including Ministers and myself. When that report is concluded, I will publish it.
    Mr. Dickens: Will my right hon. Friend the Prime Minister please confirm that it was the Conservative party which first gave parents their rights, gave trade union members their rights and gave council tenants their rights? Is it not now the Conservative party which is giving the ordinary citizens of Britain their rights and is not that to be admired under the leadership of my right hon. Friend?
    The Prime Minister: I would not wish to disagree with my hon. Friend.
    Mr. Kinnock: Does the Prime Minister recall that he told the House on 18 January 1990 that he was aware of the reports about the banking operations of BCCI, that he said:
    "I am satisfied with the supervision responsibilities and powers available to the Bank of England"—[Official Report, 18 January 1990; Vol. 165, c. 402.]
    and that he said that the Bank had "sufficient staff working" on what he told the House was "a serious matter"? Will he now answer the specific question which he did not answer in any way yesterday? When did he first know about the very serious and prolonged banking irregularities at the BCCI?
    The Prime Minister: As I told the right hon. Gentleman, the first time that I knew of serious banking irregularities was on 28 June—last month. My right hon. Friend the Chancellor of the Exchequer made that clear to the House on Friday, I made it clear to the House on Monday and the Governor of the Bank of England made it clear in a letter to the hon. Member for Leicester, East (Mr. Vaz). I am surprised that the right hon. Gentleman, as a Privy Councillor, is unwilling or unable to accept those assurances.
    Mr. Kinnock: If the Prime Minister will refresh his memory, he will discover that he made absolutely no mention whatever either yesterday or on any other occasion of serious banking irregularities. Is it not a fact that in early 1990 the Prime Minister knew about the use of BCCI by drug traffickers, and therefore clearly knew about the other grave irregularities? It is a matter of record in columns 402–3 of Hansard of 18 January 1990 that he knew about the other grave irregularities at BCCI, that he told the House that it was a "serious matter" and that he then let the matter drop, with tragic consequences for those who, in complete innocence, continued to use the BCCI. Has not he been utterly negligent? Was not his failure to act on the knowledge that he had a complete dereliction of duty?
    The Prime Minister: I regret that the right hon. Gentleman continues to conduct opposition by smear. The reality of what happened all the way through, of who knew about the details of the fraud and other serious matters, will be entirely uncovered by the inquiry that I have set up. The right hon. Gentleman should wait for the results of the inquiry and, meantime, he should not continue as he is doing.
    Mr. Kinnock: The Prime Minister is rightly exercised about the sovereignty of this House of Parliament. Will he answer questions to permit us to exercise the sovereignty of this House and hold the Government to account? He says that it is a matter of regret that I ask these questions. It truly is a matter of regret that 200,000 people continued to trade with the BCCI, including 60 local authorities and countless companies, in complete innocence when all the

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    time the then Chancellor of the Exchequer knew about serious irregularities in that bank, but did nothing to warn anyone.
    The Prime Minister: Those depositors are in difficulty because of the fraud perpetrated by the BCCI. I have told the right hon. Gentleman that the first knowledge that I had of that fraud was on 28 June. [Interruption.] If he is saying that I am a liar, he had better do so bluntly. [Interruption.] If he is not, he had better stop insinuating it.
    Mr. Kinnock: The Prime Minister has already misled the House once today by saying that yesterday he referred to the irregularities, when it is in the recall of this House that he did not say a word about the irregularities yesterday, despite being asked about them. I have said to the Prime Minister that he knew about matters other than fraud before January this year and before June this year. Despite what he knew as Chancellor of the Exchequer, he did nothing to warn innocent people of the trap into which they were moving and of a bank that was near bankruptcy, that was giving unsecured loans and was not fit to trade. He let the bank trade.
    The Prime Minister: The right hon. Gentleman has just revealed to the House why he is unfit to be in government—[Interruption.]
    Mr. Speaker: Order. [HON. MEMBERS: "Guilty!"]. Order.
    Mr. Skinner: It all started when—
    Mr. Speaker: Order. Let us behave like the House of Commons.
    Mr. Whitney: I congratulate my right hon. Friend on his excellent citizens charter. Does he agree that the typically churlish and sour reaction of Opposition Members demonstrates once again that, unlike the majority of the political parties in the world, they have still not understood that it is the competition and choice in the private sector which create quality of service? Does he also agree that it is the right of customers in the public sector to receive that same quality of service?
    The Prime Minister: I agree with my hon. Friend about that. The measures in the citizens charter, both the large ones and the smaller ones, will be welcomed by people up and down the country. It is often the small matters that cause the greatest degree of frustration to ordinary people, and those small matters require to be dealt with. Many of the provisions of the citizens charter will do precisely that.
    Mr. Ashdown: Further to that answer, yesterday the Prime Minister rightly said that where the authorities fail, the citizen should be compensated. Will he confirm to the House that that principle of compensation will apply if the Bingham inquiry shows that the authorities failed in the BCCI affair?
    The Prime Minister: The right hon. Gentleman had better wait for the result of the Bingham inquiry.
    Mr. Soames: Is my right hon. Friend aware that, in more than 40 prison establishments in this country today there is a full-blown industrial dispute? Does my right hon. Friend agree that that is a thoroughly unsatisfactory state of affairs? Does he further agree that the Government must do something to sort out that rotten union?
    The Prime Minister: I agree with my hon. Friend. It is important that we address that matter.
    Mr. Hinchliffe: To ask the Prime Minister if he will list his official engagements for Tuesday 23 July.
    The Prime Minister: I refer the hon. Gentleman to the reply that I gave some moments ago.
    Mr. Hinchliffe: Is the Prime Minister aware that the Health Select Committee recently heard evidence that there has been a huge increase in serious infections during child birth because of the declining standards of hospital cleaning, directly arising from the privatisation process? Will he include as part of his citizens charter a commitment to return to the public sector those unsafe and unsatisfactory privatised services currently operating in the national health service?
    The Prime Minister: It is a curious reality of life that all over the world different countries are moving increasingly to privatise services, including the Soviet Union which is looking to move many of its services into the private sector. Only the Labour party in this country is seeking to move back to nationalisation.
    Mr. Ward: Does my right hon. Friend agree that we are less likely to have seriously ill patients turned away from hospitals and less likely to have people waiting to be buried if we continue with our privatisation scheme and eliminate the unions from the hospitals?
    The Prime Minister: It is the Government's policy to continue to improve the quantity and quality of health care in this country, as we have done in recent years. That is in the interests of patients and it is certainly what is set out in our provisions in the citizens charter. That is the policy we will follow.
    Mr. McAllion: To ask the Prime Minister if he will list his official engagements for Tuesday 23 July.
    The Prime Minister: I refer the hon. Gentleman to the reply that I gave some moments ago.
    Mr. McAllion: Is the Prime Minister aware that the most important right available to citizens is the right to decide for themselves under which kind of Government they live? Since that is the very right that the Government are denying to the people of Scotland, does the right hon. Gentleman understand that his so-called citizens charter will be seen in Scotland for what it is—a fraud and a deceit? It is yet another reason for inflicting deserved electoral defeat on the Government when the Prime Minister finally finds the courage to face the citizens at the ballot box.
    The Prime Minister: I sometimes wonder whether the hon. Gentleman lives in the real world.

Army (Restructuring)
3.31 pm
The Secretary of State for Defence (Mr. Tom King): With permission, Mr. Speaker, I should like to make a statement on the restructuring of the Army.
For more than 40 years the British Army has stood in the front line in Europe with our NATO allies. For more than 40 years we have had to maintain, even in peacetime, very substantial force levels on the continent of Europe, against the risk of a massive surprise attack across a wide front by the huge military strength of the Warsaw pact. But suddenly, after all those years of confrontation, the Warsaw pact has collapsed; East Germany is no more; and Poland, Czechoslovakia, Hungary and others all seek closer links with the west. Only last week in London at the G7 summit, President Gorbachev came, not as an adversary, but in search of support for his economic reforms. None the less, tensions and risks remain, and the Soviet Union is still the largest military power in Europe. That underlines the importance of maintaining the NATO alliance.
NATO's strategy for the cold war was built on deterrence and strong defence. NATO's new strategy is to sustain those policies that have served us so well, but to achieve them within lower levels of forces, which will be more flexible and mobile. NATO's decisions in May opened the way for us to make changes to our own force structure. Since the greatest threat previously came in the central region in Europe, it was on Germany that the major part of our Army was focused and it is from this area that the largest part of our reductions now comes.
NATO decided in May that the United Kingdom should join and lead the new multinational Rapid Reaction Corps. This challenging role is welcomed by the Army and well suited to our all-volunteer professional forces. In addition to providing the commander and a significant proportion of the headquarters we shall also be providing some corps troops, a powerful armoured division based in Germany, a more flexible, mechanised division based in the United Kingdom and a strong air mobile brigade based in a separate multinational division.
This NATO decision was the essential component in deciding the future strength of the Army and enabled me to announce on 4 June that by the mid-1990s the strength of the Army would be 116,000. In deciding this, we also took account of our needs for the direct defence of the United Kingdom; for responsibilities overseas in our dependent territories and elsewhere; and to help the Royal Ulster Constabulary to uphold the law in Northern Ireland. It was then possible to start consulting widely within the Army on how the restructuring should be achieved. I should now like to report to the House on the outcome of this consultation.
I shall deal first with the supporting corps, which are often less noticed but which play a vital role in the fighting effectiveness of our Army. We have already announced our plans covering personnel and administration. We will be bringing together in a new Adjutant General's Corps, the Royal Army Pay Corps, the Women's Royal Army Corps, the Corps of Royal Military Police, the Military Provost Staff Corps, the Royal Army Educational Corps and the Army Legal Corps.
We now intend to concentrate the support functions into two new corps. The first, for service support, will
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comprise much of the existing Royal Corps of Transport, the Royal Army Ordnance Corps, the Royal Pioneer Corps and the Army Catering Corps, and will handle all aspects of keeping combat forces supplied in the field. The second, responsible for equipment support, will be centred upon the existing Corps of Royal Electrical and Mechanical Engineers. The effect of these changes will be to reduce the number of support corps from 18 to 10.
There are 10 Army districts in the United Kingdom each commanded by a general. This number will be significantly reduced; as a first step, a new combined Wales and western district will form in September replacing three existing districts. We shall also rationalise the Army's training organisation, concentrating training on a much smaller number of larger and more efficient establishments.
We are anxious to manage this reduction of more than 40,000 in the Army over the next four years in the most considerate and fair manner. Most of the reductions will be achieved by natural turnover, but there will be significant redundancies particularly affecting middle rank officers and senior non-commissioned officers. As far as possible, we shall seek voluntary redundancies but some may need to be compulsory if we are to maintain a proper balance of ages, ranks and skills in the Army for the 1990s. The normal redundancy terms will apply; all those leaving the Army will have access to full resettlement assistance. My right hon. Friend the Minister for the Armed Forces is giving details of redundancies in the other services in a separate written answer today.
I now move on to a subject that concerns both those leaving and those continuing to serve in the Army. Under this Government, there has, over the past decade, been a welcome major extension of home ownership, including new forms of co-ownership and part ownership, made available through new organisations in the voluntary housing sector. These developments have not been matched by new opportunities for service personnel. The proportion of home owners in the Army is on the whole low. We intend to make comparable changes in the housing opportunities open to service men and women, and to bring service housing policy up to date with developments in the community.
The Government have always ensured that service personnel are properly rewarded for the work that they do. We also wish service men and women to have the best possible insurance cover for serious injury as well as death, off duty as well as on; and we are planning new initiatives to bring such arrangements within the reach of all our services.
I now move on to reserves. They make a vital contribution to our defence effort. They need to adapt to changes in the Army as a whole and have regard to how many they can realistically expect to recruit and retain given the unfavourable demographic trends that will face us. While we have taken no final decisions on the Territorial Army, we do not wish to turn away willing volunteers, but we envisage that the long-term future strength will settle at between about 60,000 and 65,000 against 75,000 today. We are studying the best mix of regulars and reserves and we are consulting with the Territorial Army associations—I hope to make further announcements on the way ahead for the TA later this year.
I shall now deal with the changes in front-line forces, I deal first with the particular issue of the Gurkhas. In May

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1989, my right hon. Friend the Member for Ayr (Mr. Younger) announced the plan to retain some 4,000 Gurkhas, following withdrawal from Hong Kong, but he also made it clear that it might be necessary to reconsider this if circumstances changed, such as the size of the British Army as a whole.
This is now the position, and we have reviewed our plans for the Brigade, along with those for the rest of the Army. The Gurkhas play an important role in Hong Kong and Brunei. We intend to retain the Gurkhas within the British Army after 1997; but we believe, subject again to any major change in circumstances, that a smaller force of around 2,500, based on two infantry battalions and support units, would be more appropriate. As a first step, two Gurkha battalions will amalgamate in 1992.
Reductions in the combat arms will reflect the needs of the new force structure. There will, for example, be no change to the present number of six Army Air Corps regiments, reflecting the increased importance of the armed helicopter on the future battlefield. By the mid-1990s, there will be 11 armoured or armoured reconnaissance regiments, compared with 19 today. The present infantry strength is 50 United Kingdom and five Gurkha infantry battalions. Next year they will be reduced to 46 and four respectively, and progressively thereafter, until by 1997 there will be a total of 38 battalions, of which two will be Gurkha. Together with the three Royal Marine Commandos, we shall then have available a total of 41 infantry roled units.
The Household Cavalry Mounted Regiment will remain unchanged, and the Life Guards and The Blues and Royals will form a combined armoured reconnaissance regiment retaining their separate identities. In the Royal Armoured Corps, the Queen's Dragoon Guards, the Royal Scots Dragoon Guards and the 9th/12th Royal Lancers will be unaffected.
The six regiments of Hussars will amalgamate to form three regiments, the two regiments of Lancers will amalgamate and the four Royal Tank Regiments will amalgamate for form two regiments.
The Royal Regiment of Artillery will reduce from 22 regiments to 16, the Corps of Royal Engineers will reduce from 15 regiments to 10 and the Royal Corps of Signals will reduce from 15 regiments to 11.
In the infantry, we plan to make changes over the next four years, as follows. In accordance with precedent, the second battalion of each of the Grenadier, Coldstream and Scots Guards will be placed in suspended animation. The Irish and Welsh Guards are not affected. The Royal Regiment of Fusiliers, the Royal Anglian Regiment, the Light Infantry and the Royal Green Jackets will all reduce from three battalions to two. The Queen's Regiment will amalgamate with The Royal Hampshire Regiment and form a regiment of two battalions. The Parachute Regiment is unchanged.
Within the Prince of Wales's division, recruiting from Wales, the midlands and the west Country, the Cheshire Regiment will amalgamate with the Staffordshire Regiment and the Gloucestershire Regiment with the Duke of Edinburgh's Royal Regiment. The following will be unaffected: the Devonshire and Dorset Regiment; the Royal Welch Fusiliers; the Royal Regiment of Wales; the Worcestershire and Sherwood Foresters Regiment.
In Scotland, the Queen's Own Highlanders and the Gordon Highlanders will amalgamate, as will the Royal
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Scots and the King's Own Scottish Borderers. The Royal Highland Fusiliers, the Black Watch, and the Argyll and Sutherland Highlanders are unchanged.
In the King's Division we are taking the opportunity to bring the Ulster Defence Regiment more fully into the Army by merging it with the Royal Irish Rangers. The new regiment will comprise one battalion for worldwide service and up to seven battalions for service in Northern Ireland only; its recommended title is the Royal Irish Regiment.
In the remainder of the King's Division covering the north of England: the King's Own Royal Border Regiment, the King's Regiment, the Prince of Wales's Own Regiment of Yorkshire, the Green Howards, the Queen's Lancashire Regiment and the Duke of Wellington's Regiment are unchanged.
The restructuring of the Army along the lines that I have described has inevitably required painful choices and difficult decisions. Although there are no actual disbandments in the armoured or infantry regiments, none the less recognise that there will be sadness at the amalgamations and at the possible loss of some famous names. Everyone who recognises the great benefits that flow from regimental loyalty and tradition understands that—but also understands that, as with amalgamations in the past, that same spirit is carried forward into the re-formed regiments. That has been the strength of the regimental system, which we are determined to maintain.
The Army that emerges in the mid-1990s will meet the challenges for the next century. It will have a new and demanding role. It will be fully manned. It will be properly supported, and it will be well equipped. I am in no doubt that it will continue to offer an attractive career to the high-quality young men and women who have served us so well in the past, and whom we shall continue to need in the future.
I commend my statement to the House.
Mr. Martin O'Neill: I thank the Secretary of State for his statement. I imagine that the House will wish to return to this topic after the summer recess, in the debates on the estimates and when we have a chance to see the fine print of some of the financial aspects.
First, may I ask the Secretary of State a question about the strategic context in which he placed his statement? Can he tell us what he now considers to be the warning times that are available, and that allow him to make the cuts to which he has referred? Will he also tell us what proportion of the costs of the Rapid Reaction Corps, in terms of expenditure and personnel, will be borne by other NATO members?
We recognise the logic behind the organisation and composition of the Rapid Reaction Corps; the House will want an assurance, however, that the burden is being shared fairly between ourselves and our allies. We support the establishment of the new Adjutant General's Corps and the other two corps proposed for service and equipment. Surely, however, the Secretary of State will recognise the disappointment that is felt in Wales about the disappearance of the Army district into headquarters in Shrewsbury.
As early as last June, in the debates on the estimates, I said that changes in the regimental structure would be necessary; but, nevertheless, that there was a need to maintain a system of local recruitment, with all the consequent benefits for morale and retention levels. The

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right hon. Gentleman must appreciate that the reduction in the ranks of the General Officer Commanding Scotland, and the disappearance of the Welsh military district, could undermine that dimension of the Army in the nations that make up this United Kingdom.
It is with great reluctance that we accept the need to reduce the size of the Gurkhas. Will the Secretary of State ensure that assistance will continue to be given to Nepal to compensate for the fall in remittances from troops?
Our mailbags have brought a continual stream of letters from members of the Territorial Army. Will the Secretary of State give us an assurance that an early decision will be made on the review of the Territorials and the Reserves? We know that the current consultations are a source of considerable anxiety to all those involved with the Territorial Army.
The whole House hopes that the regimental reorganisation will be achieved with the minimum disruption. Certainly, we recognise that the decision not to disband any of the regiments, but to merge and amalgamate them, will be welcomed across the country, and we pay due tribute to the right hon. Gentleman for his efforts in that regard. In other words, there is no party division on this issue and we are grateful that so many of the regiments that our constituents support are ready to go into the new structure.
The lives of large numbers of men and women will be blighted by the changes. Their service careers will be at an end. Will the right hon. Gentleman guarantee that redundancy and severance payments will reflect the straitened circumstances of the economy at this time? When redundancies of this type were last made, the levels of unemployment were not as high as they are today and job opportunities outside the services were much greater.
Will the Secretary of State ensure that attempts are made to improve housing tenure for those continuing in the services, with generous housing and education resettlement allowances for those affected? Will he also ensure that retraining is in excess of the 28 days currently available? The skills of some of the infantry personnel affected by the cuts may need broadening and deepening, and that may require far more than the 28 days afforded at present.
Will the right hon. Gentleman do his best to see that uncertainty and doubt is removed as soon as possible and that all those concerned are told quickly? Will he provide service personnel and their families with a charter for their rights as citizens which is more comprehensive and convincing than that offered yesterday to civilians?
Mr. King: I have noted the hon. Gentleman's comments. He said that he would want to study my remarks and, as he knows, I have today published a White Paper entitled "Britain's Army for the 90s" which deals with many of the points that he wants addressed. There are no easy decisions in this matter and while I understand the enthusiasm and support expressed by some people as part of their loyalty to regiments, I know that the very people who cheer also feel for those regiments which will merge. That is an inevitable consequence of a change of this kind and we have tried to handle it in the most sensitive way. I noted what the hon. Gentleman said about the way in which we have tried wherever possible to avoid disbandments.
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I am grateful to the hon. Gentleman for noticing what we have said about housing. Service personnel, by virtue of the lives they lead and what is required of them as part of their service life, are particularly disadvantaged in terms of opportunities available to people with more fixed place occupations to get on the home ownership ladder. We are keen to see how that issue can be tackled, and I assure the hon. Gentleman that we shall be pursuing it energetically.
Several hon. Members rose—
Mr. Speaker: Order. I shall do my best to call as many hon. Members as possible. We have three other statements to follow, so I shall allow questions on this matter to continue until 4.30, bearing in mind that there will be a two-day debate when the House resumes. I intend to give some precedence today to those who, sadly, were not called in the Army debate on 1 July.
Mr. George Younger: Is my right hon. Friend aware that many people will deduce that his statement today represents a difficult job well done? While there is sadness about the amalgamations, hon. Members in all parts of the House are pleased that he has managed to find some extra battalions to reduce the overstretch in the infantry.
Is my right hon. Friend satisfied that the recruiting organisations for the Gurkhas will be able to cope with the much smaller number of troops on board?
While I am pleased that the Royal Scots Dragoon Guards will not be affected, what will be the position of the Scottish-recruited artillery regiments? Can he comment on their future?
Mr. King: I am grateful to my right hon. Friend for those comments. I was aware of his concerns about the problem of overstretch and commitments and I am grateful for his support for what I have been able to announce.
Discussions about my announcement are now taking place on the Gurkhas with the Governments concerned—Nepal and Brunei. We are anxious to see that in the rundown, which will be gradual over the next four years, we meet the point that my right hon. Friend raised.
My right hon. Friend also raised a fair point on the artillery aspect because people focus on infantry and armour. I confirm that the contribution of Scotland in the Royal Artillery is significant in terms of the two Scottish regiments, neither of which is affected.
Mr. Menzies Campbell: Does the Secretary of State agree that the continued existence of the regimental system, important though its contribution may be, is necessarily subordinate to the need for a coherent defence policy for the United Kingdom in the future? If that is the case, why are we considering these proposals for the Army without a full-scale defence review involving all three services? Is it not necessary now to identify our commitments, both actual and potential? Without such a review, is it not the case that these proposals, however well intentioned, are bound to be seen as patchwork and piecemeal?
Mr. King: I thought that the hon. and learned Gentleman had attended our earlier gatherings. We have carried out a complete assessment of our defence requirements against the background of the changes in the Warsaw pact. It was an across-the-board strategic

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assessment, which was included in the White Paper "Britain's Defence for the 90s" which we published recently and, if the hon. and learned Gentleman reads the command paper that I have published today, he will see in the opening paragraph a digest of the assessment on which the changes are based.
It is not just we who have conducted an assessment: the crucial assessment is in the NATO alliance and in its response to the changed situation. There has been the most intensive work in NATO, out of which arise the conclusions on lower force levels, greater flexibility and more mobility and the agreement by the NATO Defence Ministers for the United Kingdom to take on the role in the Rapid Reaction Corps.
Mr. Michael Mates: Is my right hon. Friend aware that, although this is inevitably a sad day for some old and distinguished regiments, most people have accepted that in the changed circumstances in which we live, much of this was inevitable and they will be grateful to my right hon. Friend for the sensitive way in which he has introduced the changes. For the avoidance of doubt, will he tell us that he has had the advice of the chiefs of staff, the Chief of the General Staff and the Army Board, that they are content with these changes and that their military advice is that we can undertake the commitments that we have and are likely to have with an Army of the proposed size over the next decade?
Mr. King: I am grateful to my hon. Friend for what he said. I can confirm that I am closely advised by the Chief of the Defence Staff and the defence staffs who have responsibility across all the services. I should like to pay tribute to the Army Board for the way in which it has dealt with these difficult restructuring issues. I think that the House will accept that, although the publicity may have been about the difficult, sensitive and emotional issues of regiments arid battalions, this represents a wide restructuring approaching all the facets of the Army's activities and its civilian support, which is very important. Significant parts of the Army could not work without civilian support. Such support is not simply in those sitting in the Ministry of Defence, but in those involved in many of the activities on which the Army depends.
Sir Patrick Duffy: Is the Secretary of State aware that in Yorkshire there will be much relief and appreciation that its three fine regiments—the Green Howards, the Duke of Wellington's and the Prince of Wales's Own—remain unchanged by his statement. However, is he aware that even those who understand his overall objective and the difficulties in the way of its attainment remain concerned that the savings in teeth arms are not proportionate to those in the rear echelon and that the result may be overstretch in peace time, as his right hon. Friend the Member for Ayr (Mr. Younger) undoubtedly feared, and a dangerous shortage in times of tension?
Mr. King: We have learnt lessons from the Gulf about the difference between the front-line numbers and the rear support. For example, one multiple-launch rocket system unit manned by three men can fire the same volume of ammunition as an artillery regiment firing conventional guns manned by 450 men. The key requirement in pure military terms is what is the support structure needed to
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ensure that that one unit is kept supplied. Therefore, the conventional ratio of numbers in the front line and numbers in support may be rather different.
I did an interesting historical check. At El Alamein, we had 882 conventional guns. In the Gulf we had 72 similar artillery guns together with units of MLRS. The fire capability revealed that one tenth the number of people can fire four times the weight of ammunition.
Mr. Nicholas Budgen: Will my right hon. Friend reconsider the proposed amalgamation of the Cheshire Regiment and the Staffordshire Regiment? I remind him that the Staffordshire Regiment is already an amalgamation of the North and South Staffordshire Regiments in 1958, that it has shown splendid service in Northern Ireland and, more recently, in the Gulf, and that its recruiting figures are very good. The suspicion will remain that there has been political pressure resulting in the dropping of the proposal to amalgamate the Cheshire Regiment with the Royal Welch Fusiliers, and there will be much regret in Staffordshire and the west midlands at these proposals.
Mr. King: Everything that my hon. Friend says about the quality of the Staffordshire Regiment is very fair, and I understand his point entirely. This is a very sad statement to have to make because it means that in amalgamations some very good regiments will have to face such a prospect. When my hon. Friend has a chance to read the command paper he will see that the Army Board in its consultations and in its decisions studied very carefully a range of factors. A number of hon. Members in an earlier debate stressed the importance of the ability to recruit as one of the criteria—clearly the ability to maintain the numbers required by a regiment is very important—but other factors must also be considered. This is the decision reached by the Army Board and—tough as it is—it cannot be changed.
Mr. Ken Maginnis: My party shares the concern of a number of senior and distinguished military officers about the drastic cut in the strength of the Army. I mention immediately the amalgamation of the Royal Irish Rangers and the Ulster Defence Regiment. The Secretary of State will know that any change of such a nature is viewed almost traditionally with suspicion in Northern Ireland. That was the initial reaction of many people when we heard of the amalgamation. None the less, it will be with pride that members of the Ulster Defence Regiment take their place in a royal regiment. I believe that that is something that the brave men and women who stand between the terrorist and the law-abiding community fully deserve and have earned by their service during the past 21 years.
Will the Secretary of State confirm that career structures within what is presently the Ulster Defence Regiment will be equal to those in any other regiment? Most important, can he reassure me—as his right hon. Friend the Secretary of State for Northern Ireland has already done—that there will be no tampering with the part-time element which is presently a part of the Ulster Defence Regiment and that it will be used for as long as it is required to support the Royal Ulster Constabulary in its fight against terrorism?
Mr. King: I am very grateful to the hon. Gentleman. I understand entirely his opening remark—everything of

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this nature is viewed with suspicion in Northern Ireland when it is announced. I genuinely believe—and I am entitled to say that I have an opportunity to observe the proposed merger from both sides—that it is an imaginative and constructive approach. It is in the interests of both regiments and very much in the interests of career development for many in the UDR who will now have a chance perhaps also to become involved in the worldwide regiment.
The UDR will also be able to draw on some of the senior officer capabilities within what at the moment is two, but which will become one battalion of the Royal Irish Regiment, which is the recommended name. So I am grateful for what the hon. Gentleman said. He will know that there has been a move towards more full-time and rather less part-time service, and that trend may continue, but we certainly wish to maintain a significant part-time element. There is no question of undermining that.
Mr. Jerry Wiggin: Does my right hon. Friend accept that, in mounting the recent expeditionary force to the Gulf with only one division, all the ancillary services in the Army were stretched to the limit? Does he recognise, therefore, that some of us do not believe in the basic calculations on which he propounded his statement?
Will my right hon. Friend ponder in the next ten weeks, before we have a chance to debate the matter fully, that he will get his White Paper not because his hon. Friends approve of it but because the Opposition, with their new-found interest in defence, will vote for cuts?
Mr. King: I know of my hon. Friend's close interest in such matters. We learned a lot of lessons out in the Gulf; there was a lot of stretch involved in providing for our forces, and it flowed from undermanned units and from equipment not always of the quality and reliability that we would have wished to ensure for our forces.
What will flow from the reforms is that we shall have what I described in my statement as a powerful armoured division—the most powerful that this country has ever had. There will be three square brigades, two armoured regiments, two armoured infantry regiments in each brigade, with Challenger 2, and the upgraded Challenger 1—on which there will be substantial expenditure in the years immediately ahead. Every armoured infantry regiment will be equipped with Warrior, backed up by the AS90 howitzer, MLRS—the multiple-launch rocket system—and the high-velocity missile Starstreak. All that will give us a capacity significantly greater than we were able to send to the Gulf.
Mr. John Morris: Will the Secretary of State accept that his decision to maintain the Royal Welch Fusiliers and to cut the throat of the suggestion that they be amalgamated with the Cheshire Regiment will be very much welcomed in Wales? Can he tell us how many jobs will be lost in Wales as a result of the closure of district headquarters, and what prospects a redundant soldier will have of being rehoused by a local authority?
Mr. King: I am grateful for, although not surprised by, the right hon. and learned Gentleman's opening remark. I have a feeling that about 35 jobs will be lost, but I shall check that figure for him.
Mr. Robert Boscawen: Will my right hon. Friend accept that we feel that he and his colleagues have had an exceedingly difficult time in reducing the size of the forces? Of course, there will be many disappointments, but my right hon. Friend is to be congratulated on retaining some of the famous regiments. Will he confirm that all the soldiers concerned, over as wide a range as possible, are satisfied that an army of 116,000 men is sufficient to meet all possible unforeseen eventualities?
Will my right hon. Friend answer a question about the future of the Foot Guards? A reduction by three battalions represents more than 25 per cent. of the existing Foot Guards. Will they be able to continue to carry out their present public duties as well as their valuable service as full-time soldiers? What does my right hon. Friend mean by "suspended animation"? Will that mean, as it has meant in the past, elimination?
Mr. King: The phrase "suspended animation" was used at the specific request of the Guards Regiments concerned. At their request, they remain on the Army List.
My hon. Friend also asked about our commitments. I could not have presented the White Paper and the command paper to the House unless I had satisfied myself absolutely on that question. The implications of what has happened in Europe, and of the collapse of the Warsaw pact, are profound. They affect the structure of warning time—to which the hon. Member for Clackmannan (Mr. O'Neill) referred—the alert state of our forces, the requirement for forces to be in particular states of readiness, and their availability to discharge other roles, too. My hon. Friend will know that, in the past, it has always been practice to draw forces from Germany to serve in Northern Ireland. We now have much greater flexibility than we had before and that is one of the key factors.
My hon. Friend asked about Foot Guards public duties. We shall be examining that point but, in any case, while they are losing the second battalions and coming down to five regiments, they will receive an additional increment in terms of extra strength to help them with their public duties.
Mr. Andrew Welsh: The Secretary of State will understand that there will be dismay and anger in Scotland at the fact that four of the seven Scottish regiments will be affected by amalgamation and cuts. The changes thus place what seems to be a disproportionately heavy burden on Scotland. Why did the right hon. Gentleman choose to tackle the more popular, better recruited regiments, rather than concentrate cuts on the poorer, less well recruited regiments? What will the time scale be and what numbers will be involved in the amalgamated regiments? Will the right hon. Gentleman accept that the cuts will not be acceptable in Scotland, and will he think again?
Mr. King: I understand the hon. Gentleman's disappointment, but he should look at the figures, which were drawn to our attention by my right hon. Friend the Member for Ayr (Sir G. Younger). Four Scottish regiments are to amalgamate to form two and three will remain, so that there will be a total of five instead of seven. On the cavalry side, the Royal Scots Dragoon Guards are

