Commons Sitting of 27 April 1995

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

    CITY OF WESTMINSTER BILL [Lords] (By Order)
    Order for consideration, as amended, read.
    To be considered on Thursday 4 May.

Oral Answers to Questions
  NORTHERN IRELAND

    Pig Industry
    Ms Hoey: To ask the Secretary of State for Northern Ireland what plans he has to visit a pig farm in Northern Ireland to discuss the future of the pig industry. [19607]
    The Minister of State, Northern Ireland Office (Mr. Michael Ancram): My right hon. and learned Friend discussed the position of the pig sector with the Ulster Farmers Union at a meeting on 31 March, when he invited the president to arrange for him a day of representative visits.
    Ms Hoey: I thank the Minister and I urge him to visit one or two smaller rural pig farms in Northern Ireland, where I am sure he will be very welcome. Is he aware of the concern among Northern Ireland pig farmers about the cost of the EC directive for Aujeszky's disease among pigs? The cost per pig is being borne by individual farmers. The pig industry and individual farmers have to bear those costs, yet the dairy industry does not have to pay for the vaccination of individual cows. Is the Minister also aware that the Republic of Ireland claims that its pig industry cannot afford to implement the regulations? Will he do something to help the small pig farmer in Northern Ireland?
    Mr. Ancram: I am sure that my right hon. and learned Friend will discuss those matters when he meets pig farmers and the National Farmers Union in Ulster. In respect of Aujeszky's disease, as I am sure the hon. Lady is aware, the Department of Agriculture introduced the eradication scheme on 1 September last year, following extensive consultation with the industry, particularly the Ulster Farmers Union. Implementation of the scheme is progressing satisfactorily and it is clearly important to pig producers.
    Mr. William Ross: Does the Minister really understand the great importance of the pig industry to Northern Ireland, whose high-quality animals and semen are exported all over the world? Does he not realise that
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    a tremendous industry is in great danger of collapsing, as farmers have just experienced about 18 months of the worst returns anyone can remember?
    Mr. Ancram: I fully appreciate the hon. Member's points, not least the importance of the pig industry to Northern Ireland. I am sure that, given his own agricultural knowledge, he will appreciate that pig production suffers, and will suffer, from cyclical trends. I am sure that he is also aware that there has been a recent improvement in producer returns, which I hope will be a benefit. In particular, prices have risen from 92p per kilo at the beginning of the year to 107p per kilo—an increase of 10 per cent. I hope that that will be reflected in increased confidence within the industry.

    Punishment Beatings
    Lady Olga Maitland: To ask the Secretary of State for Northern Ireland what progress has been made to counter punishment beatings carried out by terrorist organisations. [19608]
    The Minister of State, Northern Ireland Office (Sir John Wheeler): Punishment beatings are criminal conspiracies; all such criminal attacks are very serious crimes. The Royal Ulster Constabulary makes every effort to prevent those atrocious crimes and bring offenders to justice.
    Lady Olga Maitland: I thank my right hon. Friend for his reply. Is he aware of just how extremely serious punishment beatings are and that 90 have been reported since the ceasefire? Of that number, 51 were inflicted by republicans and 39 by loyalists. Such savagery is unacceptable. Does my right hon. Friend agree that the topic must be put on the agenda in forthcoming talks with both sides?
    Sir John Wheeler: I am grateful to my hon. Friend for all that she says. I assure her and the House that Ministers treat those appalling attacks with the greatest seriousness. They are totally unacceptable; they are a denial of human rights and an affront to the concepts of democracy. During the exploratory talks, my right hon. and learned Friend emphasises his condemnation of the attacks and urges all with any influence in the matter to bring them to an end.
    Mr. A. Cecil Walker: I am sure that the Minister is aware that my constituency suffers more than most from punishment beatings. Has he considered establishing some form of confidential, covert operation with the assistance of victims, to combat that scourge in our community?
    Sir John Wheeler: The hon. Gentleman is right to draw attention to the plight of victims. The Royal Ulster Constabulary will best be effective in diminishing or reducing such unlawful acts if the public help by giving the police information. They can do so in confidence, and the RUC is innovative in looking for the best ways of working with the community to ensure that persons who commit such crimes are arrested and taken before the courts.
    Mr. Barnes: In addition to and allied with the savage beatings, there is the expulsion from Northern Ireland by terrorist groups of many Catholics and Protestants, who are not allowed to return; it is a form of exclusion order. Many organisations, especially Families Against Intimidation and

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    Terror, fight against both savage beatings and expulsions. Would it not be useful to provide such organisations with extra funding for their valuable work?
    Sir John Wheeler: The hon. Gentleman is right to say that there is widespread condemnation of such evil acts within Northern Ireland and without. I hope that all who have influence on the persons who perpetuate such acts will use their voices to urge that those acts should end. Voluntary organisations do much good work in the community, often bravely. The organisation to which the hon. Gentleman referred already receives some public money, and I met its representatives recently to advise how it might attract further funding. Such organisations do a worthwhile job, and I am always willing to consider how they might reasonably be assisted to continue their work.

    Terrorism
    Mr. Molyneaux: To ask the Secretary of State for Northern Ireland if he will report progress on dismantling the apparatus of terrorism. [19609]
    The Secretary of State for Northern Ireland (Sir Patrick Mayhew): Despite the welcome cessation of violence, I can report no evident dismantling of the apparatus of terrorism. How that may be achieved is rightly for discussion in exploratory dialogue with parties closely associated with paramilitary organisations.
    Mr. Molyneaux: Given that terrorism will be a continuing and permanent scourge of civilisation, will the Secretary of State enter discussions with the Clinton Administration with a view to designing measures to extricate all terrorists, including those posing as members of political parties, and removing from their hands all instruments of terror and destruction?
    Sir Patrick Mayhew: I noted, as I am sure the hon. Gentleman did, that some time ago President Clinton described the need for a worldwide campaign against terrorism. I do not doubt for one minute that recent tragic events have reinforced that opinion, which we certainly share.
    Mr. Hunter: Does my right hon. and learned Friend agree that what is important is not only the dismantling of the apparatus of terrorism but maintaining the momentum in political developments? Was not my right hon. and learned Friend's recent invitation to the constitutional parties to take part in bilateral talks a significant and timely step? Will he make encouraging such discussions with and between the constitutional parties of Northern Ireland a priority?
    Sir Patrick Mayhew: I much agree with my hon. Friend that political progress is an important component in protecting people against the scourge of terrorism, and I look forward to beginning the talks to which he referred. This is a single-track process—not a dual-track process, as I sometimes see alleged—to substantive political talks. That single track is open to all parties with a substantial electoral mandate that establish a commitment to exclusively peaceful methods and show that they abide by democratic means.
    Mr. Mallon: The Secretary of State will be aware how difficult have been the past eight months. Nevertheless, does it come as a surprise when I tell the right hon. and learned Gentleman that public perception of the
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    Government's handling of the peace process of late has been one of vacillation, clumsiness and a lack of àny defined strategy? Would he be even more surprised to learn that at times the Government look uncertain, if not foolish, in some of their utterances?
    Given the centrality of this issue to the lives of the people in the north of Ireland, will the Secretary of State take this opportunity to tell the House how he intends to move from the present point to the round table negotiations, the only context within which the fundamental questions about an absence of violence and the principle of consent can be put to those parties and answers irrevocably gained?
    Sir Patrick Mayhew: I very much agree with the importance of proceeding to round table talks, resuming after an interval of some two or more years. I think it extremely important, and I believe that the people of Northern Ireland think it very important, that their politicians should be talking to see whether we can achieve that overall political accommodation which was our objective two or three years ago.
    I heard what the hon. Gentleman said at the beginning of his question. I am quite used to a variety of criticisms being made. I should be surprised if this is the one area in Northern Ireland politics in which there is the total agreement that he suggests; but I do my best, with my right hon. and hon. Friends, to secure the maintenance of the important principles, one of which, and only one of which, is that we do not sit down and negotiate the political structures on the future of Northern Ireland with people who, by implication, reserve the right to resort once again to violence.
    Ms Mowlam: The Labour party welcomes the exploratory dialogue between Sinn Fein and Ministers, and we also welcome the statement, which I think the Secretary of State just made, that no political party can expect to participate in full-scale talks about the future of Northern Ireland while it retains, by inference or implication—if I understood what the Secretary of State was saying—the use of violence.
    Will the Secretary of State confirm to the House the statement that he just made—that he does not see inclusive talks happening in under two years? I think that that is what he said. I think that there was some confusion among Opposition Members and it might be useful if the Secretary of State clarified that matter at this point.
    Sir Patrick Mayhew: I am very glad to clarify that. I referred to talks that concluded two or more years ago. I certainly hope that round table discussions will resume very much sooner than that. I welcome the hon. Lady's confirmation of the principle that I described a moment or two ago. It is essential not only that we do all that we can to get those talks resumed but that we maintain the principle which I have described. If we do not, we send a signal that we are prepared to sit down with people who, if they do not get what they want in democratic discussion, are prepared to go outside and resort once again, or support the use once again, of armaments. That is fatal to democracy and to the interests of those who have submitted themselves to the disciplines of constitutional government.
    Mr. Robathan: Notwithstanding what was said by the hon. Member for Newry and Armagh (Mr. Mallon), may I pay tribute to my right hon. and learned Friend's and

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    his hon. Friends' skilful handling of the peace process so far? Does my right hon. and learned Friend not think that the time has come for some tangible evidence of good faith from terrorist organisations, particularly the major terrorist organisation—the IRA, linked with Sinn Fein? When does he think that we might see some movement towards it actually handing in some of its huge stockpile of arms?
    Sir Patrick Mayhew: I thank my hon. Friend for what he said at the beginning. Of course, he is right to say that this is the time for some tangible evidence of good faith. He will recall that the Government have consistently said that, in order to make the transition from exploratory dialogue to participation in the substantive political talks, a willingness to support the principle of decommissioning has to be declared. In addition, some substantial progress has to be made, including tangible decommissioning of arms, sufficient to signify the beginning of a process—which must be on-going—and the good faith of which my hon. Friend spoke.

    Schools and Colleges
    Mr. Beggs: To ask the Secretary of State for Northern Ireland what steps are being taken by the Department of Education in Northern Ireland to determine the total amount of public expenditure required at this time, to bring schools and colleges to an acceptable level of maintenance, to enable schools and colleges to comply with health and safety regulations and the demands of the national curriculum. [19610]
    Mr. Ancram: My Department regularly reviews the capital needs of the education estate in consultation with the education and library boards, individual schools and voluntary authorities. Each year, my Department assesses the priorities within which decisions are then reached, subject to available resources.
    Mr. Beggs: I thank the Minister for that response. Is he aware that in the North Eastern education and library board area about £30 million is urgently needed to deal effectively with the backlog of maintenance, to comply with health and safety regulations and to meet the needs of either new or refurbished facilities for science, information technology, art and design, home economics and, indeed, technology itself? Is not at least another £60 million needed for new build and major capital development? If the position is similar across the five boards in Northern Ireland, about £500 million is urgently needed.
    I urge the Minister to obtain that level of funding from any peace dividend and to bring our schools and colleges up to date. Above all, we need to create employment and provide hope for those who are unemployed. We also need to revitalise our construction industry.
    Mr. Ancram: I understand the hon. Gentleman's concern, which I share to the extent that I appreciate that there is a greater need for capital spending than there are funds available within the budget each year, for which I have to decide the spending priorities. As he knows, last year was a very hard year and decisions effectively had to be between spending on capital new starts and classroom provision. I took the view, I think rightly at that stage, that classroom provision was the priority and that it should be given the advantage over capital spending.
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    This year, partly because of money that has become available because of the changed security position in Northern Ireland, I have been able to restore a capital programme of £63 million. Inevitably, within that I have to make decisions because the need is greater than that sum. However, when the hon. Gentleman studies my announcements on capital starts, I hope that he will appreciate that not only did I devote a great deal of time to deciding the priorities but I tried, wherever possible, to visit the schools so that I was personally informed.
    Mr. Worthington: Will the Minister confirm two points about the capital building programme? First, are there not more than 3,000 temporary classrooms in Northern Ireland which, at the present rate of replacement, it will take almost 50 years to replace? What does the hon. Gentleman mean by "temporary"?
    Secondly, the Minister will be aware that the Prime Minister has said that nursery education is a priority for the Government. Is the hon. Gentleman aware that in this year's allocation of capital there appears to be no money for nursery education programmes? How can he square that with the Prime Minister's promise?
    Mr. Ancram: I welcome the hon. Gentleman to his new Front-Bench role. He and I used to cross swords in previous political incarnations. I am sure that we will now wish to work together for the good of education in Northern Ireland. I certainly welcome him to what I am sure he will find a fascinating portfolio.
    The question of temporary classrooms is not unique to Northern Ireland. It is very much a matter for concern when I am trying to decide priorities in evaluating the needs of each school that applies for capital—the state of the temporary classrooms is obviously one of the factors that I take into account. I am sure that the hon. Gentleman is aware that some temporary classrooms are in much better condition than others, which must also be taken into account.
    On the hon. Gentleman's point about nursery education, he knows that the Government are considering the best way to advance the undertakings given by my right hon. Friend the Prime Minister. We will wish to take full account of those decisions in relation to Northern Ireland in due course.

    Unemployment
    Mr. John Marshall: To ask the Secretary of State for Northern Ireland what is the latest unemployment rate; and what the figure was in December 1992. [19611]
    Mr. Ancram: The seasonally adjusted unemployment rate in March 1995 was 11.9 per cent., which compares with 14 per cent. in December 1992.
    Mr. Marshall: I am sure that everyone will welcome that reduction of one seventh in the number of people unemployed since December 1992, which is due to this Government's policies. However, does my hon. Friend accept that that is nothing compared with the peace dividend to which the people of Northern Ireland can look forward? Will not peace lead to substantial inward investment in the Province?
    Mr. Ancram: I am grateful to my hon. Friend, who makes a good point. We all welcome the consistent reduction in the unemployment figures which has taken

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    place in Northern Ireland. Of course they remain too high for any of us to be complacent, and we want them to be reduced. He makes an important point when he says that peace will itself bring a jobs dividend. I would go further and say that peace, underpinned by a political settlement that brought political stability, would increase inward investment even faster, and would benefit the jobs position in Northern Ireland significantly.

    Peace Process
    Mr. Winnick: To ask the Secretary of State for Northern Ireland if he will make a statement on the latest developments in the peace process in Northern Ireland. [19612]
    Sir Patrick Mayhew: Following intensive exchanges with Sinn Fein, we have told it that we believe that a sufficient basis now exists for ministerial entry into exploratory dialogue. Arrangements are being made for a meeting at which the Minister of State, my hon. Friend the Member for Devizes (Mr. Ancram), will lead the Government team.
    Mr. Winnick: That is most welcome. Has not the peace process that has been in operation for the past seven months been a tremendous relief to the people of Northern Ireland, after sustained terror and destruction over 25 years? Although I fully accept what the Secretary of State has already told the House about the decommissioning of weapons, and that Sinn Fein should certainly repudiate all forms of terrorist violence, is not the last thing we want in Britain, Northern Ireland or the Irish Republic a sort of breakaway group, repudiating what Sinn Fein may or may not do and, once again, as in 1970, starting the cycle of terrorist violence?
    Sir Patrick Mayhew: Naturally, we want to avoid that. There is no place for violence in any democracy. I am grateful that the hon. Gentleman, who takes an interest in these matters, supports what I have said and, for that matter, what the Taoiseach, Mr. Bruton, has very recently said in the Dail about the impossibility of entering into substantive talks while an implication remains that the use of violence is on the cards. That is very important.
    It is essential that the Government continue to maintain their long-established and consistently held position that a proper place exists at the conference table for all parties that are democratically mandated to any substantial extent, that have made it absolutely clear that they are committed to a democratic means of approaching political purposes and that have set aside any connection with the use of violence.
    Mr. Hume: Does the Secretary of State agree that the basis of order, which is the basis of stability in any society, has never existed in Northern Ireland since its foundation, that that is based on agreement on how people are governed and that its absence has created the terrible symptoms, such as 50 years of discrimination, violence and killing in every decade, and the terrible 25 years that we have just been through? Does he now agree that the past eight months have given, as the hon. Member for Walsall, North (Mr. Winnick) said, the greatest hope that our people have ever had? Would the Secretary of State please advise his Back Benchers to keep their negative mouths shut, because all they are doing is undermining that great new atmosphere among the people? May I
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    appeal to his Government, whom I consistently praise for putting this dproblem at the top of their agenda, where it belongs—I thank him totally for that—to move swiftly now to get all parties to that table to create the basis of order and stability: agreement on how we are governed?
    Sir Patrick Mayhew: I accept what the hon. Gentleman has said about agreement being the basis for stability and for order. That is so not just in Northern Ireland; it is so in every civilised and democratic society. That is the first point.
    The second is that I acknowledge that the basis of the division of the community in Northern Ireland is one that denies—that has denied in the past—a necessary element of agreement; I accept that. That is why I welcome the part that the hon. Gentleman and all the other leaders of the constitutional parties have played in recognising the need to sit down together and to fashion a new beginning in relationships that will yield greater agreement.
    I was sorry that the hon. Gentleman made those allusions to negative attitudes among Conservative Back Benchers. I would have thought that there was a very unwelcome and uncharacteristically negative contribution by his hon. Friend the Member for Newry and Armagh (Mr. Mallon) a minute or two ago. We have been working for exactly what the hon. Member for Foyle (Mr. Hume) describes. I am glad that that has achieved what I hope and believe is the understanding that I mentioned a few moments ago.

    Investment
    Dr. Goodson-Wickes: To ask the Secretary of State for Northern Ireland what recent assessment has been made of trends in investment inquiries in Northern Ireland since the ceasefire brokered by the Government. [19616]
    Mr. Ancram: There has been a significant increase in the number of inward investment inquiries received at the Industrial Development Board's headquarters in Belfast and by its eight overseas offices, especially those in London and in the United States, since the cessation of violence last autumn.
    Dr. Goodson-Wickes: Does my hon. Friend agree that the transformation in Northern Ireland since the ceasefire has been remarkable, especially to those of us who served there in the early 1970s? Is that not an enormous tribute to the Prime Minister and his ministerial colleagues? But does my hon. Friend accept that peace can be built upon only if there are even further incentives to investment in Northern Ireland to reassure those who, rightly, still have strong doubts about the future?
    Mr. Ancram: I thank my hon. Friend for those comments and for the way in which he has used his question. It is indeed evident that the coming of peace has had a substantial effect on inward investment in Northern Ireland. It is interesting that, in the six-month period from 1 September 1994 to 31 March this year, the IDB received 743 investment inquiries, whereas in the corresponding period for the previous year it received 189. Of course we shall always look for ways in which to attract inward investment to Northern Ireland, but I repeat what I said earlier—that the best incentive is peace underpinned by political stability.
    Mr. Clifford Forsythe: The Minister will be aware that inward investment requires development, and that

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    development helps the construction industry. Is he aware of the allegations of increased interference from racketeers on certain construction sites in Northern Ireland, which in some cases is serious enough for the sites to be closed? Will he consult his colleagues with a view to giving extra powers to C1(3) to help to stamp out the grave extortion that is taking place?
    Mr. Ancram: Such allegations are matters for great concern, and if there is evidence of any such thing I am sure that the hon. Gentleman and other hon. Members will make it available to the Government. Certainly, my colleagues with more ministerial responsibility in that area than I have will have heard what the hon. Gentleman said. However, when we consider inward investment and attracting industry it is important to show the best side of Northern Ireland and not to allow the worst side to gain the upper hand.
    Mr. Bellingham: Does the Minister agree that, although inward investment is clearly valuable, the small firms sector is also crucial? What is he doing to encourage small businesses and entrepreneurial activity in the Province?
    Mr. Ancram: Several agencies, including the Local Enterprise Development Unit, are trying to give encouragement to such businesses. Certainly, they are of great importance to Baroness Denton, who is responsible for that aspect of the Northern Ireland Office. When we talk about rather dry facts concerning inward investment, it is worth recalling that over the past two days there has been significant inward investment. First, in the constituency of the hon. Member for Londonderry, East (Mr. Ross), Seagate announced yesterday a £60 million expansion that will bring 300 new jobs to a company that already employs many people in that area. Secondly, Dae Ryung industries announced an £18 million investment in Craigavon that will bring 500 jobs by the end of 1997. Those are two significant announcements of inward investment, and I suspect that they have much to do with the new situation in Northern Ireland.
    Mr. Spellar: We welcome the new inward investment, especially yesterday's announcement on Seagate. I urge the Minister to consider the Government's role in providing infrastructure, as there is a worrying decline in the fortunes of the construction industry. Is he aware that recent surveys by the chartered surveyors, and by the construction employers only yesterday, demonstrate a quite substantial decline in the fortunes of the industry? Is he aware of the substantial need of schools, of housing and of roads for infrastructure and new investment in Northern Ireland? Will he ensure that the peace dividend does not turn into a peace deficit for the extremely important construction industry?
    Mr. Ancram: This question would have been dealt with more successfully had the hon. Member for Rhondda (Mr. Rogers), who had tabled the previous question, on the construction industry, been present to ask it. Obviously, the matter does not fall within my ministerial responsibility, but I understand that my hon. Friend the Under-Secretary has asked all his sections of the Department to report back to him on how the construction industry may best be assisted over the coming year and whether expenditure on construction remains the same as previously.

    Arms and Explosives
    Mr. Cyril D. Townsend: To ask the Secretary of State for Northern Ireland what progress is being made over the removal of arms and explosives from illegal organisations. [19618]
    Sir Patrick Mayhew: The security forces continue to recover illegally held weapons and munitions. The most recent example was a find on 4 April of a substantial quantity of weapons, weapon parts, ammunition and weapon-making equipment in a house in Holywood, County Down, and the subsequent recovery of a substantial quantity of arms in a house in Chester-le-Street in County Durham. The RUC will continue to seek out terrorist weaponry with the utmost vigour.
    Mr. Townsend: I warmly welcome that news. Will my right hon. and learned Friend assure the House that that topic remains right at the top of the agenda? Does he agree that any talks between various groups in Northern Ireland which fail to address that subject could be fatally flawed? Does he believe that organisations, such as the United Nations, and individual countries have a part to play in helping with the removal and destruction of illegal arms and bombs in Northern Ireland?
    Sir Patrick Mayhew: I agree with my hon. Friend. I reckon that the people of Northern Ireland and the people of the whole island of Ireland are sick to the back teeth of weapons being used for political purposes and of those who justify such use. I agree with what he said about the importance of addressing that matter in talks as well as with what he said in his concluding question.
    Mr. Trimble: The Secretary of State, in reply to the previous question and to earlier questions, tried to state the circumstances and requirements for the decommissioning, as it is now called, of terrorist arsenals. May I tell him that he did so in extremely uncertain and opaque language, which people outside will find difficult to understand, that the vague and uncertain criteria stated by the Northern Ireland Office provide an opportunity for the ill-intentioned criticism of the hon. Member for Newry and Armagh (Mr. Mallon), from which he suffered earlier, and that such language also opens the door to the sort of slippage of the Government's position that has happened so often over the past few months? The only sensible thing to do is to state the clear requirements of decommissioning and the surrender of weapons and to stick to them.
    Sir Patrick Mayhew: The Government have stuck, throughout the whole of this period, to the conditions that they have described. It has been perfectly clearly stated that to make a transition from exploratory dialogue to main political talks, in which I trust that the hon. Gentleman's party will soon be taking part, there has to be substantial progress on the decommissioning of arms. I have been asked what is meant by that. I described it in Washington as a declared willingness in principle to disarm progressively, a common practical understanding of what decommissioning would entail, the decommissioning of some arms as a tangible, confidence-building measure to test practical arrangements and to demonstrate good faith and a signal of the start of a

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    process. The hon. Gentleman waves his arms as though he cannot understand that, but it is very easy to understand and it makes very good sense.
    Mr. Shore: In the talks on the decommissioning of terrorist weapons, should not the surrender of Semtex explosives have the highest priority since those particular weapons are clearly in use only for aggressive rather than defensive purposes?
    Sir Patrick Mayhew: Nobody would disagree with what the right hon. Gentleman has said. I am sometimes told that there is a long tradition of hiding the pike in the thatch when violence has come to an end. That cannot possibly be prayed in aid in favour of those who retain Semtex, given the appalling capacity of even a few pounds in weight of that material.

    Peace Process
    Mr. Canavan: To ask the Secretary of State for Northern Ireland what recent discussions he has had about furthering the peace process; and if he will make a statement. [19619]
    Sir Patrick Mayhew: I refer the hon. Gentleman to the answer that I gave the hon. Member for Walsall, North (Mr. Winnick) earlier today.
    Mr. Canavan: I welcome the decision, however belated, to initiate dialogue with Sinn Fein at ministerial, level, but can we have an assurance that, from now on, the talks will be as inclusive as possible and the agenda of the talks will be as comprehensive as possible, including constitutional matters as well as the decommissioning of arms? Do the Government now accept that they have no excuse whatsoever for excluding any party, or not fully including it in the talks, on the ground that it is allegedly not constitutional?
    Sir Patrick Mayhew: The hon. Gentleman has run together two stages. My hon. Friend the Member for Devizes (Mr. Ancram), the Minister of State, will be participating in the exploratory talks, and if our understandings prove to be correct, there is no relevant matter that cannot be discussed. As to the second part of the hon. Gentleman's question, whether Sinn Fein enters the substantive political talks depends on whether it divests itself of what has disqualified it from joining. I have repeated in answers to several questions today what it is necessary for it to do.
    Mr. Dykes: As these various complicated processes are gathering pace in a most encouraging way, will my right hon. and learned Friend examine the way in which parliamentarians and Ministers can together persuade the Ulster Unionists to join the British-Irish parliamentary body at long last?
    Sir Patrick Mayhew: I am glad that my hon. Friend finds the process encouraging—I think that it is—but, if it is going to continue to be, there has to be the most steadfast adherence to principle and we have to play matters coolly and resolutely, as well as in a sensible and imaginative way. As to what the Ulster Unionists do in regard to the body that my hon. Friend mentioned, that is a matter entirely for that party, led by the right hon. Member for Lagan Valley (Mr. Molyneaux).
    Dr. Hendron: When the Secretary of State is considering ways of furthering the peace process, will he
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    at the same time consider prisoners, both republican and loyalist, bearing it in mind that many of the young men from both communities who are in prison were not responsible for the extremely adverse environments in which they spent their formative years? Will he please look sympathetically, therefore, at the whole question of prisoners? At the same time, does he accept that the time must surely have come when Irish prisoners in England should be brought to Northern Ireland, so that their friends and loved ones can visit them there?
    Sir Patrick Mayhew: The hon. Gentleman invites me to look sympathetically at the question of prisoners, but he will know that such sympathy cannot exclude, for example, sympathy with the feelings of the relatives of those who have been murdered. There are no political prisoners in Northern Ireland. Those in prison are there only by reason of having been convicted of offences such as murder, conspiracy, the possession of arms and so forth. Accordingly, those who have been sentenced by the courts will have to serve their sentences in accordance with the law. It is very important that the hon. Gentleman, whose constituency has suffered much from these hideous crimes, should not give weight to the idea that those were somehow political crimes—they were not, they were murders and crimes of great evil and malice, done to people whom he represents, along with others.
    Mr. Bernie Grant: Will the Secretary of State clarify whether the Irish National Liberation Army has declared a ceasefire? If so, is the right hon. and learned Gentleman prepared to have talks with it?
    Sir Patrick Mayhew: I have no knowledge of any ceasefire having been declared by INLA.

    Manufacturing Investment
    Mr. William Ross: To ask the Secretary of State for Northern Ireland what further incentives he intends to provide to encourage inward investment in manufacturing industry in Northern Ireland. [19620]
    Mr. Ancram: A competitive package of incentives is already available, which has resulted in a number of major inward projects in recent years. There are no plans to introduce changes at present, but the competitiveness of the package is kept continuously under review.
    Mr. Ross: Does the Minister agree that one of the great disincentives to investment is the high cost of electricity in Northern Ireland, which is due in part to the high rate of VAT on heavy fuel oil, which affects Northern Ireland unduly? Will he take up that matter with the Chancellor of the Exchequer?
    Mr. Ancram: I shall certainly pass on that comment to my right hon. and learned Friend the Chancellor. As I have said before, when we consider inward investment to Northern Ireland, it is important that we not only look at some of the difficulties, but that we continue to point out that Northern Ireland is now an excellent place in which to invest. In that way, we can attract overseas investment, which will bring jobs to the constituencies of hon. Members representing Northern Ireland, including that of the hon. Gentleman.