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one of only three cavalry regiments that will be unaffected by the change. Similarly, the two Scottish regiments of the Royal Artillery are unaffected.
The hon. Gentleman may be interested to know that, following the changes, Scotland, with 9 per cent. of the United Kingdom's population will have 16·6 per cent., as opposed to 18 per cent., of the infantry. Its percentage of the cavalry will increase from 10 per cent. to 13·5 per cent. and its share of the artillery will increase from 13·5 per cent. to 18·8 per cent. Although there is obviously disappointment about famous regiments, no honest, objective observer could say that the changes are unfair to Scotland.
Sir Hector Monro: I am glad that my right hon. Friend has included additional battalions in his decision, but there will be profound disappointment in Scotland at the fact that we are to lose two battalions rather than one, as we originally expected. Why has my right hon. Friend decided to amalgamate the King's Own Scottish Borderers with the Royal Scots, which will make an enormous recruiting area in the south, and the Queen's Own Highlanders—already an amalgamated regiment—with the Gordons, which makes an enormous recruiting area in the north? Other permutations would seem to have been much more acceptable.
Mr. King: I well understand my hon. Friend's obvious personal disappointment, and I know of his great interest in these matters. May I say that I did not "decide"? The matter has been the subject of the most extensive consultation and consideration, and it is the collective judgment of the Army Board that these are the most appropriate amalgamations to make. The decision was based on a whole range of criteria which the Army Board considered; it was not made on the basis of some whim. I pay tribute to the Army Board and to those who work for it for the effort that they put in to this extremely difficult, and, I think, in all the circumstances, extremely well conducted review.
Mr. John Home Robertson: I remain concerned about the implications of the cuts, and I suspect that the nation and the Secretary of State may live to regret tampering with the highly successful Scottish regiments to which the hon. Member for Dumfries (Sir H. Monro) referred.
May I invite the right hon. Gentleman to say a little more about housing? Home ownership is not the whole story, and the fact of tens of thousands of people leaving the armed forces as a consequence of the changes will present serious housing difficulties in the rented sector. Will the right hon. Gentleman reflect on the problems of a constituent of mine who came to see me on Saturday. The wife and young child of a Royal Scot who is just leaving the forces after serving in the Gulf now find themselves homeless and in bed-and-breakfast accommodation. Surely there ought to be a safer, more secure and more dignified future for people leaving the armed forces.
Mr. King: That is precisely what I said. We are concerned about those who may be leaving the forces and those who remain in the services, but want to secure their own housing when they retire from the forces. I understand the problem, and I want to see how we can
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improve the help that we give to service men. What the hon. Member for East Lothian (Mr. Home Robertson) has described is not an unknown problem.
Mr. Julian Brazier: While my right hon. Friend's comments about home ownership are welcome, he is aware that there have been several attempts to improve home ownership in the Army, but they have—alas—failed. Is my right hon. Friend aware that two features will determine whether the scheme works: first, whether it is based on where a soldier is rather than on some attempted absentee landlordism in a property elsewhere and secondly, on whether the Army can recover the quarter at the end of each posting? I leave my right hon. Friend with this thought: if he wants the scheme to work—as I am certain he does—it will probably require legislation.
Mr. King: I am grateful to my hon. Friend. He has performed a great service to our service men through his absolutely relentless interest and pressure on that subject. I am very serious about that. I hope that we can carry forward some of the ideas that he has been active in canvassing—perhaps with amendment. The difficulty lies with service life and how we can help people in the services to keep their feet on the ladder of home ownership. That is what we want to do and we are determined to find a way to do it.
Mr. John McWilliam: Will the Secretary of State put the House out of its misery and, with regard to redundancies, tell us how many are involved in "considerable" and how much that will cost? In relation to the Secretary of State's reply to the right hon. Member for Ayr (Mr. Younger), is he satisfied that there will be commitments to prevent a recurrence of what happened to the Gurkhas when people who were within months of completing terms of duty lost all their pension entitlements which caused poverty in the hills? Will he ensure that that does not happen this time? Will he answer the questions from my hon. Friend the Member for East Lothian (Mr. Home Robertson) about the availability of local authority housing because my constituents who are serving in the Coldstream Guards will have difficulty in being housed and I imagine that people will face similar difficulties in other constituencies that are affected by the cuts?
Mr. King: To deal with the hon. Gentleman's latter point first, he will see in the command paper some comments on several different approaches that we will adopt to help solve those problems, including ways in which we might be able to employ parts of the present Army and defence estate—if that is surplus—which might be helpful in certain areas.
I note the hon. Gentleman's serious point about the Gurkhas. The redundancy figure in the command paper is a possible 10,000 spread over four years. I cannot give the hon. Gentleman the cost, because that will obviously depend on the timing, ranks and on the length of service of the people concerned.
Sir David Price: Why are the three best infantry regiments in the British Army—the Grenadier Guards, the Coldstream Guards and the Scots Guards—being asked to take 50 per cent. cuts?
Mr. King: That is not quite accurate. Although they are losing their second battalions, they will receive an increment to help with their public duties.
Mr. Frank Cook: The Secretary of State will know that I represent this House on the independent board of visitors of the military corrective training centre in Colchester—
Sir Antony Buck: Among others.
Mr. Cook: Yes, and the hon. and learned Member for Colchester, North (Sir A. Buck) serves on that body as well. I will confine my question to that specific area of responsibility, despite my interest in other aspects of the statement.
When the Secretary of State consulted about this issue, did he consult with Brigadier Bell, the inspector of military establishments? I understand that the brigadier agrees with me that it would be undesirable to absorb the Military Provost Staff Corps into the Adjutant-General's Corps. As the pocket philosopher Kilroy, whose comments are carved on walls, would state, "You has your catchers and you has your keepers and you know not never to mix them, no matter what." There will be dismay about today's announcement of the surrender of the neutrality of the MPSC. Lieutenant-Colonel Nick Emson of the Coldstream Guards has said:
"to absorb the MPSC into the Adjutant-General's Corps … would do much to nullify the rehabilitation work"
that is being undertaken at Colchester. Will the Secretary of State reconsider, even at this late stage?
Mr. King: I have not had the discussion and consultation to which the hon. Gentleman refers. I was talking to my right hon. Friend the Secretary of State for Northern Ireland about this matter as the hon. Gentleman was raising the point. I should like to look into the matter, and I am grateful to him for drawing it to my attention.
Mr. Cook: I thank the Secretary of State.
Rev. Ian Paisley: How is the Ulster Defence Regiment to be more fully merged into the British Army by joining up with the Royal Irish Rangers? The Act that set up that regiment makes it clear that members of the force shall be members of the armed forces of the Crown. Does the right hon. Gentleman really think that that sort of argument will wear in Northern Ireland? Is he aware of the deep outrage, concern and anger among UDR members and their families, especially when 240 members have been killed by the IRA in the action taken against them? Could he tell us whether, after the vicious campaign that was launched against the Ulster Defence Regiment by Dublin, Dublin was consulted on the decision? Was it raised at the Anglo-Irish Conference? Is this part of the overall Anglo-Irish Agreement?
Mr. King: The answer to the latter point is no. This is an Army decision. Those concerned who have a legitimate interest in such matters would have been informed at the proper time were it not for an advanced leak of this matter. It was not a matter of outside consultation, other than with those within the Army and the colonels of the regiments concerned, in precisely the same way as other regiments in the British Army have addressed the problem.
The hon. Gentleman's influence is obviously substantial and a significant element in the Province. I ask him to look objectively at this matter. He knows of my interest in
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and support for the Province. He can take it from me that I genuinely believe that this is not some underhand, seditious move. I have bowed to none in my admiration for the courage and bravery of the UDR. I also know by heart the number of part-time and regular members of the UDR who have lost their lives—some of the bravest of the brave, as I have said on many occasions.
I genuinely believe that this proposal is in the interests of those who served in the UDR, as it is in the interests of the Royal Irish Rangers, who will merge to form the regiment. I hope that the hon. Gentleman will take it from me that it is not a hidden agenda. It came to me through the Army advisers and Army staff. It is a very imaginative and constructive approach indeed, in the interests of those who serve in both regiments.
Mr. Seamus Mallon:: Many people in Ireland who would wish to give the Secretary of State's announcement a fair wind will be aware of the paradox that, on the day when he dispenses with the services of 40,000 professional soldiers, he reinforces the part-time element within the new regiment to be called the Royal Irish Regiment. Is it not outdated, cumbersome and perhaps dangerous to have a part-time militia within a full-time regiment? Is the Secretary of State aware that the history of Ireland clearly shows that each part-time militia that was formed, for whatever worthy motives, ended up as a rather embarrassing failure?
Mr. King: I note the hon. Gentleman's comments. I do not want to misrepresent him, but I take it that he also recognises that there could be merits viewed dispassionately in the proposal. I take encouragement from that, because, as I said, I genuinely think that it is an imaginative proposal. I thought hard about it. It was not one that I originated; it came to me from the Army staff. It is a very good idea indeed, and I am very grateful for and encouraged by the welcome it has received on both sides of the House.
Mr. Churchill: Will my right hon. Friend explain how the cuts announced today will represent a 35 per cent. cut in the teeth arms of the British Army, yet only a 15 per cent. cut in the strength of MOD civil servants and civilians who, after the implementation of the cuts, will be stronger in numbers than the entire British Army? Is he aware that many people in this country and in the House would like to see those proportions reversed?
Mr. King: I have read my hon. Friend's letter in the newspaper. He may be doing a great disservice to those who are called "civilians" in the Ministry of Defence. I am sure that he would not include in his comments the merchant seamen who manned our Royal Fleet Auxiliary throughout the Gulf war, who are "MOD civilians". I am sure that my hon. Friend would not want to see their numbers slashed. I am not sure whether he includes in his statement those in civilian clothes who stand shoulder to shoulder with service men in uniform to repair Tornado engines and Challenger tanks in the Royal Electrical and Mechanical Engineers and in the workshops at RAF bases where civilians and service men work side by side.
I am determined to ensure that the core establishment of officials at the Ministry of Defence is as lean and effective as I can get it. My hon. Friend might be interested to know that the total number of those classed as civilians in the Ministry of Defence has been halved since 1980. I

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would accept this criticism—it is something of a self-inflicted wound. I know that my hon. Friend believes in the importance of the nuclear deterrent, but all those who work at our atomic weapons establishments are also classed as civil servants and I do not think that my hon. Friend would like to see that group disbanded. We should look closely at the question of categorisation and take a clearer view of what we really mean by civilians, who are my hon. Friend's real target, rather than muddling the issue in a broader-based attack.
Mr. Dennis Skinner: Is the Secretary of State aware that there is nowt so funny as politics? In 1983, the Tory Government said, "Vote Labour—and they will cut defence". In 1987, they repeated that message, "Vote Labour and you will have no defence." But today the Secretary of State has taken a scythe to the battalions—so he must not lecture us any more about Labour conference resolutions. It is time the Secretary of State understood that he is the one who has used the big knife.
Mr. King: 'The hon. Gentleman's contribution, as he desperately tries to fan some spirit back into Labour's defence policy, does not fool any of my hon. Friends. We are making some reductions—overall, about 20 per cent.—in our manpower defences as a prudent and sensible response, but we are not making anything like that reduction in our expenditure on equipment, because we are determined to ensure that our forces of the future are well equipped, well supported and able to discharge any role that we look to them to carry out. It would be extremely helpful if the hon. Gentleman could at some stage enlighten the House about whether his party now has any defence policy.
Sir Marcus Fox: As someone who served in two of the three Yorkshire regiments, in the Duke of Wellington's and in the Green Howards, may I advise my right hon. Friend that there will be great relief and joy in the county tonight not least because we have a Secretary of State who is prepared to listen and to respond to the representations that are made to him? Does he agree that anyone who sees those regiments in training is bound to be impressed by their dedication, skill and loyalty?
Mr. King: I am grateful to my hon. Friend and impressed by the fact that he served in two of Yorkshire's regiments. I shall not ask the reason why, but I understand that his loyalty, although shared, is unalloyed.
Mr. John Cartwright: Although there is clearly a strong case for reducing the number of artillery regiments, does the Secretary of State accept that there will be great sadness in my constituency if it means that the Royal Artillery will have to leave its historic birthplace at Woolwich because many of my constituents regard Woolwich without the Gunners as being rather like Blackpool without the tower? Can the right hon. Gentleman offer any encouragement on that point?
Mr. King: As the hon. Gentleman knows, we are looking. We have to look and, if we are to ensure that we keep the most effective front line, it is our duty to those in the front line to examine all our support and base arrangements in that way. I cannot, at this stage, give the hon. Gentleman any encouragement on that point.
Mr. Cyril D. Townsend: Bearing in mind the fact that the crucial NATO meeting took place only in
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May, I commend my right hon. Friend for presenting his statement to the House before we rise for the summer recess and, on the face of it, for coming up with a sensible and well thought out package of changes. Does my right hon. Friend agree that the success of "Options for Change" and his leadership of it will depend on ending up with a higher capital investment in front-line service men than we have at present?
Mr. King: We met on 29 May, so the statement has been prepared even more quickly than my hon. Friend suggests. It was not easy. I was somewhat encouraged to read what Lord Wolseley said on 25 April 1887 when addressing the annual dinner of the Press Club:
"From my experience I advise any of you who contemplate changing your profession to have nothing to do with organising the British Army, for of all the difficult offices, of all the thankless duties which can devolve upon a human being, that of being an Army organiser and reformer is the worst."
Therefore, I am encouraged by the support that I have had from my hon. Friend and others in what Lord Wolseley described as this thankless task.
Mr. Richard Livsey: As a Welsh Member, may I thank the Secretary of State for preserving the Royal Welch Fusiliers? It is greatly appreciated. But cannot he gauge the sense of anger and frustration in Brecon in my constituency, where headquarters, Wales is to be closed? What would happen if HQ Scotland was to be closed? Wrath would descend on the Secretary of State's head. Does he agree that recruitment in Wales has been extremely good probably better than in any other part of Britain, because we have had our own HQ? Will he recognise that and give me good reasons why HQ Wales has been closed, with a great loss of jobs? Is there any truth in the rumours that the school of infantry is to move to my constituency from Salisbury plain?
Mr. King: On a day when, as a result of the determination of the Army Board, Wales has not been hit hard, the hon. Gentleman opened by thanking me for the survival of the Royal Welch Fusiliers and then berated me for the fact that perhaps 25 to 30 jobs may be lost. There will still be an office in Brecon. We have sought to deal with the matter as sensitively as possible. I should say politely that the hon. Gentleman's remark about recruitment was unwise. I should not have thought that the ability of regiments to recruit was based on the presence of a headquarters office. To say so demeans what I should have thought that the hon. Gentleman would wish to praise—the calibre and reputation of the regiments themselves.
Mr. Paul Channon: Can my right hon. Friend clarify the apparently confused position of the Household Cavalry? It is not to amalgamate but to "combine". Does my right hon. Friend accept that at least at first sight it seems that it will be extremely difficult to retain a proper career structure? Is it expected that people will spend half of their careers in the mounted regiment? Surely that would be a disastrous course to suggest to people who wish to recruit. Can my right hon. Friend further explain why the Blues and Royals, which was one of the three regiments to amalgamate on the last occasion, should be asked to do something similar this time?
Mr. King: I understand my right hon. Friend's loyalty and anxiety. The outcome, which is a difficult one, was

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based on the absolute determination of the Army Board to maintain the mounted regiment. While the regiments of the Life Guards and the Blues and Royals are to combine, the size of each part is to be enhanced. So, instead of three squadrons in each and one headquarters squadron, there will be two squadrons of the Life Guards, two squadrons of the Blues and Royals and one headquarters squadron plus the three squadrons of the mounted regiment. Instead of the present 11 squadrons there will be eight. It is the clear view of my advisers and those closely involved with the regiments that with good will and support from other cavalry regiments, the change will ensure that the regiments can continue.
Several Hon. Members rose—
Mr. Speaker: Order. I am sorry that it has not been possible to call all those who wished to put a question to the Secretary of State. I shall certainly bear them in mind when we debate the matter again after the recess.

Local Government Finance (England)
4.34 pm
The Secretary of State for the Environment (Mr. Michael Heseltine): With permission, Mr. Speaker, I should like to make a statement about the Government's proposals for the local authority finance settlement for England for 1992–93, and about our proposals for local government in the years ahead.
Two years ago, local authorities in England spent £32·3 billion. This year they have budgeted to spend £39·9 billion. That is an increase of 23·5 per cent. in just two years. In anyone's terms it is a very substantial increase.
Over the same period, the external support distributed by Government to local authorities has increased by even more: this year alone, it has increased by a third. We are paying an extra grant to enable councils to cut their community charges by £140. We are also providing more than £2·5 billion of support this year to individual charge payers through the community charge reduction and community charge benefit schemes. Overall, the net contribution from local people to local expenditure now stands at just 15 per cent.
We have made it possible for councils to provide decent levels of service at lower community charges. The councils have to play their part, too. Local government is not immune from the pressures and restraints faced by everyone else. Central Government, businesses and individuals must all plan to spend only what they can afford. Local government must do the same.
Against that background, the Government believe that local authorities in England together ought to spend no more in 1992–93 than £41·8 billion. That would be 7·2 per cent. more than the corresponding figure for total standard spending this year. With inflation falling even before next year to 4 per cent., that is a realistic increase: it takes account of the pressures on local authority budgets, and of the opportunities which they have to improve the efficiency and value for money of the services which they provide.
I propose to set the level of external support distributed by the Government to councils next year at £33·1 billion. That also is 7·2 per cent. more than this year, including the extra amount which we paid to cut the community charge by £140. That should ensure that next year, overall, local people will again not have to contribute more than 15 per cent. of council spending through the community charge. As in previous years, I shall announce our proposals for distribution of the Government grant in the autumn.
There are still too many authorities that budget each year to increase their spending regardless of the consequences for charge payers. We have protected many community charge payers by capping, and many councils were persuaded this year to moderate their increases to avoid being capped. Next year, if authorities budget excessively or for an excessive increase in their budget, I intend, as this year, to use my capping powers to ensure that the extra grants from Government are translated into lower community charges and not frittered away in extravagant spending.
As I did last year, I intend to announce provisional capping criteria for 1992–93 in the autumn, so that local authorities can take them into account in their budgets. My intention is that those criteria should be expressed in the same sort of format as those adopted for 1991–92.

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Authorities will thus know what to expect well in advance. We hope that all authorities will choose to budget sensibly, but if they do not we shall not hesitate to cap them.
The settlement that I have proposed is fair and realistic. The community charge for standard spending next year will be about £256. The actual charges set by authorities will depend on the budgets which they make and their determination to collect the charge. Millions of people will, of course, pay substantially less than £256 because of rebates and the community charge reduction scheme.
I now turn to our proposals for years after 1992–93. In April the Government published a consultation paper, "A New Tax for Local Government". We have received over 800 responses. The great majority have welcomed our proposals to replace the community charge with a new council tax. The consultation process has, of course, produced a great number of useful comments, which we are still considering and will take into account in framing the new legislation. There is one matter which I must, however, deal with now.
I am glad to confirm to the House that the Government intend to proceed with legislation along the lines proposed, with a view to bringing the council tax into operation by 1 April 1993—the earliest feasible date. Subject to enactment of the Local Government Finance and Valuation Bill, the task of putting properties into bands will start in the autumn. We will introduce legislation next Session to set up the new council tax regime.
Many responses have queried whether the seven council tax bands we proposed in April extend far enough up the range of house prices. We have considered this carefully and have concluded that there should be one additional band, taking in properties worth more than £320,000 in England. Houses in this new band H will be subject to a council tax of twice the amount for a dwelling in band D.
The response to the consultation paper, "The Structure of Local Government in England", has been very positive. Nearly 1,900 individuals and organisations have written in with their views, overwhelmingly in support of our proposals. There have been some useful suggestions for minor improvements. We intend therefore to introduce legislation in the autumn to set up a new Local Government Commission to review the structure of local government in England area by area.
I shall publish a consultation paper on the internal management of local authorities next week. It will invite comments by the end of November.
I believe that my proposals represent the right way forward for local government in 1992–93 and in the years ahead.
Mr. Brian Gould: It has taken just 24 hours for the illusions created by the citizens charter yesterday to be punctured by the harsh reality of the Secretary of State's statement today. Yesterday, the Prime Minister talked of helping the citizen and raising the level of public services. Today the Secretary of State revealed the true face of the Government—the face of a Government who cut public services, undermine local government and harm the citizen. The Government's priorities are clear: saving their political skins takes precedence, at whatever cost to local government services and those who depend on them.
As the Secretary of State accepts that what local authorities will actually spend this year is £39·9 billion, why will he not also accept that his proposed increase in
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spending is worth only 4·8 per cent.? How can he justify the denial to local government of £2 billion which they need simply to maintain services even at their present level? What account has he taken of the new commitments imposed on local government by measures such as the Education Reform Act 1988 and the Environmental Protection Act 1990, the demographic changes which push up the cost of education and social services, and preparations for new measures such as community care?
Does the Secretary of State dispute the local authority associations calculations that those new service pressures will cost an additional £1·7 billion? Does he dispute their assertion that an inflation rate allowance of 4·.5 per cent. will be far too low to cover pay increases for teachers, police and fire staff, which will mean that the true inflation rate for local authorities will be 7·3 per cent.?
How are those factors to be taken into account without making cuts in already hard-pressed services elsewhere? The Secretary of State said in his statement that he had taken account of the pressures on local authorities' budgets, but they assess the pressures as meaning a total spending of £44 billion, not £41·8 billion. What pressures has he chosen to ignore, and in what other way does he suggest that they are to be met?
What account has been taken of the ever-increasing costs of collecting the poll tax, which have been conservatively estimated by the Audit Commission at £800 million per year? How can we rely on the right hon. Gentleman's average poll tax prediction, which presumably assumes a 100 per cent. collection rate? Why did he not ease the collection problem by abolishing the 20 per cent. contribution rule? Is not his figure for next year just as likely to be a fairy-tale figure as those produced for the past two years, particularly when the gearing effect of any shortfall in demand will be no less than 5:1? Has the Secretary of State learnt nothing from the experience of his predecessors? Does he not recognise that wishful thinking about the level of local government spending, the inflation rate and the collection level of the poll tax is a recipe for disaster, for local authorities, the Government and poll tax payers?
Does not the announcement of another band of council tax, while welcome in itself, provide further evidence of the battle that still rages in a divided and dithering Cabinet? Were we not assured in April that the one issue on which the Government were not to be moved was the number and range of bands? In April we were told that the number and range of bands was set in concrete, so does not this late change reveal a reluctant and late admission that the original seven-band proposal was fatally flawed, and also an equally damaging failure to do anything effective about it?
Is it not the case that the fundamental unfairness of the poll tax survives and persists with the council tax? Those living in top-band properties will pay just three times more tax than those in the bottom band, while enjoying properties of at least eight times greater value. Is this not a classic case of a leopard which cannot change its spots?
It is perhaps too much to expect that a Government who have shown an unremitting hostility to local government and committed themselves consistently to loading an unfair burden on those least able to pay, should experience a change of heart at this late stage. The only consolation for the majority of us is that this is the last such statement that the right hon. Gentleman will make.
Mr. Heseltine: This House and an expectant world will note with interest that the Labour party has managed to

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summon up 14 Back Benchers to listen to the synthetic hysteria of its spokesman. It is a pity that there are so few Labour Members here today because they have heard yet one more pledge of an extra 1p on income tax from their spokesman. So naive and far removed from power is the Labour party that all that local government has to do is say, "We'd like some more," and the hon. Member for Dagenham (Mr. Gould) is on his feet promising that, without any understanding of the fact that, if there is one thing that is certain, it is that, the higher the level of expenditure in local authorities, the worse the service delivery.
The essential difference between the Conservative party and the Labour party is that the Prime Minister stood at the Dispatch Box yesterday and promised value for money for our citizens, while the Labour party is here today offering money to the trade union-dominated services of local authorities. The Labour party has learnt nothing, and so long as it learns nothing its Members will continue to sit in opposition—indeed, it seems that they do not even have the energy left to come and sit there.
Miss Emma Nicholson: I offer my right hon. Friend the Secretary of State my warm congratulations on a tight settlement, which is none the less almost double the rate of next year's projected inflation level. Is not the mealy-mouthed and mean-minded response of Her Majesty's Opposition due to the fact that they cannot come up with anything which offers public sector organisations the ability both to control their own budgets and to raise new money from outside sources which do not pull down the organisations' core funding?
Mr. Heseltine: I thank my hon. Friend and I agree with everything that she said. It is, however, a slight exaggeration to say that the Labour party has come up with nothing at all. It has come up with two different systems for local government finance in two years, and four different means of valuing the properties within that system, which will simply add yet further to the extravagance of its proposals.
Mr. David Bellotti: The Secretary of State must be aware that local government will be bitterly disappointed at the announcement of today's financial settlement. It must face an 8·5 per cent. increase in police pay this September and teachers' pay will increase by a similar sum next year. It is clear that the Government's settlement will not help local authorities to meet those pay increases. The legislation that the Government have passed in recent years will add a further burden on local government spending. Local authorities have assessed that, in the coming year, that burden will add a further 4·3 per cent. to their costs. Is the Secretary of State aware of that figure and does he agree with it? In the light of yesterday's announcement by the Prime Minister of a major citizens charter, how can we be faced with such a major cut today?
Mr. Heseltine: It is obvious that the Liberal party is even less enthusiastic for its spokesman than the Labour party, as it has only one member here. Let me help the hon. Member with the basic arithmetic. I have just announced an increase in cash of 7·2 per cent. By any standard that is a generous settlement. All that is required of local
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authorities is to face up to the fact that they must accept the same pressures to which everyone else is subject, including the hon. Gentleman's constituents.
Sir Geoffrey Finsberg: Does my right hon. Friend accept that the hard-pressed community charge payers will greatly welcome what he has announced, especially in places such as the London borough of Camden, which is closing a branch library to save £38,000? Through my right hon. Friend's efforts, that borough is being forced to put out to tender for the second time the refuse collection service, which will now be a better one at a cheaper price.
Mr. Heseltine: My hon. Friend is absolutely right. If only local government took competitive tendering seriously, the economies that they would achieve would cover a substantial part of the extra costs of next year.
Mr. James Lamond: Those of us who remember the Secretary of State's record in previous Governments will not be taken in by his conversion to helping local government now. With his Government's record on the poll tax, he should be ashamed to come here and attack any other political party. If the promises made in the citizens charter are to be kept, will not compensation have to be sought from local councils, which can only mean more pressure on the already hard-pressed local poll tax payers?
Mr. Heseltine: The hon. Gentleman has obviously not grasped the essence of the citizens charter. People should deliver a better service for the money they are already spending and better value for money for those services. Although I take leave to disagree with the hon. Gentleman, I have not been the strongest supporter of the community charge in the past. However, compared with the Labour party proposals, the community charge is a model of financial rectitude in local government.
Mr. John Lee: My right hon. Friend is aware that I take a certain interest in the replacement of the community charge by the council tax. I believe that the new higher band is morally right. Will my right hon. Friend also consider whether a new lower starting band would be more realistic for low-value areas of the country such as Pendle and north-east Lancashire, a subject on which I have written to my hon. Friend?
Mr. Heseltine: I know that my hon. Friend has taken a deep interest in the issue of low-value property areas. I must report to my hon. Friend that we have considered this matter. We must make progress with the valuations and we have decided that the new arrangements, including the H band that I have announced today, are, according to the Government's judgment, the way in which we should proceed.
Mr. Robert N. Wareing: Is the Secretary of State proud of the fact that, alone among European Community Environment Ministers he has told democratically-elected local authorities that if they decide to raise funds to implement fully section 2 of the Chronically Sick and Disabled Persons Act 1970—I also have the citizens charter in mind—he will cap them if he feels like it? Is he proud to be the nearest to a gauleiter of any of the EC Environment Ministers?
Mr. Heseltine: I probably spend as much time as the hon. Gentleman walking around the deprived areas of our urban communities. The standards of service delivery that I see for the money spent are a scandal. I have not the slightest doubt that what the Government are doing to raise the hopes and the opportunities of those citizens who live in such squalour, largely under Labour authorities, is one of the best initiatives that the Government have taken.
Mr. David Wilshire: My right hon. Friend predicted that the community charge will be £256 next year, but said that that would depend on the budget set by councils and on the efforts made by them to collect the tax. Will my right hon. Friend also confirm that that target will be severely affected by the number of people who refuse to pay their community charge? Does he therefore agree that the example set by Labour Members who refuse to pay is a disgraceful one? It means that other people have to pay for the services that those Members enjoy. Does my right hon. Friend agree that, despite the Labour Members who have bothered to turn up today, if there are such members in that party, they are not fit to run the country?
Mr. Heseltine: My hon. Friend is absolutely right that the failure to collect produces a league table of shame on which the worst 15 have one thing in common—they are all run by the Labour party. Before anyone starts arguing that that is a feature of the community charge, they should start looking at the failure of those authorities to collect rents in the same circumstances.
Mr. Allen McKay: Will the Secretary of State look at the letters that I have sent to him asking him to meet Barnsley, Sheffield and the other five local authorities to discuss their standard spending assessments and other matters affecting local government? Their SSAs have led to the desecration at their education services, social services and all their other local services.
Several Hon. Members rose—
Mr. McKay: I have not finished yet.
Although I accept that the right hon. Gentleman has replied that I should meet the Minister for Local Government and Inner Cities, the authorities want to meet the Secretary of State, as is their right. They will meet him any day of the week in seven, at any time of the day and anywhere he chooses. Will he now stop hiding and meet those authorities?
Mr. Heseltine: The news that I have for the hon. Gentleman is excellent, even better than if I were to offer to meet those authorities myself—my hon. Friend the Minister of State has already written to say that he will meet them.
Mr. Richard Tracey: My right hon. Friend will receive the gratitude and the congratulations of the people of London on his announcement today of the extra band in the collection of the council tax. That shows that this is a listening Government. My hon. Friend the Member for Spelthorne (Mr. Wilshire) spoke about those who have not paid the community charge. Will my right hon. Friend give the people his pledge that those non-payers will be pursued relentlessly?
Mr. Heseltine: I appreciate my hon. Friend's kind remarks. We listened carefully to what my hon. Friend and
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many others said to us about the need for another band. I can confirm that we have no intention other than of insisting that the community charge is collected.
Mr. Peter Hardy: Does the Secretary of State accept that, to some extent, he ignored the question posed by my hon. Friend the Member for Dagenham (Mr. Gould) about the fact that the Government continued to pile additional duties and obligations on local authorities? Reference has already been made to some of those additional obligations, which include those contained in the Children Act 1989 and the obligation and need to enhance the environment, where the role of the local authorities is absolutely essential. Those additional obligations are not necessarily covered by the total package that the right hon. Gentleman announced today.
Does the right hon. Gentleman also accept that it is not just a question of the totality of the package but a matter of how that money will be distributed? As my hon. Friend the Member for Barnsley, West and Penistone (Mr. McKay) has said, the industrial areas of the north of England have come out badly from the apportionment of the total grant in the past two years. May we have an assurance that the work that the right hon. Gentleman does in the next few months will ensure that that corruption is not repeated?
Mr. Heseltine: The hon. Gentleman has raised two important points. The assessment of SSAs is the key to the distribution process and we take carefully into account the representations we receive, particularly those from local authority associations. We shall do so again on this occasion, although I am aware that there is a significant demand for stability without change. The moment one brings about change there are losers as well as winners and most hon. Members on both sides of the House believe that the one authority that loses under the system is their own. We shall take all representations carefully into account.
The hon. Gentleman's first point, which is important, was about the duties that have been placed on local authorities and the demographic changes that have taken place since the last settlement. The figure that I have announced today, which is the Government's view of what is a realistic expenditure target, takes account not just of the levels of pay increases but of all other aspects of demographic change and statutory duties. That is an important statement, as I must make clear. My right hon. and hon. Friends and I have considered these matters carefully and it is now up to local authorities to take into account the totality of their spending plans, but to have regard to the overriding priority of meeting the Government's expenditure targets.
Mr. Martin M. Brandon-Bravo: I stress my thanks and those of the majority of my constituents to the Secretary of State and his ministerial colleagues for the genuine consultation exercise in which, as the statement has shown, he heeded the representations made to him. From the many hundreds of letters that I have had from my constituents, I know how welcome the extra band of £320,000 will be. I believe that that will underpin the equity and justice of the proposals and be welcomed throughout the country.
Mr. Heseltine: I am grateful to my hon. Friend. I can only apologise—I know that he will understand—for the