  PRIME MINISTER

    Engagements
    Mr. John Greenway: To ask the Prime Minister if he will list his official engagements for Thursday 27 April. [19637]
    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. Greenway: Would my right hon. Friend care to comment on the council tax levels set by the district councils in my area for middle-range band D houses? Labour York is charging £101, a 21 per cent. increase; Liberal Democrat Ryedale is charging £78, a massive 57 per cent. increase; while in neighbouring Conservative Hambleton, householders are getting a £32 refund. Does that not show that Labour remains the high-tax party, that a protest vote for the Liberal Democrats can prove very expensive and that people are better off under the Tories?
    The Prime Minister: I can confirm what my hon. Friend has said. Examples similar to those that he has given can be found right around the country. The Labour party has sought repeatedly during the local election campaign to mislead people with comparisons on council tax, but it knows, as everyone else should know, that, band for band, like for like, Conservative councils are infinitely cheaper than Labour councils and substantially cheaper than Liberal Democrat councils.
    Mr. Blair: Can the Prime Minister sympathise in any way with the anger of nurses, who will be paid differently for the same job, according not to their performance, but to the money in the hospital trust?
    The Prime Minister: We have done for nurses precisely what they asked of us. We have provided them with their own review body and met in full its recommendations. That is something that no previous Government were prepared to give nurses. We have given them that. A great many nurses have now accepted the national settlement, to which, of course, must be added the local settlements.
    Mr. Blair: The Prime Minister is surely aware that the review body set a national figure and that it included the local component because of Government pressure to do so. He therefore cannot shuffle off responsibility on to it. Is not the effect of Government policy on the health service now to pit nurse against nurse, hospital against hospital, doctor against doctor? The result will be to divide and rule and the commercialisation, demoralisation and break-up of the health service, when people want to see the national health service run as a proper national service for the people.
    The Prime Minister: No Government at any stage have funded the health service as generously in terms of pay or other aspects of it as we do. Set against what the right hon. Gentleman has just had to say, can he perhaps explain whether it is fair or unfair that nurses' pay has risen by an average 78 per cent. in the past six years, which is twice as fast as the economy as a whole? Does he also recall that, under the Labour Government, nurses' pay actually fell—it did not even maintain its value; it
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    fell? Since then, it has increased by 78 per cent., and nurses have, as they have always sought, an independent pay review body that is, I remind the right hon. Gentleman, independent.
    Mr. Clappison: To ask the Prime Minister if he will list his official engagements for Thursday 27 April. [19638]
    The Prime Minister: I refer my hon. Friend to the reply that I gave some moments ago.
    Mr. Clappison: Does my right hon. Friend agree that those who are indulging in political knockabout on the subject of tower blocks are ducking the real issue, which is how we can help the people who live in tower blocks? Will my right hon. Friend urge all local councils to co-operate with the Government in getting rid of tower blocks?
    The Prime Minister: I quite agree with my hon. Friend. Yesterday, I tackled serious issues that affect the lives of many people in inner cities. As a smokescreen at that time, the hon. Member for Holborn and St. Pancras (Mr. Dobson) issued a press release purporting to represent my record at Lambeth council. Even a cursory checking would have shown the hon. Gentleman that every aspect of that press release was a falsehood.
    It is, of course, more than a quarter of a century ago, so I have had the facts checked. The buildings for which I am supposed to have been responsible were designed and approved by the Labour council, before I was elected to the council, let alone became housing chairman. The Leader of the Opposition may well shift uneasily in his seat. He speaks of higher standards in politics and he allows the Labour party to indulge in falsehoods, day after day.
    Mr. Ashdown: Would not the Prime Minister's great predecessor, Winston Churchill, turn in his grave if he knew how much of the public's money was now being spent to purchase his state papers, while investment in the nation's real assets—our children and their education—is being cut to ribbons by the present Government?
    The Prime Minister: The right hon. Gentleman, I am afraid, has his facts entirely wrong about the state papers. What were purchased were the personal papers of Sir Winston, which could have been freely sold to any number of buyers, and which Sir Winston had decreed, through his trustees, should go to his subsequent descendants. It is those papers that have been purchased.
    The archive, as a whole, includes state papers and personal papers, many of which have no connection whatsoever with Sir Winston's time in government. The personal papers could have been freely sold to any number of buyers. It was to maintain the archive intact that the national heritage memorial fund, which is independent, decided to fund the purchase of the personal papers from the Churchill family trustees. The Government decided at the same time to transfer the state papers, similarly, to Churchill college.
    There is no question whatever of lottery money having been used to purchase papers that are the property of the state, and the right hon. Gentleman was wrong in his remarks.
    Mr. Jenkin: May I draw my right hon. Friend's attention to the rather nasty and vindictive policy being pursued by the Lib-Lab pact on Essex county council,

    979
    which is withdrawing support for the transport of children to grammar schools? Does he agree that, while the Opposition parties try to speak the language of choice and diversity, they continue to have the language of envy and vindictiveness engraved on their hearts?
    The Prime Minister: I am surprised to hear what my hon. Friend has to say in view of the repeated comments about education from the right hon. Member for Yeovil (Mr. Ashdown) and his hon. Friends. It seems that they are concerned about discrimination only when it does not involve some pupils in Liberal Democrat-controlled authorities, whose parents happen to have chosen for them to go to grammar schools.
    Mr. Tipping: To ask the Prime Minister if he will list his official engagements for Thursday 27 April. [19639]
    The Prime Minister: I refer the hon. Member to the answer I gave some moments ago.
    Mr. Tipping: The Prime Minister has clearly had time to reflect on the statement that he made yesterday about inner cities and their housing conditions, but does he remember that in 1979, £7 billion was spent on housing investment and this year the figure has been cut to £2.5 billion? Is that not another example of the Government saying one thing, but doing another?
    The Prime Minister: If the hon. Gentleman looks at the records through the years, he will find that the changes made in inner cities—all of them beneficial—have been opposed by him and his colleagues throughout the past 16 years. The 12 urban development corporations, which are now credited with turning round the worst inner city centres, were opposed by the Labour party. Estate action and housing action trusts were opposed by the Labour party. The single regeneration budget, which is helping to fund the scheme that I saw yesterday in Hackney, was opposed by the Labour party. The deputy leader of the Labour party, who has a loose connection with facts most of the time, seems to believe that his party was responsible for the private finance initiative. May I remind him that the Labour party has opposed us time after time over moves to bring private capital to the inner cities. I know that the Labour party is stealing many of our policies, but the right hon. Member for Kingston upon Hull, East (Mr. Prescott) should have some shame and not try to steal all of them.
    Mr. Dykes: I thank my right hon. Friend for the continuing Northern Ireland peace process and the encouraging signs therein. When does he expect the talks with Sinn Fein to start and how long are they likely to last? I know that that is a difficult question. Is my right hon. Friend optimistic about the outcome?
    The Prime Minister: The exploratory talks with Sinn Fein will start before very long. Those exploratory talks must be concluded, with a number of matters settled, as my right hon. and learned Friend the Secretary of State for Northern Ireland has set out on a number of occasions, before we can enter into the political talks process itself. I very much hope that the exploratory talks can begin very speedily.
    Mr. Nigel Griffiths: To ask the Prime Minister if he will list his official engagements for Thursday 27 April. [19640]
    The Prime Minister: I refer the hon. Member to the answer I gave some moments ago.
    Mr. Griffiths: Since so many charities have lost income because of the national lottery and since Lady Churchill so freely gave to the national archives so many of Sir Winston's works, does the Prime Minister not think that it would be patriotic to follow her example today?
    The Prime Minister: Charities will find that they will be substantial beneficiaries of the national lottery—that will continue to happen year after year. I should have thought that the hon. Gentleman would have welcomed the substantial help that will go, not only to charities, but to a number of other worthy causes, as a result of the Government's initiative.
    Mr. Duncan: To ask the Prime Minister if he will list his official engagements for Thursday 27 April. [19641]
    The Prime Minister: I refer my hon. Friend to the answer I gave some moments ago.
    Mr. Duncan: Is the Prime Minister aware that 250 jobs are about to be created by the reopening of a colliery in Nottinghamshire and that the Asfordby pit in my constituency is about to go into full production? Will my right hon. Friend call on the right hon. Member for Sedgefield (Mr. Blair) to give credit where credit is due? The right hon. Gentleman should recognise the success not only of a privatised coal industry, but of the gas industry. After the passage of the Government's Gas Bill, will not the benefits of competition and choice be extended to every domestic consumer of gas in this country?
    The Prime Minister: I imagine that the right hon. Member for Sedgefield (Mr. Blair) heard what my hon. Friend had to say. Despite the ridiculous predictions from the Labour party time after time, competition has reduced prices in the gas, electricity and telephone industries. I see no reason to suppose that it will not deliver a successful coal industry. In the case of gas competition, domestic customers should see their bills fall by about 10 per cent. thanks to the measures taken—something I should hope that everyone would welcome.
    Mr. Mullin: To ask the Prime Minister if he will list his official engagements for Thursday 27 April. [19642]
    The Prime Minister: I refer the hon. Member to the answer I gave some moments ago.
    Mr. Mullin: Has the Prime Minister read the recent speech by Mr. Michael Grade about the rise of Rupert Murdoch? Does he think that it is right that a foreign-owned corporation headed by a ruthless megalomaniac should control one third of our newspapers and much of our television? Does the Prime Minister plan to do anything about it?
    The Prime Minister: The hon. Gentleman knows that we have been studying the law relating to cross-media ownership. That study is not concluded and, as soon as it is, we shall publish what we propose to do.

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    As to Channel 5—which is clearly what the hon. Gentleman has in mind—the process of choosing a Channel 5 licensee must be, and is being, conducted on the basis of long-standing rules legislated by the House.
    Mr. Stephen: Will my right hon. Friend ask the Lord Chancellor to think again about paying legal aid in civil cases to people who are not ordinarily resident in this country? Is my right hon. Friend aware that our constituents
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    object to that practice, not on the basis of the applicant's nationality, but because there is not enough money in' the legal aid fund to pay legal aid to our middle-income constituents who have paid taxes all their lives?
    The Prime Minister: My hon. Friend raises a matter that a number of people are concerned about. I assure him that my right hon. and learned Friend the Lord Chancellor will examine it.

Business of the House
3.30 pm
Mrs. Ann Taylor: May I ask the Leader of the House for details of future business?
The Lord President of the Council and Leader of the House of Commons (Mr. Tony Newton): The business for next week will be as follows:
MONDAY 1 MAY—Remaining stages of the Children (Scotland) Bill.
TUESDAY 2 MAY—Remaining stages of the Atomic Energy Authority Bill.
WEDNESDAY 3 MAY—Until 2.30 pm, there will be debates on the motion for the Adjournment of the House.
Debate on exports, industry and inward investment, on a motion for the Adjournment of the House.
THURSDAY 4 MAY—Debate on the Royal Air Force, on a motion for the Adjournment of the House.
FRIDAY 5 MAY—It will be proposed that the House will meet at 9.30 am for Prayers and thereafter adjourn. Addresses will be presented to Her Majesty the Queen in Westminster Hall at 12 noon.
Monday 8 May is, of course, a bank holiday, and the House will not sit. I regret that, at present, I am not able' to give details of business later that week. I will do so next week and, at the same time, I hope to give some indication as to business for the following week. I will make every effort—if I may predict one of the questions that the hon. Member for Dewsbury (Mrs. Taylor) will ask—to include provision for Opposition time.
Mrs. Taylor: I regret the slippage in announcing future business that the Leader of the House has announced. We were making good progress, and I urge him to try to regain that position in the future.
I could raise many issues with the Leader of the House today, but I intend to put them to one side in light of the seriousness with which we view his failure to provide a Supply day for the Opposition next week. I have been pressing for a Supply day since the end of March, so that Opposition Members could choose the subject of debate. Today, the Leader of the House has announced the business of the House up to and beyond the local elections on 4 May, and we have been denied a Supply day yet again. That will mean an interval of at least six weeks between Supply days.
I believe that the Leader of the House is aware of his obligations to Her Majesty's Opposition, and I know that he must have come under very significant pressure—not least, because he promised in the Chamber on 30 March and on 18 and 20 April that he would do his best to take on board our requests for a Supply day.
I cannot stress enough that it is unacceptable for the Government to refuse the Opposition a Supply day throughout the run-up period to the local elections, especially given the desire on both sides of the House for a debate on health. Even with the Whip restored to some to compensate for other hon. Members who have been suspended, are the Government still afraid of the outcome of a debate on London health? The Leader of the House
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must realise that he is wrong to try to gag the Opposition, wrong to delay debates until after the local elections, and wrong to duck debates on London health.
Mr. Newton: I need hardly say that there is no question of trying to gag the Opposition or duck debate on legitimate issues. There was an above-average frequency of Opposition days earlier in the year, and we have had an above-average need to deal with Government business in the past few weeks, including three Bills for which the Opposition pressed very hard, among them the Children (Scotland) Bill, which we are due to debate next Monday. I always take account of the hon. Lady's representations, which is not to say that I can always meet them, but I have just said that I shall make every effort to include Opposition time in my next business statement.
Sir John Gorst: Could the Leader of the House find time for a debate in Government time on the closure of London hospitals?
Mr. Newton: There have already been substantial exchanges on that matter in relation to the private notice question which my right hon. Friend the Secretary of State for Health answered two or three weeks ago. I have no plans to provide for a debate in Government time, but I shall note my hon. Friend's representation.
Mr. Paul Tyler: Does the Leader of the House accept that the widespread consternation and confusion about the exact position in relation to the Churchill archives has not been dispelled by the answer given by the Prime Minister to my right hon. Friend the Member for Yeovil (Mr. Ashdown) a few minutes ago?
It is not the distinction between the state and private papers that concerns people in all parts of the House and the country, but the clear impression that Ministers have given the House on successive occasions that the national lottery would be new money, not money to substitute for something in which the Government and the state should invest anyway. Will the Leader of the House therefore assure us that there will be an opportunity not only to hear from the Secretary of State on that matter, but to debate the issue?
Mr. Newton: I certainly cannot promise an opportunity for debate but, as ever, I shall bear the request in mind. I thought that my right hon. Friend the Prime Minister was absolutely clear about the position, and, as he emphasised, the decision was taken by independent trustees of the national heritage memorial fund.
Sir Patrick Cormack: May I quote a phrase which my right hon. Friend just used and suggest that there is an "above-average need" for a debate on the situation in the former Yugoslavia? Can we have one very soon?
Mr. Newton: While noting my hon. Friend's request, and very much respecting the interest that he has taken in those matters over many years, I cannot promise a debate at the moment. Given the pressures I face from those on the Opposition Front Bench and elsewhere, he will understand some of the difficulties that I might find in so doing. I will, however, keep it in mind.
Mr. Dafydd Wigley: Will the Leader of the House arrange for the Secretary of State for Wales to make a statement next week on the delays and

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prevarications with regard to the district auditor's reports on an investigation into possible fraud in the housing renovation department in Rhondda? A management letter was submitted last year on the matter and has not been actioned. A public interest report should be brought forward. One was promised before March, but will not be brought forward before the local elections. Do not the electorate have a right to know about important material in such reports before local elections take place?
Mr. Newton: I am not aware of any plans that my right hon. Friend the Secretary of State for Wales has to make a statement on that matter, but I shall bring the hon. Gentleman's question to his attention.
Mr. Bob Dunn: Could the Leader of the House arrange for an urgent debate on commitment in politics, given that the House may wish to decide which is the greater cosmetic act: the setting up of Max Factor, or Labour's review of clause IV?
Mr. Newton: I will reflect on that.
Mrs. Alice Mahon: Is the Leader of the House aware that the public, who are outraged by the Churchill payout, will not be pacified by the Prime Minister's answer this afternoon? As the hon. Member for Davyhulme (Mr. Churchill) will almost certainly be made redundant at the next general election, will the Leader of the House make time for an urgent debate on what will be seen as the biggest redundancy payout ever?
Mr. Newton: As I have said, I thought that my right hon. Friend the Prime Minister made the position absolutely clear in his answer at Prime Minister's questions today. What is more, I think that it will be generally welcomed that it has proved possible to keep this invaluable collection of papers, regardless of their original ownership and whether they were state papers or private papers, or those on which the National Heritage Memorial Fund will have taken legal advice, together as a single, invaluable collection.
Mr. Edward Garnier: The hon. Member for Dewsbury (Mrs. Taylor) is keen to have a debate on the health service. Will my right hon. Friend assist her by allowing an Opposition day debate on the health service in Leicestershire, because my right hon. Friend will find that 93 per cent. of those who responded to a survey across my constituency were not only well satisfied but wholly happy with the way in which the health service is running under the Government's reforms? Can my right hon. Friend find Opposition time for such a debate?
Mr. Newton: I will certainly endeavour to bring that out should such a debate take place. In any event, I endorse my hon. and learned Friend's observations about the experience that people report when they actually have treatment with the NHS.
Ms Diane Abbott: Will the Leader of the House make time for a debate on the lottery? Is he aware that people in poor areas in Hackney spend more money, as a proportion of their income, on lottery tickets than people anywhere else? They are amazed to find that £13.5 million of their money is going to the Churchill family trust.
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Is the right hon. Gentleman aware that the Prime Minister's answer this afternoon was misleading, and that what the Prime Minister described as personal papers are personal only in the sense that Sir Winston Churchill chose to take them with him when he retired from office? Is he aware that the Attlee family donated all his papers, state and personal, to the nation, and will he not urge the Churchill family to do the same?
Mr. Newton: I do not believe that the hon. Lady is right in what she says.
Mr. Jacques Arnold: Will my right hon. Friend allow a debate on school transport? I am sure that his constituents must have been very concerned at the comments of my hon. Friend the Member for Colchester, North (Mr. Jenkin) about the vindictive action of the Lib-Lab pact that controls Essex county council and the damage that it will do to less well-off families whose children need to go some distance to get to school. It will not surprise my right hon. Friend that in Kent, where the county council is also run by a Lib-Lab pact, we are also very concerned.
Mr. Newton: The constituency of my hon. Friend the Member for Colchester, North (Mr. Jenkin) is immediately adjacent to mine—indeed, it is half a mile from where I live—so I am well aware of the concerns that are felt in Essex about the policies that are being considered by the Lib-Lab pact that runs Essex county council. Indeed, I am making representations on behalf of my own constituents.
Mr. Dennis Skinner: Will the Leader of the House arrange a debate on the pay of the bosses who run the privatised utilities, and has he noticed that his friend Lord Young, who is the head of the privatised Cable and Wireless company and receives £948,000 a year, has had the bare-faced cheek to attack teachers who are asking for 3 per cent. as being "greedy"? Is it not time that we debated this issue to put into context the fact that, among those who have taken those jobs, are 19 ex-Tory Cabinet Ministers, with 19 directorships between them? They are the greedy people, and the last thing they should be talking about is our teachers and nurses.
Mr. Newton: The position is that we are awaiting the recommendations of the Greenbury committee, which is considering the issue of executive pay in all public companies. I think that that is the right context in which to consider those matters, and any report from that committee would be the right context in which to consider a debate.
Mr. John Wilkinson: Can I reiterate to my right hon. Friend my previous plea for an urgent debate on civil air transport, which is one of this country's largest sources of employment and foreign exchange? In that context, could my right hon. Friend reconsider the subject matter for next Thursday's debate, and move the debate on the Royal Air Force to a later date, because the Royal Air Force affects the whole of the nation and many right hon. and hon. Members will be away for the local elections, whereas civil air transport is of particular concern to London Members, especially to those like me, who have many constituents working at Heathrow airport?
Mr. Newton: Of course, I shall, as ever, bear my hon. Friend's request in mind. I must say, however, that I am

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mildly surprised by his request in one sense, in that he is one of those from whom I had anticipated pressure for a debate on the RAF had I not announced one.
Mrs. Bridget Prentice: Given that the Director General of the Prison Service is now on probation, mainly because the Home Secretary cannot make up his mind whether to sack him or back him, is it not time that we had a debate on prison privatisation?
Mr. Newton: I cannot add to what my right hon. and learned Friend the Home Secretary told the House about this matter yesterday. There are no plans for a debate such as the hon. Lady suggests, but I shall, of course, bear her request in mind, too.
Mr. Oliver Heald: Will my right hon. Friend find time for a debate on civil air transport and air services agreements between the United Kingdom and the United States, so that Conservative Members can make the point that it is the job of the United Kingdom to negotiate such agreements, not that of the European Commission, and that we are going to defeat the ambitions of the Commissioner involved, as we have in the past?
Mr. Newton: I have to acknowledge that that is a genuinely attractive proposition for a debate, but I must stop short of promising it. I can but stress that I share my hon. Friend's view that the United Kingdom's interests are best served by direct air services agreements made by national Governments. We firmly believe that the United Kingdom and other member states should remain free to negotiate bilaterally with the United States.
Ms Angela Eagle: Will the Leader of the House arrange for a debate early next week on funding and financial provision for the Royal British Legion, especially as that would be just ahead of VE day, which we shall all celebrate, so that we can consider what might have been done with the £14 million that has just been given to the trust of one hon. Member, and how it might have been used to help the veterans who really deserve it?
Mr. Newton: I understand why the hon. Lady feels it right to ask the question in that way. I would venture the view, however, that members of the Royal British Legion and, indeed, all those who served in the British forces and on the British civilian scene in the second world war, would be very unhappy at the thought of the Churchill papers being broken up.
Mr. Toby Jessel: On that subject, does my right hon. Friend accept that everybody knows that, if it had not been for the inspirational leadership of Sir Winston Churchill in the second world war, it is highly likely that we would have been defeated and that this country would have been governed by Adolf Hitler? Does he not consider that this country owes an unbounded debt to Churchill and his memory, and that his wishes should be honoured and respected?
Madam Speaker: Order. I did not hear the hon. Gentleman ask for any change of business next week. This is not the time to make statements about individual views, but an opportunity for hon. Members to question the Leader of the House about next week's business.
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However, I shall hear the Leader of the House reply—he is quite capable of doing so in spite of the way the paint was put to him.
Mr. Newton: I am grateful for that compliment from the Chair, and I shall do my best. Perhaps the best that I can do is to point out that part of what is in effect our business next Friday is the start of the celebrations for VE day weekend, with the events in Westminster Hall. I am sure that the contribution that Sir Winston Churchill made to enable us to hold such events will be much in everyone's mind.
Mr. Derek Enright: Has the Leader of the House read the Conservative manifesto of one John Kelly, a local election candidate in Manchester, who writes:
"Are you depressed, unhappy, suicidal?—then think what it's like for me as a Conservative candidate"?
Could we have a debate a week on Friday to discuss the medical advice available for defeated Tory candidates?
Mr. Newton: I have not read that manifesto. On the second point, I do not share the reported feelings of the person in question. In answer to his last question, the hon. Gentleman will find that the Friday in question is a non-sitting day.
Mr. Harry Greenway: May we have a debate on the decision to acquire the Churchill papers? I support all who called for such a debate with a view to congratulating those who made the great decision to acquire the papers of the greatest man in the century, perhaps the greatest Englishman of all time. [Interruption.] It is true. May we have such a debate without descending to the politics of envy?
Mr. Newton: Once again, I have a request that I shall bear in mind, but I am afraid that I cannot accede to it from the Dispatch Box this afternoon, although I appreciate my hon. Friend's motives.
Ms Mildred Gordon: May I inform the Leader of the House that a number of my constituents have complained that there is still a police cordon around the City of London? I note that the letter boxes around Paddington station are still sealed. Will he arrange for a debate about security provisions on the mainland, in view of the changed circumstances?
Mr. Newton: I shall, of course, bring those remarks to the attention of the appropriate authorities, and ask them to be drawn to the attention of the appropriate authorities in the City. My own observations, as a result of being a frequent user of Liverpool street station, are that the arrangements have improved traffic flow in the area.
Lady Olga Maitland: Will my right hon. Friend consider providing time for an urgent debate on local government? Is he aware of a recent study that showed that most politically obsessed local authorities are all Labour-controlled? Indeed, their obsession with race, gender and sexual orientation is said to heighten awareness, not discrimination, and is causing serious resentment in the community at large, as people feel that they are not getting a fair share of the cake.
Mr. Newton: I certainly agree with my hon. Friend that the costs of what is known as political correctness are probably one reason why, band for band, the costs of Labour local councils are higher than those of others.
Mr. Dennis Canavan: In view of the Prime Minister's inadequate explanation, may we have a statement next week explaining exactly who are the beneficiaries of the £13 million from the lottery fund that was used to buy the Churchill papers? If those papers are part of our national heritage, why on earth did the Government not intervene to stop them being sold off on the international market, instead of using £13 million from the lottery fund as a ransom payment to people who are quite intent on threatening to sell off our national heritage to the highest bidder?
Mr. Newton: I repeat that I am clear from our exchanges that my hon. Friends do not regard my right hon. Friend's answer as inadequate. As for the rest of what the hon. Gentleman said, the decision was taken by the independent national heritage memorial fund.
Mr. Patrick McLoughlin: Will my right hon. Friend find time for a debate on the possible introduction of a national funding formula for education? Is he aware that Derbyshire county council holds back £720 per pupil, Staffordshire holds back £550 per pupil and Nottinghamshire holds back £570 per pupil? If that money went directly into the schools, it would make quite a difference to the financial position of our schools in all those counties.
Mr. Newton: I am sure that my right hon. Friend the Secretary of State for Education will examine carefully my hon. Friend's remarks. I hope also that the local authorities to which he has referred will do as he suggests.
Mr. D. N. Campbell-Savours: The Leader of the House was present last week when we debated the abuse of proceedings in the Select Committee on Members' Interests. What is the Government's response? Will there be a statement on what we are to do in circumstances where a libel action in a court is given precedence over the requirements for a Committee of the House of Commons to carry out a full inquiry? Surely the Government must have a position on the matter, particularly as they have a Whip on the Committee.
Mr. Newton: You would quickly rule me out of order, Madam Speaker, were I to comment in any detail on the affairs of a Select Committee—in this case, the Select Committee on Members' Interests. My concern last week was to enable that Committee to continue its work without interruption from the hon. Gentleman.
Mr. James Clappison: When my right hon. Friend considers the Opposition request for a debate on London's health services, will he bear in mind the fact that the Opposition had two Opposition days in the recent past on that subject? On one occasion, the Opposition's health spokesman was replaced by their campaigns co-ordinator. Will my right hon. Friend do what he can to ensure that any debate on London's health services is calm and constructive—not the sort of vote-grubbing exercise that the Opposition want?
Mr. Newton: I always do my best to ensure that all the proceedings in the House are calm and constructive.
Mr. Harry Cohen: With the planned closure of the much-loved Bart's hospital and of other hospitals in London, and given health cuts and the discriminatory low pay award to nurses, is there not an overwhelming case for debating London's health services? Does the Leader of the House share the concern felt by me and others that, with the recent three-in-a-bed scandal involving a Member of Parliament, the Secretary of State for Health might think that a good idea for London hospitals?
Mr. Newton: In circumstances in which an extra £1.3 billion is being spent on the NHS this year, I do not think that the hon. Gentleman's remarks do justice to the true situation. In referring to cuts, the hon. Gentleman did not state the correct position.
Mr. Charles Hendry: Further to the question from the hon. Member for Bolsover (Mr. Skinner), will my right hon. Friend arrange an early debate on the extremely high levels of pay of top executives in local government—especially in the light of the fact that the county director of Derbyshire, who earns £70,000 a year, has ignored three requests from me to say by how much his salary and those of his senior executives have risen over the past five years? Should there not be a debate, so that those figures can be brought out into the open?
Mr. Newton: I have already referred to the Greenbury committee. If there is a subsequent debate, my hon. Friend might be able to raise those evidently related matters.
Mr. Michael Connarty: As to the VE day celebrations, will the Leader of the House arrange for a Scottish Office Minister to come to the House to explain how that Department is dealing with the concerns expressed in early-day motion 871?
[That this House is deeply concerned that the intention of the Royal Proclamation of 22nd June 1994, that 8th May 1995 should be a Bank Holiday to commemorate the 50th anniversary of V.E. Day, is being undermined in Scotland; notes that unlike other parts of the United Kingdom 1st May is an annual Bank Holiday fixed by statute for Scotland; notes that in a letter of 22nd February 1995, replying to a question to the Prime Minister by the honourable Member for Falkirk East, the Department of the Environment stated 'In Scotland the anniversary will be marked by an additional day's Bank Holiday for this year only'; notes, however, that it appears that correspondence between the then Minister for Industry and Local Government in the Scottish Office, the honourable Member for Eastwood, and CBI Scotland encouraged employers to treat 8th May 1995 as a replacement for the 1st May public holiday; notes that this has led some employers such as the Post Office to withdraw the traditional May Day holiday on 1st May and substitute 8th May, in effect forcing employees to pay for their own V.E. Day holiday; and urges public and private companies to negotiate an additional holiday on 8th May so that Scots can celebrate the anniversary of the peace won by the sacrifices of so many. [R] Relevant registered interest declared.]
Is the right hon. Gentleman aware that Monday 1 May is a statutory bank holiday in Scotland, and that most public workers will get an extra day's holiday on 8 May?

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However, because of interference by a Scottish Office Minister, the Post Office is denying that holiday to its workers, and the Scottish Office is denying it to its workers.
Will the Department of Trade and Industry explain, even at this late date, why it will not compel the Post Office to go to the Advisory, Conciliation and Arbitration Service to avoid a strike on Monday to preserve a national holiday in Scotland, which would bring the good name of the VE day celebrations into disrepute?
Mr. Newton: I will bring the hon. Gentleman's questions to the attention of my right hon. Friend the Secretary of State.
Mr. Harry Barnes: As the Leader of the House is aware, it would be possible to include the Civil Rights (Disabled Persons) Bill on tomorrow's Order Paper, but only if that Bill finishes in Committee. Is the right hon. Gentleman aware that 113 amendments have been tabled in the name of the hon. Member for Richmond, Yorks (Mr. Hague), who is the Minister concerned? The filibuster involved is worse than that seen on the Floor of the House last year in respect of the previous Civil Rights (Disabled Persons) Bill.
Will the Leader of the House take action to ensure that the current Bill is allowed to progress this afternoon, so that it can be debated in the House tomorrow—as required by many hon. Members and the public?
Mr. Newton: It is not for me to comment on proceedings in a Committee at which I have not been present, and it would be improper for me to seek to control them. The hon. Gentleman will acknowledge that a wide range of issues require thorough discussion. He can hardly accuse the Government of being unhelpful in a week in which we tabled a money resolution for his Bill.
Mr. Piara S. Khabra: I was surprised to hear one Conservative Back-Bench Member remark that 93 per cent. of the population are satisfied with the health service. The fact is that 93 per cent. of the population are dissatisfied with the state of the health service. May I ask the Leader of the House to reconsider, and to approve a Supply day debate on the state of the NHS?
Mr. Newton: All I will say is that I will add that request to the list of comparable requests, starting with that of the hon. Member for Dewsbury (Mrs. Taylor).
Mr. Jimmy Hood: May I raise with the Leader of the House the problem of community care, and in particular Orchard house, a nursing home in my constituency? It was recently the subject of a "Frontline Scotland" investigative programme, which exposed malpractice, mistreatment and criminal neglect of residents in that home. Because of the seriousness of the allegations, I ask the Leader of the House for a debate next week on that very important subject, because there are a considerable number of residents in nursing homes such as Orchard house, who need to be protected. I think that the House should have a debate on that.
Mr. Newton: I know that the hon. Gentleman will understand that it would be quite wrong for me to seek to comment on allegations of the kind that he has just made
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or reported, and I shall not attempt to do so. The proper course would be for such allegations to be investigated by the appropriate authorities—the social work department, as it would be in Scotland, or the Secretary of State; I am not sure which. I shall ensure that his remarks are drawn to my right hon. Friend's attention.
Mr. Andrew Miller: As the Leader of the House is nervous about bringing the Secretary of State for Health before the House on a Supply day on London health before the local elections, will he at least ask her to come before the House next week to answer a specific question on an analysis that has been done on Government figures, which show that 74 out of the top 100 prescribed drugs cost less than the £5.25 cost of a prescription, and, what is more, one third of those drugs cost less than £1? That is taxation of the sick. It is about time that the Government answered that important question.
Mr. Newton: It is only slightly less than a fortnight ago that the issue of prescription charges was debated on the Floor of the House with the Minister of State. I certainly do not envisage further time for debates in the near future.
Mr. Don Foster: Will the Leader of the House find time for an early debate on education administration in central and local government? Is he aware that such a debate would enable clarification of remarks made to the House by the Prime Minister? Does he recall that, on 16 March, the Prime Minister told the House that there were two education administrators for every three teachers? Yet, in Prime Minister's Question Time last Tuesday, the Prime Minister said that those figures came from "Social Trends".
On checking with the Library of the House of Commons, I am assured that no such figures exist in "Social Trends". The reality is that, in the Prime Minister's own constituency, in Cambridgeshire, there is in fact one administrator for 16 teachers. Does the Leader of the House not think that it would be appropriate to have such a debate, so that we could raise those issues?
Mr. Newton: I do not think that it would be appropriate to have such a debate.
Mr. Jeremy Corbyn: Will the Leader of the House find time for an early debate on the question of the property of former Ministers and Prime 'Ministers: what belongs to them, what is personal to them and what is claimed to be their property merely because they held high office?
The revulsion throughout the country at the money that is to be paid to the Churchill family for the papers must be aired in the House. Above all, we need to know that other former Prime Ministers or their families will not make a killing out of selling their papers, which they gained solely by being in office, as a result of being elected and therefore being public servants.
Mr. Newton: I will observe in passing that it seems to me to be quite difficult to argue that letters written by a schoolboy to his mother in his early years can be counted as state papers. Clearly, there have been difficulties in determining precisely what is and what is not, but, as I understand it, the trustees of the national heritage memorial fund took careful legal advice on the question of ownership and valuation before making their decision.