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fact that when he made his urgent representations on this matter to me last night I was only able to give him such a non-committal response.
Mr. D. N. Campbell-Savours: Given what the Secretary of State has just said to my hon. Friend the Member for Wentworth (Mr. Hardy), is it not true that the new responsibilities to be placed on local authorities will be funded by cuts in existing services? Will not the same be true of the citizens charter?
Mr. Heseltine: I have dealt with that question several times. The Labour party is incapable of understanding that we are spending many millions of pounds but not giving an adequate quality of service to the customers who depend upon those services. One has only to visit a large number of urban authorities to realise that the quality of service to the customer seems to be the last consideration on the agenda of those distributing the money. It is critical that local authorities when reaching their judgments about their budgets, take account of the availability of balances, of economies and of the additional 7 per cent. cash, and then budget to remain within the levels that the Government have set out as appropriate for next year.
Mr. Nigel Forman: Is my right hon. Friend aware that some Conservative Members are somewhat concerned at the fact that, under the arrangements for the community charge, only 15 per cent. of local government expenditure will come as a net contribution from locally determined tax? If that situation becomes worse under the new council tax, will my hon. Friend consider, before it is too late, the argument for introducing some flexibility into the so-called uniform business rate, so that there is at least a possibility of injecting greater accountability into future arrangements after 1993?
Mr. Heseltine: My hon. Friend raises an important point, which a number of people have put to us. We have no present intention to change the existing arrangements. When my right hon. Friend the Chancellor announced significant improvements in Government support for local authorities this year, he made it clear that we had it in mind to preserve the new balance of, approximately, 15 per cent. locally determined and raised finance in future arrangements.
Mr. Harry Barnes: Why do we have to wait until autumn for what are only provisional capping criteria? A host of new authorities are liable to face capping—all those with budgets of under £15 million. In those circumstances, the provisional criteria should have been produced at a much earlier stage. My authority of North-East Derbyshire is one of the worst funded per poll tax payer, next only to North Dorset. If we have to wait until autumn before the figures are available, could we at least have a meeting with the appropriate Minister? We would settle for the Minister of State.
Mr. Heseltine: The hon. Gentleman would get a good bargain there. We are not in a position to determine the composites of the standard spending assessments in this public expenditure round. There is a normal pattern in the way in which these things are done. The House will appreciate that the public expenditure round does not
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unfold to a point at which we can make these judgments until later in the autumn. At that point, we can reach judgments about the service composition within the SSAs, and it will be possible to give the clear sign then that I have promised the House.
Mr. Richard Holt: My right hon. Friend is to be congratulated, particularly by the north of England, which has much appreciated the work that he has done. As ever, we are tempted, but we do not always receive. I draw to his attention Cleveland county council, which recently put out a contract for a private cleaner, under competitive tendering, which led to a reduction of £1·3 million in spending. However, it has now decided to spend every penny of that on job creation by retraining a large number of the cleaners as social workers. Can we not do something to stop this? Cleveland county council is about to abandon its so-called supertram system, on which it has so far spent £1 million, yet it is still not rate-capped. The criteria must be looked at again or this sort of squandering will go on and on.
Mr. Heseltine: I heard clearly what my hon. Friend said. The House will be appalled to hear that, when there was an opportunity to secure genuine value for money with a service delivered at lower cost, the consequences were frittered away. That is one of the considerations that we shall have in mind when reaching judgments on capping.
Mr. Nicholas Brown: The only point that will be even more unwelcome in the north than the meanness of today's announcement is the unpleasant rhetoric about charge capping that accompanied it. When the Secretary of State considers capping, will he allow local authorities in the north and elsewhere exceptional disregards where they have got into trouble as a result of such events as the collapse of the Bank of Credit and Commerce International, local authority swaps and late commercial rating reviews? The latter is a problem specific to Newcastle. All these issues are outside the control of local authorities when they deal with their budgets on an annual basis.
Mr. Heseltine: The hon. Gentleman will realise that at this stage we do not have sufficient information to know what the effects will be on the revenue budget and community charge payers. We do not even know whether revenue deposits have been put with BCCI. A whole range of facts are not available and I would not want to give the impression that we have any intention to take action that would make it more likely that local authorities will indulge in the sort of practices to which the hon. Gentleman referred.
Mr. Robin SquireThe settlement of more than a 7 per cent. cash increase will not strike most people as savage when set against a likely inflation rate of less than 4 per cent. I congratulate my right hon. Friend on his announcement on the council tax, which makes a good tax better. Will he publish exemplifications replacing the ones previously circulated, so that many people in my constituency and elsewhere in London can see how much they are saving against the new higher band of tax?
Mr. Heseltine: I am grateful for my hon. Friend's support. However, it would not be valuable to produce another range of exemplifications. The amount of extra

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money raised by the additional band that I announced today is not of great substance and, spread among the 20 million homes that are within the broad remit of our plans, the effect on any one person or household would be small. It is a psychological matter, with which we are seeking to make the tax appear more fair, rather than a determination greatly to increase the amount of revenue.
Ms. Joan Walley: The Secretary of State must review area by area. When he comes to look at the finances of Staffordshire, will he take particular account of the problems identified in the pindown report, and make allowances for the additional resources that need to be found to bring social services up to standard and which are not truly reflected in the SSA for Staffordshire?
Mr. Heseltine: The hon. Lady will know that this is a matter for my right hon. Friend the Secretary of State for Health. However, I must make it clear that this, and all other similar matters, were taken into account in the settlement.
Mr. Michael Latham: Is my right hon. Friend aware that his radical approach to the issue is widely appreciated on this side of the House? If, however, the £256 is to be held, as it must be, will it not require widespread capping and also further progress to be made on the transfer of services to the Exchequer, such as sixth form colleges and colleges of further education, as the Government have already promised?
Mr. Heseltine: I am most grateful to my hon. Friend. All Government policy that has been put into effect has been taken into account in the settlement that we have announced today. To clarify what my hon. Friend said about the £256, I should make the point that that is an arithmetical calculation. The community charge level that is set will depend both on the budgets of individual local authorities and on the level of collection. I imagine that they will vary widely.
Mr. Dennis Skinner: The Secretary of State has a cheek to come here and talk about an empty House of Commons when, after he left the Cabinet for the first time, his voting record and attendance in this place were among the worst that there have ever been.
Mr. Speaker: Order. These seem to be party political points. Does the hon. Gentleman have a question on the statement?
Mr. Skinner: He started this ball rolling. He was the man who was running round the constituencies—
Mr. Speaker: Let us stop the ball rolling. Ask a question please.
Mr. Skinner: Ain't it strange that he can get away with—
Mr. Speaker: Order. The hon. Gentleman has already had two questions today. Ask a question, please.
Mr. Skinner: Why does not the Secretary of State for the Environment treat this matter in the same way as the Government treated the water authorities? They allowed those authorities a 5 per cent. increase over and above inflation. He now tells the local authorities that they have to take a cut when the realistic increase ought to be more than 10 per cent. Treat them both the same.
Mr. Heseltine: We have established that the Labour party wants to spend £44 billion and that that will add another 1p to income tax, which means that my party's forecast that a vote for the Labour party will raise tax by 15p has now been overtaken by a new commitment to raise tax by 16p. If the hon. Gentleman wants to understand my view about taking this matter seriously, this side of the House obviously takes it seriously because my hon. Friends come here. That side of the House does not take it seriously, because Labour Members of Parliament do not come here.
Several Hon. Members rose—
Mr. Speaker: If hon. Members who are rising will ask brief questions, I shall endeavour to call all of them.
Mr. Kenneth Hind: My right hon. Friend will be aware that many of my constituents in West Lancashire, and in other authorities, will find it difficult to understand, when inflation is going to be well below 4 per cent., why the Labour party complains that 7·2 per cent. is not a realistic increase in local government expenditure. We fully appreciate what my hon. Friend is doing. Will my right hon. Friend make clear in all his statements what the cost of Labour local government and national Government would be in these circumstances?
Mr. Heseltine: My hon. Friend is extremely careful and very helpful, but the difficulty of keeping to a figure for how much Labour local authorities or a Labour Government would cost is that the figure is constantly changing. It is always going up.
Mr. David Sumberg: My right hon. Friend is aware that a number of local councils have made disastrous investments in BCCI, including my own in Bury, to the tune of £6·5 million. When my right hon. Friend looks at individual councils, will he try his best to relieve the burden on innocent poll tax payers who have been put in this position, either by allowing the councils to spread the making good over a number of years, rather than over a single year, or alternatively by ensuring that those repayments do not infringe the capping regulations?
Mr. Heseltine: My hon. Friend, whose concern I fully understand, will appreciate that this is not the appropriate moment for me to say anything other than that which I have already said in answer to this question.
Mr. Barry Field: My right hon. Friend will be aware that unanimity on the Isle of Wight is about as rare as bicycles on the Solent. However, there seems to be a consensus among all parties and all factions on the island that we should have a unitary authority. I welcome my right hon. Friend's statement that he will introduce legislation in the autumn. Can he recognise the great amount of effort that the Member of Parliament for the Isle of Wight has put into this effort and tell the House today that he intends to reward my Conservative colleagues on the island with the announcement that we shall be the first unitary authority, as the Boundary Commission has already recommended?
Mr. Heseltine: I admire my hon. Friend's enthusiasm for this cause. I have heard him advocate it in the House and I have heard it advocated on the Isle of Wight. I cannot tell him whether I can be influenced by it, but I have certainly heard it.
Sir John Wheeler: Does my right hon. Friend agree that his proposed higher tax band will be welcomed in the City of Westminster and regarded as fair and equitable? Can he confirm that the local government tax in support of the police is now only 10 per cent., and that what matters is value for money?
Mr. Heseltine: My hon. Friend makes an absolutely essential point. The particular element of local government support that affects police authorities is a matter for my right hon. Friend the Home Secretary, but in all services the question of value for money is critical.
Mr. Robert Hayward: May I ask my right hon. Friend to take little note of the bleeding hearts on the Opposition Benches in the light of the pay settlement that was agreed last week between the local authorities and the manual workers, which was 6 per cent., in terms of pay, and an extra two hours off the working week over the next three years, which represents another 6 per cent? The local authority negotiators said that they could find the efficiencies to pay for the deal out of the inefficiencies that remain. That is the key to controlling local government finance.
Mr. Heseltine: My hon. Friend is right. He can take heart from the announcement that my right hon. Friend the Prime Minister made yesterday, that we intend to introduce yet further compulsory competitive tendering, not just for manual workers but for white collar workers as well.
Mr. Simon Burns: When my right hon. Friend considers the capping criteria, may I ask him to bear in mind the position of some local authorities, such as Chelmsford borough council? When the Conservatives drove out the Liberals at the last election, they inherited a record of massive, profligate overspending in the previous three years. They are doing everything that they can to reduce their spending next year, but because of the scale of the overspend they may be faced with problems, vis-a-vis the removal of the £15 million threshold. Will my right hon. Friend bear in mind those boroughs that have been caught and should not be punished because of the activities of a previous administration?
Mr. Heseltine: I fully understand my hon. Friend's point. He will be aware that we have to set general rules, but before the rules finally apply there is an exhaustive consultative process, during which individual authorities are met and their cases considered by Department of the Environment Ministers.
Mr. James Pawsey: My right hon. Friend has received a considerable number of representations from all the Warwickshire Members about the level of revenue support grant during the last two years. There is a widely held view that the standard spending assessments are not fair to Warwickshire. Is my right hon. Friend able to hold out any hope in the statement that he has made for a fairer shape for the county of Warwick?
Mr. Heseltine: No one more than my hon. Friend has made that point to me and my colleagues. I hope that he will bear with me if I repeat what I have already said about the standard spending assessments—that they will be unable to be firmed up until we have been through the public expenditure round later this year, when we shall
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make our annoumncements within the same sort of time scale as we did last year. I cannot undertake to make transfers, but I shall certainly consider very carefully the case that my hon. Friend has put to us.
Mr. Paul Channon: Does my right hon. Friend agree that with an increase in expenditure of more than 30 per cent. in three years, what he has announced today is a very real increase in local authority expenditure, which is much to be welcomed by Conservative Members? When he is considering the drafting of his local government Bill in the autumn, will my right hon. Friend take steps within it to allow the Local Government Commission, for areas where there is virtually no controversy and virtual unanimity on the need to have a unitary authority, to report back as quickly as possible so that unitary authorities can be put into effect as quickly as possible? Then we shall be able to follow my hon. Friend the Member for the Isle of Wight (Mr. Field) and be the second unitary authority.
Mr. Heseltine: I am most grateful to my right hon. Friend. I wholly agree with him that a 7·2 per cent. increase in cash is a settlement that makes it possible to continue to deliver the real services that matter and also to recognise the Government's counter-inflationary policies. When we look at the work programme for the Local Government Commission we shall take into account the likely response in the areas and the likely complexity of the issues that will have to be addressed.
Mr. David Blunkett: Does the Secretary of State accept that the difference between £39·9 billion and £41·8 billion is 4·8 per cent.? Even those who have difficulty with arithmetic understand that. Some disgraceful remarks have been made about local government.
Will the Secretary of State confirm that he lost his battle with the Treasury to abolish the 20 per cent. contribution, which would have aided collection enormously and helped local government to cope with the remaining lifetime of the poll tax? Will he also confirm that, having been told that there would be first 14, then seven, then nine and now eight bands, we are currently being told that this is a psychological move to make the system, as the right hon. Gentleman put it "appear fairer"? Is this not a chameleon tax, introduced by a chameleon party whose colour depends entirely on the colour of the stone from underneath which it creeps?
Mr. Heseltine: If the hon. Gentleman studies his party's document, "Fair Rates", he will find that it is full of phrases that refer to a system that is seen to be fair. However, it then goes into a range of alternative means of valuing properties, which are likely to be not only unfair and expensive but extremely complex.
The reason why neither Opposition spokesmen appears to understand the significance of my announcement is their failure to take account of the fact that part of next year's expenditure increases will come from local authority balances. [Laughter.] In most years, local authorities spend £500 million from balances. It is extraordinary how, whenever that is mentioned in the House, Labour Members laugh as though it had never happened. That is just another indication of how far removed they are from the real world.

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Similarly, in most years, local authorities achieve economies of between £200 million and £300 million. That, of course, helps to fund their spending levels. Both those elements can be added to the extra cash that I have announced.

Local Government Finance (Wales)
5.21 pm
The Secretary of State for Wales (Mr. David Hunt): With permission, Mr. Speaker, I should like to make a statement about my proposals for local government finance in Wales for 1992–93.
First, however, I would like to refer to the council tax. I am pleased to be able to tell the House that after consultation I have decided to create an additional band at the top end of the property banding scale in Wales. The additional band, band H, will cover houses in Wales worth more than £240,000. Houses in Wales in band H will be subject to a council tax of three times the amount for a dwelling in band A. I believe that that strikes the right balance, and will be seen as fair by the majority of council tax payers. 1 shall also publish a consultation paper on the internal management of local authorities next week. It will invite comments by the end of November.
To put my proposals for local government finance into context, let me refer to the excellent package that I provided for the current year, 1991–92. Total standard spending was increased by 8 per cent. compared with budgets, and aggregate external finance by 11·2 per cent. In short, the settlement more than adequately provided for inflationary and other pressures on spending. On 21 March, I announced an additional £300 million to fund the £140 general reduction in the community charge announced by my right hon. Friend the Chancellor of the Exchequer in his Budget statement.
Against that background, it is very disappointing that many Welsh local authorities failed to set reasonable budgets for the current year. They chose instead to impose what I consider unnecessary burdens on their charge payers. Overall, they set budgets that exceeded my plans by £76 million, or 3·1 per cent. Charges were therefore set at £33 above what was appropriate. That overspending reversed the trend of recent years, when Welsh councils set budgets closer to the Government's plans than their counterparts in England. It is important to bear that in mind in considering my proposals for this year's settlement. It is also important to recognise that the Government's success in bringing down the rate of inflation is easing the pressures on local government spending considerably, and that there is also scope for councils to increase their efforts to identify and implement efficiency savings.
Taking those and all other relevant considerations into account, I propose a level of total standard spending for 1992–93 of £2,639 million. That is an increase of £206 million on the level for 1991–92, and represents an increase of 8·5 per cent. over the equivalent figure for this year.
I propose to set the level of aggregate external finance for 1992–93 at £2,383 million. That is 6·7 per cent. higher than this year's level. The community charge for standard spending in Wales will therefore be £118—£3 lower than the actual average charge this year. That figure for total standard spending means that local authority spending in Wales will be £1,207 per charge payer, to which, on average, the charge payer will contribute £118. In the autumn, I will announce my decisions on the apportionment of AEF between revenue support grant, the distributable amount of national non-domestic rates and certain specific and supplementary grants towards current expenditure.

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Hon. Members will already be aware of the significant increases in local government spending in recent years. With the settlement that I am announcing today, spending will have risen by over 30 per cent. in only three years. That must be a solid foundation, but we are all determined to being inflation down, and it is important for local government to play its part in this by constraining its spending to the level that I have proposed.
The settlement figures for 1992–93 will be adjusted in due course to reflect the transfer out of local authority control of the six major higher education institutions in Wales, including the Polytechnic of Wales as from 1 April 1992. Provisional estimates indicate that TSS and AEF will be reduced by about £34·6 million on this acount, leaving the community charge for standard spending unchanged. I have already discussed that with the local authority associations, and I will of course take their views into account in reaching my decision on the amounts to be deducted.
As the House will know, the Local Government Finance and Valuation Bill—which is currently being considered in another place—considerably increases my charge-capping powers, and thus my ability to protect all charge payers in Wales from any irresponsible and excessive budgeting for 1992–93 and beyond. Although some Welsh councils have increased their spending by more than I thought necessary, I have not so far exercised my existing capping powers. I very much hope that it will not be necessary to use my enhanced powers in the future.
Local authorities, however, should be in no doubt—especially against the background of this settlement—of my determination for the resources that I provide for local government to be used for the benefit of charge payers, and not to fuel unnecessary spending. If it is necessary to cap councils to achieve that, they should know that I shall not hesitate to do so.
I believe that the settlement is fair and realistic. With inflation falling, it gives local authorities a further opportunity to demonstrate that they have the best interests of charge payers in mind in setting budgets in line with these plans, keeping community charges low and avoiding capping.
Mr. Barry Jones: Does the Secretary of State understand that last year's settlement was not an excellent package? His criticism of local authorities is unfair: he did not fund them adequately for this year. Does he accept that Welsh local authorities have made efficiency savings, and that the proportion of such savings is better than that of their English counterparts?
The right hon. Gentleman has threatened councils—possibly all the councils in Wales—with charge capping. I challenge him to name an irresponsible local authority in Wales. We look forward to his response.
Does the right hon. Gentleman appreciate that his statement leaves a serious gap between what councils need and the cash that he has made available? That will lead to the prospect of a decline in local services, with councils finding it difficult to meet their obligations under legislation.
I welcome the fact that the right hon. Gentleman has backed down on banding. Even if he is just tinkering at the edges, and despite other defects, an additional band is welcome. He may agree that the rich must pay their share,
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and it is clear that the Government have yielded to our pressure. Even so, how many homes worth £240,000 or more are there in Wales? There are not many in the valleys, and I do not want the right hon. Gentleman to assume that he has the balance right on banding.
Against a background of serious and rising unemployment, for which the right hon. Gentleman has some responsibility, councils in north and south Wales will find it harder to plan to rebuild their economies. Local authorities are making tremendous efforts to restore the economy of Wales. Does the right hon. Gentleman accept that the settlement lets down our go-ahead local authorities, many of which are Labour? Why do the Government never give sufficient grant to cover the proper level of pay awards and the cost of Government-inspired legislation which local councils must implement? I have in mind many new and major responsibilities, such as the development of community care, the Environmental Protection Act 1990, the food safety legislation and the national curriculum.
The Prime Minister's charter relates directly to the local government services involved in today's statement. Where is the new money in Wales for the Prime Minister's charter? We have had no information about new money. We have concluded that this is a pre-general election gimmick designed only to save Conservative seats, or what is left of them, in Wales.
Neither the local government settlement nor the Prime Minister's charter will solve the severe problems faced by the 70,000 people on housing waiting lists, the large number of crumbling schools in Wales and the numerous local roads and bridges that are in need of repair.
Why is the Secretary of State still refusing to listen to all those in local government who are telling him that the cost of administering the collection of the poll tax from those who pay only 20 per cent. far outweighs the cash received? The 20 per cent. rule harms the most vulnerable and disadvantaged, particularly the disabled, the young, the elderly and those who are studying.
Will the right hon. Gentleman take this opportunity to disown the remark made by his Parliamentary Under-Secretary, the hon. Member for Pembroke (Mr. Bennett), who alluded to homeless people with mental health problems as the modern equivalent of village idiots? That Minister should apologise for making that insensitive remark.
The people are tired of the Government's handling of local government finance in Wales. They have been appalled by the poll tax fiasco and are offended by the so-called council tax. They yearn for a general election so that they can usher in a Labour Government with just and practical policies.
Mr. David Hunt: The hon. Member for Alyn and Deeside (Mr. Jones) made 13 points—unlucky for him, fortunate for me, because I can answer all of them.
He said, first, that the level of spending was unfair. Is an increase of 30 per cent. in three years unfair? The hon. Gentleman is living in cloud cuckoo land.
He dealt, secondly, with efficiency savings. I pay tribute to local authorities in Wales for their willingness to consider the efficiency initiative launched by my predecessor, but I am disappointed that, in the report from my expenditure sub-group, only £7 million out of all that spending is offered in savings. That is hard to reconcile

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with the latest findings of the Audit Commission, which said that Welsh authorities have the potential for a further £32 million of savings.
Mr. Barry Jones: That is not realistic.
Mr. Hunt: The Audit Commission has not lost touch with reality, and the hon. Gentleman should reconsider that remark. The commission does a fine job, and people should heed its recommendations.
The answer to the hon. Gentleman's third point, about capping, is that I may be announcing my criteria for capping in due course. I do not, and I did not, have to exercise my powers this year, and I very much hope that I shall not have to do so next year.
The hon. Gentleman's next question was whether I thought there was a serious gap between the announcement and the level of funding. I repeat that I am allowing for spending per charge payer in Wales of £1,207, towards which, on average, the charge payer is asked to contribute £118, against a charge this year of £121. If there is a serious gap, it is in the hon. Gentleman's thinking. [Interruption.]
I have responded to consultations with the local authorities. I am still waiting for the hon. Member for Alyn and Deeside to consult on the future of local taxation. Is he yet prepared to withdraw his ridiculous proposal to bring back the unjust inequitable rating system, which the Leader of the Opposition condemned, and to introduce revaluation? Rates plus revaluation is a prescription that the Welsh people will reject.
The hon. Gentleman asked, sixthly, how many were in band H. I think it is about 1 per cent. of properties in Wales. He next asked what was the proper level of pay awards. What does he believe the proper level to be? I have allowed in the AEF increase 6·7 per cent. extra; in the TSS, 8·5 per cent.; and on budgets, 5·1 per cent. Towards the end of this year inflation will fall below 4 per cent. At that low level of inflation we shall see spending needs start, as at 1 April next year, and I have allowed for that.
Next, the hon. Gentleman asked whether I had allowed for sufficient new money. I have taken everything into account in announcing the settlement. I believe that the preliminary reaction of local authorities will be that they must now consult. This is a proposal for consultation, but it is a settlement better than expected.
The hon. Gentleman asked, ninthly, about collection costs, and suggested that it was a poll tax fiasco. I have been told by local authorities in Wales that, unlike the rest of the United Kingdom, they expect to collect 100 per cent. of what they budgeted to collect.
Mr. Barry Jones indicated dissent.
Mr. Hunt: The hon. Gentleman shakes his head in disagreement, but local authorities have told me that they expect to collect 100 per cent. of what they budgeted to collect—[Interruption.]—and instead of shouting at me, Labour Members should pay tribute to the hard work of local authorities, the staff of which are to be congratulated on what they have achieved.
The hon. Gentleman went on to say that the 20 per cent. harmed vulnerable people in Wales. He will be aware, in respect of the calculations, that those on benefit in Wales receive more than 20 per cent. of the community charge that they must pay.
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In making his next point, the hon. Gentleman misquoted my Parliamentary Under-Secretary who, it transpires, was announcing an extra £100,000 for the homeless.
The hon. Gentleman went on to say that it was a pre-general election gimmick. I suppose that that sums up his attitude to the settlement, because it is better than expected, because it is a good deal for Welsh charge payers and because we shall get the reward for that at the next general election.
Several Hon. Members rose—
Mr. Speaker: Order. I draw the House's attention to the fact that there are 36 amendments to the Ports Bill and eight consolidation measures. Will hon. Members ask brief questions, because we are getting rather bogged down?
Sir Anthony Meyer: Does my right hon. Friend share my sense of relief that there are so few English Members present in the Chamber? It would be most unfortunate if news were to leak out of the exceptionally favourable statement that my right hon. Friend has been able to secure for Wales and the extraordinary clout that he has exercised in the Cabinet over this settlement and the preservation of the Royal Welch Fusiliers. Is he aware that his efforts are very much appreciated and have resulted in an excellent by-election win in Clwyd and another one to come in Rhuddlan?
Mr. Hunt: It has been a good day for Wales, and I congratulate all hon. Members who participated in the campaign to recognise the independence, integrity, tradition and history of the Royal Welch Fusiliers and the Royal Regiment of Wales. It must be athwart logic for the Opposition to suggest that the community charge settlement is a bad settlement when, under this spending, the community charge will be £118 whereas at present it is £121 in Wales.
Mr. Richard Livsey: I take an alternative view about the closure of Army headquarters, Wales. That is not such good news.
Mr. Speaker: Order. That is for another occasion.
Mr. Livsey: Does the Secretary of State agree that an 8·5 per cent. increase sounds reasonable in general terms but, when one looks at the requirements of new legislation such as the Children Act 1989, the Environmental Protection Act 1990, the national curriculum and many other such measures, one sees that it is inadequate to cover them. Given that there will be a reduction in services for the reasons that I have stated, surely the Welsh Office should apply the Prime Minister's citizens charter and censure itself in this matter.
Mr. Hunt: Not at all. I believe that the hon. Gentleman has misunderstood the settlement. Last year, I announced a settlement of £2,433 million, and this year I have announced a settlement of £2,639 million. That is an increase of £206 million. As I have already said, that is £1,207 for every charge payer in Wales, towards which the charge payer will contribute £118. That is a good deal by any marker.
Mr. Ian Grist: I congratulate my right hon. Friend on his statement. A 30 per cent. rise in expenditure over three years is a matter for concern as for congratulation when one is thinking in inflationary terms.

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To get on top of inflation, should we be considering putting out even more services to private tender so that we obtain value for money and better performances?
Mr. Hunt: I am sure that my hon. Friend is right. We must target this enormous sum—£1,207 per charge payer—more effectively in order to get value for money. We should apply the citizens charter so that the public have the service that they have a right to receive.
Mr. Alan Williams: Will the Minister confirm that, based on his own figures, the incurease in resources available this year will be not £200 million but £130 million? That is an increase not of 8·5 per cent. but of 4·9 per cent., which is less than the rate of inflation and substantially lower than the rising costs facing councils. Will he confirm that, out of that low and inadequate settlement, councils are expected to meet extra statutory duties? Let the right hon. Gentleman look at his own figures, and he will see that my analysis is correct.
Mr. Hunt: I hope that the right hon. Gentleman will look at the figures a little more carefully. He will then see that the increase in revenue spending is 8·5 per cent. over the settlement that I announced last year, and 5·1 per cent. over the budget of local authorities this year. With inflation falling below 4 per cent. by the end of the year and with low inflation predicted for next year, the right hon. Gentleman will recognise that it is a good settlement for Wales.
Mr. Gwilym Jones: I pay tribute to my right hon. Friend's effective leadership of a unique all-party campaign to preserve that fine regiment, the Royal Welch Fusiliers. I welcome my right hon. Friend's statement. He provides for spending of more than double the rate of inflation, which should be more than adequate. Accordingly, will the community charge reduction of £140 be revalued? In line with the principles of the citizens charter, will he spell out as soon as possible the parameters for capping councils so that citizens may see the protection working?
Mr. Hunt: I appreciate my hon. Friend's comments and I pay tribute to the part that he and other colleagues and other hon. Members have played.
It is wise to recollect that, this time last year, we were talking about a community charge of £232. I predicted a settlement of £228. Since then, my right hon. Friend the Chancellor of the Exchequer announced in his Budget—and I was able to announce it—an extra £300 million. I can confirm that that money is in the settlement. The £140 reduction remains and, instead of a community charge of £232, the reduction should mean a community charge of £118.
Mr. Gareth Wardell: May I return to the fifth question asked by my hon. Friend the Member for Alyn and Deeside (Mr. Jones)? Will the Secretary of State answer that question, and not with the answer that he gave previously? My hon. Friend the Member for Alyn and Deeside asked how many houses in Wales have a value of over £240,000. Will the right hon. Gentleman tell the House what will be the yield from that tax as a percentage of total revenue of local authorities, net of the collection charge for band H?
Mr. Hunt: I said that about 1 per cent. of properties in Wales are affected by band H, so I answered the question. When arguing for this, some local authorities said that it would make the council tax more equitable, and that is what it has done.
Mr. Ieuan Wyn Jones (Ynys Môn): The Secretary of State will be aware that one of the reasons why many councils in Wales increased their poll tax last year was that local authorities did not regard his settlement as being as generous as he announced to the House, much because of the points made by the right hon. Member for Swansea, West (Mr. Williams). The cash increase given to local authorities will be substantially lower than he has announced today. For example, in order to produce a standstill budget and to account for the increases in spending through legislative changes, Gwynedd county council had to increase its poll tax, not giving any benefits to Welsh poll tax payers. Bearing that in mind, does the right hon. Gentleman regard his extra capping powers as totally unnecessary?
Mr. Hunt: No. Parliament believes, and I agree with it, although it is being considered in the other place, that it is right to extend my powers to cap. I hope that it will not be necessary for me to use those powers. On the hon. Gentleman's first point, I wonder how many people in Wales realise that the settlement that I have announced today will mean that their local authorities will be spending £2,639 million—£1,207 for every charge payer in Wales. That is a marvellous settlement. We have to ensure that there is value for money and that that money is properly targeted.
Mr. Alan W. Williams: Since he is an expert on the poll tax, will the Secretary of State give us an estimate of how much the poll tax fiasco has cost Wales? We know that estimates in Britain are about £14 billion. Also, the preliminary reports on the census show that about 1 million people in Britain are missing from the registers. How many are missing in Wales thanks to the poll tax? How will the Minister make those estimates?
Mr. Hunt: I do not know whether the hon. Gentleman was present when I explained that I have been told by local authorities that they expect to collect 100 per cent. of what they have budgeted to collect. That is a remarkably good result, and far better than in England and Scotland. It is a great tribute to all those in Wales involved in local government.
I have now calculated that, with the community charge reduction scheme and with benefits, the average community charge payment in Wales this year is £78. I should not have said that loudly, in case there are any English Members present.
Mr. Huw Edwards: Does the Secretary of State accept that his statement will give no reassurance to local authorities in Wales which are facing a massive housing crisis, that, even in the Conservative-controlled borough of Monmouth, homelessness is set to double this year and that local authorities such as that in Monmouth are embarrassed at their incapacity to respond effectively to that growing problem?
Mr. Hunt: I deplore the language used by the hon. Gentleman. I hope that he will recognise that Tai Cymru now expects to build a record number of homes—3,300

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this year, which is a remarkable result—and that everyone involved in Housing for Wales should be congratulated on that. If the hon. Gentleman studied the subject, he would realise that the individual standard spending assessments are not being published today—they are a matter for my statement in the autumn.
Mr. Jimmy Hood: On a point of order, Mr. Speaker. Will you tell the Secretary of State that "homelessness" is not an unparliamentary word?
Mr. Speaker: I do not think that that matter arises from the statement.
Mr. Win Griffiths: Can the Secretary of State tell us how much of the money announced today is to be set aside for disabled people? I am receiving details of more and more cases related to education. Because of the large amount of money—sometimes in excess of £50,000—which enables a student to take a course at a college of further education, the authorities are having problems finding the money. As that money gives the opportunity of a lifetime to such students, the Welsh Office should make special extra provisions because the needs of those students go way beyond those covered by any settlement based on inflation.
Mr. Hunt: I recognise the needs of disabled people in Wales and, as the hon. Gentleman will know, we have introduced a number of initiatives. I believe that the level of spending—2,639 million—is appropriate, bearing in mind all those pressures.
Mr. Paul Flynn: Will the Secretary of State promise us that he will not this year again impose on Welsh charge payers the deranged system that he used last year for calculating individual bills, which resulted in families receiving bills that were sometimes 50 per cent. higher than those of their neighbours for no reason other than they were based on the old rating system? Can we have a system this year which is fair and rational?
Mr. Hunt: I remind the hon. Gentleman that the system that I introduced last year was not a new one, but followed closely the principles for the previous year which had been agreed with the local authorities. The difference was that provided substantial extra money for the community charge reduction scheme, which was targeted especially on those who historically had a low level of rates. Clearly, I am now considering how best to progress with the community charge reduction scheme, which will, of course, continue. I shall be announcing details in the autumn.
Mr. Donald Anderson: The Secretary of State will be aware that, even after issuing 300,000 court summonses in the past financial year and thus criminalising so many of the Welsh population, Welsh local authorities have so far been able to collect only 94 per cent. of the sums due for the poll tax in the financial year 1990–91. To what extent has that shortfall in the collection of the poll tax—6 per cent. for the year 1990–91—been taken into account in the current settlement?
Mr. Hunt: I have already mentioned that the 94 per cent. was the figure that local authorities budgeted to collect, and they have recovered 100 per cent. of what they budgeted for. At the start of the year, local authorities said that they would recover 94 per cent. of the community
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charges in their area on average, and they have recovered 100 per cent. of that figure. That is a cause for commendation rather than for the language used by the hon. Gentleman.
Mr. Rhodri Morgan: Does the Secretary of State agree that his statement has already been outdated by the Prime Minister's announcement yesterday about the citizens charter? How will a citizen be able to sue a local authority to get a refund for a failure to provide a service within a reasonable time or to provide a service of a reasonable quality, such as the provision of speech therapists for children with learning handicaps or the provision of a classroom without a leaking roof? Does that not also imply a right for the local authority to sue the Welsh Office for a refund to provide the additional capital expenditure for the roof to be repaired?
My own local authority in South Glamorgan has an estimated backlog of £30 million for school maintenance. The Audit Commission has commented on that as a major problem, so how does the Secretary of State square the statement today with the additional rights being conferred on the citizen to demand and obtain a refund and a guarantee that a sufficient amount of capital expenditure will be provided to ensure watertight schools and an adequate supply of speech therapists, and to fulfil other requirements?
Mr. Hunt: The hon. Gentleman criticises the Audit Commission, but he and the hon. Member for Cardiff, South and Penarth (Mr. Michael) should talk to each other; otherwise, they will both be defeated at the next general election and Cardiff will return to all-Conservative representation. I must say that of course we have taken into account all the appropriate spending demands in reaching the settlement. A total of £1,207 for every charge payer in Wales is a good spending level, towards which the chargepayer will on average contribute £118. The bad news for Wales is that the Labour party is the party of high spending and high taxes, and the people of Wales have every right to be reminded of that at the next election.
Mr. Alun Michael: In the Secretary of State's statement and answers today, there has been no word of apology for the immense burden that his inefficient and costly poll tax has placed on local authorities in every part of Wales. My hon. Friend the Member for Swansea, East (Mr. Anderson) rightly took him to task for the cost of collection of that tax. That burden still rests on their shoulders, and does not the Secretary of State think that an apology is due?
The Secretary of State made no apology for the theft of our colleges, but gave us the news that he will take away the cash as well as the functions. Has he no word of regret? Apparently, he has no word of apology for the homeless whose lives have been ruined by the Government. Does not he accept that the poll tax can go down only if the grant goes up faster than the standard spending assessment? He said in his statement that the percentage increase in the SSA is greater than the aggregate external finance. Therefore, he must know that he is pushing up the poll tax. Does he accept that his statement fails to recognise the fact that last year's local authority budgets were realistic and modest, at about 2 per cent. above SSA? He must know that, this year, keeping to his target figures for spending and for poll tax levels means a cut in real terms and in real services.