China and Hong Kong
[Relevant documents: the First Report of the Foreign Affairs Committee, Session 1993–94, on relations between the United Kingdom and China in the period up to and beyond 1997 (HC 37), the Government Observations thereon (Cm. 2608) and the Annual Report on Hong Kong 1994 by the Secretary of State for Foreign and Commonwealth Affairs (Cm. 2788.]
Motion made, and Question proposed, That this House do now adjourn.—[Mr. Wood.]
4.4 pm
The Secretary of State for Foreign and Commonwealth Affairs (Mr. Douglas Hurd): We welcome this opportunity to review developments in China and Hong Kong and to look at our policies towards them. This is no backwater; it is a central part of our foreign policy and, indeed, the last main chapter of our imperial history. I am sure that it is right that the House should, from time to time, discuss the matter.
The debate is timely. Last year, the Select Committee on Foreign Affairs, under the chairmanship of my right hon. Friend the Member for Guildford (Mr. Howell), produced its thorough report on relations between the United Kingdom and China. The Government have made their observations on that report.
Last month, I laid before the House the annual report on Hong Kong. As it happens, last week in New York I had another of my regular series of meetings with the Chinese Foreign Minister, Vice-Premier Qian Qichen. I hope that he will be visiting London later this year. Next month, my right hon. Friend the President of the Board of Trade will visit Peking and Shanghai, accompanied by more than 100 of our most senior business men.
With fewer than 800 days to go before sovereignty over Hong Kong reverts to China, it is a good time to take stock. The Foreign Affairs Committee was right to begin its report with an analysis of China's growing weight in world affairs. We all know that China's economic growth is formidable. Average growth of over 9 per cent. a year has now continued for more than 16 years. The economic reforms, including the introduction of market principles and the opening of the economy to foreign trade and investment, are, I believe, irreversible.
I am aware that there is speculation about revolutionary change and the break-up of China—on analogy with the former Soviet Union. Sometimes, the growth in regional power and the obvious decentralisation in China are cited as evidence that China is heading down that road. I do not believe that. I believe that China will remain united and, over the years, continue to grow rapidly in economic strength and in influence in the world.
China is not the Soviet Union. As I know from my past time there, in China there exist powerful forces to preserve the unity of the country—a strong cultural and racial identity and strong national institutions committed to keeping China intact and pride in China as a nation.
It is true that economic reforms have given the provinces more economic decision-making powers, which many have been quick to exercise. But there has been no evidence of a concerted attempt by regions to follow their own political agenda. I believe that China's unity and integrity will continue for as far ahead as we can see and certainly long after the transition to the new generation of political leadership.
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Against that background, we are seeking to develop a practical and realistic dialogue with China. We work with China as permanent members of the United Nations Security Council. We encourage China to be forthcoming on such issues as non-proliferation—now being debated in New York—and regional conflicts. We want China to join international bodies such as the new World Trade Organisation, although obviously that must be on the right terms. We are building up contacts of all sorts with China through the British Council, the Great Britain-China Centre, the BBC and many other channels.
At the heart of what we do with China is, of course, our special responsibility for the future of Hong Kong. As the House would wish, that responsibility is among our highest foreign policy objectives. We have the joint declaration and we must do what we believe to be in the best interests of Hong Kong on the basis of that declaration. We must not shrink from that. We owe the people of Hong Kong no less; I believe that we owe ourselves no less. That is not at odds with our wider objectives in relation to China. Some people speak as if we had a choice between China policy and Hong Kong policy. In fact, we cannot have one without the other. Only within the context of a wide-ranging relationship with China can we fulfil our responsibility for Hong Kong.
When Vice-Premier Qian and I met in September last year, he spoke of a gradual restoration in Sino-British relations, over Hong Kong and more generally. As part of that, we want to increase the frequency and scope of visits in both directions. The visit that the Minister of State, my right hon. Friend the Member for Eddisbury (Mr. Goodlad), paid to Peking last July was one element in that. We welcomed to London the Chinese Vice-Minister of Finance. This year, two former British Prime Ministers, Baroness Thatcher and my right hon. Friend the Member for Old Bexley and Sidcup (Sir E. Heath), paid successful visits to Peking and they saw, as was right, a number of China's senior leaders. As I said, the next step is next month's visit to Peking by my right hon. Friend the President of the Board of Trade. I mentioned to Foreign Minister Qian that we could develop more contacts between hon. Members and legislators in China.
Perhaps the clearest example of the depth of the relationship is on the commercial side. China's open-door policy has undoubtedly freed the entrepreneurial spirit and talent of Chinese people with spectacular results, as all recent visitors testify. Gross domestic product has trebled in the past decade and a half. British industry and commerce are heavily and successfully involved. Last year, we mounted our largest ever trade mission to China, with more than 100 representatives from more than 70 companies.
Last year, our exports to China were worth £845 million, up more than 14 per cent. on 1993, the figure for which was 72 per cent. up on the previous year. Britain is now the largest European Union investor in China. By the end of last year, our cumulative investment there amounted to $4.5 billion. More than 600 joint ventures in which British firms hold a stake exist in China. Those firms include some of the leading names in British industry.
To help our exporters, we have made use of the aid and trade provision, worth some £25 million a year, and in September last year we signed the third concessional financing agreement, worth £55 million. Therefore, our

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business men are doing well, but not yet well enough. We need to press for every advantage and opportunity for British industry in a market that, early in the next century, will be among the world's largest.
We have well-established and expanding cultural links with China. Many such contacts exist. I should like just to mention that about 5,000 Chinese students attend British universities and colleges—a striking figure. The British Council is active in promoting scholarships to Britain, English language teaching and a full exchange programme in science, medicine and technology.
Of course, there is not just progress and co-operation. Inevitably, there are disagreements, and the relationship must have the strength to allow those disagreements to be expressed. We need, for example, to talk candidly but calmly to the Chinese about human rights, and we do so. We continue to be deeply concerned at some of the reports that reach us. We raise those concerns regularly. I did so with Vice-Premier Qian in New York the other day, and the mission to China in 1992, led by my noble Friend Lord Howe, produced a number of particular practical recommendations for legal reform. We are continually in touch with the Chinese authorities about the taking up of those suggestions.
Right hon. and hon. Members are rightly much concerned about the threat to Tibetan culture and, identity—a particular example of human rights abuse. That can be sorted out and put right only by a thorough dialogue without preconditions between the Chinese Government and the Tibetans. We urge all concerned to start that process without delay.
I should say a word about Taiwan, which comes under this heading, because we have substantial commercial and cultural interests there. We do not recognise it as an independent state and that means that we have no political dialogue with it, but our unofficial links are there and making good progress.
Last year, our exports to Taiwan were worth £735 million, up 10 per cent. on 1993. Nine out of 10 Taiwanese manufacturing investments in Europe have come to the United Kingdom. We have 8,000 Taiwanese students at British universities and colleges.
We have a "One China" policy—which I am sure is right—so we have no political relationship with Taiwan, but we can develop our ties in other sectors. This year's first British festival in Taiwan, including a British education exhibition, is powerful evidence of that.
Mr. David Howell: What my right hon. Friend says about Taiwan is welcome. As he says, we recognise the "One China" policy, but although 5,000 mainland students are here, we have even more Taiwanese students. Does he accept that in developing commercial relations with Taiwan, we should impose on the movements of people from Taiwan and on the visa procedures no more onerous a regime than any other country does?
Mr. Hurd: I shall look into the detail of that question, but we certainly have no desire to put any artificial or unnecessary restraints on people coming and going on their legitimate business between here and Taiwan.
I shall now say something about Hong Kong—
Mr. D. N. Campbell-Savours: May I take the Foreign Secretary back to his reference to student movements to the United Kingdom from China? Is there not an argument that the British Government should take a far more hands-on approach to developing courses in United Kingdom universities in the Chinese languages, and also to promoting Chinese culture? Should we not at the same time promote an extensive programme of moving students from the United Kingdom to study in Chinese institutions? Is not this a critical point in our history, when we can formulate future events and the future relations between the two countries by developing that important area of student movement?
Mr. Hurd: Yes, that is important. Each time that I have been to China, I have met British students studying there, as the hon: Gentleman suggests that they should. But I have also met many Chinese who have come back from studying in this country and are now taking up positions in different professions in the People's Republic, and I have been most encouraged by the way in which they look back on their time in colleges and universities here.
If I could come to Hong Kong, there are now just over two years to go before sovereignty over Hong Kong reverts from London to Peking. We have come a long way, and achieved a great deal, since the Sino-British joint declaration was signed in December 1984 and ratified by the House the following May.
On the political front, we have put in place, I believe successfully, arrangements for developing representative government in Hong Kong that are wholly compatible both with the joint declaration and with China's Basic Law for Hong Kong. It is a pity that, as the House knows, after 17 rounds of talks lasting most of 1993, it was not in the end possible to reach agreement with China on those arrangements.
Since then, elections have been held under the new arrangements for both tiers of local government in Hong Kong; for the district boards in September 1994, and last month for the municipal councils. Both elections saw a record number of candidates and a record turnout by the electorate. Pro-democracy parties finished with clear leads, but those regarded as having close links with Peking or with the business community also performed very respectably.
The final round of elections under British rule—those for the Legislative Council—will be held on 17 September this year. I am encouraged by the interest that all sections of the Hong Kong community are showing in contesting the elections, and I see no good reason why China should dismantle electoral arrangements that are wholly consistent with the joint declaration, the Basic Law and other understandings between us, and that so clearly command the confidence of most people in Hong Kong.
But that is not enough; that is not the whole story. The Hong Kong Government have had much more to do than simply to put those arrangements in place. As everybody now present in the Chamber knows, Hong Kong is an intensely dynamic and stimulating place—I think that it is the most stimulating place that I ever visit. It does not stand still, and its Government cannot stand still.
Over the past year, the Hong Kong Government have strengthened the protection of human rights there. In June they announced measures to promote sexual equality, and the United Nations convention on the rights of the child

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was extended to Hong Kong last year. The Hong Kong Government have also announced an administrative code on access to Government information, and next week they will introduce into LegCo a Bill to prohibit discrimination on grounds of disability. They have announced plans for legislation to protect privacy in respect of personal data, and to make legal aid more readily available in Bill of Rights cases.
That big social and political legislative programme is against a background of extraordinary economic growth in Hong Kong-6.4 per cent per annum over the past decade. I am not sure that, when people discuss Hong Kong here, they fully realise the size of what is being achieved. Gross domestic product per capita in Hong Kong is now greater than that in the United Kingdom or Australia. It is now the world's eighth largest trading economy, it has the world's sixth largest foreign exchange reserves and the seventh largest stock exchange and its container port is now the busiest in the world.
In his 1993 and 1994 budgets, the Financial Secretary in Hong Kong was able once again to cut taxes, increase expenditure and put more money aside for Government reserves. Those reserves will be worth more than $HK150 billion—about £12 billion—when Hong Kong is returned to China on 30 June 1997. That is the latest estimate.
Several hon. Members rose—
Mr. Hurd: May I finish this paragraph? Sixty per cent. of the work force in Hong Kong do not pay any salaries tax at all and only 2 per cent have to pay the top rate, which I have to admit to the House is an onerous 15 per cent.
Sir David Steel: As the Secretary of State passed rather quickly over the human rights section of his speech, I apologise to him for not realising that he had moved on. Does he have any expectation that China will ratify the United Nations covenant on human and political rights before the handover in 1997? Otherwise, what does our guarantee to Hong Kong mean?
Mr. Hurd: I have no undertaking on that part. We continue to say that that would be right. In any case, we believe that China has an obligation to report under the Hong Kong obligations in the covenant. I am coming to the matters outstanding between us. The right hon. Gentleman is quite right: that point has not been cleared up and it is important.
Mr. Mike Gapes: The Foreign Secretary has also failed to mention the plight of the widows and the ethnic minorities in Hong Kong. Are the Government proposing to take any action in the near future to try to resolve the difficulties of those groups?
Mr. Hurd: Those are two separate points, which were raised in the Select Committee report. I am coming to more detailed Hong Kong matters, but the hon. Gentleman will know that special arrangements have been made to look after the widows' position by my right hon. and learned Friend the Home Secretary. The Government have not been able to accept the Select Committee's recommendation on ethnic minorities. Hon. Members may want to raise that again, but we rest on the legislation that the House passed in 1990, on admissions from Hong Kong.
I was talking about the economic achievements of Hong Kong and I shall finish that point, if I may. The Hong Kong Government have been careful; they are prudent and we are
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constantly having to point that out to the Chinese authorities, which obviously fear extravagance. However, their fears are not borne out by the figures.
The rate of increase in public spending in Hong Kong has kept pace and is closely in step with GDP growth: public expenditure amounts to less than 20 per cent. of GDP. But because of the amazing prosperity of the place, within that prudence, the Hong Kong Government have been able to increase spending on capital projects, on education and on health and welfare. The most striking symbol of that expenditure is, of course, the new international airport—the world's largest civil engineering project.
Such elements are all in place; they will continue. It is in our interests and that of China that the impetus of Hong Kong's economic success should continue undiminished. We are making a British commitment to that success after 1997 by building our consulate-general there for that time, which will be our largest in the world.
At the top of the Government's agenda for Hong Kong is the relationship with the future sovereign power. I have mentioned the disagreement over constitutional development. That is now largely behind us. Indeed, there have been some significant steps forward in exchanges with China over Hong Kong recently. In June, for example, we reached agreement on something very difficult: the disposal and development of the military estate in Hong Kong. That agreement has released some $HK65 billion worth of property to the Hong Kong Government.
At last, in November last year, we broadly reached an agreement with China on the financing arrangements for the new airport—it is being built and it is being financed out of current revenue—but detailed arrangements are still not in place. In November, we also agreed to set up a new infrastructure co-ordinating committee, to promote necessary co-operation on infrastructure projects between Hong Kong and the neighbouring province of Guangdong.
It is true, as right hon. and hon. Members will point out, that there is still a great deal to be done and little time in which to do it. In important areas of the agenda for the transition, progress has been slow or non-existent. When I saw Vice-Premier Qian last week, I urged him to help to ensure that the work of the Joint Liaison Group—the group that tackles the agenda—was speeded up.
In the weeks and months ahead, a high priority in that work will be the rule of law in Hong Kong, because the legal underpinning on which civil society and the business community rests is crucial to its distinctive international identity and the concept of two systems in one country. That legal underpinning is fundamental to Hong Kong's attractions to foreign investors and its status as one of the world's leading business and financial centres.
A part of that, which is of great practical and symbolic significance, is Hong Kong's need for its own Court of Final Appeal to take over the role that is performed by the Judicial Committee of the Privy Council. We reached an agreement with China in 1991, and the Hong Kong Government have prepared a draft Bill for the Legislative Council, to implement that agreement to establish the Court of Final Appeal before the handover in 1997. We look to China to give its early support to the Bill, so that the court can be set up in good time and good order.
Dame Jill Knight: Having visited Hong Kong not too long ago and spent some time with the chief of the Hong Kong police, I was concerned

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to hear of their feelings about the problem of corruption, which has been dealt with effectively in Hong Kong through the Independent Commission Against Corruption, but is endemic in China. That is a very real worry. Can my right hon. Friend tell the House anything about that worry or say anything to assuage it?
Mr. Hurd: I was about to say that the rule of law is one of the essential qualities in Hong Kong. Another is the professional and objective way in which the public services—the civil service and the police—carry out their duties. They have their problems in Hong Kong, but my hon. Friend is perfectly right. I think that they have overcome them and it is extremely important for the future of Hong Kong that that professionalism, which includes the issue that my hon. Friend mentioned, should be sustained and that China, as the new sovereign power, and the new autonomous Government in Hong Kong should do everything to protect that. It will involve some sensitive handling of the next 800 days by the Chinese Government and Chinese officials and Ministers, especially in the way that they handle the police, their prospects and the civil service in Hong Kong. I made that point to the Chinese Foreign Minister and it is one of the most important points that needs to be made.
Mr. Tim Renton: On the Court of Final, Appeal, Ambassador Ma, the Chinese ambassador to the United Kingdom, was in the House yesterday evening to address the all-party Hong Kong parliamentary group, of which I am the chairman. At the meeting, he made it clear that China did not want the Bill setting up that court to be introduced at the Legislative Council without China's blessing—he did not want it to be introduced unilaterally. I understand that China has been considering the detail of the Bill for about 11 months and, as my right hon. Friend says, time is beginning to run out. Does he see any way out of the dilemma? Clearly, the introduction of the Bill and the setting up of the Court of Final Appeal is a matter of substantial importance to the people of Hong Kong.
Mr. Hurd: That is of substantial importance, and my right hon. Friend is right. There is a way of reconciling what the Chinese ambassador said with the requirements of the Government and people of Hong Kong. The answer is that we should reach agreement with the Chinese. We do not need a new framework agreement; we have got that agreement. Agreement has already been reached, for example, on the role of foreign judges. There is no disagreement between us and China—it was all agreed in 1991. We now need the agreement of China to the actual draft legislation, which the Chinese have and are considering. Expert talks are planned for the next few days—the date does not come immediately to mind, but those talks are imminent.
As I explained to the Foreign Minister, time is pressing. The Chinese know that. They know that we want to see the Court of Final Appeal in good working order well before the transfer of sovereignty. They know the timetable backwards from that to the passage of the necessary legislation by LegCo. There is time to answer any remaining questions from the Chinese and time to reach agreement. That is what we seek. I hope that they seek it, too.
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We need also greater certainty on the adaptation of Hong Kong's 600 Ordinances and 1,000 pieces' of subsidiary legislation to make them compatible with the Basic Law. A great deal of that will involve technical, professional work, without main political content, but it must be done. We need to speed up the slow business of localising to Hong Kong legislation previously extended to the territory by Order in Council. A raft of multilateral and bilateral international agreements underpin the status of Hong Kong as a first-world economy and society. Those agreements need to be extended, transformed and applied to the new special administrative region.
Mrs. Gwyneth Dunwoody: I should like the Foreign Secretary to pay particular attention to public health implications, because there have always been enormous differences between the public health rules in Hong Kong and those in the People's Republic. Those differences pose a problem for any doctors in Hong Kong, who frequently find themselves attacked, not on the basis of the adequacy of their medicine, but on the basis of their perceived status as people trained under a previous colonial administration.
Mr. Hurd: I shall certainly consider that. We have had, for example, a discussion with the Chinese about sewage pollution in the harbour, which bears on the hon. Lady's request. The Hong Kong Government felt that they had to get on with stage 1 of their scheme to deal with that pollution. The Chinese had some questions and doubts about that, which, I hope, have now been resolved. Certainly, the Government are going ahead with that work. That work illustrates the importance of maintaining the standards of all kinds to which Hong Kong is accustomed, while co-operating with China in the transition.
In answer to the question from my hon. Friend the Member for Birmingham, Edgbaston (Dame J. Knight) about the police, I have already referred to the crucial matter of confidence in the public services in Hong Kong. That confidence in the reputation of Hong Kong for clean and efficient administration is crucial for the future prosperity and stability of the territory. One of our most important tasks in the next two years is to work with China—it must be with China—for a smooth transition in the civil service.
My right hon. Friend the Member for Guildford asked me about one aspect of immigration and nationality arrangements. We have plenty of work to do. We need to clarify with China the provisions for right of abode in Hong Kong after 1997; and to establish arrangements for eligibility for and the issue of the new passport for the permanent residents of the new special administrative region, which is what Hong Kong would be. I discussed that with the Chinese Foreign Minister. We need to continue to discuss in the joint liaison group the matter of visa-free travel for holders of Hong Kong special administrative region passports and holders of British national (overseas) passports. We and the Governor want to do that in co-operation with China.
In October, in his address to LegCo, the Governor set out a series of proposals for co-operation. He promised, for example, full co-operation with the preparatory committee that China will establish early next year to start work on the transfer of sovereignty. He pledged that he

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and his administration would give the chief executive designate of the special administrative region every help in preparing to take over.
Dr. John Marek: The Foreign Secretary is aware of my general support for his policies and those of LegCo and the Governor. Will he say a little more about the possible statelessness of Crown servants in Hong Kong? It is possible that certain servants of the Crown, for example, military personnel, the police and civil servants, will be stateless. The British House of Commons and the Government have a duty to ensure that none of those people find themselves in such a position after the takeover. Will the right hon. Gentleman perhaps give an assurance to those people that we shall do our duty and ensure that they do not fall into any such position after 1997?
Mr. Hurd: I do not understand that those people would be stateless. The issue is more about access to this country and so on. However, rather than answer in detail off the cuff, I shall ask the Minister of State to elaborate on that in his reply.
I repeat: the British Government and the Hong Kong Government want to and need to co-operate with China to ensure the smoothest possible transition for Hong Kong and the fulfilment by both sides of what we undertook under the joint declaration. There has been some improvement in that co-operation, but if the transition is to be as smooth as possible, and as smooth as Hong Kong needs, we shall need to work even more closely together. There is a shared interest in doing so.
Of course, Hong Kong will continue to matter greatly to Britain, even after the total transfer of sovereignty, but China has a huge and growing stake there, too. Hong Kong's economy now corresponds to 26 per cent. of the gross domestic product of China, up from 18 per cent. in 1992—an astonishing figure, given that China has been growing fast and Hong Kong is very small. Hong Kong is hugely important to China—more so than it was even three years ago. We therefore have a shared interest in successful co-operation. That will require political will on both sides.
As the 800 days tick by, it is right that, increasingly, people in Hong Kong and outside Hong Kong will look to China, the new sovereign power, for reassurance about the future of Hong Kong. I believe that the Chinese leaders, past and future, understand increasingly the scale and complexity of the responsibilities that they will take over on 1 July 1997. We want to turn that understanding into practical, concrete steps, which the community in Hong Kong is seeking.
I have spent most of my time discussing Hong Kong, but that is right, because it is—although not the only element—the central element in the relationship between Britain and China. I hope that I have shown that the interests that our two countries have in common, in respect of Hong Kong and in respect of the other links between us, go far beyond the differences that have from time to time divided us. Together, we—that is, Britain, China and Hong Kong—need to build a stronger and deeper partnership for the 800 days until the transfer of sovereignty, and indeed thereafter.
4.37 pm
Mr. Robin Cook: On behalf of the Opposition, I welcome the opportunity for a debate about China and Hong Kong.
I echo the observation of the Foreign Secretary that China is a major power, and will become an increasingly large power. It has always had one of the largest populations. It now has one of the fastest-growing economies, which is on course to become one of the largest economies, of the world. For that reason, I share the Foreign Secretary's opinion that it is important that China should take its place in the World Trade Organisation. In view of its role in world trade, it would be quite wrong if China were not a member.
That role, as China's economy grows, will also develop into a stronger political role. I noted that the Foreign Secretary met his opposite number in China most recently in New York this month, at the review conference on the non-proliferation treaty. He must be aware that China has taken a lead in the discussions at that review conference and has staked out a clear position that agreement to indefinite extension must be achieved by consensus, not by majority vote. That position has evoked considerable support from the non-nuclear states present in New York, and illustrates the way in which China will increasingly have a power to influence the outcome of international negotiations and to shape the debate in international forums. It is therefore right that the House should consider our relationship with that power.
The Foreign Secretary said that we do not need to choose between having a foreign policy on China or having a foreign policy on Hong Kong. I have some sympathy with the point that we do not have to choose between the two, but we shall not get our relationship with China right if we do not get our policy on Hong Kong right.
I want to consider why this debate is important. It touches on the future of that territory, which is now by far the largest overseas direct interest of the British Administration. We do not approach the debate in a party political spirit. I hope that I do not disappoint the House when I say that I do not intend to make this a partisan occasion. It is a subject that we should try to pursue with the least party political disagreement between us, and with the fullest unity on a national basis. It is important that we do so on two counts.
First, there are important human consequences of any decision in relation to the people of Hong Kong, of whom there are a large number, that we take in the Chamber or that the Government take. There are 6 million residents of Hong Kong, of whom just over 3 million hold British nationality of one form or another. We are dealing with a population that, in terms of total residents, is larger than Scotland and, in terms of British nationality, is larger than Wales. That is the human significance of the issues that we are discussing. We enjoy with those people close economic ties, cultural ties, which we can see in our cities, and historic ties. In the week when we celebrate the 50th anniversary of victory in Europe, it is appropriate to remember that many of those in Hong Kong served in that war.
There will be some disappointment in Hong Kong that, in the debate on Hong Kong during the week of remembrance, the Foreign Secretary was not able to respond to an intervention from my hon. Friend the

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Member for Ilford, South (Mr. Gapes) by offering British nationality to the war widows currently in Hong Kong. They constitute a small number and I do not accept that it would set an immense precedent to give them exceptional treatment, and I am sure that such a move would be welcomed on both sides of the House.
The second reason why it is of grave importance that we debate the subject and do so in a non-partisan spirit is that this is a time of anxiety in Hong Kong. The Foreign Secretary repeatedly stressed the importance of confidence in the future of Hong Kong. I agree that it is important, but we would fail the people of Hong Kong if we did not reflect in the debate the considerable unease in some quarters.
I have not seen the figures—I do not believe that the Government have published them—but I understand that the Government's survey of the civil service in Hong Kong has discovered that one third of senior civil servants wish to leave the service before the point of transition. Part of the reason for the anxiety is the continued demand by the Government of China for access to security files held by the Hong Kong Government—a demand repeated in the February session of the preliminary working committee of the Government of China.
There appears to be similar unease within the police force. The senior police officer, who was appointed to head the special unit to ensure that the top 3,000 officers remained after 1997, took early retirement last month saying that he did not wish to continue in service after the transition to Chinese rule.
The root of those anxieties is well understood by both sides of the House. It goes back to the distressing events five years ago in Tiananmen square and its surrounding streets. Images on television are powerful. It is perhaps paradoxical that those powerful images also have a capacity to ebb in the memory. It is appropriate to remind ourselves that the human consequences in China of the events in that period remain. Many people who were arrested in that month in 1989 are still in prison and are likely still to be in prison on 1 July 1997 at the point of the transfer of sovereignty of Hong Kong.
Some hon. Members will have seen the detailed report of Amnesty International on those who were arrested in that period and who are still held, despite being classified by Amnesty International as prisoners of conscience. I shall refer only to one of the many—Chen Lantao, who was charged with counter-revolutionary propaganda and disturbing traffic. Those charges related to the fact that he attended peaceful demonstrations, made one speech and was accused of listening to the Voice of America radio station. For that behaviour, he was sentenced to 18 years in prison. I hope that both sides of the House would say that that is an unacceptable infringement of the right to freedom of speech and does not represent acceptable governance or acceptable standards of political and civil freedom.
Those who took part in the Tiananmen square demonstrations were Chinese nationals. There are other concerns involving the treatment of other ethnic groups—most obviously, the continued denial of autonomy and political rights to the population of Tibet. It is important to stress in such a debate that my hon. Friends and I believe that the protection and promotion of human rights must be one of the consistent objectives of foreign policy.
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Those of us who have met representatives of the Chinese Government are familiar with the argument that western concepts of human rights are not appropriate in the different cultures of the orient and in the very different social and economic conditions of China.
I agree that it would be wrong to seek to impose the precise legal forms that we have evolved over centuries. That would be a new form of cultural imperialism. But the world has developed universal standards of human rights; they are embodied in the United Nations declaration of human rights. Every member of the United Nations is entitled to demand those universal standards of every other member of the United Nations. Nothing would go further to boost the confidence to which the Foreign Secretary referred than for China to accede to the international covenant on civil and political rights developed through the United Nations.
The events of Tiananmen square had a profound effect on the views of people resident in Hong Kong, and appear to have had a profound effect on the rulers of China as well. One of the issues with which we must now grapple is that those events appear to have left the rulers of China perhaps more hostile to democratic reform and more nervous about the impact on the rest of China of the political processes in Hong Kong. That may have been a factor in the slow progress in recent negotiations. There is a paradox in the fact that the events of five years ago have made progress towards democratic rights in Hong Kong more pressing, but have also made it more difficult to obtain the agreement of the Government of China.
We would fail if we had such a debate without acknowledging that each side must share the weight of its historic legacy and historic failures. Britain has been responsible for the government of Hong Kong for 150 years. We would be in a much stronger position in negotiating on the future of Hong Kong under China if we had not discovered democracy so strongly in the past five of those 150 years or if the present Government had made more rapid progress in the first five years after the joint declaration in 1984. As it is, we are in the slightly difficult position of saying that the lack of democracy that we have tolerated for 145 years will become intolerable two years from now when China takes over.
I welcome the fact that the Governor is currently carrying out a review of legislation to identify those provisions which limit press freedom. I understand that he has identified 41 provisions and that 28 of them have been dealt with, or are about to be dealt with in forthcoming legislation. That is good, and he will have the support of both sides of the House in that exercise. It must be a matter of regret that 41 provisions limiting press freedom have been left for reform if not at the last minute, then at the eleventh hour of British responsibility for Hong Kong. The Foreign Secretary said that we debate issues about Hong Kong in this place from time to time. Before coming to the Chamber, I checked in the Library when we last debated the subject and I discovered that this is the first debate about Hong Kong in this Parliament.
It is certainly the first such debate since the Government appointed a former member of the Government as Governor of Hong Kong. That was a bold appointment on which we have not previously had the opportunity to congratulate the Government. It was a deliberate choice, which I presume reflected a studied intention on the part of the Foreign Office to make the role of the Governor more politicised.