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The right hon. Gentleman gave no answer when we asked where was the cash to meet the additional burdens loaded by the Government on to Welsh local authorities or to meet the introduction of the council tax. Does he not also accept that the recession and unemployment have placed an extra burden on local authorities in Wales? He gives them no scope to expand their role in economic development or to take new initiatives. Will he reconsider, and give them the extra cash for that purpose?
I ask the Secretary of State for two specific assurances. First, will he fund the full cost of new obligations in community care in addition to the funds he announced today? Secondly, will he fully fund in revenue and in capital any fresh obligations placed on local authorities to provide secure accommodation for young people on remand? We have been told that, in both those cases, the cash will be allowed for in the formula. There is no cash for either in today's settlement, any more than for all the other obligations that the Government have placed on local authorities. In summary, will the Secretary of State please take away this inadequate statement and think again?
Mr. Hunt: I am grateful to the hon. Gentleman for his six pages. First, we shall make a statement shortly about secure accommodation—
Mr. Michael: And the expenditure?
Mr. Hunt: And the expenditure. Secondly, on community care, of course I have taken into account in deciding the settlement the increased pressures caused by the need to prepare for the new community care regime.
The hon. Gentleman takes me to task on a number of percentages. Let me repeat them again. We are talking about TSS—total standard spending—of £2,639 million, an 8·5 per cent. increase on the settlement and a 5·1 per cent. increase on budgets. I am talking about aggregate external finance of £2,383 million—a 6·7 per cent. increase on the settlement.
I ask the hon. Gentleman to study the figures again. He will find that the settlement is pretty fair. The only message coming from the Opposition is, "Spend, spend, spend." We need not only a realistic view of spending, which the Government provide, but a commitment to the citizens charter, which will give the public the right to the service that they deserve. All that the hon. Gentleman offers is high spending and high taxes. I reject those. The only apology that I make is to my hon. Friends who represent English constituencies, for having produced a settlement by which the community charge on standard spending in Wales is only £118.

Local Government Finance (Scotland)
6 pm
The Secretary of State for Scotland (Mr. Ian Lang): With permission, Mr. Speaker, I should like to make a statement about my proposed local authority settlement for Scotland for 1992–93. However, before giving details of the settlement, I want to refer to one aspect of the consultation process on the council tax which has recently been completed.
As my right hon. Friend, the Secretary of State for the Environment told the House earlier today, the Government intend to proceed with legislation along the lines proposed, with a view to bringing the council tax into operation, both north and south of the border, by 1 April 1993. Subject to the enactment of the Local Government Finance and Valuation Bill, the task of valuing properties for the purpose of the tax will be carried out in Scotland by local assessors working under the direction of the Commissioners of the Inland Revenue.
On the basis of the responses to the consultation paper, I have decided, in conjunction with my right hon. Friends the Secretaries of State for the Environment and for Wales, to create an additional—eighth—band. This new band will cover properties in Scotland worth more than £212,000. Houses in this new band H will be subject to a council tax of twice the amount in band D.
Before coming to my proposals for 1992–93 Local Government Finance, I remind the House of the excellent settlement that my predecessor announced for the current year, 1991–92. Aggregate external finance was increased by 10·4 per cent. The settlement represented an excellent package, a substantial real increase which more than adequately provided for inflation and other pressures on spending.
I turn now to my proposals for the Scottish aggregate external finance settlement for 1992–93. In considering the level of the settlement I have as usual taken into account a number of factors. First, I have had regard to the views which the Convention of Scottish Local Authorities has expressed in the expenditure committee of the joint convention and Scottish Office working party on Local Government Finance and at the meeting which the Convention had on 8 July with the Minister responsible for Industry and Local Government, my hon. Friend the Member for Eastwood (Mr. Stewart).
Secondly, I have taken fully into account the additional spending pressures facing local authorities next year arising both from new burdens, such as preparation for the council tax and the second phase of care in the community, and from transfers of responsibilities from central to local government.
Thirdly, I have taken into account the scope which exists for Scottish local authorities to make efficiency savings. I think that much more needs to be done on this front. In that context, I welcome the establishment of a joint COSLA and Accounts Commission working party to examine value for money issues.
Fourthly, I have had regard to the general economic background and in particular to the Government's success in bringing down inflation. This will obviously reduce considerably the pressures on local government spending.
Fifthly, I have taken into account the fact that spending by Scottish local authorities is over 30 per cent. higher on comparable services than that by authorities in both

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England and Wales. I see no reason why central taxpayers should continue to support excessive expenditure on that scale.
Having regard to all those factors, I propose that basic aggregate external finance for 1992–93 should be set at £5,122·5 million. That is an increase of £296·5 million—6·1 per cent.—over the comparable figure for the current year. In order to produce that level of settlement I have had to top up the formula consequentials of the English settlement by £50 million. That means that the resources that I have available next year for other Scottish Office programmes will be correspondingly reduced.
An additional sum of £7·5 million will be provided by the Exchequer to fund the final year of the safety net. So overall, the settlement amounts to a total increase of £304 million. Proposals for the distribution of AEF to individual authorities will be announced in the usual way in the autumn.
In reaching the settlement, I have assumed that local authorities will contribute £11·5 million to the third year of the policy of harmonisation of non-domestic rate poundages north and south of the Border.
This represents a realistic settlement, especially in the light of the fall in inflation. If local authorities budget responsibly there should be no reason why community charge levels need increase significantly next year. But if authorities do not budget responsibly, I shall not hesitate to use the new strengthened capping powers which, subject to the enactment of the Local Government Finance and Valuation Bill, I shall have available. I intend to announce provisional capping criteria for next year in the early autumn, so that local authorities can take them into account in their budget setting.
I commend the settlement to the House.
Mr. Donald Dewar: I start by welcoming the additional banding for the new rating system, although, as I am sure the Secretary of State will understand, we shall want to look carefully at the figures. Band G looks remarkably wide.
I am sure that the Secretary of State will accept that, having been forced to admit that the Labour party was right about the poll tax and the property tax, he is once again in full retreat. On the day on which the new system was announced in the House, the right hon. Gentleman told me:
"it is right to have a system where the range will vary no more than two and a half times between the top band and the bottom band".—[Official Report, 23 April 1991; Vol. 189, c.930.]
During Scottish questions on 15 May the Under-Secretary of State said:
"owners in the top band will pay about two and a half times the amount that owners of properties in the smallest band will pay, and that is perfectly fair."—[Official Report, 15 May 1991; Vol. 191, c. 270.]
Will the Secretary of State tell us what the equivalent figure is now that the additional band is in place? If the system as it stood was perfectly fair why has he been forced to make an announcement today? I regret to say that the Under-Secretary of State gloried in the inequality of the proposal. He point blank refused to concede the case for change. The announcement is a step forward, but why did it take so long for Ministers to accept that on this issue the Labour party got it right?
I cannot share the Minister's optimism on the aggregate external finance figures. I understand that last year's figure
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was £4,353 million, and for a fair comparison we must add to that the cost of this year's £140 headline poll tax reduction scheme. That produces a figure of £4,841 million for 1991–92 as a starting point for the comparison. The increase for 1992–93 is thus only £281 million in cash terms, and if we apply an inflation figure of 6·5 per cent.—that is realistic, given current pay settlements and the growing responsibilities of local government—we see that, in real terms, there will be a cut.
The Secretary of State speaks of an increase of 6·1 per cent., but however he may dress the figures up, the increase for England was 7·2 per cent., as was announced earlier this afternoon. It is impossible to draw conclusions on local taxation levels until the grant-aided expenditure assessment is known, but what matters to the poll tax payer is the gap between aggregate external finance and the sum that has to be raised by the local authority.
Will the Secretary of State acknowledge that, in setting grant-aided expenditure for next year, he must take into account the adjustment of 1·5 per cent. for under-provision this year because of pay and price increases, the real cost of local government inflation, the cost of running in the new taxation system and the disastrous shortfall in poll tax revenue? Does the right hon. Gentleman accept that in order to maintain services it looks as though the increase in budgets set by local authorities will have to be an aggregate of about £500 million. Does the right hon. Gentleman not realise that the best way of helping to cope with the poll tax chaos would be to abolish the 20 per cent. rule now?
I am sure that the right hon. Gentleman has studied the citizens charter carefully. Does he recall that it promises increased powers for the Audit Commission? Would it not therefore be sensible to listen to the Audit Commission's clear statement that the cost of collecting the 20 per cent. payments is two and a half times greater than the net yield to the Exchequer? The 20 per cent. rule should go now. If we are to take the citizens charter seriously, surely there is an unbreakable case for abolishing the 20 per cent. rule. Would it not be sensible for the Government to pay the money spent on the £140 poll tax reduction scheme across the board, and not to default on the grounds that individuals have reneged, or have been unable to meet their responsibilities?
Does the Secretary of State remember that, last week, the Minister for Local Government and Inner Cities gave an assurance that, in finalising grant payments, consideration would be given to basing the community charge grant on an authority's original payment assumption rather than on its actual collection rate payments? Is that still on the agenda?
Yesterday, we had a tidal wave of rhetoric about better public services and the citizens charter. Does the Secretary of State accept that, however good the intentions, if the resources are not provided, there will be nothing of substance? In the light of today's announcement, the citizens charter looks ever more like an exercise in window dressing.
Mr. Lang: I am grateful to the hon. Gentleman for welcoming my announcement of the change in the banding arrangements, although I do not know why he thinks it so remarkable that, following consultation—which was the basis of the publication of our proposals—we listened to the representations that we received and reached the view that it was sensible to add another band to the existing

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bands for valuation purposes. The effect will be to change the difference between the tax bills at the top band and the bottom band from 2·5 times to three times. The effect will be that the cost in respect of a property in the top band will be roughly twice that for an average-value property and about three times that for a property in the lowest band. The hon. Gentleman asked about the consultation process, and I should have thought that that was exactly what consultation was all about.
The hon. Gentleman also asked about the community charge reduction scheme. That, too, will be able to continue forward into next year. The purpose of the scheme is to reduce the burden placed on individuals as a result of high spending by local authorities. It is therefore relevant that the payments in respect of that should relate to the payments made by those local authorities.
Using his own arithmetic, the hon. Gentleman tried to convert an increase in real terms into a cut in real terms. He should look at the figures that I have given him. An increase of 6·1 per cent. is a real increase, over and above the rate of inflation. The hon. Gentleman also compared the figures in Scotland with the figures in England. I must point out to him that, on 1990–91 figures, the local expenditure level per head in Scotland is £1,309, compared with £988 in England. In other words, spending in Scotland is no less than 30 per cent. higher than in England and Wales. The local authorities should reflect upon that. If they could get their spending down to that of comparable authorities in other parts of the country, the burden placed on the community charge payer as a result of local government spending would be substantially reduced.
Sir Hector Monro: I thank my right hon. Friend for his announcement but, in allocating resources, will he bear in mind the fact that running services and building houses in rural areas is very expensive and try to weight payments to local authorities in that position? My right hon. Friend said that he would transfer £50 million to local authorities from his own budget, and that gives me some concern. Can he assure me that the momentum on constructing the M74 and on improving the A7 will not be lost as a result?
Mr. Lang: I am grateful to my hon. Friend for his comments. When it comes to the allocation of grant to each individual local authority, I shall certainly bear in mind what he said about rural areas. It is certainly true that regions and districts in rural areas have been more successful in collecting community charge than many in urban areas. I also note what my hon. Friend said about the high priority that he attaches to the roads expenditure programme and, in particular, to the M74. However, I am sure that he would not wish me to anticipate decisions that must be taken later in the year.
Mr. Malcolm Bruce: Does the Secretary of State accept that the fact that he has had to review the banding arrangements for the council tax before it has even been implemented emphasises, first, what an inflexible tax it is, secondly, that it lacks natural indexation and, thirdly, that he should have adopted a local income tax in the first place? The right hon. Gentleman is not satisfying the House with his explanation of why Scotland should get 6·1 per cent., England 7·2 per cent. and Wales
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8·5 per cent. Given the extra burdens that are being placed on local authorities, will not the proposals inevitably put a squeeze on local services and lead to cuts because the Government propose to poll tax cap those that try to find the money elsewhere? When will the right hon. Gentleman explain to us what cuts will take place elsewhere in the Scottish Office to fund the £50 million that he has had to transfer? Are not we being cut both ways?
Mr. Lang: I suppose that, if one is a Liberal Democrat, one may manage to reach that conclusion, but it bears no relation to the truth. The whole point of the consultation process is to hear views and then to react to them and, so far from showing inflexibility, we are demonstrating flexibility by adopting the change in the banding system.
The hon. Gentleman asked about the £50 million transfer from the block to the aggregate external finance settlement. It is true that that diminishes the extra resources that we shall have available for increased spending in the next public expenditure round, but it does not in itself constitute a cut.
The hon. Gentleman made the comparison between Scotland and England. It is true that the settlement in Scotland is smaller, as a percentage, than in England and Wales, and that is because spending in Scotland is 30 per cent. higher than in England and Wales. I repeat that spending per head in Scotland was £1,309 in the year 1990–91, compared with £988 in England. If spending per head in Scotland were closer to the levels in England, the settlement in Scotland as a percentage could be considerably higher.
Sir Nicholas Fairbairn: In presenting this excellent increase in our benefits in Scotland, will my right hon. Friend remind all those on the Opposition Benches—hon. Members representing all parties—that all that that they have to offer the people of Scotland are increased and multiplied taxes and reduced benefits, as that that cannot be said too often?
Mr. Lang: I am grateful to my hon. and learned Friend. I am sure that he will agree with me that it is remarkable that, in the current year, AEF per adult is 22 per cent. higher in Scotland than in Wales and no less than 47 per cent. higher than in England, and that aggregate grants to local authorities have increased by 6·4 per cent. in the past five years. No one can accuse the Government of not funding local government spending in Scotland adequately.
Mr. Robert Hughes: When will the Secretary of State recognise that he is not engaged in an arid mathematical exercise but is dealing with the real needs and real lives of people in Scotland? He says that £50 million will be transferred. Can he guarantee that that transfer will in no way damage housing, especially in Aberdeen and the north-west of Scotland, where there is a great deal of pressure?
When the right hon. Gentleman eventually announces the distribution, will he take into account the strong representations from Grampian regional council to the effect that it is not getting a proper share of roads expenditure? Is the right hon. Gentleman aware that, in the Grampian region, where the headline poll tax is less than it was last year, people on rebates, at the lower end of the scale, are paying more in cash terms this year than

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last because the Government have not properly addressed the support system for them? Will the right hon. Gentleman consider those points urgently?
Mr. Lang: The hon. Gentleman asked about the £50 million transfer. I can confirm that the existing housing programme will not be affected because the resources will come from the increased resources that would otherwise have been available to increase spending in Scotland next year.
We do not apportion spending on roads on a regional or district basis; we assess the needs of the roads programme across the whole of Scotland. If the hon. Gentleman studies the arithmetic, he will see that there has been a dramatic increase in real terms in roads expenditure under this Government, compared with a 30 per cent. cut under the previous Government.
The hon. Gentleman asked about rebates for Grampian residents. I can only say that their rebates would be worth more to them, and that the net cost of their poll tax would be less, if Grampian had not increased its poll tax to such a large extent.
Several hon. Members rose—
Mr. Speaker: I shall endeavour to call those hon. Members who are rising but I again remind the House that we have 36 amendments to the Ports Bill and eight consolidation measures to consider. I therefore ask for single questions because that will help us to get on.
Mr. Dennis Canavan: Bearing in mind the fact that members of local authorities who incur irresponsible or reckless expenditure can be surcharged and banned from public office, can we now expect the entire Cabinet, including the Secretary of State for Scotland, to be surcharged and banned because of their collective responsibility for the most blatantly foolish and expensive blunder ever perpetrated in the history of local government—the poll tax? Does the right hon. Gentleman accept that the poll tax has already cost more than £1,000 million to administer and collect and that the Government should abolish it now rather than waiting until 1993—especially in Scotland, where we had to suffer it a year earlier than England and Wales?
Mr. Lang: As the hon. Gentleman knows, we got rid of the domestic rating system a year earlier in Scotland than in England and Wales. Moreover, the cost of administering the community charge would have been considerably reduced, and the efficiency of the community charge considerably increased, if hon. Members such as the hon. Gentleman and Scottish National party Members had not been so grossly irresponsible as not to pay their own poll tax and to discourage others from doing so.
Mr. Michael J. Martin: The Secretary of State referred to a meeting that the Under-Secretary of State had with the convention of Scottish Local Authorities. The Secretary of State will be aware that Strathclyde has a shortfall of £70 million in spite of the fact that it has done everything to gather in the poll tax. Will responsible authorities like Strathclyde be further penalised? The Secretary of State knows full well that, because of high unemployment, people in my constituency and in many others look to the local authorities to employ labour. There is even more pressure on those authorities than there was 10 or 12 years ago.
Mr. Lang: I acknowledge that Strathclyde has made some efforts to contain its expenditure. Nevertheless, it forms part of the overall problem that we face in Scotland of very substantial local authority increases. Over the past five years, local authority current expenditure has increased by 8 per cent. in real terms. That kind of real-terms increase creates massive problems. However, we will consider the apportionment of resources later in the year and will take account of the client group approach developed in committee, in which COSLA is represented.
Mr. Harry Ewing: Why does the Secretary of State for Scotland always fare worse than the Secretaries of State for Wales and for the Environment in negotiations on behalf of the spending powers of local authorities? Did I hear the Secretary of State correctly? Is it really his ambition as Secretary of State for Scotland to reduce the spending by Scottish local authorities to the level of English and Welsh local authorities? If that is his purpose in Cabinet, the quicker he tells the Scottish local authorities and the people of Scotland, the better. The effect that that will have on services in Scotland will be absolutely disastrous.
Mr. Lang: Having served as a Minister, the hon. Member for Falkirk, East (Mr. Ewing) must be aware that what matters is the quality of services provided. I believe that it is possible to provide services in Scotland that are comparable with those in England and Wales at far less cost than is being charged at the moment. I do not believe that services in Scotland are 30 per cent. better than services in England and Wales. That is why spending per head in 1990–91 in Scotland was £1,309 compared with £988 in England. That is not a defensible difference, and it cannot be accounted for simply because of the difference in the quality of services.
Mr. Jimmy Hood: The Secretary of State has today announced a cut in real terms. I remind him that I wrote to him three weeks ago about cuts in the infrastructure in my constituency and referred to the Stonehouse by-pass. Will the Secretary of State's announcement today make that bypass more or less likely?
Mr. Lang: The Stonehouse bypass will be covered by capital expenditure, which will he announced later in the year, and not by this settlement.
Mr. Tom Clarke: The Secretary of State said that adjustments would have to be made in other aspects of the Scottish Office budget to meet the settlement. Precisely what will those adjustments involve? Can he assure us that they will not affect community care or safety in the streets? The Secretary of State paid tribute to Strathclyde, which has tried to balance its budget in the face of overwhelming odds. Will he therefore encourage the Scottish Tory party to withdraw the appalling leaflets that it published and included in free newpapers distributed by people on poverty wages, which blame Strathclyde for the lack of policemen, something which is entirely the Government's responsibility?
Mr. Lang: The shortfall in police numbers in Strathclyde is entirely at the discretion of Strathclyde regional council. We have increased the proportion of central Government funding and have made resources available for the council to increase its resources in that respect. With regard to adjustments to the rest of my

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spending programme as a result of the £50 million that I have added to the local government settlement, that will reduce the capacity to increase spending in some other areas. However, I can assure the hon. Gentleman that, with regard to community care, the additional costs falling on local government next year as a result of phase 2 of community care have been taken into account in the settlement.
Mr. Gordon McMaster: Is the Secretary of State aware that the poll tax is suffering a slow, lingering, painful death, and that his statement today only adds to that pain? How does he justify the fact that senior citizens who do not receive income support are being asked to pay more poll tax this year than they paid last year? How can he explain to that group of people, whose only crime has been to contribute to a wee works pension, that they had been made worse off under the community charge reduction scheme while he has been made better off and they must fork out the extra VAT to pay for that?
Mr. Lang: The increased settlement was 10·4 per cent. last year, and that was substantially above the rate of inflation. The situation has arisen because local authorities have chosen to increase their spending above the rate of inflation and thus to increase the burden on their residents. The solution for the residents is to elect a council that will control its expenditure and reduce the burden on the residents.
Dr. Norman A. Godman: Many poor people in my constituency would benefit financially if the 20 per cent. poll tax contribution were abolished forthwith. Thousands of people in my constituency receive social welfare incomes. Will the Secretary of State consider most sympathetically the needs of Inverclyde district council in respect of his comments about allocation allocations to councils? We face many problems in Inverclyde, and I believe that Inverclyde district council is worthy of sympathetic consideration in view of the massive problems with which it is seeking to deal at the moment.
Mr. Lang: That point will have to be considered together with other local authorities later in the year. With regard to the point raised by the hon. Member for Greenock and Port Glasgow (Dr. Godman) about the 20 per cent. rule—a point that was also raised by the hon. Member for Glasgow, Garscadden (Mr. Dewar), but which I am sorry that I did not respond to earlier—we have given that careful consideration.
The hon. Member for Greenock and Port Glasgow will recognise that the community charge operated as a package scheme. It had a funding arrangement, a rebate, transitional and community charge reduction schemes, and income support was increased to take account of the 20 per cent. balance required from those on maximum rebate. We have developed a new and different scheme in the context of the council tax. Resources have been made available to people on maximum rebates and irresponsible non-payment campaigns and, in some cases, less than enthusiastic pursuit of non-payers by local authorities, have led those people into difficulties.
Mr. Dick Douglas: Are the Scottish assessors happy to work under the direction of the Inland Revenue commissioners? What percentage of the new council tax will be derived from the new band that the Secretary of State has introduced? Will he give us some idea of the gearing effect on the poll tax in Scotland? What percentage of total local authority finance is likely to come from the poll tax? In view of the letter that the Minister sent me about the collection of the tax and cost-effectiveness, will the Secretary of State consider the cost-effective collection of the tax and abolish attempts by local authorities to collect the tax from people on income support and those in full-time education? That cannot be cost-effective by any standards.
Mr. Lang: The answers to the hon. Gentleman's four questions are: yes, Sir; 1 per cent.; 11·3 per cent.; and no, Sir.
Mr. Alistair Darling: Will the Secretary of State explain how the new banding will work in a city like Edinburgh unless he agrees to single dwelling evaluation? In the Royal Mile in Edinburgh which has a palace at one end, a castle at the other and quite low-value houses in the middle, would those houses be in band H, band A or somewhere in between?
Mr. Lang: The scheme will work just as well in Edinburgh and in exactly the same way as it will in the rest of Scotland. The assessors will decide in which band the relevant property should be placed, and it will be open to the householder to appeal against that. The cost to be borne by residents in Edinburgh will depend on the policies of Edinburgh district council. When I reflect on the fact that that council's expenditure has risen by 70 per cent. since 1984—twice the rate of inflation—and that its staffing has increased by 40 per cent. over that period, I cannot help feeling a great deal of sympathy for the residents of Edinburgh under a Labour administration.
Mr. Nigel Griffiths: Does not the Secretary of State realise that this £5·1 billion settlement means that next year, for the ninth year running, the Government's support for Lothian and Edinburgh will be bottom of the Scottish league table of support for regional councils, and that next year it is likely that spending in Edinburgh will continue to be below the Scottish average for the eighth year running? The Secretary of State is making sure that people in his constituency receive free bus passes, so why is he so much against free bus passes for senior citizens and disabled people in my constituency?
Mr. Lang: That is absolute nonsense. Lothian region had an increase in its revenue support grant of 13 per cent. last year, which is more than double the present rate of inflation. Of course, Lothian residents are quite happy to contend with the fact that the number of staff employed by Lothian region has risen by no fewer than 520 in the past three years, including 62 social workers and 31 non-teaching staff. However, this year 50 teachers have been sacked against that background. The residents of Lothian region should reconsider who should be running the regional council.
Mr. John Home Robertson: Why is the Secretary of State so determined to keep his party's discredited and demented poll tax system in operation until 1993? He managed to impose it a year early in

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Scotland. Would it be beyond the wit of the Scottish Office team to get rid of it a wee bit earlier in our part of the country? Will he please address the situation in Lothian regional council and the grotesque distortion of the way in which revenue support grant and other Government support has been directed to that region and the districts within that region? Has not that unfair distribution of grant led to hardship, difficulties and cuts in Lothian this year? Will he please address that point?
Mr. Lang: The hon. Gentleman asked me to bring in the council tax a wee bit earlier in Scotland. Obviously, it cannot be brought in a wee bit earlier; it can be brought in either a year earlier or a year later. It must be brought in on an annual basis as compared with the rest of the country. In fact, 1993 is the earliest realistic date on which any change in the community charge could be contemplated. Anybody who suggests that such changes of any form could be introduced earlier is talking absolute nonsense.
I have already outlined the increase in staffing numbers in Lothian. Lothian reduced its charge by £37 million quite quickly and voluntarily after I had announced my undertaking to cap it. The consequence of that was to reduce its budget by £18·5 million, which was actually less than 3 per cent. of its planned expenditure. Any efficiently run local authority would be able to take account of such a reduction without adversely affecting important services.
Mr. Tony Worthington: The Secretary of State referred in his statement to money being put into the settlement for care in the community. Will he say how much that was? Otherwise, there is unlikely to be a trusting atmosphere about that programme. Is care in the community being properly funded, and to what extent? I cannot see why it is not possible to tell us how much in the settlement is being transferred to care in the community. Similarly, there is reference in the statement to extra funding for local authorities because of the transfer of responsibilities to local authorities. What are those responsibilities, and how have they been costed?
Can we be quite clear about the Secretary of State's attitude to higher expenditure in Scotland? On education, for example, it is true that there is higher expenditure due to local authorities resisting the Government's wishes in respect of education in Scotland, and that yields good results. The Government were saying just last week that higher numbers stay on in Scotland. Is it the Government's intention that local authorities should go down to English levels of staying on and English levels of expenditure on education in Scotland?
The Secretary of State has not dealt with the central idiocy of the 20 per cent. rule. It costs local authorities more money to collect the 20 per cent. than the income that they gain. Is not that a very stupid way of conducting local government? Is it not about time that the Government realised that and abolished the 20 per cent. rule?
Mr. Lang: The hon. Gentleman's last point is a matter for local authorities and their auditors and legal advisers. As for staying on at school, the hon. Gentleman will know that we have an excellent record of increasing the numbers staying on at school, and we intend firmly to build on that record. We are keen also to expand further and higher
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education, and are already doing so with dramatic success, having increased the figures very remarkably from those that we inherited in 1979.
On the additional burdens falling on local government, the cost of the next phase of care in the community has been estimated at £11 million, the cost of introducing the council tax at £24 million, and the cost of other general increases at about £24 million, giving a total of about £59 million.
Mr. Harry Ewing: On a point of order, Mr. Speaker. May I place on record the undying admiration of the House of your endurance, occupying the Chair for four hours and 10 minutes without a break, against the background of yesterday's statements about faulty waterworks somewhere else in England? It is reassuring to know that at least one waterworks is in perfect working order.
Mr. Speaker: I was going to suggest to the hon. Member that he should not raise a point of order, but I am very grateful for what he said.
Mr. Max Madden: On a point of order, Mr. Speaker.
Mr. Speaker: Is it equally helpful?
Mr. Madden: I am sorry to prolong your occupancy of the Chair. I genuinely apologise for having to raise this point of order, but it is about an important matter.
In the past, you have deprecated the practice of parliamentary reports being released to the media before Members of Parliament received them. The Select Committee on Health—
Mr. Speaker: Order. I think that I can anticipate the hon. Member on this matter. He is aware that he cannot refer in the House to a report that has not yet been made. It is a Select Committee report. It will be possible for him to do that tomorrow when the report is published, but not today, please.
Mr. Madden: It is about the availability of the report. I wonder whether you would give the necessary instructions so that the report is available to hon. Members simultaneously with the press at 11 am tomorrow. It is particularly important, as allegations are being made that the report in draft—
Mr. Speaker: Order. I know about the allegations. As to the availability of the report, the hon. Member knows that it is a matter for the Committee, and not for me in the Chair. We should move on.

Local Government Finance (Scotland)
  WAYS AND MEANS

    PORTS BILL [WAYS AND MEANS] (No. 2)
    Resolved,
    That, for the purposes of any Act resulting from the Ports Bill, it is expedient to authorise a levy in respect of gains accruing to any company to which the undertaking of a harbour authority is transferred under the Act on disposals of— —

    (a) land which belongs both immediately before and immediately after the transfer to a transferred 51 per cent. subsidiary;

    (b) interests in land which belong both immediately before and immediately after the transfer to a transferred 51 per cent. subsidiary;

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    (c) interests in land within paragraph (a) above or in land in which an interest within paragraph (b) above subsists at the time of the transfer.—[Mr. McLoughlin.]

Orders of the Day
  Ports Bill
  Lords amendments considered.
  Ports Bill
    Clause 2

      TRANSFER OF UNDERTAKINGS
      Lords amendment: No. 1, in page 2, line 23, leave out "statutory provision of local application" and insert "local statutory provision".
      6.36 pm
      The Minister for Shipping (Mr. Patrick McLoughlin): I beg to move, That this House doth agree with the Lords in the said amendment.
      Mr. Speaker: With this, it will be convenient to take Lords amendments Nos. 21, 22, 29 and 34.
      Mr. McLoughlin: These amendments are largely technical. They arise from the existing provision in schedule 1 for transfer schemes to provide for
      "repealing or amending any statutory provision of local application".
      By appearing to limit the provisions which could be repealed or amended to ones which were applicable only locally—that is, within a limited territorial area—it is possible that that expression might be taken to exclude, for example, a port authority's borrowing powers, leaving the new successor company encumbered with the old authority's more limited borrowing powers. It is precisely such statutory limits that the Bill would remove.
      Dr. Norman A. Godman: I am extremely grateful to the Minister for showing his characteristic courtesy to me. Has he or his officials received any intimation whatsoever from the Clyde port authority concerning its private Bill which would privatise that authority? Has it decided to pull up stumps and go home?
      Mr. McLoughlin: As my right hon. and learned Friend the Secretary of State made perfectly clear on Second Reading, that is a matter for the Clyde port authority. Obviously, I hope that it will have the benefit of the Bill being on the statute book in a short time. It will be for it to decide which course to follow. It is likely to follow the course of the Bill that we are discussing.
      Having briefly explained that the amendments are technical, I commend them to the House.
      Ms. Joan Walley: The intervention by my hon. Friend the Member for Greenock and Port Glasgow (Dr. Godman) demonstrates the great concern about there being a public Bill and a private Bill. It was only as the private Bill went through the House that it was realised that the Treasury had to become involved to start getting money out of local trusts. The amendment went through the other place virtually without discussion, which means that we cannot oppose it at this stage. However, I wish to record once again our concern that this legislation is not doing its best for local communities. In effect, the interests of the port are being divorced from

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      those of the local community. As we have just heard, until now, ports have tended to act in the interests of their local community.
      Question put and agreed to.
      Subsequent Lords amendments agreed to.

    Clause 3

      INITIAL ISSUE OF SECURITIES OF THE SUCCESSOR COMPANY
      Lords amendment: No. 2, in page 3, line 7, leave out "In consideration of" and insert "Following".
      Mr. McLoughlin: I beg to move, That this House doth agree with the Lords in the said amendment.
      Mr. Deputy Speaker (Sir Paul Dean): I must inform the House that the amendment involves privilege.
      With this it will be convenient also to consider amendments Nos. 26, 27, 28 and 33.
      Mr. McLoughlin: The aim of this group of amendments is to ensure that the Bill's provisions regarding the issue of securities by the successor company are compatible with a technical provision of an EC directive on company law, while at the same time maintaining the tax treatment of those securities.
      Ms. Walley: Again, we have further proof that this legislation is not about improving transport or about establishing an integrated transport structure. Amendment No. 2 shows the need for the face of the Bill to be changed because of the Bill's fundamental incompatibility with company law and with an EC directive on company law. The provisions were not voted on in the other place and, at this stage, we do not wish to oppose the amendment.
      Question put and agreed to. [Special Entry.]
      Subsequent Lords amendments agreed to.

    Clause 5

      CONTROL BY APPROPRIATE MINISTER OVER EXERCISE OF AUTHORITY'S FUNCTIONS UNDER SECTIONS 3 AND 4
      Lords amendment: No. 3, in page 4, line 13, leave out from "disposal" to end of line 14 and insert—
      "of the whole or a substantial part of the equity share capital of the successor company to—

      (a) managers or other persons employed by the company; or

      (b) another company the whole or a substantial part of whose equity share capital is owned by managers or other persons so employed."

      Mr. McLoughlin: I beg to move, That this House doth agree with the Lords in the said amendment.
      Mr. Deputy Speaker: With this, it will be convenient to take Lords amendments Nos. 23 and 30.
      Mr. McLoughlin: The amendments aim to rectify a possible shortcoming in the Bill's provisions enabling support to be given to a management and employee team engaged in bidding for a port.
      Where such a situation exists, it is normally the case that the managers and individuals involved, rather than acting as a group of individuals, will form a company to act as a vehicle for making the bid. It was possible that, on
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      a strict interpretation of the Bill's provisions, such a company would not have qualified for support because the wording used—
      "managers and other persons employed"—
      could have been held to refer only to individuals. This group of amendments is intended to preclude that possibility.
      6.45 pm
      Mr. Stuart Bell: Opposition Members believe that these amendments go to the heart of the Bill as it stands, because they deal with the subject of management buy-outs. We are grateful for the fact that, when the amendments were discussed in the other place, as a result of probing by the Opposition, we were given the Secretary of State's guidance notes relating to the procedure for the sale of trust ports. The notes form a most helpful document.
      I asked the Leader of the House to consider incorporating the guidelines into the Bill, so important are they, but there was not sufficient time. As the right hon. Gentleman said on the Floor of the House at the time, I accept that it might have been on the late side, but, as I have said, we discovered that the guidelines existed only as a result of the prodding of Opposition Peers. Not only did that reveal the existence of the guidance notes, but it led to their being placed in the Library. I am grateful to the Secretary of State for Transport for making his final guidelines available.
      I am sure that the Minister can confirm that the guidelines that have been produced by the Secretary of State will cover all trust ports, including the Tees and Hartlepool. Although we have consistently opposed the movement of the Tees and Hartlepool port into the private sector, as the will of Parliament is reflected in the Bill and in the amendments that have been tabled in the other place, it is of the utmost importance to put on record our view that a satisfactory employee buy-out would be the best option available to the Tees and Hartlepool— provided, of course, that it was a valid buy-out, on behalf of the employees, and not a glorified management buy-out, which some of us suspect to have been the present management's long-term objective when they embarked on their own privatisation scheme through the private Bill route.
      We must place the amendments in the context of paragraph 15 of the Secretary of State's guidance notes relating to the procedure for the sale of trust ports, which state:
      "that the trust port will be required to appoint appropriate advisers to provide it with an independent benchmark valuation of the undertaking and an independent assessment of the bids received.
      This assessment should include advice as to whether the bids properly reflect the value of the port undertaking … that the trust port will need to make this benchmark valuation and assssement available to the Secretary of State in putting forward its own proposals regarding the sale of the port to the Secretary of State for his agreement.
      That these proposals will need to take into account the extent to which the bids meet the objectives of sale and will not therefore necessarily recommend that the highest bid should be accepted."
      That last point is of the utmost importance in the context of these amendments to clause 5.
      The guidance notes also state:
      "a trust port may wish to recommend that a price preference should be applied to a bid from a management and employee buy out team.

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      The Secretary of State will be prepared to consider a limited preference of this kind in individual cases and will have regard to the particular circumstances of each case."
      As can be seen from the amendments, the Government are in a dilemma of their own making. On the one hand, as we saw in Committee, thanks to the work of hon. Members of all parties, they concluded that management buy-outs should be encouraged. On the other hand, however, they are enamoured of the principle of competitive tendering—in fact, they are so enamoured that that phrase appeared yesterday in the so-called citizen's charter which was announced by the Prime Minister.
      What is to happen to the Tees and Hartlepool and the other trust ports that are covered by the Bill? Will the management buy-out be given preferential treatment, or will that management buy-out have only a limited prospect of success, being faced with a more gigantic bid from an outside firm that might even be a foreign firm? We are not, of course, allergic to foreigners on Teesside, and especially not to European foreigners.
      In racing terms, I am reminded of the apprenticeship races in which, having had 10 winners, the apprentice loses his apprenticeship status. I am glad to see that the hon. Member for Langbaurgh (Mr. Holt) is, as usual, in his place for such a debate. Far be it from me to say that an apprentice, who has a big race coming up and who does not want to lose his apprenticeship status, will hang back, but that was always the case in the stories that I read of old.
      It would not be surprising at this stage if, like the apprentice with nine wins to his credit, the Tees and Hartlepool decided not to push itself to be first past the post. In other words, the Tees and Hartlepool might not benefit from the amendments and might not want to be the first in line for privatisation, because it knows that it might be swallowed up by a competitor or foreign company and that its management buy-out would then be left high and dry.
      Dr. Godman: Is my hon. Friend satisfied that, following a buy-out or the privatisation of a trust port, the new authority would not be able to evade the responsibilities that the Port authority currently carries out? The important dredging operation on the upper reaches of the Clyde is now carried out by the Clyde port authority. That essential task must be carried out, or the river will silt up.
      Mr. Bell: I am grateful to my hon. Friend for his intervention, but I am not the Minister of the Crown who can or should answer that question. My understanding of the Bill is that the dredging would fall within the statutory authority of the port and would be a statutory requirement for whoever takes over the port. A port would be disadvantaged, because investment in it might suffer if the proposed buy-out came from a firm that decided to invest elsewhere. I am grateful to my hon. Friend for drawing that point to my attention and to that of the House.
      Mr. Tony Worthington: My hon. Friend cannot be completely familiar with the upper reaches of the Clyde. I wish to put it on the record that the Clyde port authority has a power which allows it to dredge the Clyde but that it has no duty to do so. That will be the case in the future. We are fearful that an entirely
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      commercially oriented body would be interested only in property development and not in the welfare of the river. I am grateful to my hon. Friend for letting me put that point.
      Mr. Bell: I am grateful to my hon. Friend for making that point. Undoubtedly, the Minister will respond to it. It is on the record, and it is an important point. It is one of the reasons why the Opposition consistently opposed the privatisation of the ports, as embodied in the Bill.
      To return to the amendments, trust ports might also like to take the opportunity of a management buy-out. My hon. Friend the Member for Greenock and Port Glasgow (Dr. Godman) mentioned the Clyde Port Authority Bill. It is becalmed in the other place and will be extinct when the Bill is given Royal Assent. A private Bill is extinguished when it is confronted with a statutory measure such as this.
      Other trust ports may take the view that they should wait to see what happens with the Tees and Hartlepool port authority proposals before going ahead with their own management buy-out proposals. They might conclude that they should wait for two years in accordance with the terms of the Bill and then have the Secretary of State demand their plans for privatisation.
      The board of the Tees and Hartlepool port authority might be well advised to leave its privatisation bid until two years have elapsed after the Bill is enacted rather than seek privatisation and lose out, like the apprentice who wins his 10th race and loses his apprenticeship status. Indeed, my advice to the Tees and Hartlepool port authority is that, unless it can obtain a categorical assurance from the Secretary of State that the management buy-out is acceptable under the terms of the guidelines, it is ill advised to be the first port to seek privatisation and face the prospect of the port falling into foreign hands.
      A great debate took place in the other place on these amendments. I shall not refer to that debate today. The Secretary of State's guidelines were referred to. While the Opposition pressed hard in the other place to ensure that the guidelines gave first priority to a management buy-out rather than competitive tendering, we were given no assurance in the other place that the amendments would give preference to a management buy-out. My specific question to the Minister is whether there will be a preference for a management buy-out or whether it will be only a limited preference, which will amount to no preference at all.
      Sir Teddy Taylor: I apologise to my hon. Friend the Minister for stepping in at this stage. If it is in any consolation, I assure him that I do not intend to speak many times. I appreciate that the Bill has been carefully considered by the Committee, but I wish to make one minor point.
      As hon. Members will be aware from the Register of Members' interests, I have been an adviser to the Port of London Police Federation for many years. In that connection, I wish to raise a minor issue on amendment No. 21, which refers to the transfer of local regulations. The Port of London authority has the power to have a police force. As my hon. Friend the Minister will be aware, we are transferring that power to the port of Tilbury. One of the advantages of such a transfer is that, as we are all aware, Tilbury has a splendid Member of Parliament to look after its interests. However, my hon. Friend the

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      Minister will be aware that, in the transfer from the port of London to the port of Tilbury, the persons involved will lose considerably, even though they will do the same job, in the same place and in the same way.
      The port of Tilbury is certainly as aware as the port of London of the immense benefit of having a statutory police force. But the Minister will be aware of the losses that people will face. First, the tradition has been that PLA police salaries were in line with Metropolitan police salaries. That will not necessarily be guaranteed after the transfer. The rent allowance was linked to the Metropolitan police but in future will be related to the Essex police.
      I know that my hon. Friend the Minister is a kindly person who, throughout his activities on the Bill, has shown consideration for all the people involved. But we must remember that, in such a transfer, we transfer not only cranes but people. I hope that the Minister can assure us that, although there is adequate provision to protect individuals' pension rights, there will also be some basis on which individuals can seek arbitration, understanding or some assurance that they will not lose if they do the same job in the same way in the same place.
      I hope that the Minister will bear it in mind that, if the port of Tilbury is transferred to a trust and a company is established to run it, we shall have no guarantee about what will happen in five or 10 years. There is a real danger that assurances given by the port of Tilbury may not be inherited by a successor company.
      Therefore, I hope that the Minister will give some thought to the matter and that he appreciates that it is necessary to safeguard the position and give some assurances to the port of London police who have served the port well, who will continue to do the same job extremely well and who are rather worried about their future.
      Mr. Eddie Loyden: I wish to take up the point raised by my hon. Friend the Member for Middlesbrough (Mr. Bell), which was given great emphasis in Committee, about our worries about those who take responsibility for our ports. As I have said on previous occasions, the ports will remain an important part of Britain's economy and transport structure, but in view of what has already happened in the ports and of the Lords amendments, it appears that the Government have neglected to deal with the future of the port transport industry in Britain. Our anxiety remains.
      Those who have an interest in the ports industry are those who work in it and operate the ports. The evidence is that, almost without exception, the ports have been run successfully over many years by the people who managed and worked in them. Therefore, the possibility of a management takeover is very important. I re-emphasise the points made on that matter. Whatever powers the Government have in the Bill, they must ensure that the bodies that inherit our ports will be responsible by statute for upholding all the necessary practices in the port transport industry.
      We have all expressed anxiety about dredging, conservancy and other matters. I hope that, even at this late stage, the Government will undertake to monitor what happens in our ports and ensure that any movement away from the port's interest is arrested and that our ports retain a future and are not surrendered to the rest of Europe.
      Mr. Richard Holt: After the bizarre intervention by my hon. Friend the Member for Southend, East (Sir T. Taylor), I am not sure what we are supposed to be debating. I thought that we were debating the amendments to which the hon. Member for Middlesbrough (Mr. Bell) addressed himself. I should like to get back to those amendments by assuring you, Mr. Deputy Speaker, the hon. Gentleman and the House that you need not worry about the Tees and Hartlepool port authority. It is in good hands—apart from anyone else's, mine. That means that the hon. Gentleman need not worry whether the port will be slow off the mark in seeking privatisation by the management team.
      If the hon. Member for Middlesbrough, the backwoodsmen on Teeside and those who live in the past instead of the future had allowed my private Bill to go through, the port would already be privatised, we would have the new business, and jobs would be available. The Labour party, as ever, went further and further backwards.
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      I am not too displeased about that, because it is beginning to show the people in the north-east of England that, over the centuries and the decades, it has been socialism that has held back the region. We in the north-east are now doing away with socialism, and we are seeing the benefits. Jobs are flowing in the area. Despite the recession, the north-east is the one area in the country where the jobs position has improved in the past few months, and it continues to do so. Much results from the work of the development corporations. Much could have been the result of the development of the Tees and Hartlepool port authority, if the legislation had not been brought to a halt in another place.
      One hears and talks about democracy, yet three wayward peers in another place can stop the will of this House. I was interested to hear the hon. Gentleman speak of the "will of the House". That will was usurped in another place. It did not matter, because, as ever, the Government came to the rescue with their Bill, which is probably improved as a result of the pioneer work that I did on the private Bill.
      When the Minister replies, he will undoubtedly make it clear that the Tees and Hartlepool port authority is not like the apprentice waiting for ever to ride a 10th winner. All apprentices must ride that 10th winner as quickly as possible because afterwards they can ride a Derby winner and win the real prizes. That is what the Tees and Hartlepool authority will do.
      Dr. Godman: I would not dream of engaging in the debate on the state of socialism in the north-east of England, because you, Mr. Speaker, would rule me out of order. As a Member of Parliament in another country from that of the hon. Member for Langbaurgh (Mr. Holt), I can tell him that it is the Conservative party that is slipping away in Scotland, but I shall not go further down that road, either.
      The amendments may improve matters slightly for the Clyde port authority. The Clyde Port Authority Bill seems to have foundered in the other place, or perhaps it has just come to some sort of anchorage—I say foundered, and the Minister talks about anchorage. A management-employee buy-out of the Clyde port authority may be vastly superior

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      in all sorts of ways to the management buy-out envisaged in the private Bill that has either come to grief or is tied up somewhere.
      Recently, there was a management-employee buy-out in Dundee and the operation is heading towards success. I am referring to a major bus company. The Transport and General Workers Union and the employers, with financial advice from, I think, the Clydesdale bank, although it may be the Royal bank of Scotland, bought the company. They are not turning it into a co-operative. They have set up a company which meets the entirely legitimate demands and requirements of the work force. The same should be done on the Clyde.
      Port authorities must meet obligations, so that ports and estuaries can survive. In that respect, I wish to raise with the Minister the important question of dredging the Clyde. A management buy-out may be less of a prospect if no financial assistance is provided for the form of dredging that is so important on the Clyde. I simply remind the Minister of that. The cost of buying another dredging vessel, for example, may deter a management buy-out. Therefore, it is an important consideration. When these authorities are privatised, they must honour their obligations to local communities and local work forces.
      Ms. Walley: The debate about employee-management buy-outs was developed extensively in Committee. We were disappointed that there was nothing in the Bill at the outset about how they could be achieved. The amendments and their further clarification is some proof that we made some progress on the idea.
      As my hon. Friends have already admirably pointed out, there is a gap between what we would like to see and how the Bill is finally shaping up. Although we have got some concessions from the Government on this, the legislation is inadequate. Given the discussions in another place, at this late stage it is difficult to see how we can assure the trust ports that employee-management buy-outs will be favoured.
      Mr. Bell: Can my hon. Friend refute the argument of the hon. Member for Langbaurgh (Mr. Holt) who, with his usual grace, entirely misunderstood my remarks? If the Tees and Hartlepool authority were to be the first in line for privatisation, as it does not have the clear-cut assurance from the Government that a management buy-out will be preferred to a competitive tendering bid, there is every likelihood that it will lose its management buy-out and end up in the hands of a foreign firm with no particular interest in Teesside. Is not that the point of not hurrying towards privatisation under amendments, but of waiting for two years to pass so that we can see exactly what foreign interest there is in our ports?
      Ms. Walley: I am grateful to my hon. Friend for raising the issue, in relation to Tees and Hartlepool in particular. Two private Bills proceeded through Parliament—one for the Clyde port authority and the other for the Tees and Hartlepool port authority—and it is clear to everybody that the proof of the pudding will be in how the Bill relates to and compares with the private business that came to such an abrupt end when it was previously considered in this House.
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      My hon. Friend is right: we want absolute priority for an employee-management buy-out proposal. He spelled out the position accurately. I should like to see whether the Tees and Hartlepool port authority decides to proceed with an employee-management buy-out. We should like that to happen and for the procedure to change only if the port does not wish so to proceed. We should give the port that opportunity. As my hon. Friend so clearly pointed out, the Bill gives no clearer commitment to an employee-management buy-out than the first draft of the legislation.
      We do not want trust ports to be privatised. They should make a commitment to the local community. If the legislation is enacted on Thursday, we want it to include an absolute priority for employee-management buy-outs, should that be the wish of the port concerned.
      As my hon. Friends have said, the legislation applies not only to Tees and Hartlepool, but to the London port of Tilbury. Many employees throughout the country may see the proposal as the best option in the circumstances, but they may feel worried that, in the market economy that prevails, it will not advantage those who wish to undertake an employee-management buy-out. I am going on at some length, Mr. Deputy Speaker, because this is an important issue which is fundamental to the Bill. We have wrung some concessions from the Government—[Interruption.] If the Home Office Minister wishes to make a contribution rather than interrupt from a sedentary position, he is most welcome to do so. We are pleased that it will be easier to have employee-management buy-outs.
      Mr. Bell: The hon. Member for Langbaurgh (Mr. Holt) said, in relation to the amendments, that there could be management buy-outs at Tees and Hartlepool. Is it not a fact that, had it not been for our opposition in Committee, helped by some Conservative Members—we are always glad to see the hon. Member for Thurrock (Mr. Janman) in his place and look forward to his presence when we discuss the clawback—even the limited preference buy-out scheme that we now have would not exist? That is entirely due to our opposition in Committee in which we were aided by a few Conservative Members. The great golden dream of the hon. Member for Langbaurgh of a management buy-out on Teesside, for which he and his colleagues wish to take credit, would not have come about but for the opposition of Labour Members.
      Ms. Walley: I am always glad to give credit where credit is due. My hon. Friend the Member for Middlesbrough (Mr. Bell) is right to speak of the way in which the Opposition pressed for a policy that was not even included on the face of the Bill—albeit with some assistance from Conservative Members, who realised that ports could well be bought out by foreign interests and closed down because those foreign interests might have no regard for port activities. We take the credit for obtaining a firmer commitment to employee-management buy-outs. However, that commitment does not go far enough; we would like the Bill to have given complete priority to the concept of employee-management buy-outs, but that is not contained in the legislation.
      Not long after we debated the issue in Committee, word came through that foreign firms, particularly Japanese, were interested in the London port of Tilbury. We expressed concern on behalf of the work force who, even if they had wanted to press for a management buy-out,

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      could not do so unless the Government could give a firm commitment, which the Government were perhaps unable to do. For those reasons, we are concerned that the amendment does not give the firm commitment to employee-management buy-outs for which we have constantly pressed. Many trust ports throughout the country share our views.
      Dr. Godman: I was not a member of the Committee. I note my hon. Friend's misgivings about the amendments emanating from the other place. If the amendments are accepted, it would enable employees of the Clyde Port Authority to take a much more active part in the acquisition of the CPA than would have been the case under the terms of the Clyde Port Authority Bill, which came to grief in the other place. That is an important distinction, and it is why I gave the example of the Dundee bus company, where the employees and their representatives were part of the negotiating team discussing financial considerations. If the amendments are passed, CPA employees would at least have a more active involvement in their future than would have been the case under the terms of the dreadful CPA Bill.
      Ms. Walley: I am grateful to my hon. Friend and I am sure that his constituents in the Clyde district are aware of the point that he makes. We are concerned to make absolutely certain that employees who have given their life's work to the ports are as involved as possible in the port's future. We have to do so bearing in mind the fact that the employees have to contend with legislation that forces the ports to become privatised.
      Dr. Godman: I am grateful to my hon. Friend for giving way. I had not intended to take part in the debate, principally because I am not feeling very well.
      Is my hon. Friend satisfied that European Community legislation cannot prevent the Government of the day from expressing sympathy for a management-employee buy-out as against the would-be acquisition of a port by some foreign multinational company?
      7.15 pm
      Ms. Walley: My hon. Friend makes a valid point. I can well foresee circumstances in which local employees may wish, at all costs, to proceed with an employee-management buy-out to avoid the horrendous implications of a foreign company buying out the trust port. If that could not be made possible because the provisions did not exist in the Bill, those employees would wish to use every option open to them to ensure the employee-management buy-out. We would insist on exploring our need to operate in harmony with European directives to ensure that employees do not lose the option of an employee-management buy-out.
      Mr. Bell: I hesitate to intervene in the speech of my hon. Friend, but no doubt she has read—as I have—the debate on the amendments in the other place and will have noted the great anxiety felt there, as it was in Committee, about the possible privatisation of the port of Poole. We are glad to see the hon. Member for Poole (Mr. Ward) in his place tonight. In Committee, he expressed concern that the port of Poole might be privatised.
      Is not the port of Poole a classic example of where, even though employees may not wish the port to be privatised, it may be privatised against their will? The amendments
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      will facilitate that task. It might be opportune if we could hear the views of the hon. Member for Poole on the amendments. Does my hon. Friend the Member for Stoke-on-Trent, North (Ms. Walley) agree that, although a port such as Tees and Hartlepool is even now reluctant to be privatised, other ports such as Poole are totally opposed to the idea?
      Ms. Walley: I shall be guided by you, Mr. Deputy Speaker, as to whether it would be in order for me to respond to the comments by my hon. Friend the Member for Middlesbrough, which may have been slightly outside our remit.
      Mr. Deputy Speaker: I am grateful to the hon. Lady. I am getting worried that the discussion is almost turning into a Second Reading debate. I hope that most of the arguments will be used on this group of amendments and that after that we may proceed more rapidly.
      Ms. Walley: I am grateful for your advice on that, Mr. Deputy Speaker. I would also understand if the hon. Member for Poole (Mr. Ward) wanted to intervene now, rather than later, but I have no doubt that he will make a contribution if he wants to.
      There is anxiety throughout all the trust ports about the implications of the legislation. There is a fundamental objection to the amendments involving compulsion. However, if it is accepted that that argument has been lost and nothing more can be done, the amendments relating to employee-management buy-outs give the trust ports some let-out and provide the only opportunity for the ports to continue under the direction of local people who are concerned about them.
      We should have liked the legislation to give complete priority to the concept of management-employee buy-outs—a concept that could have been modified and further clarified during the Bill's progress. At this late stage, there is still confusion because the Government have not said whether, if that concept is the preferred option, they will go along with it. That is a matter of great concern and regret to the Opposition.
      We still do not know whether the Government will let employee-management buy-outs go ahead if other bids worth far more money are made. The trust ports share our concern. The principle of management-employee buy-outs had cross-party support in Committee. However, at the end of our deliberations we have been left with the same assurances that we had at the beginning. We have been told that the Government will consider what they can do. They will only consider, they will not give the firm commitment that my hon. Friends and I want.
      We are forced to conclude that the Government are not keen on anything except window dressing. We have learnt from other debates this week that what the Govenment might say is different from what they do. We should not have such a window dressing when it comes to employee-management buy-outs; we need a firm commitment that those buy-outs will go ahead.
      The clawback property tax was designed to deter land predators from asset stripping ports. Although the ideology is right, in practice the tax has no effect other than to reduce correspondingly the tender offer to meet that possible liability. That reduction means that a management-led buy-out is not financially viable, but the aim

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      of such buy-outs is to promote and develop a port and to use the land for the purpose for which it was acquired—port development.
      The Government have not granted any concession on the basic 50 per cent. levy for management-led schemes. However, it is worth noting that the Finance Act 1990 offered a 3 per cent. concession. The Government now seem loth to offer a meaningful discount, which is necessary to achieve a successful bid.
      My hon. Friend the Member for Middlesbrough said that we had pressed for the guidelines in Committee. We were then assured by the Minister that those guidelines would be available. We were content to take advice from the Government about how they would proceed to firm up the proposals for employee-management buy-outs. The Government should have followed the proper procedures and made the guidelines available to those in another place who were discussing them. However, I gather that the guidelines were first made available to the Association of British Ports. The Government's handling of the guidance notes is another example of the way in which they have been remiss in their entire handling of employee-management buy-outs.
      Mr. Bell: The guidelines appeared in draft form in the other place. On insisting that they be placed in the Library, my hon. Friends and I discovered that they were sent to the managing director of the British Ports Federation, Mr. J. Sharpies, by a Mr. M. W. Jackson—apparently he is a civil Servant. It was only because of the unofficial title of those notes—"The Secretary of State's guidance notes on the procedure for sale of trust ports"—that we ascertained that they were the guidelines for which we were looking. Does my hon. Friend agree that it is remarkable that we have to suss out those guidelines from the Library as a consequence of a debate in the other place? Does my hon. Friend agree that it is remarkable that those guidance notes were not sent by the Minister to members of the Committee for the use in the House today?
      Ms. Walley: I am grateful to my hon. Friend for drawing the details of the issue to the attention of the House.
      We pressed for the guidance notes to be made available and we had every confidence that they would be sent to the other place in due course. No one was more astonished than me when I read Hansard of the other place and discovered that the debate was adjourned for half an hour before those guidance notes could be discussed. Far be it from me to suggest that this place does exactly the same.
      In an earlier point of order concern was expressed that Ministers may be making announcements other than in the House, which denies hon. Members the opportunity to question Ministers. I agree with my hon. Friend the Member for Middlesbrough that the guidance notes should have been available at the appropriate time so that those discussing this important Bill could have had the opportunity to peruse them and so discover their implications for management-employee buy-outs.
      We eventually got those guidance notes, but we understand from reading them that there is still confusion about the Government's exact commitment. The purpose of this debate is to try to discover whether there is a firm commitment from the Government to allow an
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      employee-management buy-out. Other types of sale should go ahead only when employee-management buy-outs are not an option.
      Mr. Bell: Does my hon. Friend agree that, in essence, it is clear from the guidelines that there is no firm Government commitment to the management buy-out option? We are committed to that option. Does my hon. Friend agree that, unless we have a firm assurance from the Minister that the Government will show a preference for such buy-outs, we may yet divide the House on this amendment?
      Ms. Walley: My hon. Friend has said it far better than I could. This issue is of great concern to us.
      If the Government are so in favour of employee-management buy-outs why was that commitment not included in the Bill in the first place? As time has gone on, we have attempted to clarify the position. We still do not believe that the clauses are perfect. However, I know that time is pressing and that it is important for the House to have an opportunity to discuss other important amendments.
      Although we welcome the improvements that have been made, we do not believe that they go far enough. However, I do not believe that it will be necessary to divide the House as my hon. Friend the Member for Middlesbrough has suggested, but I shall look to my hon. Friend for guidance on that.
      Mr. McLoughlin: This has been an interesting debate. I wonder what the Opposition's attitude would have been if the Government had given an absolute commitment to management-employee buy-outs which therefore substantially reduced the price of the ports? Let us then suppose that, at a later stage, the ports were sold. I am sure that the Opposition would have been the first to complain that we had not attracted sufficient revenue to the Exchequer. They would have been the first to complain about the taxpayer being ripped off.
      I cannot understand why the Opposition argue that we should give an outright commitment to management-employee buy-outs without testing the market. The hon. Member for Greenock and Port Glasgow (Dr. Godman) said that he was impressed by some of the buy-outs relating to Scottish buses, but I doubt whether they met with the universal support of the Labour party at the time when they were announced.
      Mr. Tim Janman: Does my hon. Friend agree that it is hypocritical and richly ironic for the Labour party to argue so hard for management-employee buy-outs? If we had a Labour Government today, we would not have this Bill, and not one set of managers or employees would have the right to buy anything in our ports.
      Mr. McLoughlin: My hon. Friend makes the very point that I was about to make.
      In the main, I want management-employee buy-outs to be successful. Paragraph 5 of the guidance notes states:
      "a statement of objectives … need to be agreed on a port-by-port basis with the Secretary of State. In framing their draft objectives ports should have regard to the desirability of encouraging the disposal of the whole or a substantial part of the successor company's equity share capital to managers or other employees of the port. A limited price preference for a management and employee buy-out may be appropriate, as described in paragraph 15 below."

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      Paragraph 15 says:
      "In particular a trust port may wish to recommend that a price preference should be applied to a bid from a management-employee buy-out team. The Secretary of State will be prepared to consider a limited price preference of this kind in individual cases and will have regard to the particular circumstances of each case."
      We believe that the right way forward is to consider the ports case by case, and I think that the Opposition agree. The trust ports are not all the same, and we must take into consideration the conditions in each one.
      7.30 pm
      My hon. Friend the Member for Southend, East (Sir T. Taylor) spoke of the Port of London authority police. We can deal with that point when we debate Lords amendment No. 35, which relates to the PLA. I recognise my hon. Friend's interest in this matter and I congratulate him on the way in which he has, on a number of occasions, vigorously raised with me both this issue and that of pensions, which has also been raised by a number of other hon. Friends, including my hon. Friend the Member for Thurrock (Mr. Janman).
      Parity of the PLA police with the Metropolitan police was never guaranteed. The PLA endeavours to match the Metropolitan police within its means. The conditions and contracts of employment will transfer with the transfer of the scheme. However, the new owners will be able to make changes, but only through the negotiated process, as would need to be the case with any employees. It would be a dangerous precedent to set out what should happen in five or 10 years. I take the point made by my hon. Friend the Member for Southend, East. We shall be watching the situation and shall take the point on board when the PLA comes to us about the sale of Tilbury.
      My hon. Friend the Member for Thurrock made the point well. We are keen to see management-employee buy-outs. If the Opposition had their way, these would not be an option, because the Bill would not be before the House.
      Mr. Bell: I am sorry to take up more of the Minister's time, but we said earlier that, if we were not satisfied with his explanation, we would divide the House. If he gave me an assurance that, although the guidelines talk of "limited preference" being appropriate, he will knock out "limited" and simply leave it as a "preference", we might be able to avoid a Division.
      Mr. McLoughlin: We are not discussing the guidelines. The wording enables the Government to have discretion between port and port. I should have thought that that would be welcome. I would not want to declare in advance what the position would be for each and every port, because decisions will be made in due course. It would not be practicable to say that, come what may, management-employee buy-outs will be successful. I hope that, in the vast majority of cases, such buy-outs are successful.
      Sir Teddy Taylor: I am sorry to interrupt my hon. Friend, but this is terribly important. Has he the approval of the EEC Commission for his important statement that preference will be given to a management buy-out, even at a lower cost? My understanding is that what he said is contrary to European Community law and that he will get hammered by the European Commission if he tries to insist on it.
      Mr. McLoughlin: One always takes seriously my hon. Friend's cautions about our position within the Community and about what the Community law says. This is in line with what we did when we privatised the Scottish Bus Company. The same words were used in that case, so I am content that we are not breaking any treaty obligations in the way my hon. Friend fears.
      Dr. Godman: I hope that what the Minister has said is borne out by the events. He was the Minister who had to change the Merchant Shipping Act 1988. That change was inflicted on the Government by the president of the European Court of Justice. Is he completely confident that a similar change will not be imposed on him as a result of these amendments?
      Mr. McLoughlin: That is going rather wide of the amendments. I remember the incident because it was my first appearance at the Dispatch Box. However, I have no doubt that what the Bill sets out is acceptable to the Commission.
      Mr. Bell: On competition, the situation under these amendments would not be dissimilar to the television franchises. As the Minister has been so frank and forthright on this issue, and given the assurances that he has made about management buy-outs, it does not appear necessary for us to divide the House.
      Mr. McLoughlin: I am grateful to the hon. Gentleman. If anybody wishes to give me any similar assurances when we debate other amendments, I shall be only too pleased to give way. I can hear my Whip telling me not to be too generous. I commend the amendments to the House.
      Question put and agreed to.