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Last year, the Select Committee produced an excellent report about Hong Kong, in which it observed:
"There can be no denying that the British approach did change and that the new Governor's line was more robust."
I think that the Select Committee was then slightly startled to discover that the last three former ambassadors to Peking disagreed with the new Governor's line.
Some hon. Members may have read—as I am sure the Committee Chairman has—the paper by Sir Percy Cradock which appeared last year in World Today. Whatever view one takes about the substance of his argument, as a practising politician it is impossible not to admire the sustained invective with which he argues it. Any of us would be proud to use such rhetoric about our opponents. It demonstrates unusually strong feelings on the part of a former diplomat about a current Governor.
I shall approach the record of the present Governor of Hong Kong in a more consensual spirit. He has our full backing in trying to achieve an open and democratic process for the people of Hong Kong within the terms of the joint declaration and the Basic Law. There will always be room for legitimate debate about the details.
I confess that I am rather perplexed by the detail of the functional constituencies that have been created. Functional constituency No. 9 covers the services and it extends a franchise to everyone employed in the civil service, the public service, education and health, and those who work in private entertainment and leisure services, electrical appliance repairers, cobblers and barbers. I think that it would be challenging for any hon. Member to claim to represent consensually such a constituency.
Mr. Hurd: I do not think that the hon. Gentleman would get the barbers' vote.
Mr. Cook: The Foreign Secretary is probably correct; that is a fair observation.
There would also appear to be practical problems, as I understand that registration is not proceeding particularly easily in such difficult constituencies. Therefore, I can understand why some in the Chinese Government regard that cumbersome mechanism as merely a device for getting around the limits in the Basic Law about the number of people who may be elected directly from geographic constituencies.
Whatever argument there may be about the details, there is no division between us about the direction of reforms. There must be no doubt about the united resolve of all political parties in Britain that Hong Kong should fulfil the terms of the joint declaration, in that it should enjoy a high degree of autonomy, its legislature should be constituted by election and the rights and freedoms of the Hong Kong people should be protected by law.
The objectives of the joint declaration provide a framework for the constitution of Hong Kong not merely to 1 July 1997 but for the 50 years beyond that. There are now fewer than 800 days until the transition of sovereignty. In those remaining 800 days, the test of whether we are successful in the administration that we provide during that period and the test of Governor Patten's achievement is not how much we can do, but how much will remain in place permanently beyond that time.
The Governor will leave Hong Kong on 1 July 1997, but the population of Hong Kong will stay—the people have nowhere else to go. If this debate is to address the concerns, welfare and rights of the Hong Kong people,
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we must look not only at the structures that we are building but at how stable they will be after we have left. I said earlier that this is the first time that we have debated the subject in the present Parliament. As we review the last three years and Governor Patten's period in office, I think that it should concern the House that during that time, we have made the least progress towards agreement with China about the future of Hong Kong after 1997.
Earlier this month, the joint liaison group met for the 32nd time. The communiqué issued at the end of the meeting was depressing. It admitted that there had been no progress on the issue of the Court of Final Appeal, no progress in the dispute over container terminal 9, and no progress on the right of abode. As time runs out, the pace of progress in Hong Kong appears to be slowing down rather than speeding up.
The people in Hong Kong who are watching the proceedings live may be rather disappointed that, having chosen to initiate the debate, the Government have no new initiative to offer as to how we will move out of deadlock. There are three major strategic concerns in the current deadlock. The first relates to democratic reforms. Those who heard the speech of the Chinese ambassador last night heard him repeat his Government's determination to dismantle the district boards, municipal councils and the Legislative Council, which proceeded to election without the agreement of the Chinese Government. It is not recognised by China, which has stated repeatedly that it will not continue beyond 1 July 1997. On the present basis, there will be no through train, as was hoped.
Some people argue that China will suspend those bodies on 1 July 1997, replace them with an appointed provisional body and subsequently relaunch them as elected bodies, having saved face and put itself in a position where it can claim that it and not the previous Government decided to set them up. I am concerned that that may be only a comforting theory. Even if that is the Chinese Government's intention, once the bodies have been suspended and replaced by appointed bodies, there will be a strong temptation not to return to the elected bodies.
The Foreign Secretary seemed to share the anxiety about how our present conduct will bear upon what happens in Hong Kong after 1997. In addressing the House in February 1990, he said:
"Those who suggest that whatever we do now China would be obliged to accept in 1997 are out of touch with reality".—[Official Report, 16 February 1990; Vol. 167, c. 580.]
I hope that, five years later, that belief does not provide a basis for policy. We would fail the purpose of the debate if we did not press upon the Government the importance that any changes must be permanently bedded. If it is to be confident about its future, Hong Kong not only needs continuity after July 1997; it needs to be able to see soon that there will be continuity after that time.
A second strategic concern is the lack of progress in the past three years on the businesslike, but essential, agenda of renewing treaties and contracts. On that point also, the communiqué from the Joint Liaison Group was depressing. The communiqués normally state that agreement has been reached on a number of multilateral agreements. However, in this case only one agreement had been reached, concerning trade with New Zealand. I believe that some 200 such agreements are still to be renewed. It is difficult to see how that can occur by

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1 July 1997. Even if political agreement is provided at the last minute, it will not be possible to achieve the necessary technical work.
The third issue to which the Foreign Secretary referred was the Court of Final Appeal. The joint declaration is absolutely clear on that point: final adjudication must remain within Hong Kong and there should be no further appeal to a legal body outside that country. No one issue is more important to resolve. It is not a marginal issue; it is crucial to Hong Kong's ability to prosper as a business based on the rule of law. Nothing would do more to undermine confidence than to suggest that final adjudication would not stay in Hong Kong or, for that matter, that the judges in the Court of Final Appeal would not be independent of political interference. Anxiety about that must be reinforced by the dispute over the container terminal, where the Government of China have blocked the appointment of Jardine Matheson as the contractor for reasons that do not relate to the nature of the tender or contract.
If Hong Kong is to continue to thrive as an enterprise economy, it must be on the basis that contracts are awarded because they are won by people who can comply with the contract, not arbitrarily on the basis of political judgment about the business concerned. I hope that, in the next two years, it will be possible for the Government of China to recognise the importance of that principle, because it is in China's interest that Hong Kong should survive and thrive as a business community. Hong Kong provides a quarter of China's gross domestic product. It is the gateway between China and the global economy. It is the source and route of much of the inward investment for China. The future of the Chinese economy is, in part, based on the continuing success of Hong Kong.
The same consideration that makes Hong Kong of such economic importance to China also makes Hong Kong important to Britain. Throughout my speech, I have dealt with the interests of the people of Hong Kong, and that must be our first concern. It is a sufficient concern on its own, but we also have an incentive to ensure the smooth transition and stable future for Hong Kong on the basis of the interests of Britain and the British economy. Hong Kong provides us with immediate access to south China. As the Foreign Secretary said, growth in that area is phenomenal. It is the fastest-growing economy in the world. It has high-quality investment and high value-added products, and it has a rapidly expanding market, which has grown 400 per cent. in the 10 years since the joint declaration.
We must acknowledge the dramatic success of that economic strategy, and acknowledge that the Chinese road to capitalism has proved much more successful than the route pioneered by the International Monetary Fund and the World bank in central and eastern Europe. China is now a major economic power on the Pacific rim, where there are a growing number of similarly fast-developing economies. By the second decade of the 21st century, six of the 10 largest economies in the world will be around the Pacific, not the Atlantic. That will make our ties with Hong Kong of increasing importance to us. It is vital that we maintain our continuing relationship and use that direct access to the region of the world with the fastest-growing economy.
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Those ties must not end on 1 July 1997. Their economic importance will become even greater for Britain as the economy of that region grows, and their diplomatic value will be of greatest significance to the residents of Hong Kong as their strongest link with the world outside China. Let us use the next 800 days to ensure that our economic and historical ties with Hong Kong continue beyond 1 July 1997 and that they are ties with a Hong Kong that retains a society that is both democratic and respectful of human rights, and that is operating in an economy that is both enterprising and prosperous.
5.3 pm
Sir Edward Heath: As I was able to spend a fortnight over Easter in the far east—China, Vietnam and Hong Kong—I am glad of this opportunity to intervene for a few minutes on this important matter.
I thank the Foreign Secretary for the quiet and conciliatory way in which he opened the debate. Some people in the far east are worried about this debate today because of some of the things that might have been said, which were almost said by the hon. Member for Livingston (Mr. Cook). It is important that we consider matters realistically and in perspective.
What impressed me most in visiting those countries was their emphasis on being Asia. Hitherto, one has known them as individual countries, and they have usually discussed with us some form of help or aid. That was no longer the case. They said that they were all Asian and knew that a large part of the world wanted to invest in them and trade with them, and that that was what they were building up.
I found it rather disconcerting when I went to see the pandas research area out in the wild. I said to the director, "I am sorry that you don't export pandas any more. Chairman Mao gave me two, but you broke the rule and again sent some to London zoo, which have now died. Now I'd like some more. Break the rule again." They said that the rule had gone, so I said, "Well, that's excellent, then. I can have two pandas." "Yes", they said, "You can have them for a year, five years or 10 years. You just sign a document to say how long you want to keep them for."
I said that that was excellent, and they said, "Yes, it will cost you $1 million a year." I said, "What? $1 million a year?" They said, "Yes, sign the document for 10 years and you put down $10 million." I argued that Chairman Mao gave me pandas, and that he would be looking down from above in horror at that proposal. "Ah, well," they said, "things have changed since that time. We now have a market economy."
Vietnam, too, is now well on the road to a market economy. Ministers there explained how they were doing that, and said that what they most wanted to establish was an infrastructure. They told me that they get on perfectly well with Britain and such business men from Britain who went there, but were sad that we were so far behind all the others. That is true. One of the reasons is that we dragged along behind the Americans, while others went in as soon as the opportunity occurred. They have now established themselves well and, once again, we must catch up.
I now come to the main topic of discussion, which is China and Hong Kong. The position of China today has been emphasised both by the Foreign Secretary and the

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hon. Member for Livingston. To my regret, I do not believe for a moment that Asia as such, or even China in its present position, is fully understood or recognised by the people of this country, even by business men.
I am glad that the Secretary of State for Trade and Industry will go to China shortly, and take 125 business men. Prime Minister Li Peng assured me that he would receive him and discuss those matters with him, which is exceptional. There will be an opportunity for business men, but it requires action on their part. They should not treat it just as a nice visit to see what the place is like, and I hope that they will follow it up.
In addition to the other figures that have been given, China today has $52 billion in reserves, which is quite exceptional. Its purchasing power as a country is third in the world. One may say that that must be divided between 1.25 billion people but, from the point of view of making purchases outside China, it is an enormous sum, and it will grow, as the Foreign Secretary emphasised.
That is the realistic position against which we must put Hong Kong. To my great regret, mistakes have been made over Hong Kong. One of the things that I agreed with Chairman Mao Tse-Tung in 1974 was that there would be a smooth handover of Hong Kong to China. He said to Chou En-Lai, "Neither you nor I will be here to see that, but Heath and Wing Lun Weng will be." He has died, so I am the sole remaining factor in that agreement.
I find that the great majority of people in Hong Kong, with any responsibilities, particularly business men, now want to get on with the changeover. They do not want another row or explosion, and that is the danger as regards the appeal court. It could lead to another explosion, and we must recognise that the Chinese will be responsible for Hong Kong in 800 days. They know the power they have, and what they want to bring about. We are foolish if we ignore that, because that is the situation that now holds sway in Hong Kong, certainly among those whom I have mentioned.
I discussed the matter of the appeal court widely while I was there. The British Government and Hong Kong and the Chinese Government came to an agreement in 1991. It was, in fact, a rather remarkable agreement. It was agreed that the supreme appeal court would consist of five judges, only the chief justice would be Chinese, and the others could be any nationality. Four would be permanent, one would be brought in to deal with particular matters and they could come from outside Hong Kong—they could be from Australia, New Zealand or Britain. However, the fact that China accepted that in an agreement was in itself remarkable. That still holds. The Chinese are perfectly prepared to continue.
Both sides having agreed that, it was put to the Legislative Council, which chucked it out. Why did we find it necessary to put the matter to an advisory body or accept what happened? However, we did. Three years then passed before we reached the next stage, which was to have a draft and put it to Beijing. Beijing says that it has had it for five months, but it is we who are complaining. We kept it for three years, and, what is more, the Governor has now set a time limit. He says that the answer has to be back by July, or he will go ahead with what he wants to do.
I am afraid that the response from Beijing is that it will not be dictated to by Hong Kong. There is room for an approach. In fact, an approach must be made. We cannot have an explosion about this. As I suggested, the approach
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should be that Beijing says clearly to those responsible that it wants to establish the appeal court before 30 June, and has already said what is agreeable to it. Then the Governor is in a position to tell Hong Kong that he is withdrawing any question of a dictated time limit, and he will continue negotiations on what was agreed as long ago as 1991. That is the positive approach to take to all these problems.
The Foreign Secretary mentioned sewerage. Yes, there is a row, not because the Chinese do not want sewerage for their health but because they believe that the proposals will not be adequate for Hong Kong in the future. Surely there is room for discussion. If the Chinese want to do more about sewerage, they will be there in the future, so let everyone agree on what has to be done. It cannot be said that Hong Kong is penniless—far from it. It has the money. For heaven's sake, let us do what both sides agree is necessary for the health and safety of the people of Hong Kong. We cannot have an explosion about that.
What about the general constitutional situation? There has been a complete misjudgment. People thought that the Chinese would not do anything about it, but that, when the time came, they would accept it. It is obvious that they will not. They said that firmly, right from the beginning. As the Foreign Secretary hinted, there are parts of the Basic Law whose meaning is not exactly clear. That is a matter for discussion and something to be thrashed out. It should not be a case of our putting forward a single view and saying that, if the Chinese do not accept it we shall go ahead anyway.
That was particularly the case with the exchange of letters about the elections, in which the Foreign Secretary said at the end that he hoped that that would be accepted. It was a hope; one could say that he was justified in hoping, but it was not an agreement. That is what Beijing said—it was not an agreement. However, without consultation, we go ahead. The result was, of course, an explosion. That is the explanation of what happened. The Chinese will change things again when they take over in 1997. They will go on what was agreed in the Basic Law and in the correspondence that followed. It is pointless to doubt that.
I was glad that the Foreign Secretary mentioned two other important issues. The first was Chinese instability. People right at the top in China believe that we are trading on future Chinese instability. I am afraid that there were many mentions in the report of my right hon. Friend the Member for Guildford (Mr. Howell) that supported them in that view. They think that we believe that they are going the same way as Russia, so we are delaying as much as we can and getting things fixed up that we had not before, and that we think that we can hold on to Hong Kong after 1997 for that reason. The Foreign Secretary stated dogmatically that that is not the case.
Anyone can see that China is not going the way of Russia. If there ever were any danger of that happening, the Chinese, having seen what happened to the Soviet Union, would not allow it to happen to them. They are absolutely clear about that, and will take whatever measures are necessary to prevent it. I also went to Szechwan and the south, where the people do not want to go the way of Russia. They have the utmost contempt for Russia, and the further west, the greater that contempt.
The second matter is the idea that, when Deng Xiaoping dies, there will be an enormous power struggle that will tear China apart and result in collapse. I do not believe

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for one moment that there is any truth in that. Having been there 10 days ago, I can tell the House that I have never seen the top people so relaxed, although I hope they will not mind my saying so. They are relaxed and confident, and have everything at their fingertips. They see that they are in a strong position in world trade; they have substantial financial reserves of $US52 billion and a surplus on the balance of payments which is very large—so much so that people outside are complaining about it. I see no immediate possibility of a great power struggle when Deng Xiaoping dies.
I am glad that the Foreign Secretary cleared up those issues. He has done so from the highest level of government, and I hope Beijing will accept what he says. It does not recognise that a parliamentary group does not have any power, and has very little influence.
What happens to our trade in these circumstances? There is no doubt that they have been damaging. The Foreign Secretary rightly said that our trade has increased from a small start. Japanese trade is now worth $HK32 billion a year, while ours is approaching $HK4 billion. American trade is worth something over $HK22 billion, and German trade is more than $HK8 billion. Clearly a tremendous amount needs to be done.
The hon. Member for Livingston mentioned human rights. I believe that there has to be a fairly deep re-think about the matter, and in particular, how it should be handled. One of the other messages that I received out there was that China will not be told by anyone what it has to do. That is not peculiar to Asia—I found the same in Moscow under the new regime there. They believe that people can help in various ways, but not tell them what to do. That notion applies to human rights.
If we want action on human rights, we have to be able to influence people and we can best do that by working with them, not by lecturing them all the time from outside. There are changes. I became more and more convinced that people will notice the changes. They will carry on regardless of whether we change—we have seen that in south-east Asia where people say, "Sorry, we shall deal with things as we believe to be right."
There has been economic development, but there has also been political development. It has not been according to our systems, but there is undoubtedly development. I was once told by Deng Xiaoping that China was going to have 1.25 billion people by the year 2000, and he asked what political institutions I would recommend for their lives. How could I say anything? No one had told me what to say. That is a real practical problem in the second largest country in the world.
Mention was made of Tibet. I went there myself a few years ago, and I have talked frequently to the Dalai Lama. He made an agreement with Mao Tse-Tung in 1953 about Tibet, its future and its relationships. That was accepted by both sides, and as a result, the monasteries were opened.
I spoke to the people who came out of the monasteries. There is a big monastery some 20 miles outside Lhasa. Its 11,000 monks had been put there by their families. Under old Tibetan law, the fourth child had to be put into a monastery. After the monks had been given their freedom, 229 were left. I spoke to one who was farming outside. He told me: "I can never get rid of the mark it has left on me mentally, but I decided to come out."
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The Dalai Lama, who had made the agreement, escaped from the military rising in Tibet in 1959. It was not his rising, but he decided that his only option was to escape. I spoke to him on various occasions, and some 10 years ago I asked Deng Xiaoping: "Can he not come back?" and he replied, "Yes, he can come back. He can come to Beijing, and we will provide him with a house and everything he requires to live there, and he will be able to go to Tibet whenever he likes. There is only one condition, and that is that he goes to Tibet as the spiritual leader, and not the political leader of a party."
Mr. Chris Mullin: I have also been to Tibet. Does the right hon. Gentleman agree that the people of Tibet should decide whether the Dalai Lama should be allowed to return and what system of government should exist in their country?
Sir Edward Heath: It would be fashionable for them to have a referendum, but I do not know whether the hon. Gentleman would accept the result. It may well be that the great majority of people in Tibet today do not want the Dalai Lama back, but if he wants to return, he was told 10 years ago that he could go back as the spiritual leader of all his flock in Tibet. In that respect, he cannot complain, but he has never gone back. He has never gone to Beijing to discuss it further.
In respect of our overall position, we must now settle the appeal court. We must deal with the other problems, working with the appeal court and recognising that it will have the ultimate decision.
It is difficult to see any way in which we can get over the problem of elections. I am absolutely convinced that it was a terrible mistake, as are a large number of people in Hong Kong now that they see the outcome of the decision. I have spoken to them, and that is their view. They want to settle the matter, get 30 June behind them, and carry on with their trade and business.
We heard just now all about corruption. Yes, there is corruption in Hong Kong. I was given graphic descriptions of how the Mafia is now working. It is trying to establish a connection on the other side of the border, so that, when Hong Kong becomes part of the mainland, it will still be able to operate. I have the utmost admiration for the police chief and the work he is doing, and he will stay on.
The trade from Taiwan has greatly increased over the past three years, because it goes through Hong Kong and into mainland China. I asked those responsible in Beijing whether that trade will continue when Hong Kong becomes part of the mainland. They told me that they have already decided that Taiwan can continue to trade through Hong Kong after 30 June 1997. That is one reassurance for Hong Kong as well as for Taiwan, and is fully justified. I hope, therefore, that the Foreign Secretary will be able to continue that reconciliation and recognise that the ultimate decision rests with China, whether we like it or not.
We have been in Hong Kong as leaseholder, and now we are handing it back to its owner. When one does that, one has some obligations. As has already been said, we have had Hong Kong for nearly 150 years, and what did we do about all those issues? We did nothing. Only when the time came to hand it back did we say that they all should be addressed immediately and in exactly the way

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we wanted. The House and the Government cannot get away with that. We must be realistic, and I hope that the Foreign Secretary will be so in the remaining 800 days.
5.24 pm
Sir David Steel: On this occasion, I am not in total agreement with the former Prime Minister, the right hon. Member for Old Bexley and Sidcup (Sir E. Heath), but I certainly bow to his superior experience of life in China.
I agree with the right hon. Gentleman's last point: that the Chinese Government have consistently wondered why only now, at the point of handover and in the past few years, we have expressed any great interest in democracy in Hong Kong. I hope that I am not breaking a confidence when I say that one of those who expressed such a view some years ago was the then hon. Member for Bath, Chris Patten, after a parliamentary visit to Hong Kong. In common with many of us who have been to Hong Kong, he expressed concern at the lack of any democratic development and other items of progress, over which he has belatedly been presiding as Governor.
The impact of the change in China on someone such as myself, who has not visited China anything like as often as the right hon. Gentleman, and who has been there only twice with a gap of 10 years between, may be even more dramatic than it is on a regular visitor. I have never seen, anything as astonishing as the gap in Chinese economic development that has been overcome in a decade. It is absolutely staggering.
The right hon. Gentleman is quite right to remind the House of the present and future power of the Chinese economy. I found it interesting that China is developing faster economically the nearer one gets to Hong Kong from Shanghai southwards. The political climate is by no means monolithic. It is easier to have free political conversation in the parts of China that are economically developed than in the historic capital. That gives me hope that there will be change in the long run.
I agree with what the right hon. Gentleman said about false comparisons with the Soviet Union. The Chinese Government have a right to be irritated by those who think that China may go the same way as the Soviet Union. They hope not, and we must too. There can be a process of evolutionary change, starting with substantial changes in the market economy, that goes further than the pandas he mentioned, and is real and substantial in that extraordinary country. The parallel growth and success of the economy in Hong Kong and mainland China must be the basis of our optimism that, despite all its difficulties, the transition will be successful.
I have a particular affection for Hong Kong, because it happened to be the first territory that I visited as a new Member of Parliament way back in 1965. I have been there half a dozen times since—on the last occasion, about six months ago. What struck me forcibly on that last visit—again, with some surprise—was how optimistic people were, and how they were getting on with the job of making a success of their lives.
A few years ago, great anxiety was expressed that, as 1997 approached, everything would wind down and there might be an economic slump. On the contrary, investment is continuing, people are leading normal lives and there is a certain amount of optimism.
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Where I disagree with the right hon. Gentleman is that I am not quite so sanguine about the views of the business men, whom I have also met. Business men are not notoriously deeply concerned about such issues as human rights and democratic development. They are naturally concerned with making money; that is their purpose.
We are politicians. We are supposed to be concerned about those wider issues, and we would be failing in our responsibilities to the people of Hong Kong if we ignored the fact that, in recent years, as democratic developments have been offered to them, they have seized them with both hands, and have elected their own choice of politicians to LegCo. That cannot be undone. Whatever decision the Chinese Government may take about how they treat LegCo after the transition in 1997, I trust that there will be no absurd short-sighted vendetta against those who have now been elected. Those members of LegCo were chosen by the citizens of Hong Kong to represent them, so they have a particular status and standing.
I thank the Minister of State for the excellent letter he sent those of us interested in the subject, which brought up to date the Government's relations with China in respect of Hong Kong. Like the former Prime Minister, I hope that settlement will be reached on the Court of Final Appeal. I support the proposal for a human rights commission by the Foreign Affairs Select Committee. I am concerned that that has not been accepted by the Government, and that there is no Bill of Rights.
I said when I intervened on the Foreign Secretary that there is as yet no sign of China ratifying the international covenant on civil and political rights. The joint declaration states:
"The provisions of the International Covenant on Civil and Political Rights and the International Covenant on Economic, Social and Cultural Rights as applied to Hong Kong shall remain in force."
We must have known in 1984 that those covenants, as applied to Hong Kong, cannot remain in force until and unless China ratifies them. The British Government's pledge to uphold those covenants ties the joint declaration to the broader structure of international law in an important and concrete way.
It disturbs me that when Li Peng visited Hong Kong last year, he said that Bejiing was not obliged to make reports to the United Nations Commission on Human Rights after 1997. There appears to be a complete impasse, with the British Government saying that the covenants apply to Hong Kong and remain in force, but a lack of any mechanism to make them remain in force. I should be grateful if the Minister will comment when he winds up.
We have dealt badly with the ethnic minority of non-Chinese in Hong Kong who hold British passports. They number 7,000—the Minister will correct me if I am wrong. It is unfair not to have granted them full citizenship rights in Britain. Not many have expressed a wish to take up residence in this country, but we have not dealt fairly with them.
There is a curious disparity between our treatment of those 7,000 people and the 100,000 in Macao who have been granted Portuguese citizenship and who, under the European Union, will have the right to come to Britain. It seems bizarre that 100,000 people sitting in Macao can have the theoretical right of residence here, but that 7,000 persons in Hong Kong for whom we are responsible do

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not have that right. I should be grateful for further clarification of the Government's intentions for that minority.
The Foreign Secretary referred to the Governor's review of some existing legislation, particularly that affecting press freedom. I hope that he will closely examine all Hong Kong's statutory provisions. There are examples of colonies where we left behind emergency legislation from the colonial era that was subsequently used against the population. It would be a terrible indictment of our legacy if we were to leave on the statute book measures that could be used by a future Government to restrict press freedom and other freedoms in Hong Kong.
The constitution of Kenya, for example, still contains provisions from the Mau Mau emergency that we imposed in the early 1950s. They should not be there, but are used wrongly on occasions by the Government. We do not want the same mistake made again in Hong Kong. I would welcome the Minister's clear assurance on that point.
The final round of democratic elections will be held in September. I hope that the Chinese Government will change their mind and live with the existing LegCo—that must be our first position. If they do not, I hope that they will recognise the status of the successful candidates in the elections. Is it the British Government's intention to treat those elections the same way as others and to send international observers to oversee the freeness and fairness of those elections? That might be a useful precedent.
The political arguments are bound to continue when the transition is reached and there is the one country, two systems, on which the British and Chinese Governments have agreed. People in Hong Kong ask for minimal interference from Beijing. It is not unreasonable for Beijing to be entitled to ask for minimal interference from Hong Kong.
There must be some sort of self-denying ordinance on the part of Hong Kong politicians to mind their own business and not to meddle in China's internal affairs. If they exercise such a self-denying ordinance, their position will be more respected, not less respected, in Bejiing. However, that does not involve the rest of us in the international community in making any similar self-denying ordinance.
It was a terrible mistake to state in the joint agreement with China—I do not know how on earth we ever assented to this—that democratic politicians in Hong Kong must not have links with international organisations. I find that particularly sad because I am currently serving as president of Liberal International, which is not allowed to invite colleagues in Hong Kong to its meetings.
In south-east Asia, there is a new, self-generated organisation—the Council of Asian Liberals and Democrats. It includes the governing party in Thailand and the opposition party in Taiwan, but it cannot invite fellow democrats from Hong Kong to participate in its meetings. That cannot be right, and I hope that that restriction will be removed in time.
I note that the President of the Board of Trade is soon to visit China. I hope that, in our trade links, we will continue to raise human rights questions. I disagree with the former Prime Minister—we cannot pretend that, because China has a different culture, events such as
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Tiananmen square do not matter and can be forgotten as years pass. We cannot completely ignore events inside Tibet under the Chinese authorities, much as I agree that there should be dialogue between Peking and the Dalai Lama. Also, while we have been extremely immobile in our Government policy on Taiwan, Cabinet Ministers from France and Canada have visited the country. We have not got even that far.
There is a useful and constructive engagement to be had with China. It ought to be positive, but our trading links should not be purely that. They must also sustain a dialogue on wider issues. The People's Republic of China is getting its economy right, but it has some way to go before we can fully and rationally accept it in the comity of nations.
5.37 pm
Mr. Tim Renton: I am glad to have caught your eye, Madam Deputy Speaker, because I have a number of interests to declare. I am vice-chairman of the British Council, and will refer later to its work in Hong Kong and China. I am a consultant to Robert Fleming, the international investment bank, which has made many successful investments in Hong Kong and China.
I am also chairman of the all-party parliamentary group on Britain and Hong Kong. My right hon. Friend the Member for Old Bexley and Sidcup (Sir E. Heath) was right to say that, like other all-party groups, it does not have any particular influence or standing. However, in the nearly three years that I have been its chairman—and at a time when, for one reason or another, we have not debated the issue in the House—that all-party group, which is always well attended by Members of both Houses, has provided a useful forum. It has provided a forum for the Governor, who has been able to make his views known to parliamentarians of all parties, and for visiting LegCo members, who were often not fully in agreement with my right hon. Friend the Foreign Secretary or the Governor and were able to give us their views. Yesterday, the Chinese ambassador, Mr. Ma, addressed the all-party group, and made plain—using extremely blunt language, extremely well delivered—China's current views on some of the problems mentioned this afternoon.
By far and away my greatest interest in Hong Kong, though, is simply that of a visitor, business man, politician, and former Foreign Office Minister, who has visited it regularly, and did so one year after the right hon. Member for Tweeddale, Ettrick and Lauderdale (Sir D. Steel), who speaks for the Liberal Democrats. I first went to Hong Kong in 1966 as a fairly young business man. I was, like so many of us, immediately struck by the extraordinary excitement, drive and dynamism of the place. I suppose that if I had invested all my meagre net worth in some tiny corner of a dilapidated warehouse on the waterfront in Kowloon, I would now be very rich indeed. Unfortunately, I did not do that.
Every time that I go back to Hong Kong, I am, like other hon. Members, always immensely struck by the fact that there are more tunnels under the harbour, built with incredible speed; more high-rise housing—the flats are treasured by those who live in them—more schools; and more and better skyscrapers. Indeed, if one looks at the recent budget in Hong Kong—my right hon. Friend the Foreign Secretary referred to some of the details—one

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sees that it really is mouthwatering stuff: an increase in $HK210 million for funds for technology development; $HK2.5 billion to be spent on purchasing premises for welfare services; and another $HK1 billion to build the new Tsing Yi bridge. I remember that when I was first staying with Chris Patten—he was about to make his first address to the Legislative Council, in October 1992, to which I shall refer in a minute—he said to me, "Any British Chancellor of the Exchequer, any British spending Minister, would simply love to have the resources that are available to the Hong Kong Administration." The new Financial Secretary, Donald Tsang, who has just been appointed, is taking over from Sir Hamish Macleod in September, and is the first local to occupy that extremely important post.
Mr. Hugh Dykes: I apologise to my right hon. Friend for intervening, as the point has long since past, so it seems illogical to intervene, but let me return to what he said earlier about his own group, which he chairs with great skill. I think that he may have been mistaken, because my right hon. Friend the Member for Old Bexley and Sidcup (Sir E. Heath) has just told me that he was thinking of the Foreign Affairs Select Committee, not the Hong Kong all-party group, when making his comments.
Mr. Renton: I am sure that my right hon. Friend the Member for Guildford (Mr. Howell) will be able to answer that more than adequately when he catches your eye, Madam Deputy Speaker.
Mr. David Howell: I certainly will.
Mr. Renton: My right hon. Friend does not need me to speak for him.
There is no doubt that the administration in Hong Kong in recent years has been fantastically successful. It is a record of which the United Kingdom will be able to be extraordinarily proud at the time of the handover of territory on 30 June 1997.
As I have just mentioned, I had the good fortune to be staying at Government House with Chris Patten when he made his speech to the Legislative Council on 7 October 1992. I must say to my right hon. and very good Friend—I hope that he does not mind me referring to him as such—the Member for Old Bexley and Sidcup, that I stayed on in Hong Kong for quite a few days afterwards. I remember the tremendous enthusiasm with which Chris Patten's speech was greeted, on all sides—from taxi drivers, to whom I spoke, to senior civil servants. The only group who differed from the views put forward by Chris Patten, in those three or four busy days, was a small group of business men whom I met on my last day in Hong Kong before going up to Shenzhen and travelling through Guangdong, at the invitation of the Chinese Government. They said that the constitutional changes, the changes in electoral reform, which the Governor was suggesting, simply would not be acceptable to China. In particular, the extension of the franchise in the functional constituencies would not be accepted. Alas, those business men were right.
To draw an analogy from tennis, I think that our good friend Chris Patten made an opening serve with the ball marked "constitutional reform" and the Chinese simply never returned the ball. That is a matter of very considerable regret. I believe that Chris Patten, in his speech to the Legislative Council, had a clear mission in
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his mind. That mission was firmly rooted in his own highly successful career as a liberally minded politician in this country. The mission was to leave a legacy of a very well-founded democracy in Hong Kong from 1 July 1997 onwards—a democracy that is based not on factions, oligarchies or a few cronies but on the worth and standing in the community of those who are elected from many different sections and areas by a substantial number of voters. Of course, the aim of a legacy is, by definition, that it should survive, not only for a few years but for generations, growing and becoming stronger within the unique framework of one country, two systems.
I believe that Chris Patten, both as Governor and as an individual, could not have done more to achieve that democratic legacy. All of us, from whatever party and whatever our views about the future relationship with Beijing, to which I shall refer later, must regret that the tennis ball was never returned in any shape or form and that 17 rounds of talking on constitutional issues have led to 17 stalemates. That is an issue on which the United Kingdom, Hong Kong and Beijing have simply failed to agree.
As my right hon. Friend the Foreign Secretary, and indeed, my right hon. Friend the Member for Old Bexley and Sidcup have said, quite rightly, this is a leaf in the book of continuing relationships, which simply must be put behind us. We must now look forward and consider what other things need to be done in the 796 days that remain until 30 June 1997.
I now touch briefly on two matters that have not yet been raised in the comprehensive speeches made by other hon. Members.
Sir Edward Heath: I agree entirely with what my right hon. Friend said about the reception that Chris Patten's speech received. One must accept that the taxi drivers and others were not really fully aware of the Basic Law or of the exchange of letters between the Foreign Secretary and the Chinese. They just saw it, quite naturally, as opportunities to vote. That atmosphere has changed very considerably, I can assure my right hon. Friend. Would it not have been more appropriate if Chris Patten had accepted the invitation to go and discuss it all with the Chinese before he made his speech? Would there not have been less chance of an explosion if he had done that? Those are the problems and they have left a legacy with which we are now trying to deal, as he is.
Mr. Renton: I understand what my right hon. Friend has said. Perhaps we should not go further down that path now. He will remember the speech as well as I do, and, of course, Chris Patten made the point very clearly that, having made those proposals, he was going to Beijing to discuss them just a few weeks later. There it is. That is behind us and we must now look forward. Obviously, the wish of the House and of the Hong Kong Administration is to make the next 800 days as fruitful as possible for the future success of Hong Kong after 1 July 1997.
I want to touch on the matter of the British Council, of which I am a vice-chairman. The teaching of English in Hong Kong, the training of people to teach English and the exhibitions of contemporary British art and culture that the British Council has sent to Hong Kong, have formed an important part of our activities over a number of years. We first established the council in Hong Kong in 1948 and English language teaching started in 1975. The aim has been to help to secure Britain's long-standing and mutually beneficial relationship with Hong Kong in