    Clause 10

      SCHEMES INITIATED BY THE SECRETARY OF STATE
      Lords amendment: No. 4, in page 7, line 1, after "authority" insert
      "who have not formed a company in pursuance of section 1 above and"
      Mr. McLoughlin: I beg to move, That this House doth agree with the Lords in the said amendment.
      Mr. Deputy Speaker: With this it will be convenient to take Lords amendments Nos. 5 and 6.
      Mr. McLoughlin: These amendments should be called the Ward amendments because they are the result of the well-constructed case made by my hon. Friend the Member for Poole (Mr. Ward). They mean that, once the Government have looked at a port after the two-year period and have decided not to privatise at that stage, they will not look at that port again for another five years. My hon. Friend argued his case well on Report and I gave him the commitment that we would make this amendment in the other place, and we have done so.
      Mr. John Ward: It would be churlish not to thank my hon. Friend the Minister for the amendments. He knows that we do not wish the port of Poole to be privatised. The five-year moratorium gives it the opportunity to carry on its business in a sensible businesslike way which will prove, in five or seven years' time, that there is still no need to privatise. My hon. Friend the Minister listened with courtesy to the representations made to him rather noisily in my constituency, and I thank

      1099
      him for that. We obviously did not entirely convince him, but half a cake is better than none and I am grateful to my hon. Friend for what we have.
      Ms. Walley: We are glad of some further clarifications on the Secretary of State's powers of compulsion. We are totally against any compulsion. If there is to be privatisation, it must be done voluntarily and on the merits of the argument. We are concerned about the position of Poole trust port, but other ports are in a similar position and do not want these powers compulsorily attached to them. We are therefore glad of that clarification.
      Question put and agreed to.
      Lords amendments Nos. 5 and 6 agreed to.

    Clause 17

      LEVY ON DISPOSALS OF LAND, ETC.
      Lords Amendment: 7, in page 13, line 2, leave out
      "land or any interest in land belonging to a relevant port authority is"
      and insert
      "property, rights, liabilities and functions of a relevant port authority are".
      Mr. McLoughlin: I beg to move, That this House doth agree with the Lords in the said amendment.
      Mr. Deputy Speaker: The amendment involves privilege.
      With this it will be convenient to consider Lords amendments Nos. 8, 10, 16 and 36.
      Mr. McLoughlin: Amendments Nos. 7, 8 and 16, and the amendment to the Bill's title are all in one way or another paving or consequential amendments of amendment No. 10, which is designed to close a serious potential loophole in the arrangements for a clawback levy contained in clauses 17 and 18 of the Bill. In its present form, that levy applies only to land which is transferred directly from a port authority to its successor company. But some of the larger trust ports own subsidiary companies and, even if they do not, may well have the power to establish them. These companies perform a variety of functions, including, in some cases, the owning of land. It is therefore clearly necessary that the Bill should provide for the levy on onward land disposals to apply not just to land owned by the successor company itself but to land owned by the port authority's subsidiaries, which after the transfer will become subsidiaries of the successor company.
      The amendments tighten up a possible loophole. I commend them to the House.
      Ms. Walley: Suffice it to say that this is just one more example of how in reality we are dealing with a finance Bill rather than a transport Bill. The fact that the Treasury did not understand the difference between the successor companies and the subsidiary companies at the outset of the proceedings of the Bill means that at this late stage this has had to be done to achieve consistency. Nevertheless, we agree that the amendments tighten up the loopholes.
      Question put and agreed to. [Special Entry.]
      Subsequent Lords amendment agreed to. [Special Entry.]
      Lords amendment: 9, in page 13, line 13, at end insert "("the levy period")."
      Mr. McLoughlin: I beg to move, That this House doth agree with the Lords in the said amendment.
      Mr. Deputy Speaker: The amendment involves privilege.
      With this, it will be convenient to consider Lords amendments Nos. 11, 12, 13, and 15.
      Mr. McLoughlin: The principal amendment in this group of five amendments is amendment No. 12, which is intended to close a technical but not insignificant gap in the provisions of the Bill relating to the clawbreak levy. The amendment refers to the meaning of the word "disposal" in the context of clause 17, and it is made necessary because of a discrepancy between the time factor in clause 17 of the Bill—specifically, the levy period of 10 years—and a time factor which is sometimes relevant for determining whether there has been a disposal for the purposes of the Capital Gains Tax Act 1979. This latter time factor may be referred to as the six-year time limit.
      The Government have accepted that "disposal" should have the same meaning for clawback purposes as it has for the purposes of the 1979 Act—that is, the Capital Gains Tax Act—and this is expressed in subsection (4) of clause 17. One of the cases where there is a disposal for the purposes of the 1979 Act could, however, have anomalous effects if applied without modifications for the purpose of clause 17. The case in question would be where land or an interest in land was transferred by a successor company to another company within the same group—or, indeed, by a relevant port authority to a subsidiary company at some time before the property of the authority is transferred to a successor company under clause 2 of the Bill—and then, during the levy period, the company owning the land or interest in land leaves the group.
      Question put and agreed to. [Special Entry.]
      Subsequent Lords amendments agreed to. [Special Entry.]
      Lords amendment:No. 14, in page 14, line 13, after "order" insert—
      "( ) imposing penalties (including continuing penalties) in respect of contraventions of provisions of any order under this section;".
      Mr. McLoughlin: I beg to move, That this House doth agree with the Lords in the said amendment.
      Mr. Deputy Speaker: The amendment involves privilege.
      With this, it will be convenient to consider Lords amendments Nos. 17 and 18.
      Mr. McLoughlin: This amendment makes it possible for penalties to be imposed where the provisions concerning the clawback levy on subsequent disposals of land are not complied with. I am sure that it will be welcomed by the House.
      Ms. Walley: I place on record the fact that this will be subject to affirmative orders in both Houses. We pressed for that in Committee and we very much welcome the amendment.
      Question put and agreed to. [Special Entry.]
      Subsequent Lords amendments agreed to. [Special Entry.]

    Clause 19

      FINANCIAL ASSISTANCE FOR PROPOSALS TO MAXIMISE EMPLOYEE PARTICIPATION IN EQUITY OF SUCCESSOR COMPANIES
      Lords amendment: No. 19, in page 16, line 4, leave out from second "to" to end of line 5 and insert
      "have a reasonable prospect of securing that the objective of the proposal is achieved."
      7.45 pm
      Mr. McLoughlin: I beg to move, That this House doth agree with the Lords in the said amendment.
      Mr. Deputy Speaker: With this, it will be convenient to consider Lords amendments Nos. 20, 24 and 25.
      Mr. McLoughlin: These amendments are intended to clarify the drafting of one aspect of the provision that the Bill makes enabling port authorities to repay the costs incurred by their management and employees in attempting to buy out the authority's successor company.
      It may perhaps be the case that more than one group of a port's management and employees attempt to buy the company and, if that were so, it would clearly be unsatisfactory if the authority ended up providing financial support for several competing bids, one or more of which would, inevitably, be unsuccessful.
      Ms. Walley: I do not wish to detain the House any longer on this issue. However, it is important for me to point out that the Opposition would have preferred the option of some involvement of independent advisers. Nevertheless, the amendments represent a tightening up of the measure. We therefore do not intend to oppose the amendments.
      Question put and agreed to.
      Subsequent Lords amendments agreed to. [Some with Special Entry.]

    Clause 40

      GENERAL INTERPRETATION
      Lords amendment: No. 31, in page 29, line 44, at end insert—
      ("(3) For the purposes of any provision of this Act to which this subsection applies a person employed by a company which is a wholly-owned subsidiary of any company or other body mentioned in that provision shall be regarded as employed by the company or other body so mentioned.
      (4) Subsection (3) above applies to the following provisions of this Act—

      section 2(3)(c);

      section 5(3);

      section 13(3)(b);

      section 19(3)(b) and (5);

      section 26(5);

      section 28(2)(b) and (4); and

      subsection (2)(a) above;

      (all of which are concerned with participation by employees of a company in ownership of its equity share capital or related matters).")

      Mr. McLoughlin: I beg to move, That this House doth agree with the Lords in the said amendment.
      The Bill already provides that management and employee buy-outs should be encouraged and that a port authority may bear the costs incurred in mounting such buy-outs. In some cases, however, ports own subsidiary companies which have their own directly employed work
      1102
      force. These will, after the transfer of the port's undertaking, become wholly owned subsidiaries of the successor company. It seems only right that employees of these wholly owned subsidiaries should be in a position to benefit from the same encouragement that the Bill provides to management and employee buy-outs.
      Question put and agreed to.
      Subsequent Lords amendments agreed to. (Some with Special Entry.]

    Schedule 2

      GENERAL. SUPPLEMENTARY PROVISIONS WITH RESPECT TO TRANSFER UNDER SECTION 22
      Lords amendment: No. 35, in page 37, line 50, at end insert—
      ("Transfer of rights and liabilities relating to employment 9A.—(1) For the purposes of the Transfer of Undertakings (Protection of Employment) Regulations 1981 section 22(8) above shall be regarded as effecting a transfer to which those regulations apply of a part of the Port Authority's undertaking comprising all activities of the Port Authority, which by virtue of the transfer cease to be carried on by the Port Authority, including any such activities which themselves form a part of the Port Authority's undertaking which is not in the nature of a commercial venture.
      (2) According in those regulations, as they apply in relation to the transfer, references to the part of the undertaking transferred apply to all such activities of the Port Authority (of whatever description).")
      Motion made, and Question proposed, That this House doth agree with the Lords in the said amendment.—[Mr. McLoughlin.]
      Sir Teddy Taylor: Earlier, the Minister was kind enough, to say that I ought to have raised the issue that I raised then on Lords amendment No. 35. He was very helpful in providing information, but I want to ask him whether I was correct in my assessment. He said that police employed by the Port of London authority would have certain safeguards. They are possibly to be transferred to another employer, for whom they will be doing the same job in the same circumstances. There will be no change. The Minister said that the previous assurance that they received—that they would receive Metropolitan police rates of pay—may no longer apply; instead they will receive Essex rates of pay.
      The rent allowance is another fundamental issue. It appears that, instead of receiving London rates, the people concerned will receive Essex rates. The Minister said that it was impossible to say what would happen in five years' time. I have no doubt that a great consolation for those working in the port of Tilbury will be the presence of an energetic, trustworthy and able Member of Parliament to look after their interests. I nevertheless hope that the Minister will consider the implications of the Bill.
      The Minister has said, in effect, that people are being transferred to a new employer. They will not enjoy their previous rights, wages and working conditions; and, as far as I can see, they have been given no guarantee of any kind about their future. I know that the Minister is a kindly person, and that he is concerned not just about cranes but about people. Surely he accepts that the position is unsatisfactory. Can he not give some guarantee to the police who have worked so well for the port of London—helping the port to obtain work that it would not otherwise have obtained—that their rights and welfare will be maintained?

      1103
      As the Minister will know, anyone who moves to a new employer and a different job is entitled to redundancy pay, and is enabled to start over again. Surely a job in which wages, conditions and rent allowance are different is a different job. Although the Minister may not treat Brussels with the care and attention that I consider necessary—he would be well advised to do so; I am told that Brussels prisons are very nasty places—I trust that he can at least assure us that he will look into the position.
      I know that the Minister wishes to ensure that employees do not lose out too much. He seems to be saying, however, that the Port of London police have no guarantee about their future. That is unsatisfactory. I know that the local Member of Parliament will make a point of investigating the matter, but I hope that all who are involved in police matters will do so as well.
      Mr. McLoughlin: I shall certainly give careful consideration to what my hon. Friend the Member for Southend, East (Sir T. Taylor) has said.
      The amendment is technical. It applies specifically to the Transfer of Undertakings (Protection of Employment) Regulations 1981 under part II of the Bill, as they already apply to the transfer of port undertakings in part I. The PLA police force is not a commercial undertaking, and is therefore not automatically covered by the regulations. A specific application will be required for it to be transferred to the new Tilbury company.
      The regulations will protect employees' rights following the transfer of both the PLA police force and, if necessary, the transfer of any other PLA employee whose work might be considered not to be in the nature of a commercial venture.
      My hon. Friend's point is not lost on me. We shall take it seriously when the PLA scheme is presented to us, although, as I said earlier, no guarantee can be given that the same conditions will apply to the PLA police force as apply to the Metropolitan police.
      Let me add that I hope that the police will be included in the buy-out, and become successful operators at the port.
      Question put and agreed to.
      Subsequent Lords amendment agreed to.

  Criminal Justice Bill
  New clause proposed by the Commons in lieu of a Lords amendment to which they have disagreed:
  Criminal Justice Bill

    DUTY TO RELEASE DISCRETIONARY LIFE PRISONERS
    '.—(1) A life prisoner is a discretionary life prisoner for the purposes of this Part if—

    (a) his sentence was imposed for a violent or sexual offence the sentence for which is not fixed by law; and

    (b) the court by which he was sentenced for that offence ordered that this section should apply to him as soon as he had served a part of his sentence specified in the order.

    (2) A part of a sentence so specified shall be such part as the court considers appropriate taking into account—

    (a) the seriousness of the offence, or the combination of the offence and other offences associated with it; and

    (b) the provisions of this section as compared with those of section 27(2) above and section 28(1) below.

    (3) As soon as, in the case of a discretionary life prisoner—

    (a) he has served the part of his sentence specified in the order ("the relevant part"); and

    (b) the Board has directed his release under this section,

    it shall be the duty of the Secretary of State, subject to subsection (7) below, to release him on licence.
    (4) The Board shall not give a direction under subsection (3) above with respect to a discretionary life prisoner unless—

    (a) the Secretary of State has referred the prisoner's case to the Board; and

    (b) the Board is satisfied that it is no longer necessary for the protection of the public that the prisoner should be confined.

    (5) A discretionary life prisoner may require the Secretary of State to refer his case to the Board at any time—

    (a) after he has served the relevant part of his sentence; and

    (b) where there has been a previous reference of his case to the Board, after the end of the period of two years beginning with the disposal of that reference; and

    (c) where he is also serving a sentence of imprisonment for a term, after he has served one-half of that sentence;

    and in this subsection "previous reference" means a reference under subsection (4) above or section 32(4) below made after the prisoner had served the relevant part of his sentence.
    (6) On determining for the purpose of subsection (3) or (5) above whether a discretionary life prisoner has served the relevant part of his sentence, no account shall be taken of any time during which he was unlawfully at large within the meaning of section 49 of the Prison Act 1952 ("the 1952 Act").
    (7) The Secretary of State may defer a prisoner's release under this section for a period not exceeding six months if he is satisfied that exceptional circumstances exist which justify such a deferment in the public interest.
    (8) In this Part "life prisoner" means a person serving one or more sentences of life imprisonment; but

    (a) a person serving two or more such sentences shall not be treated as a discretionary life prisoner for the purposes of this Part unless the requirements of subsection (1) above are satisfied as respects each of those sentences; and

    (b) subsections (3) and (5) above shall not apply in relation to such a person until after he has served the relevant part of each of those sentences.'

    The Lords do not insist on their amendments to which the Commons have disagreed, but propose an amendment to the words so restored to a clause proposed by the Commons, to which the Lords desire the agreement of the Commons: In subsection (3), leave out 'subject to subsection (7) below'.
    Lords amendment considered forthwith.—[Mr. Greg Knight.]
    7.54 pm
    The Minister of State, Home Office (Mrs. Angela Rumbold): I beg to move, That this House doth agree with the Lords in the said amendment.
    The amendment is purely consequential, introducing a drafting change that resulted from an amendment to which the House agreed when the Lords amendments were considered on 16 July. The House agreed to the deletion of subsection 7 of a new clause on discretionary life sentence procedures. That subsection gave my right hon. Friend the Home Secretary power to defer a prisoner's release by up to six months. Following the deletion of subsection 7, the cross-reference in subsection 3 is no longer relevant, and the new amendment removes it.
    Question put and agreed to.

  Water Industry Bill
  Order for Second Reading read.
  7.56 pm
  The Solicitor-General (Sir Nicholas Lyell): I beg to move, that the Bill be now read a Second time.
  As five Bills relating to water consolidation are before the House this evening, I shall, with permission, speak to all five together, as they form part of the one consolidation.
  The Water Act 1989 substantially restructured the water legislation of England and Wales. Functions previously vested in the water authorities were divided between a new national body known as the National Rivers Authority, and the companies appointed as the new water and sewerage undertakers.
  The two main Bills in the consolidation are the Water Industry Bill and the Water Resources Bill. They bring together the principal legislation from the 1989 Act and elsewhere, dealing with the new undertakers and the National Rivers Authority respectively.
  The third Bill, the Statutory Water Companies Bill, consolidates the provisions in the 1989 Act that deal with the corporate structure and powers of the statutory water companies. The fourth Bill, the Land Drainage Bill, reproduces the functions of the internal drainage boards and local authorities. The fifth Bill, the Water Consolidation (Consequential Provisions) Bill is ancillary to the four main Bills. It covers consequential amendments and repeals relating to the other four.
  In preparing the consolidation, the Law Commission issued a report in which it made a number of recommendations for minor technical amendments to improve the consolidation. All five Bills were referred in the usual way to the Joint Committee on Consolidation Bills during their passage in another place. The Joint Committee reported that the recommendations of the Law Commission were necessary to produce a satisfactory consolidation of the law, and that the five Bills, taken together, amounted to a single consolidation.
  7.58 pm
  Mr. John Fraser: We are always supporting consolidation measures, which make life easier for those who must deal with legislation. As usual, we congratulate those responsible for the consolidation and the drafting, and the Law Commission. I am sorry that there was a slight hiccup last week, when we could not get the Bills through in a reasonably short time.
  Opposition Members will always be co-operative on measures of law reform and consolidation, and we praise the Law Commission's work. I understand, however, that there is a considerable backlog of law reform and consolidation Bills, and I only hope that things will move rather more quickly. To ensure that they do, I shall say no more today.
  Question put and agreed to.
  Bill accordingly read a Second time.
  Bill committed to a Committee of the whole House. —[Mr. Greg Knight]
  Bill immediately considered in Committee; reported, without amendment.
  Motion made, and Question, That the Bill be now read the Third time, put forthwith pursuant to Standing Order No. 75 (Third Reading), and agreed to.
  Bill accordingly read the Third time, and passed, without amendment.

  Water Industry Bill

    WATER RESOURCES BILL [Lords]
    Read a Second time.
    Bill committed to a Committee of the whole House.— [Mr. Greg Knight.]
    Bill immediately considered in Committee; reported, without amendment.
    Motion made, and Question, That the Bill be now read the Third time, put forthwith pursuant to Standing Order No. 75 (Third Reading), and agree to.
    Bill accordingly read the Third time, and passed, without amendment.

    STATUTORY WATER COMPANIES BILL [Lords]
    Read a Second time.
    Bill committed to a Committee of the whole House. —[Mr. Greg Knight.]
    Bill immediately considered in Committee; reported, without amendment.
    Motion made, and Question, That the Bill be now read the Third time, put forthwith pursuant to Standing Order No. 75 (Third Reading), and agreed to.
    Bill accordingly read the Third time, and passed, without amendment.

    LAND DRAINAGE BILL [Lords]
    Read a Second time.
    Bill committed to a Committee of the whole House. —[Mr. Sackville.]
    Bill immediately considered in Committee; reported, without amendment.
    Motion made, and Question, That the Bill be now read the Third time, put forthwith pursuant to Standing Order No. 75 (Third Reading), and agreed to.
    Bill accordingly read the Third time, and passed, without amendment.

    WATER CONSOLIDATION (CONSEQUENTIAL PROVISIONS) BILL [Lords]
    Read a Second time.
    Bill committed to a Committee of the whole House. —[Mr. Sackville.]
    Bill immediately considered in Committee; reported, without amendment.
    Motion made, and Question, That the Bill be now read the Third time, put forthwith pursuant to Standing Order No. 75 (Third Reading), and agreed to.
    Bill accordingly read the Third time, and passed, without amendment.

  Deer Bill [Lords]
  Order for Second Reading read.
  8.6 pm
  The Solicitor-General (Sir Nicholas Lyell): I beg to move, That the Bill be now read a Second time.
  This Bill, like the water consolidation Billls, is a consolidation Bil with amendments to give effect to the Law Commission recommendations which are contained in the Commission's report on the Bill. The purpose of the Bill is to consolidate the Deer Act 1963—which has been amended extensively over the years—and the Deer Act 1980.
  During its passage in another place, the Bill was referred to the Joint Committee on Consolidation Bills. The Committee reported that the recommendations of the Law Commission were necessary to produce a satisfactory consolidation of the law and that, in all other respects, the Bill was pure consolidation. The House will wish to express its gratitude to the Law Commission for its work on the Bill.
  Question put and agreed to.
  Bill accordingly read a Second time.
  Bill committed to a Committee of the whole House. —[Mr. Sackville.]
  Bill immediately considered in Committee; reported without amendment.
  Motion made, and Question, That the Bill be now read the Third time, put forthwith pursuant to Standing Order No. 75 (Third Reading) and agreed to.
  Bill accordingly read the Third time and passed, without amendment.

  Statute Law Revision (Isle of Man) Bill [Lords]
  Order for Second reading read.
  The Solicitor-General (Sir Nicholas Lyell): I beg to move, That the Bill be now read a Second time.
  The purpose of this Bill, which applies only to the Isle of Man, is to remove an anomaly whereby many obsolete Westminster statutes continue to form part of the law of the Isle of Man even though they have been repealed for the United Kingdom.
  The Bill therefore extends to the Isle of Man a series of enactments that have already been used to repeal statutes in United Kingdom legislation. It also takes the opportunity to repeal for the island 30 or so miscellaneous measures which are similarly obsolete.
  During its passage in another place, the Bill was referred to the Joint Committee on Consolidation Bills. The Committee reported that it was satisfied that all the enactments proposed to be repealed by the Bill were either obsolete, spent, unnecessary or superseded—in due course, that will apply to every hon. Member—and that there was no point to which the attention of Parliament should be drawn.
  This is yet another Bill that has been prepared and drafted by the Law Commission, this time in conjunction with the Isle of Man authorities. I should like to take this opportunity, on behalf of the House, to acknowledge and express appreciation for the work of the Law Commission and of parliamentary counsel in preparing the consolidation and statute law revision measures—such as those before the House this evening—that do so much to tidy up the statute book and present it in a modern form. Study of this Bill is a fascinating microcosm of 1,000 years of Isle of Man history. I commend it to the House.
  8.11 pm
  Sir Teddy Taylor rose—
  Mr. Deputy Speaker (Sir Paul Dean): Order. I shall call the hon. Member for Southend, East (Sir T. Taylor), but I remind the hon. Gentleman and the House that this is a consolidation measure and it is only in order to discuss whether consolidation should take place.
  Sir Teddy Taylor: That is exactly the point that I want to raise. As the Solicitor-General rightly said, this is a technical Bill that repeals some 700 obsolete enactments that have been repealed for the United Kingdom but not for the Isle of Man. The Solicitor-General omitted to mention that there are two items that are not in that category and I wonder whether we should consolidate them. One of those measures is the Military Lands Act 1900 and the other is described as 7 Jac. 1 c.4.
  Mr. Deputy Speaker: Order. I am sorry to interrupt the hon. Gentleman, but if I understand him correctly, he is dealing with Acts that are not consolidated. If that is the case, it is out of order.
  Sir Teddy Taylor: I am not seeking to do that. I am simply saying that we are repealing two proposals that did not apply to the United Kingdom but only to the Isle of Man. I simply want to know what they are. This went through the House of Lords without any discussion. The Isle of Man has no representative in the House, and it would be wrong for us to repeal this legislation without knowing what it is. The measure is entitled Assurance of the Isle of Man.
  I went to the House of Commons Library because we have an obligation to the Isle of Man. I asked about that measure. We looked up the books and found that it was an Act for the execution of divers laws made against rogues, vagabounds, sturdy beggars and other lewd persons. The Library said that it must be a private Bill but, sadly, it was not available.
  Although we are restricted in our discussion, bearing in mind our obligations to the Isle of Man, it is important to know what we are repealing. My simple point is whether the Solicitor-General can tell us what it is; what was the assurance of the Isle of Man and why is it necessary to repeal it now? It is a technical matter, but it is important. If we are dealing with legislation that applies to the Isle of Man, we should know what we are doing. If we do not, we are not doing our job for the Isle of Man.
  8.13 pm
  The Solicitor-General: I understand fully the points made by my hon. Friend the Member for Southend, East (Sir T. Taylor), and I shall give him an answer.
  If I understand him correctly, he was referring to the Bill that is mentioned in abbreviated form and described as 7 Jac. 1. c4 under the title, Assurance of the Isle of Man.
  That Act settled the lordship of the Isle of Man on the Earl of Derby and his heirs. The lordship was revested in the Crown by the legislation of 1765, 5 Geo. 3 c. 26, which was repealed by the Statute Law (Repeals) Act 1976. Therefore, this Act is obsolete. I hope that that gives my hon. Friend the information that he requires.
  Question put and agreed to.
  Bill accordingly read a Second time.
  Bill committed to a Committee of the whole House.— [Mr. Sackville.]
  Bill immediately considered in Committee; reported, without amendment.
  Motion made, and Question, That the Bill be now read the Third time, put forthwith pursuant to Standing Order No. 75 (Third Reading) and agreed to.
  Bill accordingly read the Third time and passed, without amendment.

  Agricultural Holdings (Scotland) Bill [Lords]
  Order for Second Reading read.
  8.16 pm
  The Solicitor-General (Sir Nicholas Lyell): I beg to move, That the Bill he now read a Second time.
  Having regard to my Scottish ancestry, which involves the law and farming in Scotland, I am glad and privileged to have the opportunity, on behalf of my Scottish colleagues, to introduce this Bill, which consolidates the Agricultural Holdings (Scotland) Act 1949. That Act remains the primary piece of legislation on agricultural tenancy matters in Scotland, but it has been quite extensively amended over the years. The Bill incorporates these amendments and disposes of certain spent provisions.
  It has long been recognised that there was a need to clarify the statutory position in Scotland which, because of the many amendments, had become unnecessarily complex. The Bill is pure consolidation and makes no change in substance to the existing law, but the result will be a much simpler and more straightforward account, which will be welcomed by those who need to advise and act on behalf of farmers and landowners in Scotland.
  The preparation of this Bill has been a long and difficult task, and I must thank all those with an involvement in its preparation. I commend the Bill to the House.
  Question put and agreed to.
  Bill accordingly read a Second time.
  Bill committed to a Committee of the whole House.— [Mr. Sackville.]
  Bill immediately considered in Committee: reported, without amendment.
  Motion made, and Question, That the Bill be now read the Third time, put forthwith pursuant to Standing Order No. 75 (Third Reading) and agreed to.
  Bill accordingly read the Third time and passed, without amendment.

  Northern Ireland
  8.18 pm
  The Solicitor-General (Mr. Nicholas Lyell): I beg to move, That the draft Northern Ireland (Emergency Provisions) Regulations 1991, which were laid before this House on 18th June, be approved.
  Again I feel privileged to introduce these regulations.
  When the new Emergency Provisions Act comes into effect on 27 August, the whole of the Emergency Provisions Act 1978 will be repealed, including the regulations contained in schedule 3 to that Act. As these regulations remain essential provisions, the House needs to ensure their continued survival after the repeal of the 1978 Act. That is the purpose of this statutory instrument. It consolidates the existing regulations without amendment.
  Question put and agreed to.

  Scottish Bus Company (Privatisation)
  Motion made, and Question proposed, That this House do now adjourn.—[Mr. Sackville]
  8.19 pm
  Mr. Henry McLeish: I am pleased to have the opportunity to discuss the privatisation of the Scottish Bus Company with particular reference to the sale of Fife Scottish, the bus company which covers the five parliamentary constituencies of Fife, including my own.
  I regret having to bring this matter before the House because the debate is about the incompetence of the Scottish Transport Group, the insensitivity and duplicity of Scottish Office Ministers, and the intimidation of the management-employee buy-out of Fife Scottish by Stagecoach Holdings Ltd. They were the key players involved in the sale of Fife Scottish and, in a sense, the debate is about the failure of the management buy-out to buy its own future. What began as the sell-off of the best bus company in Britain has become the sell-out of the Fife Scottish bus group and the abandonment of the clear principle of which the Government often talk but on which they rarely act.
  It is interesting to refer back to the earlier debate on the Ports Bill because there was much talk about support for management-employee buy-outs but, as the debate ensues, we shall find that, in the Scottish Office in particular, there is no enthusiasm for such a step towards the privatisation of a particular company.
  The intimidation, insensitivity and incompetence to which I have referred has left 850 of my constituents very bitter, bewildered and betrayed. They have been frustrated and blocked by an unprincipled and unprecedented set of circumstances and by a coincidence of factors that I should more appropriately describe as a conspiracy by certain groups to kill the hopes and aspirations of a very enthusiastic work force, including the management.
  The tragedy is that the employees and management of Fife Scottish did nothing wrong. They had worked enthusiastically for three years to set up the context in which to bid for their company, their jobs and their future. They had invested large sums of money from their earnings into the management-employee buy-out. They had made tremendous gains in efficiency to turn Fife Scottish into not just the best bus company in Britain, but the most profitable. They also brought the skills, enthusiasm and commitment to the service that they deployed for the benefit of the people of Fife. The simple question is, why did they fail when they had everything going for them, and when the Government purported to support the idea of a management-employee buy-out? That is the key issue that I wish to discuss.
  Before I get to the technical aspects of the debate, I refer to the Scottish Office. A group of Tory Ministers said that they supported management-employee buy-outs. They invested £50,000 in the quest for the buy-out within the company, but when the bid was made it was rejected out of hand. Of course, that group of Tory Ministers wanted to get the highest price for the company, but when Fife Scottish put in a second bid, the Scottish Office Ministers again rejected it. I hope that the Scottish Office will publish the detailed bids from Stagecoach Holdings to satisfy my curiosity and that of the employees as to whether it submitted a bid that was not heavily qualified by conditions that were dealt with in secret.
  1114
  The group of Tory Ministers made it quite clear that Fife Scottish could obtain no assistance from public funds, although the Scottish Office was happy to sit and see the Scottish Development Agency invest £500,000 of taxpayers' money in Stagecoach Holdings, thereby giving it a competitive advantage in terms of the security of its equity base. We heard from Scottish Office Ministers that they wanted a quality bus service, so why did they sell out to a company with no track record of services in Britain, a company with an unenviable record of employment conditions and a reputation for tough talking, asset stripping and anti-competitive practices? That was the quality handed down to the people of Fife by Scottish Office Ministers.
  The employees, the people of Fife and I might say that this was nothing more than characteristic Tory hypocrisy. We could also say that it was a breach of good faith, but the tragedy is that the charges against the Government go much deeper than that. The story that must be told this evening is about the role of the Scottish Office, the Scottish Transport Group and Stagecoach Holdings.
  To set the scene for the details that will follow, I draw the Minister's attention to the private meeting attended by my hon. Friend the Member for Dunfermline, East (Mr. Brown). We warned the Minister at that time that we had heard from Deloitte, which was advising the Scottish Transport Group, that the level playing field was fast disappearing. There would seem to have been no continuing enthusiasm for the management-employee buy-out and it was implied that perhaps there had been too many management-employee buy-outs.
  We also heard that the Scottish Transport Group had completely bungled the estimate of sales and proceeds from the privatisation process, so it appears that, as Fife Scottish was well back in the list of sales, Ministers were looking for the highest bid and excluding all considerations of quality, of management-employee buy-outs and a host of other considerations which were important to people whom I represent. We advised the Minister that those concerns had been expressed by the STG and from Deloitte and that in confidence we were willing to exchange our concerns with him.
  The Minister said—and confirmed in a letter—that we should have no fears and that it was a level playing field. Of course, the Scottish Office ministerial team was still wedded to the idea of giving management-employee buy-outs a fair wind. We were also reassured two weeks before the bid that there was nothing wrong and nothing to be upset about.
  As for the bidding process itself, Stagecoach Holdings had put in a bid almost £2 million in excess of the valuation of the company's assets. We believe the figure to have been £9·1 million—the Minister can correct or confirm that figure. That meant that the bid was, we believe, more that £1 million above the Fife Scottish bid which, in turn, was £1 million more than a realistic valuation of the company's assets. One does not have to be a financial genius to work out that if one bids way above the asset value of a company, it is extremely difficult to get the necessary financial support.
  Indeed, the first act of sabotage carried out Stagecoach Holdings was to put in a loss-leading bid. The company had upped its turnover in Britain from about £28 million to nearly £100 million in about two years. It could deploy

  1115
  assets and investment and, at a stroke, put the fledgling management-employee buy-out at a competitive disavantage, so that is what it did.
  From the moment of the first bids, known as the sealed bids, it was clear that the company was loss leading in a way that would destabilise the management-employee buy-out. Ministers may say, "That is the marketplace, and if a company wants to loss lead, that is fine." But Scottish Office Ministers have a responsibility not to be carried away by a company with assets but whose record on quality is dubious, to say the least. Some consideration should have been given over and above the final deliberations to the management-employee buy-out, which was a fair bid based on a fair appreciation of the assets. The bid by Stagecoach Holding Ltd. was not that type of bid.
  Now we come to the heart of the matter. There were two sealed bids—one for about £8·1 million and the other, we believe, for about £9·1 million. Because Fife Scottish had bid realistically it found, to its amazement, that it had been outbid by Stagecoach Holdings and was apparently being given short shrift by the Scottish Transport Group, Deloitte and, it would appear, by the Scottish Office.
  Despite that financial pressure at an early stage, Fife Scottish obtained a commitment for the extra £1·1 million from the Bank of Boston and put in another bid to the Scottish Office. That bid was competently submitted—there was never any doubt about that. Indeed, I quote from a private and confidential letter from Mr. M. S. Roxburgh, commercial and planning executive to Mr. Stuart of Fife Scottish Omnibuses Ltd.:
  "If prior to completion a new competitive offer is made, STG is obliged to make the contents of such an offer known to the Secretary of State, and there may be no alternative but to consider that offer. It is therefore in your interest"—
  that is, in the interests of Fife Scottish—
  "to be able to complete the transaction as soon as possible. STG will not be obliged to recommend to the Secretary of State acceptance of the highest or any hid."
  The STG itself then reneged on the principles that it had agreed with the Secretary of State for Scotland, and which were part of the legislation that went through the House.
  I will tell the shabby tale of incompetence that ensued after the second bid was received, but first I shall give the details of the technical background to the bid. Following submission of the formal offer by Touche Ross on behalf of Fife Scottish on 24 April, Touche Ross was engaged in discussions and correspondence with the STG. The question of increasing the price in the management-employee buy-out's former offer was discussed. The important aspect was that the STG did not reply to letters dated 24, 28 and 29 May from Touche Ross.
  Consequently, Touche Ross wrote to the Parliamentary Under-Secretary of State, the hon. Member for Edinburgh, West (Lord James Douglas-Hamilton) on 7 June 1991, and Henderson and Jackson, the solicitors acting for Fife Scottish, wrote on 10 June to the STG, with a copy to the Secretary of State for Scotland. Again, no replies were received.
  I will spell out what that shabby process meant in practice. Fife Scottish timeously submitted a bid on 24 April. On 9 May it got in touch by telephone with the Scottish Transport Group. On 24 May Touche Ross wrote a letter to Mr. Roxburgh of the STG:
  1116
  "I refer to our telephone conversations today and on 9 May when I explained that it might be possible for the management team to consider an increased offer for Fife Scottish if that became necessary. I understand that you will have advised the relevant parties of this and it may now be helpful to provide you with further information."
  The telephone call of 9 May was not passed on to the Scottish Office. I ask the Minister to confirm or deny that when he replies. The letter went on to suggest that a new offer of £9·1 million was being submitted, and to offer to meet representatives of the STG that week. Again, that was not done, because there was no response to the letter. Finally, Touche Ross's letter said:
  "I should be most grateful if you would ensure that this information is conveyed to the Scottish Office and I trust that I shall hear from you prior to any final decision."
  No action was taken; there was no response.
  After the letter that referred to 9 May and 24 May, another letter was sent on 28 May, again to Mr. Roxburgh, referring to telephone conversations on 24 and 9 and a previous letter sent on 24 May:
  "regarding an increase in the offer from the MEBO team at Fife Scottish … I find this surprising when the offer from the MEBO team is close to the rumoured £9·1 million from Stagecoach, particularly in the light of competitive issues surrounding East coast bus services. There has been no attempt whatsoever to negotiate acceptable terms with the MEBO team and I must ask you to give further consideration to our request for a meeting".
  Again, no action was taken. The letter was not even acknowledged.
  Exasperated, Touche Ross again wrote to Mr. Roxburgh, who was obviously an avid reader, but not so good at sending letters on to the Scottish Office or replying to the people who had sent them, as follows:
  "I refer to our telephone conversations on 9 May, and 24 May and my letters dated 24 and 28 May, to which there has been no response. I have heard indirectly that these approaches have not been properly considered as they did not represent a formal offer. If this is indeed the case. I find it astonishing that you have been unable to advise me of your position, to enable the offer of the management and employees to be properly considered. I should like an explanation as to how your approach can be compatible with the requirements of the relevant legislation."
  The letter ended:
  "I must insist that this offer is communicated to the Secretary of State for Scotland without further delay and that you acknowledge receipt of this letter."
  The House has guessed it in one—no action was taken, and no response was given.
  The company had intimated on 9 May that it wanted to submit a formal bid and to have further discussions. Yet between 9 May and the time that the Scottish Office was willing to make a formal announcement on 29 May there was no reply to eight representations to the STG. That is disgraceful. It may involve a great deal more than a Fife Member of Parliament heaping disgrace upon the STG. We must ask what the role of the STG is. That is simple— it is handling the privatisation. Taxpayers are paying Deloitte hundreds of thousands of pounds to advise the STG and for it in turn to advise the Scottish Office.
  Will the Minister tell the House whether, before 29 May, he knew of any of the representations made to the STG, and to Mr. Roxburgh in particular? More specifically, was the hon. Gentleman aware that on 9 May, a few days after the sealed bids were submitted, Fife Scottish, as was allowed for in the privatisation document, wished to discuss a new way forward and to meet either the

  1117
  STG officials, Scottish Office officials or Ministers? These points are crucial to my argument, and I hope that the Minister will deal with them in his reply.
  The Minister may want to comment on another interesting point. This whole shabby process continued until the Fife Members received letters dated 28 May confirming that the Scottish Office would be making a formal announcement on 29 May. It is now quite clear that Stagecoach was given preferred bid status on 23 May; indeed, we believe that a deposit was lodged with the Scottish Office on 20 May. So in essence, we were to be given a formal announcement nine days after the debacle unfolded, and after the whole process had been sewn up by Ministers and the Scottish Transport Group.
  At 9.20 am on the day on which I received the letter from the Scottish Office, I telephoned the Minister and asked whether he had received any further representations regarding a bid. My judgment was that the Minister had not received any further representations and I asked him to contact the Scottish Transport Group to ascertain what had happened to the formal bid which had come in by telephone on 9" 24 and 28 May and which had then been faxed to the STG on 29 May and conveyed to the Scottish Office on the same day.
  The important point is that it was a competent bid. The question that must be posed is what level of incompetence led the STG not to bother the Scottish Office ministerial team with any of the discussions and bids until the very day on which the Scottish Office was to make a formal announcement. Was the STG guilty of a dereliction of duty in not consulting its political masters at the Scottish Office? My judgment is that it was.
  There is another, more serious, point, however. Did Scottish Ministers know about the discussions, telephone conversations and bids, and, if so, why did they do nothing about them? It seems to me that we need an inquiry into what Mr. Roxburgh, the commercial and planning executive of STG, and Mr. Elwyn, the chairman and chief executive of STG were doing between 9 May and 29 May. Not only was their behaviour disgraceful; it was a gross dereliction of duty not to pass on important information affecting the future of 850 employees. I hope that the Minister will respond to that.
  Two weeks later, after the Minister had withdrawn the announcement of 29 May, the Secretary of State confirmed that he was proceeding with the bid after due consideration. Let me quote from the letter of 7 June advising me that, after deliberations, Stagecoach Holdings Ltd. was to be given preferred bid status:
  "I do however wish to emphasise that I am satisfied that the sale process has been properly conducted in accordance with the Disposal Programme and that the objectives of the Disposal Programme in this case will be met by proceeding with the sale of Fife Scottish to Stagecoach."
  It is obvious, following the three days in the Court of Session, that the STG intimated to the Secretary of State for Scotland on 29 May the existence of the final offer. It is quite clear that the right hon. Gentleman did not exercise his discretion to look at the bid sensibly, because he was swayed by the advice given by STG to the effect that, because it had come in after the sealed bid process, it should not be considered. I believe that the ministerial team at the Scottish Office is in dereliction of its duty because it did not take the new offer seriously and, indeed, because it did not know about it until the eleventh hour. That crucial point is germane to my argument.
  1118
  Fife Scottish did not lose. It could never win, because there was a conspiracy of forces. The incompetence of the Scottish Office and STG prevailed, and Ministers made the decision regardless of quality of service, of the management-employee buy-out consideration and of the company record of Stagecoach Holdings Ltd.
  The whole shabby tale does not finish there, however. I can report to the House that, before the judicial review was heard in the Court of Session, my hon. Friends the Members of Dunfermline, East (Mr. Brown) and for Kirkcaldy (Dr. Moonie) and I had a meeting with the senior management of Fife Scottish on a Saturday evening at which we were told of the company's decision to pull out of the judicial review process.
  When asked why, the company's representatives gave a very forthright answer. The bus industry had heard from Stagecoach Holdings Ltd.—in characteristic style—that if Stagecoach lost in the Court of Session, and if Fife Scottish secured the contract, Stagecoach would come into Fife and destroy the newly fledged MEBO operation. Two of the directors decided that they had had enough, and I can understand why. At that point, the Bank of Boston withdrew its funding, with the result that the financial structure of the company nearly collapsed. Following frustration at the incompetence of the Scottish Office, we now have the first signs of intimidation by Stagecoach Holdings Ltd.
  Fortunately, the courage of the employees and the finance of the Transport and General Workers Union came to the rescue, and Fife Scottish decided to proceed with the judicial review. The House will understand how the 850 employees felt. For three years, they had done nothing wrong. They had been treated with contempt by the Scottish Office and now, in the marketplace, they found that they were dealing with a predator who would stop at nothing to secure the bid and who was prepared to threaten to come in and destroy their company. I find that sickening in the extreme—but that was part of the process in which Stagecoach was involved.
  There is another serious matter that I wish to raise in connection with this affair, and I have written to the hon. Member for Tayside, North (Mr. Waker) to tell him that I am raising it. The Glasgow Herald of 26 February 1990 reported that my hon. Friend the Member for Cunninghame, North (Mr. Wilson) had had a discussion with the hon. Member for Tayside, North in the Committee that considered the legislation:
  "Mr. Wilson said: 'The question which now arises is, when the various parts of the Scottish Bus Group come up for sale, will he'"—
  the hon. Member for Tayside, North—
  "'be lobbying for management-employee buy-outs, which is supposed to be the Scottish Tory policy, or will he be lobbying for Stagecoach, because the two will be in direct opposition?"'.
  It gives me no particular pleasure to say this, and I am not a judge of the activities of hon. Members—there are appropriate Committees for dealing with such matters—but in the Dunfermline Press and West of Fife Advertiser on Friday 31 May, we read:
  "Last-minute bid stops bus sell-off … Tayside North Tory MP Bill Walker who is also a Stagecoach director said he had written to Ministers expressing his concern at the turn of events. He said 'The decision they made originally was the right one.'".

  1119
  How did he know? I do not know whether it was the right decision or the wrong one. Clearly the hon. Member for Tayside, North has extra-sensory perception—or, at least, an unusual insight—into what was happening.
  After that article in the Dunfermline Press, the Sunday Mail reported:
  "Mr. Walker expressed his concern about the delay in a letter to the Scottish Office.
  He said, 'The original decision made by Ministers was the right one.'
  He was not available for comment last night."
  The Daily Record reported on 11 June in an article entitled "It's War on the Buses":
  "But last night Mr. Walker, MP for Tayside said"—
  I want hon. Members to note the next word—
  "'We stuck to the rules for bidding for Fife Scottish and won fair and square.
  If anyone is suggesting I have done anything improper, they had better have proof to back it up.'"
  I had a meeting with Mr. Brian Souter, the chairman of Stagecoach Holdings, in Westminster Hall cafeteria. Mr. Souter may be a good businessman, but he has an awfully slack tongue. He said to me, "Mr. McLeish, don't be silly. Mr. Walker has been doing the same as yourself and Mr. Brown. He has been lobbying intensively on our behalf and of course, not only is he a director of Stagecoach (Malawi) Ltd"—which I find an interesting idea—"and Stagecoach International Ltd., but he is a paid consultant." I bow to the greater wisdom of my colleagues in this place, but his behaviour outraged and incensed the people who had fought for three years and then found that there was a conspiracy of interest in the Scottish Office, in this House and within Stagecoach Holdings which frustrated their admirable hopes and aspirations for the future.
  I feel very sad that this matter has to be raised. I hope that a Committee of this House which deals with such matters, would want to receive the submission that I will put forward about this matter and that it will be considered once more.
  To complete the story of the sell-out of those 850 employees, I refer to another comment made by Brian Souter in Westminster Hall cafeteria. He said that, if they managed to take over Fife Scottish, he would destroy the competition of Rennies and Moffat and Williamson within nine months. He said, "That's the way we operate."
  Will the Minister confirm that I sent him a letter on 7 June advising that we had serious information about anti-competitive practices around the country involving Stagecoach and that we had details of transactions in the bus industry which could result in Stagecoach taking over north of England firms which already had an investment in Scottish bus companies? I received a reply to my letter from the Minister on 10 June which was illuminating, but unhelpful. He wrote:
  "With regard to points you make about Stagecoach's competitive activities within areas of their existing operations, I suggest that, if you have any evidence of anti-competitive practice, you draw it to the attention of the Office of Fair Trading."
  That seemed reasonable, but notwithstanding the fact that in the procedures for the disposal of the companies within the ambit of the Scottish Bus Group, those anti-competitive practices had been mentioned. It was stated that, if there was a hint of any company closing down its competitors, that would be a serious issue which
  1120
  should be addressed. What happened? There was a dismissive letter from the Scottish Office advising that the Secretary of State for Trade and Industry should be contacted for further discussions. That was not done at the time, but it will be done now.
  A tragic situation has developed which brings no credit on Scottish Office Ministers for having been involved in such a shabby and duplicitous process. The privatisation of Fife Scottish has been highly irregular and unprofessional in the extreme, and it provides a shocking insight into the tawdry behaviour of what employees in my constituency can describe only as a complete whitewash of their aspirations and a determination to sell to Stagecoach, regardless of whether there was an MEBO involving £50,000 of taxpayers' money and regardless of quality and the £500,000 invested in Stagecoach through the Scottish Development Agency. We have now reached the stage where I cannot trust the Scottish Office to deal with any further privatisations of the Scottish Bus Group, if the experience of the Fife team is anything to go by.
  We are looking at some fairly serious accusations of intimidation, incompetence, insider dealing and indifference, on behalf of the Scottish Office, to all the activities around it. I have met the Comptroller and Auditor General, Sir John Bourn, who is interested in an investigation into the matter before he considers the wider aspects of privatisation of the bus group in Scotland. I will pass my material to him after this debate and on the completion of the court case.
  I want to refer the activities of the hon. Member for Tayside, North to the Select Committee on Members' Interests. I want an investigation by the Scottish Office into why the STG refused on eight occasions to respond to letters or telephone calls from Fife Scottish and, in turn, did not pass on any of the information to Scottish Office civil servants or Ministers. Of course, I would like the Scottish Office, if it was technically possible, to hold Stagecoach Holdings Ltd. to account for its intimidation, destabilisation of the management buy-out because of the loss-leading bid, and anti-competitive practices which could result in Stagecoach Holdings Ltd. controlling every bus route and service between the north of Scotland, the east coast of Scotland, through the central belt of Scotland and into Glasgow. All that has happened after the Government said that bids would be received from two or more companies and that they could not be on a contiguous basis. What hypocrisy that was when we consider what has happened.
  What has happened may be disturbing the conscience of the Scottish Office, but there is nothing much that we can do now. The employees have a new owner, and I wish them well. Stagecoach Holdings has a group of men and women whom it does not deserve. For the benefit of the travelling public in Fife and for the benefit of the employees, I hope that it will go from strength to strength.
  I believe that there is enough evidence, however, for a wide-ranging inquiry into the issues that I have raised. The behaviour of STG has been so deplorable and disgraceful that the chairman and chief executive should be suspended until the matter has been resolved. That would be a small price to pay for the betrayal of 850 employees and the best bus service in Britain, which has been passed over to a shady group with no track record and no good employment conditions and which has made hasty promises which I fear will not be kept.
  8.57 pm
  The Parliamentary Under-Secretary of State for Scotland (Lord James Douglas Hamilton): The hon. Member for Fife, Central (Mr. McLeish) has used some strong language, but I reject his allegations. The procedures that were adopted followed the disposal programme. I shall refer to the details later on, but four management-employee buy-outs have succeeded, and they have succeeded because they have won. The hon. Gentleman referred to a meeting that we had. I made the position clear at that time. He asked for a level playing field. Of course, preference is given to management-employee buy-outs in terms of the disposal programme.
  The hon. Gentleman asked about letters that were received and considered by the Scottish Transport Group. No formal increased bid was received until about 10 am on 29 May. When we received that formal offer from the Scottish Transport Group we agreed that it would be right further to consider the position. I reported that decision to the hon. Gentleman and we discussed it on that occasion. I can assure the hon. Gentleman that all bids received were fully and properly considered. I cannot go further than that. However, in view of the fact that the appeal period relating to the court action which was recently raised has not yet expired, there is not much further than I can say on that point.
  Mr. McLeish: That simply is not good enough. I have the private and confidential letters, which I am quite willing to make available to Scottish Office civil servants and Ministers. It was quite clear, as early as 9 May, in the telephone conversation on 24 May, and then in letters on 24, 28 and 29 May that a bid—a higher bid—was being considered and that representatives were anxious to discuss further with the STG or the Scottish Office. Is the Minister telling me that he knew about those conversations prior to the telephone conversation that I had with him on the morning of 29 May?
  Lord James Douglas-Hamilton: I am not saying that. What I can give the hon. Gentleman is the chronology of events. The Department was aware that, on 24 May, Malcolm Roxburgh of the Scottish Transport Group received a phone call from Touche Ross that the MEBO would come up with a further sum. That was followed by a letter from Touche Ross on the same date, indicating a possible increase and a wish to discuss. However, I must stress that the letter which made a formal increased offer was the letter of 29 May, and the hon. Gentleman and myself discussed it on the programme. At the time, the Secretary of State was away. I went into the matter thoroughly and I believe that it was absolutely competent for the Secretary of State to consider the matter further in the light of the circumstances and the facts that the hon. Gentleman had put before me. It was absolutely right that he should follow the best legal advice. That has been done. The disposal programme has been followed and the winner was absolutely clear.
  Mr. McLeish: I must again repeat that that simply does not square with the facts. Can the Minister answer the question that I asked? Did he see, was he aware of or was he informed about—any way that he would like to receive this question—the 9 May telephone conversation, the 24 May telephone conservation, the 24 May letter or the 28 May letter? Of course, he was eventually made aware of
  1122
  the 29 May offer. Can he confirm whether he was informed about those previous contacts desperately seeking some discussion of a revised bid?
  Lord James Douglas-Hamilton: The hon. Gentleman is suggesting that a formal offer was made on 24 May. That is not the case. A formal offer was made on 29 May. The hon. Gentleman is asking what I knew. I knew very well on 29 May, because the hon. Gentleman had telephoned. I went into the matter very thoroughly. We came to no rushed decisions on the matter. Indeed, an announcement was about to be made that morning, and that announcement was postponed. The circumstances were gone into very thoroughly by all the Scottish Office lawyers and I am glad to say that it was absolutely clear at the end who the winner was.
  I have listened very carefully to what the hon. Gentleman has been saying. He is concerned about the privatisation of the SBG, but most particularly concerned about the sale of Fife Scottish. As the hon. Gentleman is aware, my right hon. and learned Friend the Secretary of State announced on 10 June 1991 that he had granted consent to the Scottish Transport Group to sell that company to Stagecoach (Holdings) Ltd., which is based in Perth and owns and operates a number of bus companies in the United Kingdom and overseas. The hon. Gentleman has raised a number of questions relating to that consent, in view of his support for the unsuccessful bid made by the management and employees of the company. He has questioned whether the sale has been properly conducted.
  As the hon. Gentleman knows, the sale has been the subject of proceedings in the Court of Session. The management buy-out team submitted to the court a petition for judicial review seeking a reduction of the Secretary of State's consent. That petition was dismissed on 11 July. We have this week received the text of Lord Coulsfield's opinion, but the hon. Gentleman will appreciate that we have not yet had time to consider its terms in any detail. However my right hon. Friend welcomes Lord Coulsfield's decision. I understand that no appeal has been lodged against the court's judgment and that there is unlikely to be one. Nevertheless, the period for an appeal has not yet expired and, in those circumstances, it would be wrong for me to comment in detail on the circumstances of my right hon. Friend's decision.
  The hon. Member for Fife, Central has criticised my hon. Friend the Member for Tayside, North (Mr. Walker). I can say only that my hon. Friend made Ministers aware of his interests in all the dealings involving Stagecoach at the beginning of the privatisation programme. I cannot comment on the—
  Mr. Brian Wilson rose—
  Lord James Douglas-Hamilton: On this point?
  Mr. Wilson: I am grateful to the Minister for giving way. This is interesting. He has said that his hon. Friend the Member for Tayside, North (Mr. Walker) made his interest known from the outset of the privatisation process. Does the Minister mean from the outset of the Bill's consideration by the House?
  Lord James Douglas-Hamilton: He made his position absolutely clear to Ministers from the time at which he had an interest. We never had the slightest doubt about that point throughout the process—
  Mr. Wilson rose—
  Lord James Douglas-Hamilton: No, I have made my position absolutely—
  Mr. Wilson rose—
  Lord James Douglas-Hamilton: If the hon. Gentleman wants to table a written question, he may do so. I cannot give him the specific date. I have been aware of my hon. Friend's interest throughout the process.
  Mr. McLeish: Will the Minister give way?
  Lord James Douglas-Hamilton: No, I cannot—[Interruption.] My hon. Friend the Member for Tayside, North is an honourable man and the House should so regard him.
  Mr. McLeish rose—
  Lord James Douglas-Hamilton: No, I have answered that point and want to go on to the next. The hon. Gentleman can come back later if he wants.
  I cannot comment on the detail of the bids, which are commercially confidential, but I do not accept the hon. Gentleman's suggestion that there was anything improper about the conduct of the sale or about the way in which my right hon. Friend the Secretary of State reached his decision. I believe that the work force have said that they will co-operate with the new owners, and I welcome that. I am sure that Fife Scottish will have a strong future as a bus company and will continue to serve the travelling public in Fife very well, as it has in the past.
  Mr. McLeish rose—
  Lord James Douglas-Hamilton: I should like to answer the hon. Gentleman on one point. He recently visited the Scottish Office with a deputation of employees from the bus company and handed in a petition, containing a considerable number of names. The petition suggested that the present arrangements that are operated by Fife regional council, by which pensioners and the disabled can travel free, will be ended by the sale of Fife Stagecoach. I am glad to confirm that that is not the case. Stagecoach proposes to run Fife Scottish as a bus operating company, providing timetabled services. Fife regional council's concessionary fare scheme will continue to apply to the service as before.
  Although I cannot comment in detail on the sale, it may he helpful if I explain the background to the sales of the subsidiaries of the Scotish Bus Group.
  Mr. McLeish: The Minister is going off the subject.
  Lord James Douglas-Hamilton: I am not off the subject; I am on it. I must again repeat to the hon. Gentleman that we are within the time scale for an appeal, and if he—[Interruption.] I must make it absolutely clear to the hon. Gentleman that if those concerned wish to appeal, they have the right to do so, so I choose my words with great care.
  Mr. McLeish rose—
  Lord James Douglas-Hamilton: I shall give way to the hon. Gentleman, but reluctantly.
  Mr. McLeish: The Minister can speak freely tonight because he knows that there is no cash available for any appeal in the Court of Session, which would cost
  1124
  thousands of pounds. What we have heard tonight allays none of the fears that have been expressed in this House —[Interruption.] I shall continue despite the involvement of the hon. Member for Eastwood (Mr. Stewart). None of our fears have been allayed, because the Minister has chosen to miss all the essential points. There was never any doubt about the legalities; what we are talking about are the procedures involved. It is clear that the Minister was not aware—this information was not available to him through his civil servants or the STG—that new bids, new telephone conversations and new letters were around and about. Will he confirm that he did not know until the 29th?
  Lord James Douglas-Hamilton: The hon. Gentleman must appreciate that he is raising a legal question about whether a properly constituted legal bid was submitted on an earlier date. All I can say to him is that I was absolutely certain in my own mind on the morning that we spoke together on the telephone that I was absolutely correct to consider that bid further, as was the Secretary of State. The fullest possible legal advice was taken and accepted by the Secretary of State before a final decision was arrived at. I think that that was correct.
  The Transport (Scotland) Act 1989 provides the Secretary of State with power to draw up a disposal programme for the whole of the STG's undertaking with the exception of its shipping operations for which the Act makes provision for transfer to the ownership of the Secretary of State. That leaves the Scottish Bus Group which, before implementation of the disposal programme began, consisted of 10 separate bus subsidiaries.
  The disposal programme was published on 6 February 1990 and copies have been made available in the House. Since it is however now some time since the disposal programme was published, I think it would be helpful if I were to refer to certain passages in it which set out the objectives of the programme.
  The disposal programme was prepared by my right hon. Friend the Secretary of State after consultation with the Scottish Transport Group. The programme provides for the disposal of the subsidiaries and the arrangements to be made in preparation for the dissolution of the Scottish Transport Group. Section 2(1) of the Transport (Scotland) Act 1989 set out the main objective of the Secretary of State in preparing the disposal programme. That is the promotion of sustained and fair competition between the SBG companies and between them and other bus companies. That objective is being promoted primarily by offering the Scottish Bus Group for sale as 10 separate undertakings with a view to the establishment of independent companies operating within a competitive framework in the bus industry.
  The general approach which the disposal programme requires STG to adopt is to offer the companies listed in the programme for sale on an individual basis. The disposals are required to be effected generally by means of sale and purchase agreements relating to shares in the subsidiaries disposed of. The programme does, however, provide for subsidiaries not disposed of in this way to be wound up prior to the dissolution of STG.
  The appendix sets out in detail how the companies will be advertised for sale on a phased basis. They will be placed in the national trade press. All those conditions were followed and an information memorandum would be made available for a nominal charge to prospective purchasers who registered an interest in a company,

  1125
  provided that STG is satisfied that the prospective purchaser has sufficient financial backing or the prospect of sufficient backing.
  Prospective purchasers will be invited to submit indicative bids and other relevant information and may be invited to have discussions. Sealed bids—
  Mr. McLeish: On a point of order, Mr. Deputy Speaker. Will you make a judgment on the relevance of the wider implications of the matter to the specific issue of the sale of Fife Scottish to Stagecoach Holdings?
  Mr. Deputy Speaker (Mr. Harold Walker): I did not follow the hon. Gentleman. Is he complaining that the Minister is going into matters which are wider than those which he raised?
  Mr. McLeish: Yes.
  Mr. Deputy Speaker: That is not a matter for me. The debate on the motion for the Adjournment can be wide.
  Lord James Douglas-Hamilton: The hon. Gentleman assumes that there will be no appeal. I am not entitled to make any such assumption. I will proceed on that basis. He is unrealistic if he pursues the debate on any other basis.
  Sealed bids will be required to be submitted to STG by a closing date. When seeking the Secretary of State's consent for a sale, details of all bids received for that company together with a statement of its reasons will have to be submitted. Following the Secretary of State's consent, arrangements will be made with the successful bidder for completion of the sale. Clearly, the disposal programme provides that discussions will take place as necessary between prospective purchasers and a negotiator acting on behalf of STG before the submission of sealed bids by purchasers.
  STG reserves the right not to invite a formal bid from any prospective purchaser and is not required to give any reason for not inviting any such bid. STG is required to obtain the Secretary of State's consent before deciding not to invite any bid. STG is not obliged to recommend to the Secretary of State acceptance of the highest or any other bid for a particular undertaking. No disposal will take place until a management-employee team has had a reasonable time in which to lodge a bid.
  Bidders are required to include all relevant information in their bids, including the following details: names of the principals involved; details of the shareholding and financial structure proposed for the company or group of companies the basis for employee participation, and any limits on the transfer of shares; a statement of their future intentions for the business; the price being offered for the company; and so on.
  As I mentioned earlier, the legislation sets out the main objective in preparing the disposal programme as being the promotion of sustained and fair competition in the bus industry. It provides that no buyer of a bus company, including persons connected with that buyer, will be allowed to buy any other bus companies operating in contiguous areas, as defined in the programme. There is also an overall limit of two on the number of companies that one buyer can acquire. These restrictions apply to the nine area-based operating companies, but not to Scottish Citylink Coaches. In order to promote the competition
  1126
  objective, STG is also required to make inquiries of intending bidders to establish what links they have or might intend to have with other companies in future.
  I am well aware that the hon. Gentleman sets high store by the provisions in the disposal programme concerning a preference for bids involving employee participation. The Secretary of State has a statutory obligation to have regard to the desirability of promoting the acquisition by the employees of a controlling interest in the companies to be sold. For that reason, preference is given to bids involving the acquisition of such a controlling interest.
  Such bids can take the form of a management-employee buy-out, MEBO, or an employee buy-out, EBO. In the case of MEBOs, at least 25 per cent. of the ordinary shares in the company should generally be owned by or on behalf of non-management employees to satisfy the requirement of adequate non-management employee share ownership. It is open to bidders to make whatever arrangements they consider appropriate to satisfy that requirement, and non-management employee share ownership could well be above that figure.
  As a general principle, shares should be available to all management and non-management employees on equal terms. The shareholding arrangements could be by means of an employee share ownership plan ESOP, by arrangements for employees to buy shares, or both. Where a bid, which involves a controlling interest by employees along the lines that I have specified, is otherwise comparable with a third party bid, a price preference will be given to the bid involving employee ownership. Further passages in the disposal programme set out arrangements regarding pensions and travel concessions.
  I stress that four of the sales so far have been to management-employee buy-outs: Lowland Scottish, Scottish Citylink, Eastern Scottish and Kelvin Central Buses. Northern Scottish has been sold to Stagecoach. Midland Scottish was sold to GRT Holdings, and Strathtay Scottish to the Yorkshire Traction Company Ltd. Clansman Travel and Leisure Ltd. and Rapsons Coaches have jointly been awarded preferred bidder status in the sale of Highland Scottish.
  An important matter to which the disposal programme does not refer is the publication of sale proceeds. The position is that the total proceeds for the sale of all the SBG's subsidiaries and the prices obtained will be made public only after the privatisation process has been completed. Earlier publications of prices realised could prejudice the sale process.
  The hon. Gentleman wanted a chronology of events and I shall give him that chronology as it is known to the Scottish Office. On 8 February 1991, the sale advertisement appeared, 11 information memoranda were issued and the indicative bids date specified. On 7 March 1991, indicative bids were due and five were received. In the week commencing 18 March 1991, the agreed purchasers were advised that 25 April would be the final bid date. On 25 April, five formal bids were received. The Stagecoach bid was the highest. On 8 May, the STG board considered the bids and recommended Stagecoach. On 9 May the STG requested the Secretary of State's consent to make the sale to Stagecoach. On 17 May—
  Mr. McLeish: Will the Minister give way?
  Lord James Douglas-Hamilton: No, just let me finish the chronology. The hon. Gentleman can intervene later.
  Mr. McLeish: On that very point. After mentioning the board meeting on 8 May, the Minister moved to 9 May. Was the Scottish Office informed on 9 May of the telephone conversation held between the STG and Touche Ross about the interest of Fife Scottish in readjusting that bid?
  Lord James Douglas-Hamilton: To the best of my knowledge, I was not, but I shall have to check that from the papers.
  On 17 May, there was a submission to Ministers. On 23 May, the Secretary of State made it clear that he was content and the letter of consent was issued to the STG. On 24 May Malcolm Roxburgh of the STG received a phone call from Touche Ross, as the hon. Gentleman staged, that the MEBO would come up with the further sum. That was followed up by a letter indicating that the increase was possible. The hon. Gentleman is putting a legal argument on whether that constituted a formal offer. It was not recognised as such and was not treated on that basis.
  On 27 May Stagecoach signed a deposit agreement. On 28 May the deposit cheque was received by the STG's bank. On 29 May the Touche Ross letter was delivered, the hon. Gentleman telephoned me, and I called off the announcement which was due to be made two or, perhaps, three hours later that morning, in order to look thoroughly into all the circumstances because it was clear that a formal increased offer had been made.
  On 25 May, the intended press announcement was cancelled. On 30 May, a letter from the Scottish Transport Group said that its board was still of the view that the sale to Stagecoach should go ahead. On 5 June, there was a submission to Ministers that recommended consent should be granted to Stagecoach. On 10 June, there was a press announcement and a new consent letter was issued. On 13 June, a petition for judicial review was advised and papers were received. On 14 June, a petition was heard in court and the MEBO failed to obtain interim interdict, but an order was made for a first hearing of the judicial review. The first hearing, on 3 July, was adjourned and on 10 and 11 July, the hearing continued and the petition was dismissed. The appeal period expires on 1 August. That is the chronology of events.
  However disappointed the hon. Gentleman may be at the outcome, I have to tell him that the advice of the lawyers was followed to the letter, which we believe was absolutely right. If he has any grounds for questioning the judgment of Scottish Office lawyers and Ministers, the proper course is to resort to the courts. The hon. Member's MEBO has done that. If I had been in any doubt, the MEBO would have won. I was in no doubt, and the MEBO lost. That is the reality; this is not a discretionary matter but a matter of fact. Four MEBOs have won and the final sale is now under consideration. In earlier discussions, the hon. Member for Cunninghame, North (Mr. Wilson) said that we were merely paying lip service to the matter, but four of the MEBOs have won, which is a substantial number.
  I cannot go further than I have gone tonight, as the matter could conceivably come up on appeal in court. Therefore, I have chosen my words with care.
  9.22 pm
  Mr. Brian Wilson: My contribution will be brief, first because I do not want to interfere with the second Adjournment debate, to be introduced by my hon. Friend the Member for Glasgow, Springburn (Mr. Martin), and secondly, because the subject of this Adjournment debate has been set out not only ably but brilliantly by my hon. Friend the Member for Fife, Central (Mr. McLeish)—in contrast with the Minister's performance.
  I say without malice that the speech that we have just heard from the Minister—if "speech" is not too strong a word—was a disgrace. I thought that the long passage that he blabbered out while reading from notes was particularly bad—it was clearly written about two years ago. The Minister did not even change the future tense into the past tense. I hope that the Hansard writers will do him no favours. He told us what was going to happen—it was an old speech written when the process was under way.
  The Parliamentary Under-Secretary of State for Scotland (Mr. Allan Stewart): My hon. Friend was quoting.
  Mr. Wilson: The Parliamentary Under-Secretary of State says that his hon. Friend was quoting. In that case, we look forward to seeing several columns of quotations in Hansard tomorrow. The Minister's speech was a disgrace with no attempt to address the detailed points raised by my hon. Friend the Member for Fife, Central.
  I wish to iterate some of the perspective on the matter. I spent many long hours in Committee listening to similar feats of eloquence from the Minister. No one doubts the Minister's good will or his integrity. We all knew that, at that time, the Minister was the front man for much darker forces. We did not know the entire details of how the privatisation of the Scottish Bus Group would work out, but we were certain that Stagecoach—unloved, unwanted, but so influential—would end up with two large slices of the action. That is what we knew from day one, and that is precisely what happened. It did not matter too much how that was to be achieved—it was part of the end goal and, by heavens, one way or another it would be achieved.
  It is a dreadful story. [Interruption.] The hon. Member for Dorset, North (Mr. Baker) is welcome to intervene if he understands the issue, but if he wants to sit there muttering, that is his hang-up. The case relating to Fife is a dreadful one and the Minister has conspicuously failed to answer the detailed questions posed by my hon. Friend the Member for Fife, Central about the eight representations made between 9 and 29 May. Either those representations were not reported to the Scottish Office, or they were and they were ignored.
  How is it that the central figure in the privatisation, Mr. Roxburgh, the solicitor acting for the Scottish Transport Group, could receive such communications from interested parties without responding to them? How could he still be acting within the terms set out for him by the Scottish Office? How could that happen?
  The Minister should consider the eight communications that my hon. Friend the Member for Fife, Central has detailed. He should tell us what was done about each of them. He should tell us in what sense Mr. Roxburgh has been called to account for his actions, or lack of them, on the eight representations made between 9 and 29 May.