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the run-up to 1997 and to turn that into a lasting and productive relationship with the special administrative region and the People's Republic of China.
More recently, the council has reopened its offices in China. It was represented in China from the early 1940s to 1952. Operations began again, really rather early, in January 1979 when a British Council officer was attached to the embassy. In 1991, the council moved away from the embassy to its own office block, which has open public access—the same being true of its office in Shanghai.
The council's aim is, of course, to promote a wider knowledge of the United Kingdom and the English language and to foster a positive Sino-British relationship. The policies that it is pursuing to achieve those aims are, first, to enhance among decision makers, opinion formers and future leaders a British reputation as a source of high-quality products, services and expertise; secondly, to promote the effective use of English in trade, social development and education; thirdly, to improve access to British information and resources; and fourthly, to increase awareness of British education and training and the opportunities that they offer to China's institutions and individuals.
The future development of the British Council on mainland China and its continuance in Hong Kong will be an important tool of British diplomacy over the years immediately ahead. The British Council has adopted worthy objectives. I trust, therefore—and I say this conscious of the fact that my right hon. Friend the Minister of State is sitting on the Front Bench—that future allocations of grant in aid to the British Council from the Foreign and Commonwealth Office and the Overseas Development Administration will fully allow the council to achieve its important objectives. It can play a vital part in the wider British objective of close relations with China, to the benefit of trade and understanding between our two countries.
I want to ask my right hon. Friend the Minister a few questions about the Vietnamese refugees and what is likely to be the further clarification of the process of repatriating the Vietnamese migrants who remain in Hong Kong. My understanding is that those who have been identified as refugees with a well-founded fear of persecution will not be returned to Vietnam, but will be settled in a third country. It would be helpful if my right hon. Friend could tell us a little about how the process of resettlement is proceeding and also about the simplified repatriation procedures, to which Vietnam has recently agreed. Speaking as an ex-Home Office Minister responsible for immigration, as well as an ex-Foreign Minister, I remember the very great problems of the Vietnamese refugees. I know that progress is being made and I would like to hear a little more about the final resolution of the matter.
I am sure that everyone in the House would agree that the unsolved riddle for China is whether the move towards the free market, a market economy and regional independence can, in the long run, be compatible with the continuing sovereignty of the Chinese Communist party. That issue is unresolved. As the succession in Beijing fully takes over from Deng Xiaoping—and I listened with interest to what my right hon. Friend the Member for Old
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Bexley and Sidcup said on that subject—the solution to the riddle will become clear. However, it is obviously a matter of concern to Hong Kong.
In the years when I had the job now held by my right hon. Friend the Minister of State, I was responsible, under Geoffrey Howe—now Lord Howe—for Hong Kong during 1985 to 1987, very soon after the joint agreement had been signed, and when convergence was all the fashion. We talked all the time about convergence, about through trains and about trains that would go over the 1997 junction without too much of a jolt. Those phrases, for reasons that have already been stated this afternoon, have become less fashionable. I regret that.
The Chinese ambassador, Mr. Ma, when speaking to us frankly yesterday afternoon, made the point that the Chinese were seeking co-operation, not confrontation. I was reminded of the old Chinese proverb, "You can't clap with a single hand." Co-operation is clearly in the interests of the three parties—the United Kingdom, Hong Kong and the People's Republic of China. We all have so much to respect, appreciate and learn from each other, but it is not a one-sided business. The treaties that ceded Hong Kong, Kowloon and the new territories to the United Kingdom have often been described as an historic humiliation for China. Surely great countries have the capacity to put historic humiliation behind them and not let the disasters of the past govern their future actions and opinions. Britain did just that in relation to the Boer war; the United States had to do it with Pearl harbour and Vietnam; and France had to do it with the events of 1940.
China is a great country and it will become yet greater. It can afford to put the humiliation that Hong Kong has possibly represented in the past well behind it and, from 1 July 1997 onwards, to treasure Hong Kong—there is no other word for it—as a golden nugget, as an economic miracle and as an example of extremely well-ordered and good government. One country, two systems must, by definition, be extraordinarily difficult to put into effect. After July 1997, the rest of the world will be watching to see how it is done.
The greater the success of Hong Kong as an autonomous region within China—as a special administrative region—the more the world will learn about China itself. It will come to respect a China that can absorb—fairly, with justice and with human rights—an ex-British colony, a system that is so different from the rest of China and a system that has been so astonishingly successful in its own right.
5.57 pm
Dr. Jeremy Bray: The right hon. Member for Mid-Sussex (Mr. Renton), following the speeches of the former Prime Minister, the right hon. Member for Old Bexley and Sidcup (Sir E. Heath) and the right hon. Member for Tweeddale, Ettrick and Lauderdale (Sir D. Steel), did much to reassure the Chinese that there is no question of our seeking any extension of British interest in Hong Kong after 1997; that there is no question of relying on any collapse of the Chinese Government, with the departure of Deng Xiaoping; and that both sides of the House seek co-operation, as the Chinese ambassador put it.
The perspective of the right hon. Member for Mid-Sussex of the Chinese hold on Hong Kong is not one that I really recognise. China has never regarded Hong

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Kong as an embarrassment; it has regarded it as unfinished business, about which it was concerned long before we were and will be concerned long after we have departed.
Not every Financial Secretary can open his budget speech with a quotation from Xunsi, a sage of the third century BC, on how to govern one's country, as happened in Hong Kong last month. Xunsi said:
"The way to make a community prosperous is to be prudent in public spending, to improve the well-being of the people, and"—
yes—
"to maintain good reserves."
I doubt whether we had a currency, let alone an economic policy, in the third century BC. There were other ancient civilisations, but no others have survived to form within one nation a population of 1.2 billion—more than one fifth of the world's population.
China sometimes complains, and with some justice, that other countries do not understand the complexities of governing such a country. We must, of course, continue to express our concerns about human rights, but if one puts together the whole of Europe and the United States of America and asks what civil rights abuses occur there today, if one compares the time scales over which political and social traditions that are still alive have accumulated or if one asks what communication problems exist in the European Union or the Federal Government of the United States, one moves only part way towards a comparison with the problems facing the Chinese Government, who have learnt so many lessons from their past and who are still learning, as we all are.
If one considers the strength of the efforts to tackle those problems in China, it is less easy to criticise. Justifiable concern exists about the environment. Yes, China is increasing coal production by 40 million tonnes annually, which will increase carbon dioxide, but the developed nations account for only 20 per cent. of the world's population yet consume 80 per cent. of the world's resources.
Where developing countries can act for the future of the world community is on population. China's population is still increasing, but its fierce one-child family planning policy has reduced the size of its population growth by some 300 million in the past 20 years. China's population is smaller than it would otherwise have been by a number equal to the population of the United States and Britain combined.
As hon. Members on both sides of the House have said, in production and trade China is moving extremely fast. In the past five years, output has been increasing in the high-tech, development zones in different parts of China not at 9 to 11 per cent., as has GDP, but at 25 to 30 per cent. per annum. Those developments are spreading further west within China.
The concern is not whether China is growing fast enough but whether it is growing at a pace that it cannot sustain and that will inevitably lead to recession. The problem of economic management, which even medium-sized countries such as Britain find difficult enough, is compounded by the sheer size and diversity of the Chinese economy, the vigorous entrepreneurship of Chinese business people, the number of enterprising provincial and city governments and the increasingly open economy.
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Like other Governments, the Chinese Government must be concerned about the dangers of inflation and the massive social problems of millions of unemployed young people moving around China without homes, jobs or prospects. In China, the problems are simply larger. The astonishing feature of the development debate in the past 30 years is that we are now so concerned with the problems of success as China moves increasingly into world trade and the world community generally.
The starting point must therefore be that bilateral and international relations with China have a broad base and are of the highest importance. In world trade, in international investment, as permanent members of the Security Council, on security issues and in education and research exchanges it is important that Britain and China work together. It is therefore encouraging to reflect that practical relations with China are improving—I do not think that Ambassador Ma would disagree. That only leads us to ask why they have not been better in the past. The answer is simply because of the differences on transitional issues in the restoration of Hong Kong to China in 1997, in what is now less than the proverbial 800 days.
The biggest issue has been the basis for the 1995 elections to the Legislative Council. The decisions have been taken—they are past. The elections are about to take place and will be vigorously fought by parties of all hues. Those parties have become successfully established in Hong Kong. It is best to put those decisions behind us as we look forward to the important tasks that remain in securing a smooth transition.
There is no need to remind people in China or Hong Kong of what the differences have been, but we need to remind ourselves of them in the House, as we face the inevitability of an election and the strong possibility of a change of Government in the United Kingdom before 30 June 1997.
The practical reality is that the Prime Minister has said that he will seek to take this Parliament to its full term. A Labour Government entering office in the last few months before the handover of Hong Kong would not be able or willing to make any drastic changes in any arrangements for which the UK still remained responsible. I say that they would not be willing, and that would be so if by some happy circumstance a general election were to be held tomorrow.
Let me explain why, and I shall speak frankly. The Labour party has no political interest in saving the face of the Governor, Chris Patten, when he returns to Britain in 1997. He may return to Westminster politics, where in the likely state of the Tory party he may feel that he has a job to do. We have no interest in facilitating that job. Our primary interest and duty is in seeking the well-being and interests of the people of Hong Kong. To be fair, that interest has been shared by Chris Patten in what he has attempted to do in Hong Kong.
Labour Members are asked, and ask themselves, why Britain has suddenly become so concerned about elections in Hong Kong on the brink of handing it over when we managed without democracy for most of the 150 years of our exercise of sovereignty. This is the point at which the right hon. Member for Mid-Sussex might feel that I take a different view of Hong Kong's past.
There were inglorious and, in modern terms, shameful circumstances in the original establishment of Hong Kong as a British colony in the opium war, in which Britain

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fought to defend the rights of British drug dealers massively to corrupt the people of China with their opium cargoes. In the years since, however, much has been done in Hong Kong to atone for those deeds. Most of it has been done by the Chinese people but, under the umbrella provided by British rule, with the help of countless teachers, doctors, nurses, magistrates, missionaries, journalists, civil servants and, yes, traders, industrialists and bankers from this country and from all over the world. A fair share of adventurers, characters and rogues exist among them, but the result, as the world has seen and as I have known it before and since the war, is nothing of which we need be ashamed.
In the Easter Adjournment debate on 11 April 1963 I secured the first debate on Hong Kong in the House of Commons since the war. Those were the days of decolonisation, and naturally the question came to mind with regard to Hong Kong. The judgment in Hong Kong at that time was that any election would become a cockpit for a bloody fight between the KMT—the nationalists, based in Taiwan—and the Chinese Communist party, just across the border.
There were good reasons for that judgment. It was acknowledged that if at any time China wished to resume the exercise of sovereignty in Hong Kong, the people's army could just walk across the border and would be in Government House in a few days. China chose not to intervene, then or since.
As everybody has said, Hong Kong is now the most prosperous part of China, with an average income higher than in the United Kingdom and a gross domestic product accounting for 25 per cent. of China's as a whole, although Hong Kong contains only 0.5 per cent. of China's population. Furthermore, and most important, Hong Kong is a free society.
In my view, there were opportunities in the 1970s and early 1980s when it would have been to the advantage of the people of Hong Kong to introduce direct elections for the legislature, and democratic government. I said so at the time both in Hong Kong and in the House.
It was said that there was no demand for such democratic government in Hong Kong, so I argued for and encouraged the development of embryonic political parties that could express that demand, believing it to be necessary to secure the foundation of a prosperous, free and just society, whatever the future sovereignty of Hong Kong might be.
By 1984, when it was getting very late, I was disappointed that the joint declaration did not go further and faster towards direct elections and democracy—and I said so, as did some of my hon. Friends. Lord Healey, who was then the shadow Foreign Secretary, simply supported Lord Howe, who was then Foreign Secretary. Nevertheless, to be fair, the joint declaration and the Basic Law are remarkable documents, and our duty now is to exercise what influence we have to ensure that they are honoured and fulfilled, to create the conditions in which our aim can be secured.
I apologise to the people in Hong Kong, who seem to be listening to a broadcast of the debate, because they need no reminding of the history, but the circumstances of Hong Kong and its history are less well known to some of my newer hon. Friends, who are busy in their constituencies winning local elections, and who are as
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keen as I am to secure orders from China for engineering firms in our constituencies. Those orders are coming through, and will continue to increase.
A question faced the Opposition when the Chris Patten whom we knew so well appeared as a somewhat belated knight in shining armour in Hong Kong, seeking ingeniously to squeeze the last ounce of democracy out of the arrangements that he found had already been made there, even at the risk of upsetting Chinese friends in Beijing. I was in Shanghai at the time, and I must confess that my reaction was to cheer.
I do not want to irritate Chinese friends in Beijing by speculating about what developments there may be in the government of China. I agree with all that has been said about the unlikelihood of any major disturbance or change after the departure of Deng Xiaoping. Just as China has left us to be responsible for Hong Kong until 30 June 1997, the Chinese will be responsible after that date, and there is nothing that we can or should do to interfere.
The changes in China in recent years have been quite remarkable. The Chinese Government have been skilful in managing the transition to a market economy, and there have been many developments in political and social policies too. The right hon. Member for Old Bexley and Sidcup was right to attribute much of that to the institutions and to the commitment to the idea of China throughout the population, but another important influence has been the sheer drive and ingenuity, and the skills, of the people of China, where the tradition of entrepreneurship is very different from that within the former Soviet Union.
In the fullness of time there may be things for both Britain and China to excuse in their past relationships, as they build policies for the future, but I believe that, in circumstances that are becoming better, we should persist in the path that has been set until 30 June 1997.
There are outstanding issues, but I hope and believe that the political judgment and statesmanship on both sides will reach a resolution. Those issues have been enumerated: the setting up of a Court of Final Appeal, airport financing, the adaptation of local laws, the completion of civil rights laws and institutions—including, I hope, a human rights commission—an access to information Bill and an independent legal aid department.
Those are all consistent with the Basic Law; indeed, they are necessary and appropriate for its implementation. The go-ahead for container terminal 9 will certainly greatly help to consolidate vital international confidence. I trust that civil servants will co-operate fully with the preparatory committee when it is set up, and that the Governor will see his way to relax the arrangements for working with the preliminary working committee meanwhile.
The joint declaration and the Basic Law enshrine the principle of "one country, two systems". It would increase the confidence of the people in Hong Kong and of the international community in that principle if the Chinese Communist party made it clear that it will not operate in Hong Kong as it does within the rest of China.
The arrangements announced by the Financial Secretary for informing and then involving the Chinese Government in the budgetary process should be used to the full on both sides, because that, perhaps, is the most vital arrangement for securing a smooth transition.

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It is a remarkable provision of the Basic Law that article 106 says that the Hong Kong special administrative region shall use its revenues exclusively for its own purposes, and they shall not be handed over to the central People's Government. Furthermore, the central People's Government shall not levy taxes in the Hong Kong special administrative region. Article 110 says that the Government of the Hong Kong SAR shall, on their own, formulate their monetary and fiscal policies. The Chinese statement in annexe I of the joint declaration requires the Hong Kong SAR to report its budgets and final accounts to the central People's Government—but simply for the record. That is rather as if the City of London were exempt from paying any taxes to the Treasury for the next 50 years.
Great political skill and restraint will be needed on both sides if those articles are to be honoured fully. A condition is that honouring them must be seen to be in the best interests of China as a whole, because Hong Kong's contribution to China will be greater in that way than it could be under any other arrangement.
One major contribution that Hong Kong can make is to act as a window on the world, not only in trade and finance but in education, research, technology, health services, social services and other ways. I can give an example that I have discussed with many people in Hong Kong. Universities in Hong Kong will be fully stretched in providing for undergraduates, mainly from Hong Kong, but one or more of them are capable of becoming national' institutions within China, complementing the roles of such great universities as Beijing, Xinghua, Fudan and others, drawing and contributing graduate students from all over China and providing China with a means of having highly trained people in business, technology, science, humanities, law and so on, who are wholly at home in a climate that can rival that of the Massachusetts Institute of Technology, Berkeley, Stanford and our own universities in Europe. It would be a wise investment for Hong Kong if it were fully to contribute to such development in China.
I should like to conclude with the piece of rhetoric with which I concluded my speech in the 1963 debate and which was not bad for a young man.
"I would ask whether we see Hong Kong like the string of crackers with which our Chinese friends so delight to welcome us, flashing and banging and then leaving the deepened stillness of a tropical night; or whether we see Hong Kong like a seed which will grow into a tree which the children and the children's children of all those millions in China and in Hong Kong will see, and seeing, give thanks for the labour, the wisdom and the piety of their ancestors."—[Official Report, 11 April 1963; Vol. 675, c. 1517.]
6.20 pm
Mr. David Howell: This is a welcome opportunity, not only to return to the issue of Hong Kong, as is our proper duty in this House, but to look at Hong Kong matters in the broader context of our relations with China and, indeed, our relations with the whole Asia Pacific region. It is also a welcome event from the point of view of the Select Committee on Foreign Affairs because it gives the House an opportunity to comment on its report on Britain's relations with China and Hong Kong, which we published well over a year ago. Some of the detail may be out of date, but its main thrust and considerations are still very apposite.
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I shall explain, because some may have forgotten as it was published some time ago, that the report did not only address the narrow issue of Hong Kong or the bilateral issue of relations with China. We were trying—indeed, it was the purpose behind the report—to look a little further ahead, especially beyond 1997 and, as it were, beyond the obvious difficulties and problems that we want to overcome in our relations with Bejiing over Hong Kong, to the enormous possibilities of establishing very much closer ties of every kind, not only commercial and financial, but of all sorts, with that giant awakening nation which has 23 per cent. of the world's population. That was our aim.
I heard my right hon. Friend the Member for Old Bexley and Sidcup (Sir E. Heath) take a swipe at the report. I can just about endure that, but I must say that he was being—very uncharacteristically—a little unfair in his assessment of what we were trying to say. If he reads the report, he will find in almost every page, right from the beginning, our insistence that we were looking for positive ways in which to sew together our relations with that great nation. We have reflected in almost every page the Committee's view—I think that it is a wider view—of the huge respect that we have for China and how it is coping. How that vast nation is able to cope with immensely rapid economic change remains to western minds a miracle of construction. That was entirely our view.
Perhaps what my right hon. Friend the Member for Old Bexley and Sidcup did not like was that we approached the subject—again, we see this as our duty to the House—in a fairly candid way. We do not see it as our duty to approach such matters with buckets of whitewash or to be starry-eyed or uncritical about even our closest friends. In considering all the problems—we certainly marvelled at all the aspects of modern China and at how the People's Republic of China was tackling problems—it would have been wrong to brush them aside and not be frank and open as a parliamentary Committee should properly be. I am sorry if that was misunderstood by my right hon. Friend and perhaps by other people around the world, but that was our approach and I make no apology whatever for it. It was, and remains, an attempt to be utterly constructive about how, beyond 1997, we view our relations with that vast country.
There was an even bigger thought behind that aim which today has even more validity as every month goes by: our belief—it is certainly mine—that the rise of Asian economic power will be followed and is already being followed by the rise of Asian political power. That vast shift of power to the Asia Pacific region—a shift in the centre of gravity of the whole planet—will be the most compelling theme of our politics, our policies and, indeed, almost our ways of life over the next 10 and 20 years.
In preparing our report, we saw, as anyone may see now, some amazing figures. They are not just fancy forecasts, projecting things as though everything will go smoothly in Asia, which obviously it will not, but facts now or only a little way ahead indicating the true power and potential of that region. The hon. Member for Motherwell, South (Dr. Bray), who speaks with authority, mentioned some of those facts, as have many hon. Members.
I am very struck by one of the European Commission's documents, which says that by 2000—only 54 months ahead—there will be more than 400 million people in the

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Asia Pacific region with disposable incomes higher than the average for the European Union. That means that even though there will still be much poverty, in terms of disposable income and purchasing power it will be a market bigger than the entire European Union. That is one of many figures that we need to keep in mind when thinking about the vast importance of developing a good relationship with the region in every way.
We need also to think beyond economics. It is not only a question of higher living standards. Income per head in Hong Kong is higher than in the United Kingdom. It is also higher in Singapore and about the same in Taiwan. I should think that there are many areas of other parts of Asia and the Indian subcontinent where living standards are already high. However, we must consider not only living standards, but the staggering increase in education standards.
From the schools of Hong Kong and Taiwan and perhaps even from schools in parts of China—certainly, from schools in parts of the Indian subcontinent and elsewhere in south-east Asia—a generation of children are emerging who are better educated and equipped than many of our own children to deal with the information age and the high-technology future. So we must not only consider superior living standards but superior education standards.
It may even be, although this is a more tricky statement, to which there are so many exceptions that it could be shot down, that we shall have to look at the higher moral standards being pursued, at least in terms of the Confucian commitment to the family and the family bond and the concepts of personal obligation and family duty, which seem to be strong in many Asian communities—a lot stronger than in the west, where we preach such values but have ceased to practise them quite as well as we should.
Mr. William Powell: My right hon. Friend made a point about education of quite awesome importance for the future. Is that not underpinned by the fact that in the Republic of China and in Taiwan the constitution requires at least 15 per cent. of all public expenditure to be spent on education? That is the major reason why in Taiwan, and elsewhere in the region as my right hon. Friend says, there is such an enormous and emerging educated class.
Mr. Howell: That is a very good example of the point that I was trying to make. I shall reinforce it with two more statistics. I do not want to bore the House with endless figures which, again, are facts today and not futurology predictions, but the Asia Pacific region, and within it the huge China economic region, now produces a quarter of all our income from overseas investments. It is a very large amount and it may even be higher than the latest figure that I have, which is for last year. It takes about a fifth of our exports. Again, I suspect that that figure is rising.
Even more significantly, the region is generating the capital growth of the planet. Out of the fantastic savings of those peoples, who are committed to saving and are not consumption-minded, come the capital resources that are financing the planet's growth. A striking fact is that Japan produces 56 per cent. of the entire net savings of the world. I suspect that Taiwan produces a further 4 or
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5 per cent., Hong Kong produces savings of the same order, and China is already generating large savings which are being fed into the international financial markets.
He who saves the money calls the tune, and the tune of the future will increasingly be dictated by those who are mobilising those colossal savings. In this debate, the theme has been what we feel should happen on the other side of the planet, but we should note that those huge capital flows are coming to Europe and especially to the United Kingdom. Of Taiwanese investment into Europe, 80 per cent. comes to the United Kingdom. Japan's direct investment in the UK is equal to its investment in the rest of the European Union. I suspect that increasing amounts of money are also beginning to flow in from Taiwan, Malaysia and the People's Republic of China, although we do not immediately see them labelled. They are the sources of investment of the future, so as a nation we would be mad not to realise that our interests lie in good and ever stronger relations with all those nations, but especially with China.
The issue at the forefront of our relations with China, and which has understandably been the subject of most comments today because it blocks our longer-term vision, is Hong Kong and how we can do the right thing and fulfil our duty from Hong Kong's point of view. Some of our Chinese friends find it difficult to grasp the concept that we are pursuing our duty and what we believe to be right rather than our own interests.
We must also pursue our own interests, however, and not be too high-minded or starry-eyed. We must ensure that our good relations with Hong Kong and the huge investment and political effort that we have put into fulfilling our duty there can in turn benefit this nation so that we do not come out a lap behind those who could bypass Hong Kong's political problems and develop their relations directly with Beijing. It would be a great disappointment if the Anglo-Hong Kong relationship, which was to be the one to provide us with a head start against other European nations in investment in the awakening China and parts of Asia—including north-east Asia, which has hardly been mentioned—turned out to be more of a handicap than a benefit. In one's gloomier moments, when listening to the exchange of vituperative slogans, one sometimes feels that that may be so, but that is an unnecessarily gloomy view and it need not be so.
My right hon. Friend the Member for Old Bexley and Sidcup has had huge experience of talking to Chinese leaders who, although they are inclined to say that the Hong Kong problem could damage relations with Britain, are also inclined to say that in general it probably will not. I declare an interest as a director of Trafalgar House, which is undertaking huge infrastructure investments in China. In my experience, the Hong Kong problem has not made much difference. Let us hope that that is the reality and what will prevail despite some of the more chilling statements.
How do we ensure that Hong Kong is a plus for us and also for the people of Hong Kong? The report of the Select Committee on Foreign Affairs considers all the propositions and deals with whether the Patten proposals for electoral law reform contradicted the Basic Law. It came to the conclusion—not casually, but after painstaking analysis—that they did not, that they were within the spirit of the Basic Law, that it was right, and that that law and the joint declaration say that Britain has responsibility for what goes on in the territory of Hong

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Kong until 1 July 1997. The Basic Law and the joint declaration require the Chinese authorities to co-operate with us—co-operation has been mentioned—to ensure that the best interests of Hong Kong are served.
I do not say that as a Committee—or, indeed, personally—we thought that every step taken by the Hong Kong Administration has been right. It is possible, especially with the wonderful aid of hindsight, to criticise and to say that things have gone wrong. The Select Committee heard some trenchant criticisms from Sir Percy Cradock and the like. Nevertheless, we are where we are and I agree with my right hon. Friend the Foreign Secretary and with the hon. Member for Livingston (Mr. Cook) that it is essential that we stand firm to our commitment to democratic electoral practices and that we do not begin to say that we think that the situation is hopeless, time is against us, the clock is ticking away and we must make all sorts of concessions on democratic rights and duties and the necessary ingredients of what we believe to be a separate system—a free economic system and a free society.
Undoubtedly, the mood in Beijing is difficult and I hope that my right hon. Friend the Member for Old Bexley and Sidcup will not criticise me for saying so. An end-of-dynasty mentality is prevailing. Some people in Beijing, whose words I follow closely, are saying things with greater hardness and harshness than they were some years ago. There is a mood that there must be no concessions and no understanding, and that the PRC will do certain things the moment it takes over and that will be that. We shall lose respect, and the people of Hong Kong will probably lose out, if we give in to or tire in the face of that attitude. We have to be absolutely firm about where we are now and I hope that we shall be. The report of my right hon. and hon. Friends in the Foreign Affairs Select Committee takes that line. I do not think that we should apologise for it and I am glad to hear that view reinforced by both Front-Bench spokesmen.
The report was certainly not uncritical of certain more detailed matters of Hong Kong policy. We return time and again to the issue of the 52 or 53 widows of ex-service men. I find it difficult to understand the attitude of my right hon. Friends and of the Government to those people. Why they should not just be given nationality I cannot fully understand.
On the non-ethnic Chinese—
Dr. Bray: The right hon. Gentleman should make his representations at the door of the Home Office, not the Foreign Office.
Mr. Howell: I stand corrected if I have got the wrong Department. I hope that my right hon. Friends, whatever their Department, will look into the matter once again. Indeed, I visited the Home Office with the late Lord Bonham-Carter and other distinguished people, including Baroness Dunn, to plead the case once—though yet again without success, I fear. That remains a niggling problem and I hope that my right hon. Friends will not keep brushing it away, but will re-examine it to find out whether they can at least show some movement.
People with far more expertise have dealt with the Court of Final Appeal. As the hon. Member for Motherwell, South said, the matter is related to the role of the Chinese Communist party. What role will it play after 1997 and what assurances can we get that it will not
1030
play the same sort of political role that it plays in the rest of mainland China? We must watch that issue closely, among many others.
The freedom of the press is another issue that we must watch closely. Every day, there is evidence of the shadows closing in on such freedom in Hong Kong. We shall have to combine the task of being a proper monitor and fulfilling our duties to Hong Kong with our wish not to attack or undermine the People's Republic of China—I must stress the latter time and again—but to recognise all its problems, support it and reinforce its efforts to open out and move towards the future.
Although it is a year since our report appeared, the need to look at the post—1997 priorities has been left in the air. It is not too soon to begin to decide on them. First, we should work extremely hard to get and maintain good relations with Beijing, despite the rancour and the difficulties over Hong Kong. We should follow through the range of ideas in our report for sewing together informal relations at a parliamentary, cultural and educational level.
Secondly, we must solve the Hong Kong problem—ideally, as my right hon. Friend the Member for Old Bexley and Sidcup said, through dialogue. That will be difficult if the other side will not talk or, as my right hon. Friend the Member for Mid-Sussex said, the tennis ball is simply not returned. None the less, we must keep working at those talks and never let up.
Thirdly, we must recognise our commercial interests in the region, particularly in relation to Taiwan. We accept, of course, the "One China" policy. Taiwan is not a political entity, but it is a mighty one commercially. It has made great investments in Britain and we should be at least as sensitive as our competitors and neighbours in western Europe in our dealings with it. There are no fewer than 9,000 not 8,000—Taiwanese students here, which is a colossal number. Taiwan has tremendous good will to our country and, given our difficulties with Beijing, we must be careful not to compensate too much the other way by being less than friendly to it. I refer in particular to the way in which we handle visa applications from Taiwan. Apparently we are the only country which requires the Taiwanese to have a separate piece of paper outside their passport as a visa. I cannot see that that is correct, but apparently it is deemed necessary. I hope that my right hon. Friend the Minister will comment on that.
Fourthly, our general foreign policy stance should be less Euro-centric. That does not meant that we should not get our relations with the European Union absolutely right, but we must remember that it represents a lesser part of world trade because more than half our overseas receipts, if one includes visibles and invisibles, come from outside Europe.
Finally, we have lessons for ourselves, our policies and politics to draw from the amazing rise of power and influence in Asia. Although we should consider its faults, as we have done in the report of the Foreign Affairs Select Committee, we should also consider its fantastic virtues. Countries in Asia deliver personal security through their family bonds, which we seem unable to provide through universal benefit provision and an elaborate system of social security. Perhaps we could learn a lesson from that. If we want to succeed and to be as rich and as socially cohesive as those countries, we should investigate other ways of delivering security.

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We should consider how the parents of the poorest people in Asia devote their entire lives to the schooling of their children, which goes far beyond their states' provision for schooling. Those parents are turning out a new and brilliant generation of young Asians. We should also note how inter-generational respect is so important in parts of the Asian world—something on which I get keener and keener as time goes by. Asian countries have realised that the elderly are not a separate, dependent group, but an integral part of a balanced society. When I visited Japan recently I was fascinated to see how its aging society is not considered a problem, but a gigantic resource which will increase the country's growth, balance and dynamism. I am all for seeing things that way in the European Community as well, instead of granny being pushed into a home.
The way in which Asian countries handle the problem of employment and jobs is, in some ways, superior to our approach. Everyone has a role, dignity and status even if, in a ruthless, competitive world, such people would be declared redundant and considered an unnecessary cost on the books. A quite different approach from that is taken in many parts of Asia, including even super-efficient Hong Kong. After several hundred years of assuming that European values are always the best, we must recognise that in many cases the superior values of Asia are delivering superior prosperity, economic performance and quality of life. That is a sobering thought for those who have gone round preaching the wonders of western philosophy for 300 years.
I urge upon right hon. and hon. Members, and all those who think about the great power shift in China and Asia, some humility. We must realise that the issue now is not westernisation, which has stirred the world, including Asia, for the past 100 years, but perhaps easternisation—the influence of Asia's fantastic performance on our more stagnant societies.
6.44 pm
Mr. Mike Gapes: It is important that we have the opportunity to comment not only on the Select Committee report, which was published in March 1994, but on the Government's response to it, published in July 1994. It is regrettable that the House has not had an opportunity to discuss that report, especially since the Select Committee made a number of recommendations—which, unfortunately, the Government have chosen not to adopt. I shall limit my remarks to the Committee's recommendations on Hong Kong, although all hon. Members should endorse what the Chairman of the Committee and other colleagues have said about Taiwan.
The Select Committee made a number of recommendations about human rights in Hong Kong. It recommended, for example, that a human rights commission should be established, and that vigorous steps should be taken to press the Chinese Government to ratify the United Nations convention on human rights, the international covenant on civil and political rights and the international covenant on economic, social and cultural rights.
The joint declaration made it clear that those agreements would remain applicable to Hong Kong, but those international covenants have not yet been ratified
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by China—it appears that it has no intention of doing so. If that is still the case in July 1997, where will that leave Hong Kong?
The Government have not been forthcoming either about the discussions in the Joint Liaison Group, or about the reality for Hong Kong in 1997. I understand that the head of the Hong Kong and Macau Affairs Office, Lu Ping, visited Hong Kong in May last year. He said that Beijing was not obliged to make reports to the UN Commission on Human Rights after 1997, which is a cause for concern. When the Minister replies, I hope that he will say what will happen to human rights in Hong Kong after 1997. In recent months, what assurances, undertakings or even discussions and disagreements have been forthcoming from China?
Time is running out, and we need some clarification. It is not acceptable for us simply to say, as the former Prime Minister, the right hon. Member for Old Bexley and Sidcup (Sir E. Heath) seemed to suggest, that human rights do not matter, so long as we get the money and achieve economic growth. I find that attitude deplorable. Human rights are a universal right—the UN convention on human rights is a universal declaration. One cannot argue that three quarters of the world's population should have human rights, but that that principle does not extend and does not matter to those who happen to be Chinese.
If "one country, two systems" is to mean anything now, for people in Hong Kong at least, it does not mean one country with a developing capitalist system in China and an already established capitalist economic system in Hong Kong. It does not mean two systems in that sense. It now means the preservation of the legal, judicial, press, free trade union and democratic, or increasingly democratic, political system of Hong Kong.
In those circumstances, it is essential that we have some assurances that, come 1997, "one country, two systems", and the 50 years after, will not shortly lead to the snuffing out of the independence of the judiciary or of people's rights to express their political opinions openly.
In Peking, people continue to speak about the leading role of the Communist party. They continue to speak, in a way, of a party state. It may be a state in which almost everything goes, but the very week in late 1993 when the Foreign Affairs Select Committee, of which I am a member, visited China, we were told that a decree had been introduced to ban satellite receiver dishes.
That is absurd, because part of the economic development in the south of China was based on the fact that, on television, companies were advertising products that were produced in Hong Kong or in the south of China. Nevertheless, that mentality continued to exist at that time, and I suspect that it persists in some quarters now. We need to know the answer to the question, what will that mean for the people of Hong Kong after 1997?
The Select Committee made several recommendations that I have no time to discuss, but it is important to mention a few issues. Citizenship and nationality have been mentioned, and a reply of sorts was given by the Foreign Secretary when I intervened earlier on the subject. The issue of the widows of service men must be tackled. Those few people deserve better treatment than the vague references that we currently receive from the Government.
We need to consider the ethnic minorities of Indian origin and other ethnic minorities living in Hong Kong. Their position is also unclear. It appears that the Chinese

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Government's attitude is that everyone who lives in Hong Kong after 1997 will be given Chinese nationality, and they will not recognise any other nationality for people living there.
Press reports that I have read, published as recently as earlier this week, say that people who will not be classified as Chinese nationals include non-ethnic Chinese in Hong Kong, ethnic Chinese who were born or have settled in foreign countries, and stateless people. In those circumstances, it appears that there will be a problem for people who are somehow left by us without the possibility of being able to extricate themselves from that position.
Will the Minister, in his reply, specifically discuss the recommendation of the Foreign Affairs Select Committee:
"We remain of the view expressed by the then Committee in 1989, that Britain has a duty to give non-Chinese ethnic minority residents of Hong Kong full British citizenship. If the Government continues to refuse to do this, we recommend that the Government state publicly that if this group encounter discrimination in the new Special Administrative Region, whether or not they face explicit pressure to leave, they will be given every help to enter Britain and acquire British nationality"?
I know that statements were made by the Home Office last year that moved a little way in that direction, but we should go further and clarify what will happen for those several thousand people who may be left in an uncertain position in two years' time.
Obviously, the position regarding Britain and China has. changed since the Select Committee produced its report. Progress has been made with democratic changes, although China says that it will not abide by them in future. The Governor appears to have receded into the background, and other people are playing a more prominent role in Hong Kong politics than they were.
We must recognise that Britain continues to have responsibility, formally, legally, for the next two years. Although our power may be much less than it appears on paper, because the transformation of Hong Kong is already taking place—Chinese influence and control grows inexorably day by day—nevertheless, in international law, and in terms of the joint declaration, Members of the House and our Government continue to have a responsibility.
Because of our history and the joint declaration, we should express our worries even after 1997. If there is any suggestion of Chinese Government pressure, or of the agreements and promises that have been made being abrogated, Members of the House have a duty to speak out loudly and clearly in defence of human rights, trade union rights and the rights of free speech and association in Hong Kong.
6.55 pm
Mr. David Mellor: I too shall be brief—high-mindedly, because it is about time that Members other than Privy Councillors were heard from the Conservative Benches, and, less high-mindedly, because I have a pressing broadcast engagement to go to.
The debate has been useful, because it shows a pretty united front in the House about those issues. Even though the fact that the House will have held a debate on Hong Kong that has been conducted in measured and responsible tones will not be conveyed any distance outside the House by the media in the United Kingdom, I hope very much that it will be reported widely in Hong
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Kong. If so, it will provide some reassurance that there is a tremendous commitment in this place to discharging the final substantial responsibility of Britain's colonial past—that of handing over Hong Kong to China.
We have done everything we can to reach an agreement that, as the hon. Member for Motherwell, South (Dr. Bray) and others have said, is fraught with difficulties. It will be a miracle if that agreement is adhered to, and we have done everything in our power to prepare the people of Hong Kong for the transition, and to negotiate with the Government of China and to internationalise the issue in a way that gives them some prospect of a happy outcome.
My association, registered in the Register of Members' Interests, with the Oriental Press Group, the largest newspaper group in Hong Kong, has given me the opportunity to visit Hong Kong several times recently.
One cannot go to Hong Kong without being enormously impressed by the extraordinary energy of the place. To me, one of the great wonders of the world is the experience of looking down from the Peak on the incredible creation that Hong Kong is. The fact that it has been able to turn itself into the eighth largest trading nation in the world is the type of formidable achievement that makes me deeply regret that that buoyant, dynamic, wonderful, free, civilised place must be handed back to a Government of the nature and character of the Government of China.
It is an irony that we can appreciate, but painful for the people of Hong Kong, that, while the balkanisation of Europe proceeds apace—seemingly, every half a dozen fields in the former Yugoslavia can obtain independence with the blessing of the international community—it has not been possible for self-determination to apply in Hong Kong.
It is deeply regrettable that, during an era that was characterised by a concerted and successful effort by the west against communism—the era of President Reagan and Mrs. Thatcher—it was felt necessary to negotiate an arrangement with China that involved handing back Hong Kong.
I do not imagine for a moment that there was an alternative. I have been re-reading Mrs. Thatcher's memoirs on that matter. It is obvious that she sought to decouple the sovereignty issue from the other issues of the future of Hong Kong that she wished to discuss. The Chinese always asserted that sovereignty was the crucial element. The Chinese Government were not willing to be swayed, and the international community did not have the resolve to take on the Chinese Government, so Hong Kong must be handed back.
It is therefore right that, in our relationship with China, we are showing patience and forbearance, and adverting as little as is consistent with our duty to the Chinese Government's lamentable record on human rights issues, which have a fundamental bearing on the arrangements that they have negotiated in Hong Kong. We are endeavouring to keep the temperature at a level that permits constructive work. It cannot be reassuring that the Chinese Government are taking issue with the relatively limited steps towards democracy that the Governor of Hong Kong has properly taken.
It is a good debating point, but no better than that, as my right hon. Friend the Member for Old Bexley and Sidcup (Sir E. Heath) said, to ask why we have left it so long. One suspects that one reason is that the governance

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of Hong Kong was a matter for the civil service rather than political leadership. Having seen what Hong Kong has achieved, perhaps we should try that system here. It was inevitable that, when a politician of the front rank such as Chris Patten went to Hong Kong, he should want to make changes such as those he has advocated. The House should be proud of what the Governor has achieved.
One of the aspects that particularly strikes me when I go to Hong Kong and watch the television and read the newspapers is the extraordinary bond of affection that has grown up between the Governor and the people of Hong Kong. Whatever cavilling there may be by business men and one or two senior politicians in the House, whose enthusiasm for China has overwhelmed their judgment about the nature and character of the Chinese Government, it is clear that Chris Patten has done what every decent, humane and statesmanlike Member of the House would do if placed in that position.
I hope that the Governor will have trodden the fine line and avoided greatly provoking the Chinese Government, to whom almost anything is provocative. We cannot all live in a world where it is accepted as reasonable when the Dalai Lama is told that he can return to Tibet provided he does not do anything effective to alleviate the suffering of the people there.
That cannot be the basis for our relations with the Government of China. We must not conduct our relations with the Government of China from our knees—certainly not from our bellies. We must show the same respect for our institutions and our beliefs in freedom and democracy as they have in theirs. Chris Patten has done as good a job as possible.
What of the future? I believe, for a range of reasons, that it will be a miracle if the one country, two systems is able to proceed. First, it is not the nature of the Chinese Government to accept dissent. As I know only too well, as I work with one of the leading newspaper companies in Hong Kong, it is part of the nature of Hong Kong to dissent. Anyone who has been the victim of a press conference in Hong Kong knows only too well that, if the press are robust in this country, they are doubly so in Hong Kong.
The Government of China as at present constituted will find it enormously difficult to tolerate that. It will require a level of patience that they were not prepared to share with their own students in Tiananmen square. It will be a miracle if the Government survive in their present form; we must all hope that they do not. They will be required to behave in a way in which they have never been able to behave before.
I wonder whether those of us who are enthusiastic about investing in China and who take a joy in the growth of the Chinese economy—there are 1.25 billion people, and growth is soaring—realise what the sleeping giant is capable of once we finally wake it from its slumbers.
We applaud the developments of an economy where wage rates are 1 per cent. of those prevailing in the European Community, while at the same time trying to harden yet further the arteries of the European economic system with devices such as the social chapter. One wonders what sort of world we will find in 50 years' time,
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if, as Deng Xiaoping suggested, 50 years after the agreement with Hong Kong, China should be a full and equal member among the ranks of developed nations.
How do we ensure that the Chinese Government behave responsibly? I suspect that the threat will come not so much from direct Chinese Government intervention to break the arrangements, as from the fact that the Chinese Government do not control much outside some of the central areas of China. A great deal depends on individual regional governments, individual powerful elements in the state and powerful individuals.
The danger for Hong Kong is corruption. The Chinese Administration are corrupt and unwieldy. The great thing about the Government of Hong Kong is that, for the most part, they run an efficient, effective society and banish those arrangements to the sidelines as a result of the vigilance of the law and order services.
I suspect that there are no easy solutions. We can internationalise the matter and try to ensure that China, as a permanent member of the United Nations Security Council, is unable to get away without signing a key United Nations convention. It is hard to think of a more fundamental United Nations convention than that pertaining to human rights. The eyes of the world community, not just those of Britain, focus on Hong Kong and the solemn obligations that the Chinese Government entered into when they signed the arrangements.
I did not intend to say much about press freedom in Hong Kong, but the subject has arisen a number of times. There is something in the point made by the right hon. Member for Tweeddale, Ettrick and Lauderdale (Sir D. Steel)—I hope that I got his constituency right—
Sir David Steel indicated assent.
Mr. Mellor: Good—that is a start.
The right hon. Gentleman said that we should not leave rules that could be used oppressively by the Chinese. During my most recent visit to Hong Kong, it came as an unpleasant surprise to me to find that a shadowy tribunal exists, comprising people whose names are not published. It sits in judgment on newspapers and is able to fine them, without a hearing, for producing indecent material.
People will, I hope, be as dismayed as I was to find that one of the publications of the Oriental Press Group, the English language newspaper the Eastern Express, published a front-page picture of a young Chinese child who had been maimed in a street accident. The picture was an affecting one, of the badly scarred child clutching its mother. The aim was to launch an appeal to raise money, so that the child could have some operations to improve its face by plastic surgery and to remedy some of the other injuries. The tribunal fined the Eastern Express $HK5,000 for publishing an indecent photograph.
It is hardly an ornament to the Hong Kong Administration, of whom I otherwise warmly approve and applaud, that such mechanisms should exist. I do not think that it is an ornament to any society to think that a picture of a seriously handicapped child is indecent. Such an attitude takes us back to the Victorian age, when we used to lock away such people in asylums in the depths of the countryside so that no one was forced to gaze on them. We shall need to look carefully at one or two such aspects.
Overall, I suspect that the resilience and vigour of the people of Hong Kong will sustain them. As a child, the only things I knew of Hong Kong were the ghastly little

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plastic nick-nacks which came out of Christmas crackers, and the nastier T-shirts at the nastier end of Woolworth counters, both of which always had written on them, "Made in Hong Kong". Within that time, while our economy has, in relative terms, stood still, Hong Kong's has surged away.
Not only does Hong Kong now have one of the most dynamic economies in the world, but it is one of the most pleasant and attractive places to visit, with high-quality hotels, wonderful service in shops and marvellous public transport. Without the slightly repressive edge of the Lee Kuan Yew regime, the Hong Kong regime has managed to persuade people not to drop litter, and to behave in a civilised way—something from which all of us in this country can learn.
People who have been able to attain those achievements in such a short time can surely survive what is to come when shorn of democratic institutions. That is not to deny that it is a cruel fate for Hong Kong when nations infinitely less capable of managing in the world are accepted as free and independent members of the world's community, while the extraordinary group of people in Hong Kong must be handed back to the state of China. No one should assume—I am sure that no one in the House does—that the passage ahead will be easy or clear. It will not.
7.9 pm
Mr. Denis MacShane: The debate so far has been wide-ranging and absolutely fascinating. From 1980 until I entered the House last year, I visited Hong Kong more times than I care to remember. Like everyone else, I found it a most exhilarating and exciting place to visit. I am sad that today's debate has attracted the presence and participation—although it has been of a very high quality—of so few Members of Parliament. If we were grains of rice, we would hardly make a teaspoonful to feed to a baby. I think that it is the equivalent of a debate on a wet Wednesday in Dudley.
The Governor of Hong Kong has not deemed the debate important enough to warrant his presence. I know that members of the Legislative Council are extremely concerned that, owing to the short notice of the debate, many have not been able to make arrangements to attend or to brief fully all Members of Parliament about the very important issues at stake.
As I said, I have visited Hong Kong many times and I have been thrilled by the dynamism and growth of the Hong Kong economy. However, we must have some sense of historic perspective. I remember reading in the history books about people returning from the Soviet Union 50 or 60 years ago and assuring people that there were yearly growth rates of 10 or 15 per cent., that jobs were being created, welfare systems were being set up and new housing was being provided. They told us that they had seen the future and that it worked.
The Foreign Secretary made the good point that our trade with Taiwan is only a little less than our total trade with the whole of China. In fact, the per capita gross domestic product of the Association of South-East Asian Nations is approximately $1,400 per year compared with more than $20,000 for the European Union. Although there are some very dynamic examples of economic growth in Asia, we should not assume that our future lies
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to the east and turn our backs, as some hon. Members appear to have done, on our continuing commitment to Europe.
I agreed with the remarks of the right hon. and learned Member for Putney (Mr. Mellor). He has left the Chamber to make his broadcast; I will stay in order to listen to any further contributions that he may make to the debate later. It is very sad that we are handing over the people of Hong Kong without better preparation for the future. I expect that when 20th century diplomatic historians come to write about this period, they will deplore the hurried way in which the Prime Minister of the day, Mrs. Thatcher, blundered through the diplomacy of handing back 6 million Hong Kong people to the Chinese gulag without sufficiently safeguarding their interests. I think that history will record that as one of her greatest mistakes.
Lady Thatcher was, for some, a wonderful warrior. When it came to the Falkland Islands crisis, the Gulf war or dealing with the IRA, or—to use her own words—"the enemy within", she knew what she was doing. However, when it came to diplomacy regarding Europe, South Africa or Hong Kong, she was a disaster. One could consider her to be an expert in what might be called "chopstick" diplomacy, but she held a chopstick in each hand. Anyone who has tried to eat using that method will know that it may be wondrous to behold, but it leaves an awful mess. It is that mess that the Foreign Office has been trying to clear up ever since.
The joint declaration to which many hon. Members have referred has been replaced—as the Select Committee report makes clear—by the Basic Law, which has been agreed unanimously by the People's Congress in Beijing. In opening the debate, the Foreign Secretary spoke of parliamentary exchanges. I am all for that; I would like to meet with my opposite numbers in Beijing to talk about the 10 million Chinese people who are in forced labour camps. I would like to talk about the 100 million peasants who have been uprooted from their homes and who are exploited quite ruthlessly by Chinese and foreign companies. I would like to talk about women in China who face compulsory abortions and sterilisation or about the eugenics law, as it was originally titled. I would like to talk about the prisoners who are executed in order to provide organs for transplant to sell to rich people in the west or elsewhere in Asia. They are some of the parliamentary exchanges that I would like to have if I were confident that my opposite numbers in Beijing were elected democratically in the way that we and the members of LegCo are.
All those events are well recorded; nothing that I have mentioned is a secret. If it is embarrassing for Conservative Members to hear those truths, I put it to them that no one can afford to ignore the continuing repression of human rights when it is reduced to individual life and death and exploitation in China. We should not talk about human rights in general terms; we should look at the plight of the individual. I speak with some passion on the subject because my children are one-quarter Asian. If I have understand correctly some of the comments by hon. Members on both sides of the House, three quarters of my children's identity allows them to enjoy western human rights, but one quarter does not. I believe that every human being—no matter where he or she is born—should enjoy indivisible human rights, which must be cherished.

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When some of the practices that I have described were applied in the Soviet Union, North Korea, Cuba or in Nazi Germany, Conservative Members were among the first to condemn them with immense vigour and passion. They linked whole areas of Government policy, such as trade and international politics, to attempts to stop those human rights abuses. However, because there is so much money to be made in China—Conservative Members have been open and honest in declaring their interests—at best we skate over those issues and we do not raise the individual concerns of so many Chinese people.
In the end, we do not ask the Chinese to obey our laws or to accept a western system of values; we simply ask them to respect their own laws and culture. Classic disappearances are occurring regularly in China. Chinese citizens are being seized by plain-clothes military officers and held incommunicado. That practice breaks the Chinese law, which says that families should know where family members who have been taken prisoner are being held.
We do not know the whereabouts of Wei Jing-Shen, a great human rights campaigner who founded the democracy war 15 years ago. He was imprisoned by Deng Xiaoping—who is apparently the friend of at least one hon. Member who has spoken in the debate—and released only two or three years ago. He is the Andrei Sakharov. of China. He has now been rearrested and we do not know where he is being held. We know that his assistant Tong-yi was arrested and badly beaten in prison.
We should also mention Han Dong-fang, who is the leader of the Workers Autonomous Federations in Tiananmen square. We have already discussed the citizenship and passport problems of the people of Hong Kong. Han Dong-fang is a Chinese citizen and he holds a Chinese passport, but when he left the country for medical treatment and then sought to return, he was refused admission at the railway border between the new territories and China. It is to his credit that the Hong Kong Governor, Chris Patten, protested about that.
What will be Han Dong-fang's fate after 1997? I tabled written questions to that effect last year, but as yet I have received no satisfactory reply. Han Dong-fang has been my guest on the Terrace at the House of Commons. What will hon. Members say if he is arrested after 1997? If there is a change of Government—I sincerely hope that there will be—what will my hon. Friend the Member for Livingston (Mr. Cook) have to say if he is Foreign Secretary?
We have an opportunity to raise some of those issues by focusing on what we can do in Hong Kong. We have 800 days, which should be long enough. It is equivalent to two parliamentary Sessions and, my goodness, we can get through some Acts of Parliament in this place in 800 days. What, then, should we do during that period? We should encourage the civil society in Hong Kong to sink deeper and deeper roots between now and July 1997.
I reinforce the importance of what hon. Members on both sides of the House have referred to: freedom of information. Hong Kong is currently our only eyeglass into China. The Far East Economic Review, the Asian Wall Street Journal and other media now operating in Hong Kong provide far more information about what is happening in China than can correspondents and
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journalists operating in Beijing or the Chinese media operating out of China, such are the restrictions on press freedom in China.
We should also have regard to freedom of assembly. We have discussed the marvellous economic growth rate in China. Although it has been achieved by business men and entrepreneurs, it has also been achieved by workers, whose rights need to be considered in Hong Kong. They should have trade union rights to assemble, negotiate and organise. In Tiananmen square, one of the most powerful movements that linked up with the students was that of the Workers Autonomous Federations. The number of recorded strikes and of arrests of democratic trade union organisers since Tiananmen square show that the example that the Chinese communist authorities in Beijing are terrified of. is equivalent to Solidarnosc in Poland and workers movements around the world.
Last December, LegCo had before it interesting and important legislation on social and workers' rights, but Mr. Lau Chin-shek, a member of LegCo, put forward amendments taking those slightly further forward. He obviously had the support of a majority on LegCo, but the Government withdrew their own legislation. I shall return to that matter in a moment.
Given Governor Patten's regular forays to Europe, the United States and all over the world to make theme speeches, albeit of great interest and learning, it is strange that he is not here tonight. [Interruption.] I hear laughter from Conservative Benches. The Select Committee report was produced more than a year ago, but we have had few debates in the House on this matter. My hon. Friend the Member for Motherwell, South (Dr. Bray), who is present in the Chamber, goes back some 30 years and knows that, when the House is debating Hong Kong—this may be the last full debate before July 1997—it is extraordinary that the man who is effectively the Minister responsible for that area is not present.
Governor Patten had a wonderful history teacher at his school. I know that because that history teacher happened also to be mine. Although I am several years younger than Chris Patten, I attended the same school. In our history classes, we learned about the importance of democratic development as the hope of history. The yearning for freedom is the marching song of all humanity, whether European, American, black, Asian or whatever. The Conservative party would probably place most emphasis on freedom in the economic sphere, but there should also be freedom under the rule of law.
If one country in the world has no visible rule of law, it is China. People should have freedom to travel, speak, write and read. Those freedoms were supported in the House in the 19th century and effectively in the 20th century. In my maiden speech, I paid tribute to the passionate commitment to those freedoms expressed by the right hon. Member for Old Bexley and Sidcup (Sir E. Heath) when he stood against his party's appeasement of Nazi Germany, a record of which he can be proud.
Those freedoms remain just as important in the 21st century, but China is now the country where they are most flouted anywhere in the world. If the continuing flouting of human rights and democracy in so many spheres continues unchecked, it will cause endless problems. Governor Patten's attempts to democratise in part the election process show that he understands that. He has admitted that all that he is doing with those functional democracies, about which my hon. Friend the shadow

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Foreign Secretary made such fun, is to advance the electoral college in China to where it was in England in the middle of the 19th century. Despite his efforts to introduce some democracy in the legislative sphere, he remains a prisoner of Conservative philosophy. Although I support the general line of not seeking a huge party difference on this issue, it must be noted that Governor Patten, as a child of Thatcher and an appointee of the Prime Minister, cannot support in Hong Kong what is not supported in this country—legislation to pluralise the press and guarantee human rights in the workplace.
That does not relieve the House of the responsibility to argue those rights tonight. What can we do? First, I agree with those who say that we must maintain an open policy of trade, investment and contact, not just with China but with the whole of that region. Secondly, we must embrace all the Chinas in the new networks of international bodies. China should be admitted to the World Trade Organisation. The United Kingdom should increase discussion, involving Hong Kong citizens in other international bodies such as the International Labour Organisation, the World Health Organisation and other relevant United Nations agencies in which Chinese issues will be discussed. I hope that, at the forthcoming UN conference on women, to be held in Beijing later this year, we shall make a forthright denunciation of China's barbaric practices with regard to its female citizens.
Thirdly, we should support the admission of Taiwan to the United Nations on a par with that other Chinese state; Singapore, so that Taiwan can play its part in the debate and decisions on the future of all Chinese people, not just those in China and Hong Kong but those who live in many other parts of Asia and the rest of the world.
There has been much reference to one country, two systems. That was the old slogan which Deng Xiaoping developed to explain China's relationship with Hong Kong and Taiwan. It is now out of date. There is one system—authoritarian market capitalism—and at least three identifiable Chinese states: the People's Republic of China; Taiwan; and Singapore. If there is one iron certainty about China, it is that in the past 100 years, one has never seen, from one consecutive 10 or a dozen years to the next, the same outlook, approach and system being applied in China. Great changes happen as a result of either decisions from the top or pressure from below.
An aspect that nobody has mentioned—the debate is on China and Hong Kong as a whole—is China's military role. China is now developing into a major military power. It is building a deep-water fleet. It has missiles. China is selling arms all over the middle east. Its armed forces intervene in naval engagements over islands that are many hundreds of miles from the Chinese coast. I find it worrying that that giant state that is being created with a great deal of internal turbulence is now turning into a huge military power.
Finally, I put it to the House that we have 800 days that are an opportunity to strengthen the civil society of Hong Kong—800 days to put right the denial of democracy over the past 150 years.
Tongue-in-cheek, just after the joint declaration was announced 11 years ago, I suggested that we should leave all the white gwailos in China, but give passports to all the Hong Kong Chinese so that they could come to England and then we could watch Britain grow again. That was tongue-in-cheek, but the question of those people who have contributed massively to British wealth
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and British companies and who do not at present have the right of abode in this country is serious. Reference has been made to war widows, and I very much hope that in his reply the Minister of State can make a concession on that issue.
It is not too late to act in areas of legislation that would sink deeper the roots of civil society in Hong Kong. The Government and the Governor can act and they should act now.
7.32 pm
Sir Rhodes Boyson: I approach this subject in a way rather different from other hon. Members in that I was in the East Indies fleet when we reoccupied Hong Kong—I almost said in 1845; perhaps that is why most of my hair has gone—in 1945.
I was too young to vote in the 1945 election, although I had already spent a number of years in the East Indies fleet. At that time, I was much more left wing than I am now and I was for decolonisation and for getting myself back to the United Kingdom very quickly. Neither the first nor the second took place.
Even then, there was a feeling about the decolonisation of the British empire. It is almost unbelievable that, 50 years later, we still have a Crown colony in Hong Kong. Two years after we reoccupied Hong Kong, India got its freedom, by which time I was in India, and freedom movements were stirring around the world. It is quite amazing to me that the one—possibly the last—colony that we will have, apart from tiny islands, is Hong Kong.
I welcome the agreement on handing over. It was inevitable that, at some stage, we would have to hand Hong Kong over. The balance of power in the far east has changed, whatever one's principles might be. It is changing fast now. Indeed, from the beginning, the Chinese could have cut off the water. They could have taken action and Hong Kong would have been untenable as a colony. It was only a matter of time before an agreement had to be made to hand it over, and it has been made.
It is my view—it is certainly not the view of every hon. Member who has spoken today—that this is an agreement between two separate sovereign countries, just as the treaty of Nanking was in 1843. The locus is two sovereign countries: Britain and China. It is an agreement not with Hong Kong but between two sovereign countries. From my conversations in the far east, and I have returned there regularly—indeed, I was there last autumn—it is clear that it is a question not of an agreement with Hong Kong but of an agreement between two countries.
Hong Kong is not a party to the treaty, any more than Brent, North, which is an island of Conservatism in what is almost a sea of red in London at present, could on its own be a party to a treaty that we signed with Europe. From my conversations with people over there, I think that China is very well aware that the agreement is between two sovereign countries.
I think that it was a mistake to introduce an extended voting system without the agreement of the Chinese authorities. That has soured the relationship between us and somehow we have to get back to conversation and agreement. I think that that was a moral, if not a political, breach of the agreement.

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Obviously, the balance of power is moving around the world. The 19th century was the century of Britain. The 20th century has been that of America and Europe and the 21st century will be that of China and the eastern states. What the majority Chinese people have done in Taiwan has been a miracle. What has happened in Hong Kong has been an economic miracle and a similar economic miracle is now taking place in mainland China. As the hon. Member for Rotherham (Mr. MacShane) said, those changes are moving now from the economic to the military and other spheres.
We must somehow get around the table again with China, because time is running out, as if in an egg timer, to get concessions where we can. I hope that the through train can come back, because if it does not, there will be serious consequences for Britain and our relationship with China in the long run.
I intend to speak only very briefly. It is amazing that, 50 years from the time that I was first in Hong Kong, it is still a colony, while change has been going on all around the world. If it could be handed over well, we would he able to say that the British empire, having been one of the greatest empires that the world has known, has come to an end honourably and well. I very much hope that we can achieve that through the work of our Foreign Office—I served as the No. 2 to the Foreign Secretary for 15 months up to the Anglo-Irish Agreement of 1985—and skilful diplomacy and concessions where required.
I was very impressed this afternoon by the speech of my right hon. Friend the Member for Old Bexley and Sidcup (Sir E. Heath). I was not a Member when he was Chief Whip and became Prime Minister, but I realise now why he was chosen—because of his excellent China policy, which suggested his other abilities. It is the first time that I have congratulated my right hon. Friend in the House, but I do so with great pleasure this afternoon. I was inspired by his speech and if the Foreign Office wants someone to sort the matter out, it need only ring my right hon. Friend.
7.38 pm
Mr. Robert G. Hughes: I had not realised until this debate began that it is the first that we have had on Hong Kong in this Parliament, which I think must mean that I took part in the last such debate, some time ago. I did not expect that that would be the case.
I was intrigued by the speech of the hon. Member for Rotherham (Mr. MacShane), and I nodded along with it, thinking that it was brave and that he was saying things that needed to be said. There are indeed human rights abuses in the People's Republic of China. We should acknowledge that and not be afraid to say it and spell them out and ask what the answers to those questions are. The hon. Gentleman was right to make those points. However, there came a point when I stopped nodding, and that was when he ruined his speech.
What the hon. Gentleman said about the People's Republic of China is, of course, right. The People's Republic should be mature enough to discuss human rights with us but, by overstating the human rights deficiencies in Hong Kong, which he did, he weakened his arguments. He further weakened them by making comments that were wrong and unworthy.
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The hon. Gentleman joined the hon. Member for Motherwell, South (Dr. Bray) in a rather narrow-minded and opportunist attack on the Governor of Hong Kong, Chris Patten. The hon. Member for Motherwell, South said explicitly—it will be clear in Hansard for those who did not hear it—that he could not back Chris Patten and that, if there were problems, he would not come to his aid, merely because Chris Patten was a Tory politician who might want to return to politics in this country. I found that an extraordinary admission. I do not think that any Conservative Member or, indeed, many Opposition Members, would take that view of a politician from another party who is trying to do a difficult and, let us face it, almost impossible job for his country.
Mr. MacShane: My criticism of Chris Patten is that he has not gone far enough. I would welcome his return to politics in this country as a civilising influence on the Conservative party.
Mr. Hughes: I go along with the hon. Gentleman as far as to say that Chris Patten is much missed in politics in this country and in my party.
However, the worst part of the hon. Gentleman's speech—the same flavour ran through a number of speeches by Labour Members—was his theory that everything could have been done better, that our noble Friend Baroness Thatcher failed and did not understand or try and that, if only cleverer people or people who cared a bit more had been involved, we could have sorted out some of the human rights problems before we agreed to hand back Hong Kong.
As my right hon. Friend the Member for Brent, North (Sir R. Boyson) said, it was crystal clear that Hong Kong was going to be handed back. We had 99 years' notice of that. If the Chinese would not play ball, and if they did not want to deal with human rights issues, or anything else for that matter, there was no way for us to make them do so because the deal was going to go through. I agree with my right hon. Friend that it was remarkable that such a good deal was done.
One issue that has been brought to my attention relates to the construction in the Clearwater bay area of Kowloon of a 400 kV overhead power transmission system by the power utility, the China Light and Power Company Ltd. As many hon. Members will have read in the press, it is causing considerable alarm among local residents. It raises the wider question of the extent to which the Hong Kong Government will act to protect the health of their citizens and the right of local people to be consulted.
The power line is being constructed through what was one of the few remaining scenic parts of Kowloon and the route passes very close to people's homes. An alternative alignment was available, which would have taken the line away from residences, but it was rejected by the Government simply because it involved the possibility of felling trees in a small section of a country park area. Perhaps that was the right decision, although the local people whose homes were affected do not think so. The fact is, however, that the decision was made without their knowledge and they continue to object to a decision about which they learned only when the construction was announced. I do not expect my right hon. Friend the Minister of State to take time in his summing up to respond to that point, but I would be grateful if he would write to me about it.