  1129
  I want to consider the role of the hon. Member for Tayside, North (Mr. Walker), which has been an issue for a long time. I regret that the hon. Gentleman is not present. I have said most of what I am going to say tonight before, but I would be much happier saying it if the hon. Gentleman were here. It is remarkable that such a diligent director of Stagecoach has not made it his business to be in the House tonight.
  I remember the Committee stage of the Transport (Scotland) Bill very well, as does the Minister, I am sure. I remember particularly the performance of the hon. Member for Tayside, North, who was diligent in his attendance. However, the hon. Gentleman did not make many speeches in Committee, but, occasionally, he leapt into action. Anyone who studies the record of the Committee will find that the hon. Gentleman repeatedly intervened to represent the interests of Stagecoach.
  On one occasion the hon. Member for Tayside, North nipped out of the Door to telephone the Stagecoach management. He then came back to refer to the interests of Stagecoach. Every time we drew attention to the hon. Gentleman's behaviour, he said, reasonably, that he was acting in his role as a constituency Member. Although Stagecoach is not based in the hon. Gentleman's constituency, he pointed out that some of his constituents worked for it. Those were the grounds on which we were led to believe that the hon. Gentleman took such an active interest in the proceedings in the good name of Stagecoach.
  The Committee stage ended in 14 February 1989. Imagine our surprise a few weeks later when we read a reference to the hon. Member for Tayside, North as a director of Stagecoach. Imagine our further interest when we read in the Register of Members' Interests that in April 1989, at most six weeks after the Committee stage and some three months before the Third Reading was completed, the hon. Member for Tayside, North—
  Mr. Deputy Speaker (Mr. Harold Walker): Order. If the hon. Gentleman is implying some impropriety on the part of the hon. Member for Tayside, North (Mr. Walker), who is absent, he is not going about it in the correct way. There is a procedure laid down that he should follow. It is not the procedure that he is following tonight.
  Mr. Wilson: I cannot imagine that by reading from the Register of Members' Interests I am attributing impropriety.
  Mr. Deputy Speaker: As I understand it, the hon. Gentleman was suggesting that the hon. Member for Tayside, North had expressed certain views in the proceedings on the Bill prior to the entry in the Register of Members' Interests. That carries serious implications, and the hon. Member for Cunninghame, North (Mr. Wilson) must not pursue them in the manner in which he has. He must raise them through the proper procedures laid down.
  Mr. Wilson: I am grateful to you, Mr. Deputy Speaker, and I will restrict myself to factual matters. I will not
  1130
  speculate. The factual matter is that the Committee stage ended on 14 February 1989 and the Register of Members' Interests shows that, in April 1989, the hon. Member for Tayside, North—
  Mr. Deputy Speaker: Order. The hon. Gentleman is either not listening or is disregarding what I said. The hon. Gentleman is now clearly suggesting some impropriety on the part of the hon. Member for Tayside, North.
  Mr. Jimmy Dunnachie: My hon. Friend is reading from—
  Mr. Deputy Speaker: Order. The hon. Gentleman must not raise the point in that way. The appropriate way is to write to the Select Committee.
  Mr. Wilson: It is difficult to question the Minister without referring to these matters.
  Mr. Deputy Speaker: Order. The hon. Gentleman is referring to the conduct of the hon. Member for Tayside, North. That is not a matter for the Minister, but a matter for the hon. Gentleman. If the hon. Member for Cunninghame, North wishes to refer to the conduct of the hon. Member for Tayside, North, he must not raise the matter in the House. He must write to the Select Committee.
  Mr. Wilson: I am referring to what was said by my hon. Friend the Member for Fife, Central. He has read reports in the press in which the hon. Member for Tayside, North claimed that he approached the Minister, using the word "we" in terms of Stagecoach, to raise certain concerns about the interests of Stagecoach with the Scottish Office. I ask the Minister directly: did the Scottish Office receive such representations from the hon. Member for Tayside, North?
  Mr. Deputy Speaker: Order. I hope that the hon. Gentleman will not persist in disregarding the advice of the Chair. My attention has been drawn to the relevant passage in "Erskine May". On page 389 it says:
  "Where one Member makes an allegation against another Member, he is required to do so in writing to the Registrar, who refers the allegation to the Committee and informs the Member concerned."
  By implication, the hon. Member for Cunninghame, North is making an allegation against the hon. Member for Tayside, North, who is not here tonight. He should instead follow the procedure that I have described.
  Mr. Wilson: I shall leave this subject entirely. My hon. Friend the Member for Fife, Central and I will write to the Select Committee on Members' Interests. I stress that I have made no allegations. The hon. Member in question was advised by my hon. Friend the Member for Fife, Central of his intention to raise these matters on the Floor of the House tonight. I have asked the Minister a direct question, which is germane to the debate: did he receive the representations to which I referred? The whole business stinks to high heaven.

  Housing (Glasgow)
  9.32 pm
  Mr. Michael J. Martin: I should like to convey through you, Mr. Deputy Speaker, my thanks to Mr. Speaker for allowing me this second Adjournment debate, which was a pleasant surprise. I also thank the Minister, who is responsible for housing in Scotland, for giving me the opportunity to talk about a matter that is important to me. Like most Glaswegians of my generation, I was brought up in an old tenement building, in a room and kitchen with an outside toilet. Therefore, throughout my life in public office, I have always felt it important that people get a decent home and decent shelter.
  Many of us in the city of Glasgow felt that, when everyone had a home with adequate rooms and a bathroom, all problems would be solved. However, we know from the housing situation not only in Scotland but throughout the United Kingdom that people need more than that for their housing needs. I hope to highlight some of the problems that have arisen in my constituency. As the debate is about housing in Glasgow, the problems in my constituency are relevant to those in any Glasgow constituency. I am glad to see that, along with my hon. Friend the Member for Cunninghame, North (Mr. Wilson), my hon. Friends the Members for Glasgow, Pollok (Mr. Dunnachie) and for Paisley, South (Mr. McMaster) are here. My hon. Friend knows a great deal about local authority housing. He is a former leader of the Renfrewshire district local authority.
  Both Glasgow district councillors and officials take pride in trying to give a good service to council tenants. When I was a Glasgow district councillor, I found that the local ward councillor could solve tenants' minor problems by making representations to the housing manager. If there was any difficulty with the housing manager, the local ward councillor could ask to see the convener of housing. If there was any difficulty with him, the local ward councillor could appeal to the leader of the group or to the committee. However, problems that could be solved in that way when I was a councillor cannot be dealt with in the same way by the present councillors. They are experiencing great difficulties, due to the fact that the Government are starving local authorities, particularly the housing authorities, of the money they need.
  The houses in Broomknowes road in my constituency were built in the inter-war period. It is referred to as intermediate housing. They are grey sandstone buildings. Although they are old, they are in better condition than some of the houses that were built in the 1960s. I have spoken to a tenant who lives in Broomknowes road who went to live there when she was a young girl. She is now in her fifties. The standard in those tenements is so high that they are a credit to the local authority and to the people who live there.
  Only one thing is needed. The windows are deteriorating. Consequently, those properties are not properly draught-proofed. Ten or 15 years ago, the Minister knows that the local authority could have said, "Let's get this through the budget. It's a 50-year-old property. The people who live there are good tenants. We want to encourage them to continue what they have been
  1132
  doing, in some cases for generations." The Minister's aim must surely be to provide decent housing. If tenants take a pride in their properties, they ought to be encouraged.
  The people who live in Broomknowes road cannot get double-glazed windows for their properties, even though that is a standard provision in other houses. They need double-glazed windows because their houses are on a main road, with heavy buses passing by. The houses ought to be insulated against noise as well as against cold in winter.
  Mr. Gordon McMaster: Does my hon. Friend agree that this is a false economy, and that it is to be found in Glasgow and elsewhere? As the Government have starved housing authorities of the necessary funds, replacement windows cannot be provided for tenants. Windows just have to be patched up. Over 15 years, that is a false economy. It would be cheaper to replace the windows than have to keep patching them up. However, that option is not available to housing authorities. They do not have the funds for that purpose.
  Mr. Martin: My hon. Friend is correct. One of my constituents in that area told me that the council could carry out only minor repairs to a window sash. One part of the window was repaired. The tradesman went away and did not return until weeks later to repair another part of the same window. Someone has to pay that tradesman. His wages come from public funds. If the work were properly carried out, morale in the area would be raised. A problem that could have been solved easily in a councillor's surgery has led to the tenants' association making representations to the community council and to the community council holding a public meeting.
  When I travelled from Westminster to Glasgow to speak there, members of the regional council were present to support the district councillors. The local housing manager was also there. The starvation of funds has led to the involvement of Uncle Tom Cobley and all in a problem that should be easily resolved. I think that the people of Broomknowes road are entitled to a better deal.
  I had not intended to refer again to the hon. and learned Member for Perth and Kinross (Sir N. Fairbairn). In various housing debates, however, the hon. and learned Gentleman has refered to the big, empty, soulless housing units that Labour-controlled authorities had built on the outskirts of Glasgow. I assume that he was referring to Drumchapel, Easterhouse, Castlemilk and Priesthill.
  If the hon. and learned Gentleman had been brought up in the tenements in which I was brought up, he would know that, in the 1950s, people told lies to get into housing in those areas. So high were family standards then that brothers and sisters who slept in the same room never saw each other unclothed. On winter nights, boys would have to be dressed if one of their sisters wanted to wash at the sink. When the Drumchapel and Easterhouse accommodation became available, a mother and father could have their own room, and brothers and sisters could live separately in a flat with a bath. It was like winning the pools.
  If the hon. Members who talk of soulless communities knew anything about housing in Glasgow, they would appreciate that such peripheral schemes gave those in the city centre a breathing space. Those schemes were similar to the current "merchant city" scheme. That scheme would not have been possible if people had not been rehoused away from the centre of the city. Not every peripheral

  1133
  scheme involves a bad housing estate. I have mentioned the Balornock and Barrmullock schemes before, and I am sure that there are high-demand schemes in every constituency that contains good council housing stock.
  The Minister has failed to help the local authorities in one regard. Many of the estates were started up in the late 1940s and early 1950s, when men and women finished their army service and started families. Now, those people are pensioners. They have lived and built up communities on those estates. They should be given flats designed for elderly people in the surroundings where they brought up their families.
  If we are serious about creating communities and keeping them stable, why cannot we accommodate such people? They brought up their families in four or five-apartment tenements or houses with front and back doors, but now they need smaller accommodation. Why can they not be accommodated by one of the schemes that I mentioned earlier? Let me cite a specific case: it may be appropriate for me to do so on a day when a Minister has talked about doing away with regiments in the British Army.
  Some members of that family are now dead. A man came to see me who had been a prisoner of war, having been captured at Dunkirk when with the Cameron Highlanders. He could not accept a proper job after the war because, having been in Poland and exposed to severe cold without a proper diet, he was not as robust as he had been when a young soldier.
  The main political parties talk about patriotism and how we must wrap ourselves in the union jack, and nowadays we talk about the great tradition of the British regiments. The man who came to see me in that case had come out of the forces and wanted a decent home, and I am pleased to say that he got one. Unfortunately—it must have been a million-to-one chance—the tragedy that occurred to his family was dreadful. In his old age, he, his wife and his son—three people in the same house—contracted cancer. I know that certain members of that family died. They all may be dead by now.
  I felt a sense of failure on behalf of society at that time. Although that family had lived in that house since 1945 —in a community in which I lived—with the minister, priest, home helps and neighbours aware of their plight and visiting them because they knew that they needed support, society let them down when they needed alternative housing. Because they needed a bathroom on the ground floor, they were told, "You have plenty of points for another home, but you will have to move away from your present community."
  We all carry some responsibility for letting that family down. We must not simply heap all the blame on the local authority. I hope that families such as that will not be forced, by circumstances beyond their control, to move from the local communities they love and have played a part in creating.
  Much is said about multi-storey flats. In my constituency I have the 32-storey Red road flats, among the highest in Europe. They were built by the father of the hon. and learned Member for Fife, North-East (Mr. Campbell). I remember him well. He was a building manager with Glasgow corporation, and I knew him when I served as a young councillor. I recall working with him on various committees. I had the highest regard for him.
  Although in England they are called flats, we in Scotland refer to them as houses, even though they may be
  1134
  in high-rise blocks. Such flats suit some people—particularly, say, married couples with teenagers, when everybody in the household is out working. Such homes are easy to decorate and are sometimes more secure. When people come home after a day's work, such flats are usually warm, and the people living in them may not want homes with front and back doors and the bother of looking after a garden.
  A big problem with some multi-storey flats is security. Many multi-storey flats were built not just by local authorities but as a result of decisions taken by Government. Both Labour and Conservative Governments of the past told local authorities, "If you don't build multi-storey dwellings, you will not get grant." Local authorities had people pounding on their town hall doors demanding to get out of the slums in city centres —in places such as Anderson, where I was brought up, Old Springburn and the Old Gorbals. People were demanding, "Get us out of these rat-infested places." Local authorities were told by central Government to build non-traditional houses.
  As a result of what happened in the past, we still have multi-storey flats, and I could take the Minister to some developments in my constituency which are absolutely beautiful. One could literally eat off the floor in the entrance hall. The lifts are well cared for and in superb condition. Other multi-storey flats, on the other hand, are not so good, and the reason is usually lack of security.
  It is clear that multi-storey properties will be with us for a long time to come, and I fear that we are, as it were, spoiling the ship for a ha'p'orth of tar. We have spent a fortune on such housing and we have employed caretakers, but they are not there 24 hours a day. We spend a lot of money on lifts, sound insulation and so on, but we need a concierge service to provide security and stop vandals coming into the building and causing havoc. In an ordinary tenement dwelling, the worst that can happen is that someone can put graffiti on the wall. However, if a vandal gets into a multi-storey flat and damages the lift, it may mean that someone with a heart disorder might be required to walk up 18 floors.
  Mr. Menzies Campbell: What if there is a fire?
  Mr. Martin: Yes, it could cause problems in any emergency. An ambulance may be needed or a doctor may have come to call. A concierge service has been introduced in some multi-storey flats in Glasgow and I hope that the Minister will be prepared to expand that service.
  My hon. Friend the Member for Pollock served with me on the local authority when we said that there should be some experiments on the sale of council housing. Therefore, I speak as a Labour Member who was not frightened to say that we should look at the sale of council housing. However, we should not have embarked upon the wholesale selling of council housing. In my constituency, the best housing stock has been bought and the worst is left lying there, sometimes derelict.
  If, in the 1950s, people were glad of their corporation house to rent, why should not the same apply to young couples in the 1990s? Circumstances change. Now, young couples who have lived all their days in one community are being told that they cannot have a house. In fact, strangely, a lady in my constituency came to see me and said, "My Sandra can't get a house." I said, "Your Sandra

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  can't get a house because you have bought your house, the woman next door has bought her house and so has everybody else." The Sandras of this world should be able to get decent housing in their community.
  Fair enough—by the sale of council housing we have given people the bargain of a lifetime. People are proud of their homes, and I can see the improvements that they make to them. However, there should be new housing for young couples who are not sitting tenants and who do not have an opportunity to buy their house. The problem is that people have to be tenants before they can buy their council house. How are young couples to become tenants if there are no houses to rent?
  The Minister might say that the housing association movement is receiving a fortune from the Scottish Office and is rehabilitating the tenements throughout Glasgow. I am proud of the work that is being done by the housing associations in my constituency. I was a founder member of one of them. There is the Springburn Possilpark housing association, Milnbank and Reidvale. In fact, a photograph of one of the back courts of the Reidvale tenements in the Dennistown area appears in Prince Charles's book, "A Vision for Britain", as he was so impressed by the beautiful way in which it has been done up.
  However, there are problems in the housing association movement. It does a good job, but there is a lack of accountability. The Minister has often talked of local authorities being accountable, but he fails to highlight the fact that the housing associations have a great deal of autonomy. They have general management committee meetings, but the Minister knows that full membership consists only of tenants and householders. They alone can attend an AGM. At least within local authorities everyone over the age of 18 in a house can have a say in whether the council is doing a good job. Sometimes, the associations disregard decisions made at the committees' AGMs. They are becoming remote, and the Minister should consider ways of encouraging those associations to become more involved in the community. I cite an example.
  Possilpark in Springburn wanted, with the help of public grants, to take over Springburn public hall, which has lain derelict, to sandblast it, to do it up internally and to sell it to the private sector. I said that I did not mind a bit of it going to the private sector, but that as it was a public hall, surely it had some function for social activities such as weddings and dance classes, so that the community would get something back from the urban aid money put into the project.
  I was told that the community would have a nice clean building and that the housing association would have its value added tax paid from the profit it made from the sale of the building. I could not convince the housing association that the real function of a community-based association was not always to have foremost in its mind the worry of getting wages for the staff and keeping the association going—it should be to ensure that the community got the best deal.
  Flats are being built in my constituency, and everyone says that that is great, because Springburn has lain derelict and its planning has been in a state of decline. However, when one-bedroomed flats are sold for £42,000, it is not
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  the 8,000 local unemployed people in my constituency who will buy them. If they are one-bedroomed flats, families will not buy them—at best, they will go to a couple.
  The Minister has a responsibility through Scottish Homes to ensure that the committees are more accountable to the public whom they serve. The waiting list system is a puzzle to me. I have complained before that, when a constituent of mine asked to be put on the waiting list, she was told that the list was closed. She then discovered that her neighbour was put on the list a week later. When I inquired about that, I was told that the first constituent had tried to be put on the list on Monday the 22nd and that the neighbour tried on Tuesday 23rd, and on Tuesday the 23rd the list was reopened for a day.
  That leads to abuse. I am not saying that anyone is dishonest, but if someone phones Jeannie to say that the list will be open first thing at 9 am, I know that Jeannie will try to put her name on the list. That is unfair to the person who, the day before, had appeared on the scene and wanted to put her name on the list. If public money is involved, everyone should have a fair chance. Nobody would tolerate the circumstances that I have described if a local authority were involved.
  I welcome the private sector in places such as Springburn. I believe that there is room for everyone to be involved in housing, and that there should be a social mix. The private sector can always move quickly, and I am pleased that it has done so in the centre of my constituency in parts of Dennistown and in Portland Dash, where the famous Speirs wharf is being built. The people there might be in the high-income bracket and therefore not after council housing, but they bring in a population which can serve schools, churches and community groups, which can all benefit. I am happy to see the private sector coming in.
  I do not want to stray wide of the subject of housing, but people from the private sector raise problems with me involving not only housing but planning in general. Developers often feel that, with the two-tier local authority system in Glasgow, sometimes they get—
  It being Ten o'clock, the motion for the Adjournment lapsed, without Question put.
  Motion made and Question proposed, That this House do now adjourn.—[Mr. Nicholas Baker.]
  Mr. Martin: I shall be brief now, Mr. Deputy Speaker; I have nearly finished.
  Private developers often feel that, with the two-tier planning authority structure, they get permission from Glasgow district council to build houses, offices or commercial developments, only to discover that the region has called the plan in. Developers sometimes feel that it would be best to let the region consider the matter—perhaps it has a legitimate right to consider it—only to discover that the district council has appealed against the call-in, as it is legally entitled to.
  If someone has £3 million to invest in property in my constituency, and the property market is fluctuating because of business rates, bank rates and all the rest, that person will be getting nervous. It would be understandable if such a developer decided to invest in a new town next time, not in a city with two planning authority structures. I hope that the Minister will bear that in mind.
  I finish by thanking you, Mr. Deputy Speaker, for your time, and the Minister for listening.
  10.2 pm
  The Parliamentary Under-Secretary of State for Scotland (Lord James Douglas-Hamilton): I congratulate the hon. Member for Glasgow, Springburn (Mr. Martin) for having spoken effectively in the debate. I have greatly enjoyed visiting his constituency several times, and I know that he has taken a keen interest in housing, in seeing housing associations develop and in generally improving conditions for his constituents.
  It will amuse the hon. Gentleman to know that a year or so ago, just before the end of the year, I was in a position to make a supplementary allocation of about £3 million. We ascertained that Glasgow could make full use of such a sum, so it was almost all given to that city. To my surprise, I saw in the evening paper the headline, "Insult to Glasgow". I read the article and suddenly realised that the award had been thought to be the main allocation, although it was only a supplementary allocation. I received an apology shortly afterwards.
  I assure the hon. Gentleman that we shall take the needs of Glasgow seriously into account. The city is the largest public sector landlord in western Europe, and has the biggest and most pressing problems. I do not wish the hon. Member to doubt that I see Glasgow as a great city. I have enormously enjoyed visiting it since I was a boy, when I used to be taken to the dentist there. The dentist was a lay preacher and I learnt much about Christianity when I had no chance to answer. The campaign, "Glasgow's Miles Better" has an enormous impact. The city has now been brought forward tremendously. Not only the People's Palace but the Burrell collection, the garden festival and a stream of other successes have put Glasgow firmly on the European map as a city of culture.
  I agree with the hon. Gentleman that we should concentrate not only on the problems of the merchant city but on the peripheral housing schemes—the hon. Gentleman mentioned specifically the problems of high rise flats. Many of the points that he covered are matters for the district council, and I have no doubt that it is acting on many of them.
  Mr. Jimmy Dunnachie: What about money?
  Lord James Douglas-Hamilton: The hon. Gentleman asks about money. I will make available as many public sector resources as I possibly can, but if there is a shortfall between what is intended for the local communities concerned and 'what is available in public resources, all the other possible sources of funding need to be considered, including funding from housing associations—Scottish Homes—and the private sector. Let me give an example.
  Mr. Gordon McMaster: I endorse all that the Minister says about the turn-around in Glasgow, which I also praise. I seek an assurance from him, however, that, given that he proposes to do all this for Glasgow, he will not take the money away from authorities such as Renfrew district, which not only have peripheral housing estates but which are on the periphery of Glasgow and should not be forgotten.
  Lord James Douglas-Hamilton: I agree with the hon. Gentleman. Last Thursday, I made an extra allocation of £128,000 to his district council. I realise that it was for environmental improvements, not in Foxbar but in Ferguslie Park, but I hope that the money will help, and we
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  will bear the needs of Foxbar particularly in mind. I made the chairman of Scottish Homes aware of the visit that I paid with the hon. Gentleman to his constituency, and I am certain that the discussions on that matter will be taken forward.
  We envisage the urban regeneration schemes developing much further, into smaller urban renewal initiatives of which there are now three in Scotland—Alloa, Kilmarnock and Falkirk. We hope that there will be three more before very long. The hon. Gentleman is quite right in saying that we must give additional attention to the peripheral housing schemes in his constituency and elsewhere in Scotland. The Greve report stressed the importance of looking at an empty property and considering the possibility of disposals and the housing association movement has a strong role to play.
  The hon. Member for Springburn mentioned the valuable example of Speirs Wharf which, if not in his constituency, is on the edge of it. He is absolutely right. However, I stress that that project was undertaken not just between the district council and the SDA. It also involved Historic Scotland, which has given more than £12 million in grants to historic churches in Scotland and to historic buildings generally. Although it is a small part of the picture, if the hon. Gentleman has historic buildings in his constituency, he should contact that body. I am sure that his proposals will be considered sympathetically.
  The hon. Gentleman mentioned the position of the Gordon Highlander. My right hon. Friend the Secretary of State for Defence made it clear earlier today that housing needs must be addressed—
  Mr. Martin: Cameron Highlander.
  Lord James Douglas-Hamilton: That is an important correction. I myself was a Cameronian, and that institution, too, was founded by a Cameron.
  I regard the officials in Glasgow as giving a very good service. One example of the way in which they have excelled is to be found in the Hamish Allan centre for the homeless. When young people—or anyone with a problem that has caused them to be homeless—go there, they are really well treated. They are made to feel at home and there is no element of stigma attached to going to the centre. It is performing an extremely valuable role, and I believe that other councils in Scotland would be well advised to look at the excellence of the service that it has provided with a view to following its example. The hon. Gentleman will be aware that we have made an additional allocation to Glasgow in respect of homelessness projects and I believe that Glasgow is proceeding with such projects successfully and effectively.
  The hon. Gentleman is obviously interested in what the local authority can do to help to enhance its resources. There are two things that it could do. If right-to-buy sales were processed within six months rather than 12, that would result in many hundreds of thousands of pounds extra coming into the system. Let me give the example of the rents-to-mortgages scheme: a quarter of all the expressions of interest have come from the Glasgow area. If a small number of tenants—say 50—buy under the rents-to-mortgages scheme, that will bring in £500,000 of receipts which will go an immense distance towards renewing the window frames in the hon. Gentleman's constituency. If one of the district council's priorities is to build houses, that is an absolutely legitimate aim; the

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  council is entirely within its rights to pursue that aim—if it is the council's priority. The hon. Member for Glasgow, Pollok (Mr. Dunnachie) must appreciate that one of the problems facing Glasgow is whether it should spread the funds available to it thinly or concentrate on specific upgradings. I understand that it is doing the latter and that is a matter for Glasgow and not for me.
  With regard to housing associations, Glasgow has had spent on it almost half the total available for the whole of Scotland. It has had about £500 million spent on it. Much of that may have gone to the inner city, but that will spread outwards in future and will concentrate increasingly on peripheral housing schemes.
  Mr. Dunnachie: What about the private sector?
  Lord James Douglas-Hamilton: I realise that there is a strong prejudice in Glasgow against the private rented sector, but I believe that the best landlord that a man can have is himself. If Glasgow wants to enhance its receipts, having a voluntary rents-to-mortgage scheme will undoubtedly improve the amount of funds that it can spend on its public sector stock.
  Mr. Dunnachie: I have raised the matter before, but received no answer.
  Lord James Douglas-Hamilton: That was about a completely different point on repair grants. I have written to the hon. Gentleman fully about that and, I understand, action has been taken.
  This year, £82 million is being spent by Scottish Homes in Glasgow. In spite of that, the hon. Member for Glasgow, Govan (Mr. Sillars) calls for its abolition. That is seriously irresponsible. Scottish Homes is performing an extremely valuable role, as the hon. Member for Glasgow, Springburn (Mr. Martin) has recognised. I believe that it should be strongly supported.
  Mr. McMaster: I would not defend the hon. Member for Glasgow, Govan (Mr. Sillars). I want to refer to the use of capital receipts of the sale of houses to fund the ideas referred to by my hon. Friend the Member for Glasgow, Springburn (Mr. Martin). However, the arithmetic does not work out if we carry it to its logical conclusion. Where there is a diminishing housing stock and the best houses are sold and the loan debt must still be financed with fewer tenants, eventually all the council's receipts will be used to finance the loan debt which has not decreased.
  Lord James Douglas-Hamilton: The hon. Gentleman should be aware that £1,600 million has been made available to spend on public sector stock as a result of right to buy sales. The receipt from right to buy is much higher than the outstanding debt on each house which varies from area to area. It may be £4,500 or £6,000. The average council house sale varies between £10,000 and £12,000, and that is well above the average outstanding debt in Scotland. The great strength of right to buy is that it benefits everyone, not just the aspiring tenant who wishes to own, but the public sector.
  Scottish Homes has been spending those huge sums in Glasgow this year and it is also giving priority to
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  homelessness projects and to urban regeneration initiatives. Such initiatives affect Castlemilk and North Forgewood in Motherwell. I believe that that role will increase. I am glad that the hon. Member for Springburn has struck up such a good relationship with Scottish Homes. His particular point on the whole is not so much a point for me as one for him to pursue with the chairman of Scottish Homes and at a local level. I hope that a suitable arrangement can be worked out.
  Housing projects are successful where well-established agreements are worked out at community level. It would be easy for us to go faster, but if we did that we would not have the support of local communities, and the housing projects concerned would not stand the test of time.
  I have mentioned that Glasgow can do a lot more to enhance receipts by shortening the processing time for council house sales and by considering a voluntary programme from rents to mortgage. I regard the other call that was recently made in Glasgow—again it was by the Scottish National party; I think that it was the hon. Member for Govan—that £976 million of capital debt should be written off as totally inappropriate. That sum would have to be raised either by extra taxation or through borrowing. It follows that any decision along those lines would have to be considered most carefully and would require legislation, and we have no such proposals.
  As for resources to Glasgow, I must make it clear that, before we make allocations, we look first and foremost at Glasgow, because it is far and away the biggest public sector landlord not only in Scotland but in western Europe. Its needs are greatest and we must therefore look at them carefully. I receive complaints that too much is going to Glasgow and not enough is going to the rest of Scotland, but, objectively, the needs are greater. The hon. Member for Pollok is shaking his head. Needs are greater in Glasgow than in many other parts of Scotland. However much he is given, the hon. Gentleman will try for more. Whatever Government are in power, Glasgow will not get everything that it wants. It must make the best of the opportunities before it. The Greve report recommended the disposal of empty stock. I recommend that the possibilities should be effectively followed up.
  On resources for this year, the provisional housing revenue account capital allocation of £92 million includes more than £4 million to honour commitments given to fund the costs of approved innovative projects in Castlemilk. Excluding that, the gross allocation gives the council an allocation of £616 per council house, which is above the Scottish average of £559. The council's net allocation of £60·5 million is 11 per cent. higher than the corresponding allocation for last year. That increase, together with resources of £60 million, which the council expects to draw from its covenant scheme, should enable the council to sustain its substantial capital programme.
  Again I congratulate the hon. Member for Springburn on his success in the ballot. I also congratulate Glasgow on its many successes. I stress that Glasgow's success is in the interests of Scotland's success. I should like not only much better housing in Glasgow but more job opportunities in Glasgow. We must work for that as well.
  Question put and agreed to.
  Adjourned accordingly at sixteen minutes past Ten o'clock.