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Human rights and democracy are issues that have run through this debate and it is difficult to deal with one without the other. Of course the people of Hong Kong have every reason to be suspicious of the intentions of the People's Republic of China, especially in the aftermath of Tiananmen square, which still echoes down the years. However, the people of Hong Kong have chosen to accept the various changes to their legislation. They could have rejected what Chris Patten was trying to do and stuck with the view that had been the British Government's view for at least 90 years of British rule of Hong Kong. I do not think that that was the right view and said as much in previous debates.
I believed then, as I believe now, that we should and could have moved more quickly on human rights and democracy, but the people of Hong Kong know what the dangers are. They know what they are facing—they know what could happen in 1997 and beyond—but they have made their choice. I do not think that, from many thousands of miles away, we should seek to second-guess what that choice is or tell them that they should be going further or faster or that they should not have done what they have. They know the circumstances and the dangers but they have made a decision.
The criticism of Chris Patten in his role as Governor is misguided. I do not believe that the Governments could have reached a different agreement, nor do I think that a different Governor with a different approach could have achieved more. Nothing that I have read has persuaded' me otherwise.
In his evidence to the Foreign Affairs Select Committee, Sir Percy Cradock said that pushing ahead with legislation despite Chinese opposition
"will do much more harm to Hong Kong than the alternative policy of co-operation with China on the best terms we can get."
As far as I can see, he failed to back up his argument.
What would have been achieved had these issues not been raised by Chris Patten? What would the Chinese Government have agreed to that they have not agreed to under pressure? The answer is nothing. I accept that, having lived there, Sir Percy Cradock understands a great deal about China, but I believe that the attitude that he adopted was craven. I am afraid that, in the past, it was characteristic of British diplomacy in that area to say that we should agree with the Chinese because theirs is a big, emerging nation and we should not quarrel with them. I accept that that is not the British attitude now and I am delighted about that, but I find no evidence to suggest that something has been lost by the harder attitude that has been adopted.
People often talk as if only Britain and the people of Hong Kong have anything to lose. That is not correct because the problem for the People's Republic is that it needs to be seen to make a success of the transition. It needs Hong Kong to work as much as the people of Hong Kong need it to work. That is why I agree with the optimism expressed in some speeches today.
Of course, China has a great deal to learn. If it wants Hong Kong to work, to earn money for the People's Republic and to be a window on the world for the People's Republic, it has to stop doing things such as rescinding McDonald's 20–year lease on the world's largest fast food restaurant, as happened in November 1994. What confidence does that give other multinational companies to move into China? If there is any flavour of that in Hong Kong, the People's Republic will suffer.
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[Interruption.] If my neighbour and hon. Friend the Member for Harrow, East (Mr. Dykes), does not like McDonald's, I suspect that, uncharacteristically, he is out of step with his constituents. I eat at McDonald's in his constituency regularly; I never ask his permission, but I hope that I have it.
The world is not entirely without leverage, however. It may be that the United States Administration would not take much notice and would continue to relate to the most favoured nation status that they accord the People's Republic, but I am sure the Senate and Congress would notice and that a future American Administration would take China to task if the transfer of power in Hong Kong went wrong.
It is certain that the Government of Taiwan—the big prize for the People's Republic—would notice. If they felt that the same would happen to them, there would be no prospect of talks on any future relationship between Taiwan and the People's Republic.
Although the premier of Singapore characteristically defended the People's Republic of China, even he warned that
"Hong Kong will be worse off if she does not retain the instruments of Government which the British brought."
I end my speech with a quotation from the Financial Times which summed up the problem faced by the People's Republic of China. It made the following comments on what the Governor Chris Patten was doing, the dangers of what was happening and the refusal of the People's Republic to discuss matters:
"At least this way he is giving Hong Kong people the chance to experience two years of relative democracy if they so choose and to leave China's rulers with the responsibility of dismantling it in the view of the world, if they so choose."
The transition is taking place in the view of the entire world and if China does not make a success of it, it is not only the people of Hong Kong who will suffer, but the People's Republic of China and it would not want that.
7.51 pm
Mr. Hugh Dykes: Thank you, Mr. Deputy Speaker, for calling me now. In a geographical sense, you have shown remarkable imagination by bringing together the scintillating cluster of my right hon. Friend the Member for Brent, North (Sir R. Boyson), my hon. Friend the Member for Harrow, West (Mr. Hughes) and myself, representing the precious little area of north-west London that we cherish so much.
Sir Rhodes Boyson: And the Edgware general hospital.
Mr. Dykes: We could mention the Edgware general hospital, but that would be strictly out of order.
The debate so far has been both thoughtful and subtle. I commend the speech of my right hon. Friend the Foreign Secretary and the equally measured, cautious and restrained presentation of the shadow spokesman for foreign affairs, the hon. Member for Livingston (Mr. Cook), who made a characteristically skilful speech.
My hon. Friend the Member for Harrow, West made some valid points with which I greatly agree. I reassure him that I was not criticising McDonald's, which is one of the most striking and awesome symbols of western culture. Its growth and expansion in Britain is a great saga of commercial success—I also enjoy its offerings. I am

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delighted that my hon. Friend visits its restaurants in my constituency; I visit the ones in his constituency, so we have reciprocal gastronomic support.
I have visited the People's Republic of China many times and I declare a parliamentary interest as chairman of the Chinese-British parliamentary group. Even I, with my enthusiasm for that particularly occidental culture, felt dismayed when I looked out of the window of my room at the Beijing hotel just by Tiananmen square and saw a Burger King outside. That was in November 1992, and I am told that it may have moved since, so perhaps that will be the subject of verification on a forthcoming visit.
I have visited Hong Kong many times, but I have visited China many more times. As chairman of a parliamentary friendship group, my words tend to reflect both a great respect for the People's Republic of China and its remarkable achievements—although its political culture is not the same as ours—and an attempt, as an ignorant westerner, to understand China more than some of our colleagues. A clash of cultures occurs when Hong Kong bumps up against the People's Republic of China.
I also have to declare a commercial interest in Hong Kong as I am adviser to an international law firm that is establishing an international office in Hong Kong as a testimonial to its confidence in the future of the territory. It is interesting that the more sensible people in business circles of any provenance and country who work in Hong Kong already or are considering going there are much more open-minded in conversations about the People's Republic of China and what should be done, politically or otherwise, in future by that country.
One of the great diseases of western politicians is the dreadful condescension that we use when we refer to the People's Republic of China. I pay tribute to our colleagues in the Foreign Office for not doing so; one of their principal jobs is to get on well with foreigners. That is often criticised by hon. Members who say that we are giving away some vital national interest. Nothing could be further from the truth.
What has been achieved in the agreement with the People's Republic of China is unique. It is an extraordinary coming together of interests and I remain optimistic about it despite the huge difficulties involved. It is a great tribute to the past and present work of the Foreign Office.
By the same token, the agreement represents a remarkable achievement for the People's Republic in reclaiming its own territory, bearing in mind the dreadful history of the foreign presence in China and its surrounding territories and what we and other foreign nations did to the Chinese, although it was a long time ago and the world is now much more modern and open.
I cannot think of another example of a country reacquiring a territory that was plundered and stolen from it on unequal terms more than 100 years ago and being prepared to make political concessions on the future structures there for the sake of reassuring the local population and many other reasons, including self-interest.
Although spokesmen for the People's Republic of China are often polite enough to say that the transition is definitely on equal terms, we have to face reality. We are a small, fading ex-colonial power and not on equal terms
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with a unique and enormous country that is groping and grappling with great difficulty and with the enormous complexities of entering the modern world politically and economically.
The story so far has been stunning in economic terms and the remarkable history of recent expansion is understandably causing anxieties among the leadership in Beijing. It is facing problems that are difficult for foreigners to understand because of the linguistic problem and the sharply different culture, history and traditions of that amazingly interesting country.
China is the most fascinating country in the world for visitors. I have been there many times and I always feel great excitement about visiting it. In contrast, the excitement that we feel when visiting Hong Kong is caused by its capitalist razzmatazz, and Conservatives in particular feel that Hong Kong is uniquely impressive and special.
What has been done so far in the People's Republic of China is a totally different scene. If one considers the extraordinary misery, squalor, degradation and brutality of the political past of China before the revolution and the new regime, one can begin to understand the background to the anxieties of senior members of the political classes when they begin to grope towards whatever form of representative government may emerge in the People's Republic of China in future. It is crazy for us to say, "We have our cosy Westminster and occidental patterns of conventional bourgeois democracy to bestow upon you with immense kindness and here you are, you Chinese chappies. Please accept it from us, bow down and say thank you."
The old attitudes of foreigners in China was a disease as far as the Chinese were concerned and the older ones remember some of its worst manifestations. The previous Kuomintang regime was the internal representation of that external foreign brutality and corruption. It takes time to make a psychological adjustment. I make no excuses for the examples of the lack of human rights in China, but the Tibet saga is grossly exaggerated. I visited Tibet once, but perhaps that was not enough. I am a reasonably experienced observer of different foreign scenes, and the idea that the entire population of Tibet is oppressed is nonsense. It has made remarkable social and economic progress, albeit under a regime that practises collective public ownership of all means of production and exchange—apparently the sort of thing that Labour is giving up.
Neither Tibet nor the People's Republic is, in our terms, an example of free-floating capitalism and effort but manifestations of capitalist growth, fast economic expansion and the acquisition of new production and factories are stunning. I urge hon. Members who have not visited the People's Republic to seize an early opportunity to do so.
The public ownership of assets remains the norm in the People's Republic but the Chinese authorities and their commercial entities have acquired significant mobile and immobile assets in Hong Kong. By July 1997, the People's Republic will already own substantial chunks of Hong Kong's economic activity. That will be a force for stability and continuity.
It is not for us—other than in the framework of the unique treaty-plus agreement deposited at the United Nations, under which the Chinese have obligations that they must respect over a 50–year period and which

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embraces two systems in one country—to tell the Chinese, as the future owners of territory originally stolen from them, what to do and how to do it. We may express our opinions but it would be out of order to lecture them and to insist that they must do as we say. That approach causes enormous resentment in Beijing. I criticise not any particular person or persons but the general attitude.
I first visited Hong Kong many years ago—long before Beijing had begun to indicate that it was too late to think of sweeping changes to internal democratic structures. Incidentally, turnouts at the quasi-elections have been modest, with some exceptions. We should not get too carried away with how splendid the new democratic structure in Hong Kong is. Before Beijing indicated that time was running out, and when I asked naively as a first or second-time visitor to Hong Kong, "Why don't they have democracy?" I was told repeatedly by grand, elegant and well-paid business men that the British Hongs as well as the newly emerging Chinese Hongs—who represented outside capitalist interests rather than Chinese traditions—said that democracy was not wanted. There was no question of ever having it because Hong Kong was a British colony and would remain so. Subsequently, reversion to China loomed and common sense prevailed.
Limited democratic structures are already in place. I hope that there will not be excessive conflict and tension between now and 1 July 1997. If resentment in Beijing is so great by then that it is put in a bad mood, that will not help anyone. I am not saying that one should indulge in appeasement or be pusillanimous but we must be realistic. The tragedy is that Britain lost the opportunity to introduce universal suffrage in Hong Kong many decades ago. It was thought that it was easier to run the capitalist system. I will not go into the sordid details of what occurred in those days, but Hong Kong has improved remarkably since. There are probably no significant sweatshops left. There may be small back-street examples, but I am sure that the authorities are vigilant in rooting them out.
We must avoid something of which the Americans are sometimes guilty when they are selective about their definitional basis for human rights. They say, "That's our pattern, folks, so you must accept it. We will be the determinants of human rights classifications in other territories." In the Falklands, the interests of the inhabitants were paramount, but when the Americans wanted a military base in Diego Garcia, its entire population—who had dark skins, by the way—were swept away into east Africa, despite their protests. When the Turks kill Kurds in eastern Turkey, against whatever political background, the Americans do not protest, but if Saddam Hussein or any Iraqi laid so much as a finger on a Kurd, America would go berserk. Such selectivity in Asia and elsewhere—I do not refer to genuine idealists who want human rights implanted everywhere—generates wrong arguments. No attention is paid to different cultures.
I hope that plural political systems will develop in the People's Republic, but it is for its leaders and the Chinese people to determine how that will happen. I understand why those leaders, having seen the chaos and degradation that existed before the revolution, worry over how to handle that change in an enormous country. Political control in the remote provinces is different from that in large cities. How will that be accommodated while allowing much more democracy and freedom? The
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emphasis has been on the unique dictatorship of the proletariat, on the traditional Marxist pattern. I hope, with my political views, that that will fade, in concert with remarkable economic growth of the kind already seen in the People's Republic. Again, it is for the Chinese to decide such matters without outside interference or lecturing. The culture in that unique, special and unusual country is often difficult for us to grasp, partly for linguistic reasons.
The suggestion is that the future Government in Beijing will be similar to those of the old days, when the revolution exercised iron discipline—excessive in our terms—over people not prepared to be part of it. We saw that over a much longer period in the Soviet Union, but that has been demolished. I am not sure what will happen in future China. I imagine that the collectivist system and the dominance of the Communist party will continue longer but will allow the development of civic and political freedoms that we cherish—but in the Chinese way, and more strongly in cities than in rural areas for evident reasons. We will applaud whatever freedoms emerge in the People's Republic. Meanwhile, we must make sure of a good future for Hong Kong and that, as the outgoing colonial power, we leave it in a good state.
I conclude by quoting the words of my right hon. Friend the Minister of State—before he does so himself—from his article in London's excellent newspaper, the Evening Standard:
"But the choice for Hong Kong is not, and never has been, for Britain alone to make. As the hand-over approaches, the spotlight will inevitably shift to the future sovereign power. More and more it will be to China that the people of Hong Kong and its overseas friends and investors look for reassurances about the future. The British and Hong Kong governments will do all they can to help maintain the confidence on which Hong Kong depends.
I am neither over-optimistic nor a pessimist about the future. I know only that if China and Britain work together, in their own interests and that of Hong Kong, the right choices will be made."
I also rest on that proposition, which is a reasonable one for the House, this debate and the population of Hong Kong.
8.9 pm
Mr. William Powell: It is not surprising that there has been, this afternoon and this evening, a celebration in the House of how successful Hong Kong is as a British colony and dependent territory, but I hope that, as British people, we will not be too self-satisfied or complacent about that, because the reality is that the success of Hong Kong is above all else the success of the Chinese people who live there and the Chinese people from outside Hong Kong who have traded with it and contributed to building up its remarkable economy.
My right hon. Friend the Member for Mid-Sussex (Mr. Renton) called it a golden nugget. My right hon. Friend the Foreign Secretary said that it was the most exciting city that he knew of this age. Those are two judgments with which I concur. But the reality is that it is the Hong Kong Chinese themselves who have made by far and away the greatest contribution to the success of Hong Kong. It is not merely a commercial success, but a success in the public service. Some of the finest public servants I have ever met anywhere in the world are Chinese Hong Kong people. I have found that they have served Great Britain and Hong Kong with a distinction unrivalled in any other country I have ever seen.

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I shall try to illuminate aspects of the Chinese relationship by referring to the People's Republic of China and to China within a wider Chinese context. The success of Hong Kong is mirrored in Singapore and in the Republic of China, on Taiwan. I declare an interest as chairman of the British-Taiwan parliamentary group, which, I am glad to say, is now one of the largest single friendship inter-parliamentary groups in our Parliament and it goes from strength to strength. The 3 million Chinese people of Singapore, the 6 million Chinese people of Hong Kong and the 21 million Chinese people of Taiwan have created economic tigers with a massive and awesome potential. They are, of course, precisely the same people as those who live in the People's Republic of China. Most of those who live on Taiwan are brothers, sisters and cousins of people who live just over the straits of Taiwan, in the province of Fukien/Fujian.
All of us should be aware that as economic liberation—perhaps political liberation, but let us concentrate on the former—grows in the People's Republic of China, so we must expect to find more and more of its residents becoming as successful, as enterprising and as important to the world as their brothers, sisters and cousins in Singapore, Hong Kong and Taiwan.
Only one matter disappointed me in the speech of the hon. Member for Livingston (Mr. Cook): he did not mention Taiwan at all.
My right hon. Friend the Member for Old Bexley and Sidcup (Sir E. Heath) and my right hon. and learned Friend the Member for Putney (Mr. Mellor) referred to the fact that the media will not be interested in what we say in the House. It will not be reported. They are not really interested in what is happening in east Asia itself. The ignorance, as my right hon. and learned Friend said, about what is going on in east Asia is quite terrifying. The media—television, radio and newspapers—are failing to convey to the people of our country what is happening in east Asia.
Let me give one insight, which to me is of the greatest significance for the future. The time of the United States' peak influence in the world's economy was 1950, when the United States was responsible for 40 per cent. of the world's economic activity. But it was predictable that that would be the peak, because it was predictable that Germany and Japan would recover from world war two, and that although the United States would continue to grow, its relative influence in the world economy would in fact decline from that peak. The estimates now being made are that in 2000–54 months away, as my right hon. Friend the Member for Guildford (Mr. Howell) said—the whole of the Asian Pacific rim, from South Korea to Singapore and Malaysia, will account for 40 per cent. of the world's economic activity. But anybody who imagines that that will be a peak year for east Asia's influence in the world economy is simply living in cloud cuckoo land. It will grow and grow. Of course, the biggest growth will be in the People's Republic of China.
Let me consider for a moment our relationship with Taiwan and how it fits into the whole pattern, because our relations today, I believe, are as close and as warm as they have been at any time. I pay tribute to Mr. Philip Morrice, our trade representative in Taipei, for all the excellent work that he has done in building up that relationship. I also pay tribute to Taiwan's representatives in this
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country, who have also worked extremely hard. They are Dr. Eugene Chien and his staff, Mr. David Liu in the cultural office, and their predecessors, not least Mr. Ray Tai, who is now the equivalent of the presidential spokesman for President Li, in Taipei. A lot of people have worked hard to build up the relationship. But the trading relationship, important though it is to both countries, is still on a low plane. Total trade involving the Republic of China on Taiwan and Great Britain is in the region of $US3 billion a year. It is still at a relatively low level. There is potential for a massive expansion, if we want it to take place.
In considering what our relations, as regards the People's Republic of China and Hong Kong, will be post—1997, we must also consider what our relations with Taiwan will be at that time. That must be reviewed. My main plea to my right hon. Friend the Minister this evening is to urge that there now be a fundamental review, conducted in the Foreign Office, the Department of Trade and Industry, in all aspects of the British Government, as to our total relationship with the People's Republic of China. I find, wherever I look, ignorance about the true events on Taiwan. That is not helpful to the interests of this country and to our understanding what is really happening in China itself.
My right hon. Friend the Foreign Secretary made an interesting and correct point, when he referred to the fact that Hong Kong is now the world's largest container port. The second largest container port is Singapore and the third largest is Kao Shiung on Taiwan. Rotterdam is only number four. If one goes to Hong Kong—as so many hon. Members have done—one will see that the containers have come from Singapore and Kao Shiung. Of the six largest container lines in the world, two are based in Taiwan. The world's largest shipping line is Evergreen. We see its containers on our motorways every single day. We see their distinctive green and white colours. The sixth largest shipping line in the world is YM—Yang Ming, from Taiwan.
Taiwan is the size of the Netherlands, with a population of 21 million. It is the world's 12th largest trading power, with the world's second largest foreign currency reserves—an important matter, as my right hon. Friend the Member for Guildford underlined. It has two of the largest shipping lines in the world. Its potential for the economy of Asia is of the most profound importance. The British empire was based on shipping and our ability to ship goods across oceans. Today, the Chinese—whether they are in Taiwan or Singapore, because one of those six container lines is Genstar from Singapore—are enjoying economic activity on a huge scale. The container vessels in Hong Kong have come from Kao Shiung and Singapore—and, of course, from the rest of the world, but those are the two largest ports.
I ask the hon. Member for Livingston to prepare for the office he seeks by going to see, with his own eyes, not merely what is happening in Hong Kong—that is easy for British people—but what is happening in Taiwan. The hon. Member for Torfaen (Mr. Murphy) should go too. They should go to Kao Shiung, with its modern industrial economy and awesome power—the steel works; immediately next door the shipyard; and immediately next door to that the port, with 17 km of berths. Every day of the week, every week of the year those berths are being used. They are constantly being expanded. We have no

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port like it—17 km with ocean-going container vessels in full activity and being turned around in under 24 hours, again and again and again.
China Shipping in Taiwan is not even the most efficient shipbuilding company in the world, although it can make a 149,000 deadweight-tonne, ocean-going container ship in just nine months. We could not begin to do that, but it can be done even faster in South Korea. We must see, think about and understand what is happening in the Taiwan economy and realise that it is dominated by Chinese people.
We should go not just to Kao Shiung; we should go to the other end of the island to Shinschu university, near the Chiang Kai Shek international airport. It is a modern science university and next door to it is the Shinschu science park. Of course, it is associated with the university. It has 140 acres—only a small site—but it is the original one-stop shop. It is fascinating that the one-stop shop was invented in Taiwan. The science park now has an annual turnover in excess of $US 6 billion and soon it will be $US 10 billion. Companies such as Acer, one of the world's largest computer companies, dominate the park. It has 140 companies, but when I visited it I found that only four came from Europe and none from Great Britain.
If we want to know what is happening in the world economy of the future, we must visit places such as Taiwan. Of course, we have no diplomatic relations with that country. Almost no British public officials have been there. I am glad to say that a number of Ministers have been there in a semi-private, semi-public capacity, including my hon. Friends the Members for Bexhill and Battle (Mr. Wardle) and for Eastwood (Mr. Stewart) and my right hon. Friend the Member for Wokingham (Mr. Redwood), the Secretary of State for Wales. I hope that he has told the Cabinet about what he saw there on his short visit.
When I was last in Taiwan, as I was leaving I saw something that almost made me cry. I had taken with me a number of my colleagues from the British-Taiwan parliamentary group to see for themselves what was happening there. As we were leaving the airport, Francois Fillon—a young man of great importance to the future of France, its Minister for higher education—was arriving on a visit to Taipei. He had brought with him 40 members of the national assembly. It would be a good thing if 40 Members of this House were to go to Taiwan to see what was happening—at once and with a Cabinet Minister.
The relationship with Taiwan matters enormously and I want to underline a few of the really important factors. First, we should celebrate and give all credit for the transformation from a society under martial law to an exuberant and increasingly democratic society in Taiwan. We could not say about many places in this world that a country is undergoing a genuine transformation from a totalitarian to a democratic regime, where the people do not vote just once, but repeatedly. We might feel rather superior about many of the exuberant and exciting practices in the Taiwan democracy, which may have their origins more in American society than in ours. However, the fact that Taiwan is making such a transformation is something that we should recognise publicly and at the highest level.
Secondly, we should recognise the contribution that Taiwan makes to Britain. It is not just the fact that 90 per cent. of its inward investment into Europe comes to
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Britain—and there is enormous potential for more Taiwanese companies to invest in this country. We need to go out and get it. There is also the investment Taiwan makes in our education system with 8,000 Taiwanese students. Ten years ago, the number of Taiwanese students who came to this country for their education was comfortably under 100. It is massive business and a massive vote of confidence in our colleges and universities. It is not just students; it is endowments, such as those at the London School of Economics, at Oxford university and at other universities. I hope that more universities will sign agreements with Taiwan's universities—21 of them. Some 15 per cent. of Taiwan's gross national product is, under a requirement of the constitution, invested annually in education.
What is happening in Taiwan is happening in Hong Kong and in Singapore. It is a feature of the Chinese people themselves. We have absolutely nothing about which to feel superior or complacent when we look at their achievements in the last generation. Liberate those in the PRC and we will find that the entire centre of the world will shift to Asia, exactly as my right hon. Friend the Member for Guildford underlined in his powerful, overarching analysis of the total position.
The time has come for British Cabinet Ministers to go to Taiwan. The time has come for us to enhance the political and diplomatic recognition between our countries. The time has come for us to say that whatever may have been the potential difficulties in a relationship with Taiwan because of Hong Kong, in 1997 that will have passed. We have only 26 months to start planning for the post—1997 British-Taiwan relationship.
There is another important matter, which was raised by my hon. Friend the Member for Harrow, East (Mr. Dykes). We are concerned whether the agreement between Beijing and Hong Kong will stick. However, I do not believe that in Beijing, Hong Kong is the most important horizon. Far from it, in the inter-Chinese relationships it is the Beijing-Taipei relationship that is of more importance to Beijing than the Beijing-Hong Kong relationship. There is a desperate desire for the Chinas to be reunited. Nothing would cause a collapse of potential confidence between Beijing and Taipei more than for Beijing to misbehave and renege on its agreement with Hong Kong. Indeed, Hong Kong will play a central part in building the confidence that is essential for the future relationship between Beijing and Taipei. But Taipei is more important to Beijing than Hong Kong. Reunification is an essential goal for Chinese people. Although they may growl at each other in public, the reality is that unofficial relations between those countries are considerable.
In improving, upgrading and reviewing our relations with Taipei, we need to consider the protection of intellectual property—a vitally important matter for this country. If we leave Taipei and Taiwan out in the cold even though she is a first division country—we must now call her a premier division country—in the world economic leagues, and unless she is tied in with the international relationships governing trade, intellectual property and so on, a barrier will always exist.
We should be taking the lead in the International Atomic Energy Agency, another important matter. It is not just a matter of what Taipei contributes to this country. Trade is taking place in the other direction. Two

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years ago, ICI opened in Taiwan its largest single overseas investment. Other major British companies such as Glaxo already have huge investments there.
In the commercial world, we find that business men look at the whole Chinese situation, not merely one small part of it. The time has come for our Foreign Office and the Government to reconsider the matter and to realise that changes must be made in the way in which we handle Taiwan.
8.31 pm
Mr. Michael Colvin: It is a pleasure to follow my hon. Friend the Member for Corby (Mr. Powell), who is chairman of the British-Taiwan group. Perhaps we should say, the Republic of China on Taiwan, because that is what it really is. He is so right to draw attention to the importance of the Pacific rim, and to the way in which Taiwan is leading growth in that region. It is significant that growth in that region still increased during the world recession that we have just been through. As a measure of economic activity, civil aviation is a good guide, and civil airlines of the far east and Pacific rim were still showing enormous growth in traffic when the rest of the world was in recession.
I was interested to hear the comments of my hon. Friend the Member for Harrow, East (Mr. Dykes), who is chairman of the British-China group. He follows the late Robert Adley, a distinguished chairman, who was an expert on China. I dare say that his interest in China may have originated from an interest in its trains. It is still one of the countries laying down considerable lengths of track. That is fairly unique and shows the way in which the economy of the People's Republic of China is growing.
Part of the object of all-party groups is to build up a better understanding of the countries with which we are twinned. It would be worth while putting on record our debt of gratitude to Jung Chang, the author of that memorable and unique book "Wild Swans". If ever one wants to get a picture of China's chaotic political past over three generations, that is the book to read. I am sorry that it has not been mentioned this evening.
I was interested in what my right hon. Friend the Member for Brent, North (Sir R. Boyson) said. He has been the only person to mention the through-train concept, which was worth following. I am sorry that it has been dropped. It is important to safeguard the system that we want to see established in Hong Kong to the year 2047 and beyond, and the through-train concept was likely to ensure that that was done.
When I was preparing my notes for this debate, I realised that I was sitting just below a print of the East India Company ships that helped to build Hong Kong into one of the world's greatest trading centres. The picture was published in 1843, the year in which the first Governor of Hong Kong took office—the right hon. Sir Henry Pottinger. I want to recall some appropriate words of the present and, I hope, last Governor of Hong Kong, Chris Patten. I pay tribute to the work that he has done as Governor of Hong Kong. I applaud his energy, dedication and what he has delivered.
The hon. Member for Rotherham (Mr. MacShane) made an interesting speech. He struck a sour note, but he did the debate a service because he reminded us of
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China's problems, of the need to understand that country better, and of its human rights record, which we should never forget. He said that Mr. Patten was a prisoner of Conservative philosophy. I dug out a slim volume written by Chris Patten in 1982–83, called "The Tory Case". It may be slim, but it contains some weighty words. On the subject of principles of the Conservative party, he said that three strands of thought
"have run through the history of the Party. First, there was opposition to systems, to political blue-prints and to utopianism … Secondly, there was the defence of property and order and an organic view of society. Thirdly, there was an unashamed patriotism, a defence of Crown and of country".
Chris Patten has applied those principles to his job as Governor, and he has done well.
The first of those principles is especially important in relation to Hong Kong. It is the opposition to systems. We have heard repeatedly this afternoon that Hong Kong's future is based on the slogan, "one country, two systems", but the free enterprise culture that has so characterised Hong Kong is much more than a system; it is a total way of life unencumbered by rigid constitutional rules or dogma. It is unlike the People's Republic of China, where communism still rules—never let us forget that.
I hope that the marriage of two systems will be no less dramatic than that between old imperial Britain and the Hong Kong Chinese more than 150 years ago. That new marriage has the potential to create the same hybrid vigour that will ensure that Hong Kong continues to prosper in the years to come. That will happen because no doubt exists that the People's Republic of China is changing fast.
The world circumstances in which responsibility for Hong Kong will pass to the People's Republic of China on 1 July 1997 will be different from those that prevailed when the Sino-British joint declaration on Hong Kong's future was signed in 1984 or, for that matter, when Chris Patten wrote his book in 1982–83. The world has undergone a fundamental political change with the collapse of communism in eastern Europe. The People's Republic of China was a key player in bringing that about and deserves credit for it.
I ask the House to think back to April 1985, when Mikhail Gorbachev first launched his ideas on perestroika. That was never going to work unless it was coupled with glasnost—perestroika meaning "reform", glasnost meaning "the open door". Immense pressures were being brought to bear on the Soviet Union at the time—pressures involving not only military matters such as the arms race, but satellite dish and international communications. People in the Soviet Union were beginning to be able to see what life was like the other side of the iron curtain. He found those pressures impossible to resist and the economy was beginning to crumble anyway. He needed perestroika and, therefore, an open door so that he could begin to communicate with the west.
No one opens his front door without ensuring that his back door is safe, and the Soviet Union's back door stretched all the way from Afghanistan to Vladivostok—3,500 miles, with Chinese all the way. It is greatly to the credit of the People's Republic of China and its leadership that it held a summit meeting, the first for 20 years, at which agreement was reached with Gorbachev to ensure that his back door was safe should he decide to open his

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front door. We should not forget the role that the Chinese played in promoting glasnost and reform and therefore helping to trigger the collapse of communism all over the world, although not in their own People's Republic.
Once the process of reform in the former Soviet Union had begun, the dominoes began to fall everywhere else. The mistake that the Soviet Union and so many of the other countries in eastern Europe made was to rush for political reform, setting up new political democratic structures without first establishing the free market economies essential if those new administrations were to succeed and be sustained in the longer term.
The People's Republic of China recognised the impending chaos, and was far more cautious. The Chinese were determined to see the free market economic structure well in being before they would ever start thinking about changing political structures. The Chinese think long term, and they knew that once the free market was up and running, the political changes that they wanted would almost certainly follow, as night follows day. There is no doubt that that is good for Hong Kong.
Bilateral relations between the United Kingdom and the People's Republic are ever improving. Our relationship with China is now broadly based—commercial, cultural, and covering political issues, too. Business between our two countries is booming, and we are the largest European investor in China, with new investment last year 50 per cent. higher than it was in 1993. And my right hon. Friend the President of the Board of Trade is to take 100 British' business men to China on a trade mission soon.
Our links are not only in business, but are cultural. We have many Chinese students in this country—about 5,000 in all—and that number is growing all the time. That form of cultural diplomacy is probably the best that one can have.
China also shares with the United Kingdom important international responsibilities as a global power, such as our joint membership of the United Nations Security Council. We also look forward to welcoming China as a member of the World Trade Organisation. Those are all good reasons why it is in China's national interests to honour her agreement to the one nation, two systems arrangement in Hong Kong. The fragile business and political confidence there will then be preserved, so that Hong Kong can continue to expand its contribution to China's economy—it produced about 26 per cent. of China's gross domestic product in 1993—to the advantage of all the Chinese people.
There are two territories sitting on the sidelines watching all this with great interest, and with as much anxiety as the people of Hong Kong. The first, Tibet, is concerned about its political autonomy, which we rightly recognise. We hope that China will not only improve its human rights record in that country but give Tibetans a greater say in running their own affairs.
The other territory is Taiwan, the last remaining province of the old Republic of China, which we have just heard about from my hon. Friend the Member for Corby. It has been deprived of its seat at the United Nations and is not now recognised as an independent state, although effectively it operates as one. Taiwan is an important trading partner of the United Kingdom, and 90 per cent. of its investment in Europe comes to Britain. It also sends about 8,000 students here, all young ambassadors for their country. No doubt they are just as ambassadorial in representing us back home.
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Taiwan's economic relationship with China is not unlike Hong Kong's. Just as China can regard 1997 as a step towards national reunification with Hong Kong, the circumstances that might lead to reunification with Taiwan are also beginning to emerge. First, China is changing. Even following a change in China's leadership, I do not think that the People's Liberation Army would let the present impetus towards economic and political reform be lost.
Secondly, Taiwan has established democratic structures that seem to be working. Thirdly, its economy is becoming more and more closely linked with that of the People's Republic of China. It is significant that manufacturing has now almost moved out of Taiwan. In Hong Kong, there is now a substantial fall in manufacturing employment and a big increase in service industries, marketing, banking and finance. In Taiwan, which has one of the highest per capita incomes in the world, unit labour costs are 20 times higher than those on the Chinese mainland, and it is hardly surprising that much of its investment in manufacturing now takes place on the mainland.
The stepping stone that Taiwan has hitherto used for its investment in manufacturing in the People's Republic of China—Hong Kong—is being reunited with China, so effectively Taiwan will be dealing directly with China after 1997. If the PRC really wants reunification with Taiwan, it must demonstrate that the one country, two systems arrangement can be made to work in Hong Kong.
If a constructive dialogue between the PRC and Taiwan about reunification begins, would the Government consider granting diplomatic status to the Taipei representative in London? For 40 years, the Republic of China on Taiwan has held out as representing the whole of China, but in 1991 that changed and it established a mainland affairs council to work out policies for reunification, to add a political dimension to what was already beginning to happen, economically.
There have been 14 rounds of talks already on a wide range of issues, political, cultural and economic. The democratic process that has now been established in Taiwan confirms that the Chinese people who live there like what is being done on their behalf by their leaders, which will help to maintain their economic leadership.
I was sorry to hear that the Taipei representative in London, Dr. Eugene Chien, was burgled the other night. Although it does not accord him diplomatic status, it might be worth the Foreign Office considering offering him some of the niceties usually afforded to the representatives of other countries here. The police are normally on guard at diplomatic residences, and we ought to consider such facilities for Dr. Chien, who is an important person in the economics and politics of his country and also a vital link between this country and Taiwan.
I have little time for the alarmist rhetoric of some members of LegCo, such as Martin Lee, the chairman of the Democratic party, but I share his concern that after 1997 the rule of law in Hong Kong must be safeguarded, so as to maintain the open and free system that instils and maintains confidence and attracts inward investors. I also agree with him that an independent statutory human rights commission with teeth should be established to enforce the Bill of Rights already in existence. I agree that the Court of Final Appeal must be set up well before 1997,

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according to the requirements set out clearly in the joint declaration and the Basic Law, and not watered down in any way by China.
Concerns are also expressed by Christine Loh, another LegCo councillor, about the functions and status of the Chinese Communist party in Hong Kong. If the CCP is just another political party, I know how many seats it is likely to win in future municipal and national elections in Hong Kong. But it is not an ordinary party; it holds supreme power in a totalitarian state. It is important that the CCP realises that its system in China cannot be extended to Hong Kong without the wholehearted consent of the Hong Kong people, which is not likely to be given.
I believe that Hong Kong post—1997 will continue to be a shining example of what free enterprise and the individual freedoms thus engendered are all about. Confidence will be maintained. It is in everybody's interest, not least China's, that it is maintained. I also believe that the unique special administrative region, as it will be known, will be an economic locomotive for the whole of China and, by its example, could well also become a political locomotive.
8.49 pm
Mr. Nigel Waterson: Several hon. Members have referred to the fact that there are only some 796 days left before Hong Kong is returned to the People's Republic of China. It seems a great shame that at this crossroads in the history of Hong Kong and, indeed of China, despite some bright spots such as progressfinally—over the airport and over the disposal of the defence estate, we are still seeing far too much megaphone diplomacy between Peking and the Governor of Hong Kong.
I take this opportunity, as other hon. Members have, to pay tribute to the former Member for Bath, Chris Patten, who has been conspicuous in exercising grace under pressure since he became Governor of Hong Kong. Some people are far too glib, especially Hong Kong's business community, which attributes the sort of difficulties that we have seen to his arrival. In fact, historically, they stem not from that moment in history but from the tragic events of Tiananmen square, which, as we have heard, had two distinct effects: one on the leadership in the People's Republic of China and one on the population of Hong Kong, many of whom had never given much thought until then to democratic systems and the like.
There are, let it be said, growing worries in Hong Kong about press freedom, about the status and independence of the judiciary and of civil servants, about the statutes and regulations that need to be dealt with, about the rule of law itself and about the impasse over such matters as container terminal 9. I shall touch on two difficulties over the rule of law: the Court of Final Appeal and the problem of local statute law and regulation.
I have, sadly, come to the conclusion that to protect Hong Kong after the handover in 1997, democracy is simply not enough of a bulwark. Whatever the troubled history of trying to introduce democracy over the years in Hong Kong—there was an attempt, for example, shortly after the second world war—much of what we have done has been too little, too late, despite excellent intentions.
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The Patten proposals are very laudable indeed, albeit fairly small beer by United Kingdom standards, which makes it all the more worrying that they have caused such annoyance in Peking. The business community in Hong Kong, or large sections of it, has little interest in political matters and is antipathetic to what Governor Patten is trying to do. Indeed, even now, although there is growing enthusiasm, voter registration and participation in elections is still somewhat disappointing.
So the so-called through train now seems certain to be derailed in 1997, or at least the passengers will be required to disembark and will be subjected to some form of vetting by their new political masters before some of them are permitted to continue their journey. There are fears, of course, that part of that vetting process will involve some kind of loyalty test to the People's Republic.
All that is happening despite the fact, whatever arguments there may be about the small print, that the joint declaration clearly envisaged the evolution of Hong Kong's political system, not only up to 1997 but beyond and well into the future. It is all the more surprising perhaps that in recent urban council and regional council elections, there has been a respectable showing for the pro-China Democratic Alliance for the Betterment of Hong Kong. Certainly, it took part with considerable enthusiasm in those elections. I assume that it will do the same in September in the LegCo elections, which will be the last elections under British administration. I suspect, however, that the real preference of the PRC is for the more traditional type of so-called functional constituencies, which, apart from anything else, are somewhat easier to lean on in difficult times.
The only realistic bulwark in favour of Hong Kong, to protect it after 1997, is the rule of law. That is the lasting legacy of this country in Hong Kong. First, it underpins entirely the phenomenal commercial success of Hong Kong, of which we have heard so much this evening. Secondly, it does so much to control corruption. It has always been there, bubbling away under the surface in Hong Kong and at times there have been problems.
The two main aspects of the rule of law, as I said, fall into two distinct categories. First, there is the problem of statutes; the technical side of tidying up thousands of pages of statutes and regulations such as those affecting references to the Crown, to the British Government, matters of property and matters of company law. That may sound very dry and uninteresting to some hon. Members, but those statutes are, in fact, pretty crucial, when one thinks about it, to ensuring the continued success of the free enterprise capitalist system that is Hong Kong. There are also rather more sinister laws and regulations such as those referring to sedition, some of which are throw-backs to colonial days, as other hon. Members have said. It arouses considerable concern—I hope unjustifiably—in some quarters in Hong Kong that the PRC was so very annoyed when some of those old regulations were removed, unilaterally, as it turns out, by the Governor.
The Court of Final Appeal is vital. Other hon. Members have referred to it, and rightly, because it is such a crucial issue. It is difficult to exaggerate its importance in sustaining confidence in Hong Kong up to and beyond 1997. We know that it featured in the original discussions with the Peking Government and that a separate agreement was reached in 1991, which dealt with the constitution of the court. Admittedly, progress was

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delayed when LegCo rejected part of the agreement, limiting the number of non-permanent judges, including overseas judges, who would sit on the court. But support for the agreement in Hong Kong and, indeed, in LegCo has been growing recently, which allowed the Government in Hong Kong in May 1994 to give the Chinese Government the text of a draft Bill designed to put the 1991 agreement into effect.
The Peking Government have reiterated their commitment to the 1991 agreement, but despite various technical discussions—we heard from my right hon. Friend the Foreign Secretary that there are to be more shortly—the Chinese have yet to support the introduction of the Bill into LegCo. It is important that that court is established soon, in good time for the handover to Peking, to give it an opportunity of building up a body of jurisprudence and, indeed, of respect within the Hong Kong community. That would give an enormous boost to confidence in Hong Kong.
One of the dangers that threatens the success of Hong Kong after 1997 is the growth of corruption, eating away from the bottom the success story that has been Hong Kong. I am not talking about the more mundane signs of corruption, but of privilege and influence—perhaps the growing pressure, when organising joint ventures with the mainland, to include one of the so-called princelings in the arrangements, which is the sort of influence that one sees in certain parts of business in the PRC. That concern, among others, underlines the need for a through train, if not on the democratic reforms, at least for the rule of law.
I would say to the PRC tonight, "What are you worried about? Why be so churlish and seem so intent on hurling abuse at the retreating back of a former colonial power that is leaving voluntarily, peacefully and by agreement in less than 800 days? That power is bequeathing you reserves that are several times the size of those originally promised, not to mention a thriving economy, including a major new airport structure and other infrastructure projects, as well as a sophisticated financial centre." The problems of the Vietnamese refugees have largely been dealt with and we are leaving a stable and well-run Administration.
The concept of one country, two systems, was bold, courageous and novel when it was first announced by Deng Xiaoping. It has far-reaching implications for the PRC's status in international affairs and such matters as the World Trade Organisation and, not least, for its future relationship with Taiwan, as was pointed out by the ever-perceptive, late Mr. Richard Nixon and many hon. Members. It also has the far-reaching implication that the Chinese Government are seen to do the right thing within the one country, two systems principle.
I call on the PRC to put past misunderstandings and mistrusts behind it. It has everything to gain, and a great deal to lose by further obstructionism. It should get on with the task in hand, to which Her Majesty's Government are fully committed—to produce a smooth and efficient handover of that dynamic and successful asset—because, to use the words of Governor Patten,
"Standing still is not an option".
9.1 pm
Lady Olga Maitland: May I warmly welcome the fact that this debate has taken place today? It is significant that it is the first such debate in
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this Parliament and the fact that so much time has been devoted to it should demonstrate the importance that we attach to it.
My knowledge of Hong Kong is relatively new. I flew there last year and it was a memorable experience. The landscape was dramatic. The mountains, surrounded by a soaring forest of dazzlingly designed skyscrapers and high-rise buildings, all descending to the sea, gave a first taste of what I found when I landed. On the ground, I discovered a dynamic and exhilarating community, whose energy is rightly the envy of the world.
I arrived last September, as the guest of the Hong Kong Government and accompanied by my husband, to discover for myself at first hand exactly what is going on there. I found it a stimulating, worthwhile and highly illuminating exercise. I had an intensive programme, covering all the principal aspects of the world of business, bankers, shipowners, entrepreneurs, lawyers, academics, politicians, civil servants, and the people themselves. I found a jewel of a territory, with a thriving economy which, in just 796 days, will be in the full possession of China.
Logic would suggest that the Chinese Government would be delighted at getting such an asset, which will arrive with reserves at an unprecedented level of $HK151 billion. That is way ahead of the original estimate of $HK25 billion, and $HK31 billion more than was forecast just a year ago. Add to that the exchange fund of $HK30 billion and the new airport, which will bring handsome dividends—I welcome the news that the financial arrangements have finally been agreed—and the new container terminals, all of which could be considered handsome dowries to secure even greater prosperity.
Hong Kong's thriving economy will be a boon to the People's Republic as it will represent 23 per cent. of China's GDP. The colony's real average GDP growth is 7 per cent., twice that of the world's economy as a whole. Some 1,000 British companies operate in Hong Kong, including some enterprising businesses from my own constituency of Sutton. Record profits, low taxation and high reserves make any country envious of Hong Kong.
Why, then, is there such a sour taste in the mouth of the Chinese Government? In truth, it is caused by a cultural gap, which is unlikely to be bridged properly in the short term. We are hindered by the history of old imperialism. The Chinese just do not believe that any colonial power could be so altruistic as to hand over a generous endowment without any strings attached. They believe that they will be landed with a heavy bill at the end, despite all the evidence to the contrary. They do not believe that they are really getting a gift horse. They do not believe that Britain's sole policy is to do what is best for Hong Kong. We have no selfish interest; we see our role there as a duty.
That is why, regrettably, the Governor of Hong Kong, Chris Patten, will most likely be criticised by the Chinese Government until the very moment of his departure. The truth is that whatever plan of action he took would be criticised. If he did nothing to secure the best possible deal in the interests of the people of Hong Kong, he would be labelled a lame duck. By his taking typically direct action, in his own way—admittedly a somewhat House of Commons style—political mistrust, which has existed for a long time, has now been able to focus on the Governor,

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and he has been made a scapegoat. China has used that as an excuse for dragging its feet and delaying progress on the handover arrangements.
The Chinese see democracy, as proposed by Mr. Patten, as a means of thwarting the full exercise of Chinese sovereignty, even though they have agreed to it in principle under the joint declaration. As a result, they have resorted to xenophobia, personal insults and appeals to Han nationalism to encourage rejection of the proposals. They are on weak ground, because they have persistently refused to put forward any alternative proposals, and instead have retreated behind a wall of angry rhetoric.
In fairness to the Governor, it takes two to tango and without one partner, the Chinese, it is difficult to make much progress at all. I agree that we should be positive, approachable and maintain contact at all levels no matter what the provocation. One does, however, need a response. To that end, I am proud that the Governor has not wilted under the pressure from Beijing. He needs broad shoulders to cope with the constant flow of carping criticism and negative positions. He has, however, added to his personal dignity by being scrupulous in not engaging in direct attacks on Chinese tactics.
I resent the utterly unworthy remarks about Chris Patten made by the hon. Members for Motherwell, South (Dr. Bray) and for Rotherham (Mr. MacShane).
Dr. Bray: The hon. Lady would do well to read my speech, because I was explaining the political position in the House of Commons, as we understand it very well, to a highly intelligent public in Hong Kong. I believe that she has got the matter upside down.
Lady Olga Maitland: If I have somewhat misrepresented the hon. Gentleman's comments, I shall withdraw my remark, but I got the impression that his references to the Governor were not worthy. I stand by my assertion that the speech of the hon. Member for Rotherham did not reflect the dignity of the speech of the hon. Member for Livingston (Mr. Cook).
In the end, history will be kinder to the Governor. It is a tribute to Chris Patten that he has sparked an open debate and galvanised opinion in the manner of a democratic society. It may, of course, be true that the quieter, continuing efforts to develop an independent administration for LegCo may be more effective in the long run.
However, long after the Governor has left and the proud Union Jack no longer flutters above Government House, the Chinese will realise that he left a territory that is an opportunity for China to build on, not a threat. After all, Hong Kong has been largely created by people who fled from the old China, who desperately want the new China to do well.
Hong Kong is not asking for the moon. It is simply saying, "Hang on; we want to have a say in the running of our own affairs." The people of Hong Kong have a vested interest in ensuring that their society continues free of corruption, with a fair and just legal system—hence the importance, as we have heard today, of the Court of Final Appeal. They want a society free from the fear of the knock on the door by the secret police in the middle of the night, a society with a free press and freedom of speech and political thought. Those are the best guarantors of a prosperous, thriving society.
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Admittedly, different interest groups have different perspectives on the future. I ran into a heavy wall of flak from the business community. Those people bent my ear very hard, individually and in groups. The Hong Kong chamber of commerce had a clear message; its members feared that attempts by the Governor to press forward with a limited democratic programme would cause a backlash from Peking, which would affect their business prospects, although they admitted that there was no evidence that that was happening.
Reading through the notes that I took at the time, I read that members of the chamber of commerce claimed that the Governor was
"insufficiently flexible—he should co-operate more with Beijing—he should focus more on relations with China because that ultimately is where the future lies."
Perhaps there are touches of truth behind some of the comments about the Governor's style, but there was also an unattractive tinge of self-interest—a case of, "I'm all right, Jack," because the big businesses are doing extremely well in China. In many cases, they have moved all their factories out of Hong Kong into China, and they do not want to rock the boat.
If those business men paused for a moment to consider, they would realise that the tremendous boom and prosperity that has occurred in Hong Kong did not happen by accident, but by ensuring an ordered, corruption-free society, with an effective judicial system which guaranteed the security of their commercial dealings. What of the people left behind? What about the man in the coolie hat with his street stall? How will he fare? Who will report openly and fairly what the ordinary man's fortunes are likely to be?
As a former journalist, I paid a call on the Foreign Correspondents club—a salutary lesson, for the foreign press corps is already beginning to pack its bags in preparation for 1997. Those correspondents have repeatedly learned of Chinese colleagues who have been arrested and disappeared for being too frank with the news. The Peking Government have made it very clear to them that the freedom of speech that they are used to in Hong Kong will not be allowed to continue. They were warned by the New China News Agency that reporting must be "accurate—and objective". In shorthand, it meant, "no criticism".
I therefore welcome the Hong Kong Government's plan for 41 regulations to help maintain that important democratic freedom. In my opinion, that is an urgent priority.
Human rights are important. I am not altogether comfortable with putting all our faith in the Bill of Rights, worthy as it is, introduced after the Tiananmen square massacre. I am not convinced that the Bill of Rights alone would guarantee human rights. It would be bolstered if supported by a human rights commission with teeth. It would give human rights a higher profile with a greater infrastructure around it.
I congratulate many of the brave politicians in Hong Kong on their efforts in that direction. We would be failing ourselves utterly if we were not persistent in our vigilance in that regard. I believe that a firm approach to human rights will not affect our ultimate relations with China, in much the same way as it did not affect our relations with the former Soviet Union when we drew attention to human rights there.

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I shall now discuss the importance of democracy as it has developed. The district election campaigns were going on when I was in Hong Kong. I went out to watch two of the parties, the United Democrats and the Democratic Alliance, canvass for supporters in Kowloon.
The Governor was right. The ordinary Hong Kong citizen was interested in political representation. I attended a public meeting at which all the local candidates were present. About 40 sat on wooden benches in a school. It was not so different from meetings in this country. Local issues were discussed such as transport, noise pollution, pensions and so on—the latter being a major topic, for state pensions were unknown before they were introduced by Chris Patten. I accompanied candidates on the doorstep and found that there was polite interest. Not one door was slammed in the face of a candidate.
A local opinion poll showed a high percentage of genuine interest. Some 90 per cent. of the people were aware of the elections in which they could vote. Ultimately, both the district board elections in September 1994 and the elections for the municipal councils in March ended in convincing wins for pro-democracy parties. I expect that this September's elections will produce a similar result and, as befits major elections, will have a higher turnout. A taste for democracy has come and will remain.
The issue of the boat people is outstanding and must be addressed. At present, 21,000 migrants remain in camps waiting to be repatriated—some will go voluntarily, some will not. I made a point of visiting the camps after reports of human rights abuse. The allegations were not borne out, save for the fact that when injuries occurred, it was because fighting had broken out between the inmates.
Some refugees had been in the camps for five years. Children had been born there and knew no other life. I had total freedom to mix and talk to the Vietnamese. I concluded that they were largely economic refugees, not political refugees. The programme of flying them home has now been streamlined. Only yesterday, Wednesday, another 44 departed. Another 17,000, who have been able to prove that they had been victims of political violence, have been granted asylum and are now in the process of being resettled in other countries.
I can hardly blame the boat people for initially trying to reach Hong Kong. When people are desperate, they try anything. But it must be said that Vietnam has changed dramatically, not just by the year, but by the month. Economic progress has been enormous, as I discovered when I flew to Vietnam after my visit to Hong Kong. Returning home may be difficult for the migrants, but it will not be nearly as arduous and tough as it was under the former, rigid rule of communism. I therefore support the Hong Kong Government's efforts on repatriation. It would be cruel indeed to leave the refugees to the uncertainties of Chinese control.
Another matter that I came across was that of the 52 or 53 war widows who have been refused full British passports. Their husbands served and died in the British Army. It is hurtful that the Government cannot grant them full British citizenship. They deserve sympathy—a special stamp in their current papers entitling them to come to the United Kingdom is not the real thing and makes them feel like second-class citizens. I understand that their situation needs primary legislation, but is it beyond the realms of possibility to look more positively at their cases? As we
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approach VE day and the spirit of reconciliation, surely that is one case that we should not pigeonhole as being too difficult to tackle. I pay tribute to Jack Edwards, an old prisoner of war, who has fought so hard on their behalf.
I conclude with the view that, come 1997, we should feel proud that we have more than honoured our obligations. We shall have strived to the end; I trust that the handover arrangements will be complete—I know that it is a race against time. We shall regretfully have to accept that we have not been able to secure the through train on democracy that we would have hoped, but we shall leave Hong Kong with pride and honour. We also know that by playing fair by Hong Kong we helped to give Hong Kong a chance to contribute its uniqueness to China.
9.18 pm
Mr. Paul Murphy: I am sure that all of us would agree with the hon. Member for Harrow, East (Mr. Dykes) that the standard of debate for the past five or so hours has been high. If the debate is being watched on television in Hong Kong, it will certainly prove that the House of Commons has not lost its reputation as a deliberating Chamber.
The significance of the debate for China was highlighted by the right hon. Members for Mid-Sussex (Mr. Renton), for Old Bexley and Sidcup (Sir E. Heath) and for Guildford (Mr. Howell), and by my hon. Friends the Members for Rotherham (Mr. MacShane) and for Motherwell, South (Dr. Bray). It was fascinating to hear my hon. Friend the Member for Motherwell, South talk about his first speech 32 years ago, when he talked on the subject of Hong Kong.
I accept the point made by the hon. Member for Corby (Mr. Powell) about the position and importance of Taiwan not just in the context of this debate—clearly, what happens in Hong Kong will be watched very closely by those in Taiwan and in China itself—but because my predecessor in this place, Leo Abse, was one of the first Members of the House of Commons to visit Taiwan and to take an active interest in that country. I am sure that all hon. Members would agree with the hon. Gentleman's comments.
I come to the debate today as my party's spokesman on Northern Ireland and that significant and very important peace process which will dominate the proceedings in the House for the next couple of years. However, the importance of Hong Kong in international as well as British affairs in the next two years cannot be underestimated. In the debate on the Queen's Speech in November last year, the Foreign Secretary referred to Britain's links with Hong Kong—the 3.5 million British passport holders, the 1,000 British companies and the £90 billion in British investment.
But they are not the only links that Britain has with Hong Kong. I suspect that there is hardly a family in Britain which does not have a family or a friendship link with someone who has lived or worked in Hong Kong. Hong Kong is very much a part of our lives. Michael Yahuda, a distinguished academic with a wealth of knowledge in such matters, recently wrote:
"The Hong Kong negotiations constitute, without a doubt, the most important set of bilateral negotiations in which Britain has been engaged since the Falklands War".

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The consequences of any failure in the negotiations in the next two years would be dramatic, not least for the industrious, educated and highly productive Hong Kong people who, in this of all years, we remember withstood four years of Japanese occupation. Another writer, Gerald Segal, wrote last year:
"The real Hong Kong crisis will begin in 1995–96, some 12 to 18 months before the date of the official handover, and it might even coincide with the next British election".
Of course, it will coincide with that election.
The hon. Member for Harrow, East made the very telling point that perhaps some of the problems in understanding the matter arise out of the differing attitudes, styles and languages of the Chinese and British negotiators. China viewed Governor Patten's proposal as a U-turn. However, we are given to understand that the two countries' diplomatic styles are very different indeed. China adopts struggle diplomacy and deals in agreements which, to us, seem broad and somewhat vaguely worded. Our tradition favours much greater detail. That is why in my view—I am certain that it is my party's view also—there is no evidence to suggest that Mr. Patten went to Hong Kong seeking a confrontation with the Chinese. I believe that part of the problem derives from the clash of styles and political cultures of the two sides.
The right hon. Member for Guildford chaired the. Foreign Affairs Committee and it is important to record our thanks to the Committee for producing a highly instructive and extremely valuable report. It said:
"It is difficult to avoid the conclusion that Britain and China have, throughout all the negotiations since the Joint Declaration was signed in 1984, been looking at its provisions through differently coloured spectacles."
I suspect that there is a great deal of truth in that statement.
A number of right hon. and hon. Members referred to the incident at Tiananmen square and the effects of that tragedy. We all viewed it, correctly, as a great blow to democracy. As my hon. Friend the Member for Livingston (Mr. Cook) said, in China the effect was also significant because it deepened suspicions about democracy, which is now seen as a source of instability and a threat to the Chinese regime. It also led to an increased demand for some sort of proper democracy in Hong Kong. I believe that China had agreed initially to some sort of democracy in the territory. That is enshrined in the joint declaration and in the Basic Law. The two Governments committed themselves to effect what they called a
"smooth transfer of Government in 1997".
The Foreign Affairs Committee report described Governor Patten's actions as perfectly legal in international law and said that there was nothing improper or untoward about them.
As my hon. Friend the Member for Motherwell, South and the hon. Members for Harrow, East and for Eastbourne (Mr. Waterson) said, democracy has increased considerably over the past couple of years. In the early days, the people of Hong Kong declined to agitate for greater democracy because, I suspect, they feared the reaction of China and were busy making money, but Tiananmen square changed all that. As the hon. Member for Eastbourne said, they have developed a taste for democracy. Although the recent local government
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elections were not exactly successful in terms of turnout, they were a start. Although the new breed of democratic politicians in Hong Kong have had only about 13 years of experience in democracy and government, they will doubtless wish to continue that experience.
It is a great tragedy that the "through train", which has nothing to do with the train to which the hon. Member for Romsey and Waterside (Mr. Colvin) referred, the great Robert Adley or an interest in Chinese trains, will be derailed and democratic institutions may be disbanded after 1997. The "through train" was one of the most important aspects of the original agreement and, if we are to take his view seriously, it is tragic that the Chinese ambassador, in this building yesterday, talked about dismantling all those democratic institutions after 1997.
The right hon. Member for Guildford and my hon. Friend the Member for Ilford, South (Mr. Gapes) rightly referred to the role of the Chinese Communist party in Hong Kong after 1997. It is not the same as having just another party in that territory. Are we to see a replication of what has occurred in China, where that country's constitution hardly recognises it even though it is all-powerful in China? We know that the head of the New China News Agency is effectively the head of the Communist party of China in Hong Kong. The Government must deal with that over the next 800 days.
What will happen to the Hong Kong civil service? Will civil servants have to pass some sort of loyalty test in order to be employed after 1 July 1997? The right hon. Member for Tweeddale, Ettrick and Lauderdale (Sir D. Steel) and my hon. Friends the Members for Ilford, South and for Rotherham were right to refer to the problem of human rights in China. No one who represents a constituency in this House of Commons, with all our traditions, could turn a blind eye to the problems of human rights and democracy in China. That matter intensely worries people in Hong Kong as much as it disturbs us. The rule of law must be retained at all costs. It is the fundamental principle that underlies all institutions in Hong Kong.
I hope that when the Minister of State winds up, he will refer to the points made by the Foreign Affairs Select Committee about international human rights conventions and say where the Government stand on those. The Committee rightly argued for an independent human rights watchdog and said that the Hong Kong Government should be supported in strengthening human rights before 1997. The problem is that China has not ratified those international conventions. Is some bilateral agreement between the UK Government and China sufficient to ensure that the rights enshrined in the international covenants are applied in Hong Kong after 1 July 1997?
It is important to ensure that, after 1997, the Court of Final Appeal is seen internationally as an independent and proper judiciary which the people of Hong Kong can feel confident will safeguard their freedoms and rights.
The right hon. Member for Guildford and my hon. Friends the Members for Livingston and for Ilford, South mentioned the plight of the widows of ex-service men, a matter that has still not been addressed. I believe that there are only 52 such people. Although the matter concerns the Home Office, I hope that when he winds up the Minister of State will say what he believes is the case and whether the Home Office will take another look at it.

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Reference was made to the ethnic minorities in Hong Kong. In total, I believe that about 7,000 people could be stranded and stateless after 1 July 1997. In response to an intervention, the Foreign Secretary said that the matter had been decided but Earl Ferrers, who was a Home Office Minister, said on 15 July 1993 that
"if, against all expectation, members of that group"—
the ethnic minority
"were to come under pressure to leave Hong Kong and had nowhere else to go, the government of the day"—
I assume that he was referring to his own party although it might well be mine—
"would be expected to consider, with considerable and particular sympathy, their case for admission to the United Kingdom."—[Official Report, House of Lords, 15 July 1993; Vol. 548, c. 415.]
That matter needs to be cleared up in the next two years because thousands of people in Hong Kong come into that category.
There is, of course, uncertainty about the future leadership of China. The right hon. Member for Old Bexley and Sidcup and others referred to what is termed the "impending succession" question. The Chinese ambassador said yesterday at a meeting in the House that there was no problem and that the matter had been settled but, clearly, when someone as significant as Deng dies, it is bound to have an enormous influence on China and Hong Kong but not, I suspect, on the future of these particular negotiations.
Similarly, the role played by the United States of America has been exaggerated. It clearly wants to trade in the huge Chinese market. It is rather interesting to note that a headline in this week's International Herald Tribune stated:
"Trade threat removed, human rights situation worsens".
There is a telling contradiction in the two phrases. The European Union is hardly better. Germany, for instance, is anxious to trade with China and Chancellor Kohl visited China in 1993.
Some believe, then, that the prospects over the next two years and beyond could be bleak, that an elected assembly, which would by then have been working for two years, will come to an end, that we shall be at constant loggerheads with the People's Republic of China, that difficulties will occur with human rights and citizenship, and that trade between this country and China will worsen. I do not think that that scenario is likely. There are grounds for optimism.
The hon. Member for Sutton and Cheam (Lady Olga Maitland) referred to the airport which is well under way. It is one of the most significant economic developments in not only China or Hong Kong but the world. The right hon. Member for Mid-Sussex referred to the thriving Hong Kong economy. It is still the eighth largest trading economy on earth, still the world's busiest container port, Asia's main destination for tourism and one of the world's largest financial centres.
In March this year an opinion poll conducted by the Hong Kong Government found that 62 per cent. of respondents believed that the colony would remain stable. One can add to that the fact that some moderate voices are emerging in China itself. In a speech on Hong Kong and its relationship with China, a member of the Chinese politburo, Li Ruihan, said:
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"When you do not understand something you may damage it, by trying to improve it."
Things are changing in China itself.
The right hon. Member for Old Bexley and Sidcup talked of the need to be positive in the next 800 days. Last night the Chines ambassador talked of co-operation and consultation replacing confrontation. We must all ensure that our efforts are aimed at bringing about stability and harmony after 1997. That must be the most important single objective of all hon. Members and of those who govern Hong Kong.
9.34 pm
The Minister of State, Foreign and Commonwealth Office (Mr. Alastair Goodlad): I begin by welcoming the hon. Member for Torfaen (Mr. Murphy) to the Front Bench. I congratulate him on his appointment and on his speech—the first of many that, I hope, we shall hear him make from the Opposition Front Bench.
The debate has been a true reflection of the range and diversity of Britain's connections with China and Hong Kong. Having participated from the Back Benches in most of the debates on Hong Kong in years gone by, I welcome the deep knowledge and understanding shown by right hon. and hon. Members, especially members of the Select Committee so ably chaired by my right hon. Friend the Member for Guildford (Mr. Howell).
I have been greatly encouraged by the support from both sides of the House for the thrust of the Government's policies on China and Hong Kong, which was reflected in some extremely knowledgeable and, in some cases, distinguished speeches. That broad measure of bipartisan support is an important source of legitimate strength for Ministers and the Governor in their dealings with the Chinese Government and all shades of opinion in Hong Kong.
My right hon. Friend the Member for Guildford spoke eloquently of the dramatic changes in east Asia and their consequences for the United Kingdom. China, of course, is at the heart of those changes.
In opening the debate, my right hon. Friend the Foreign Secretary described the strategic importance for Britain of our relationship with China. China has opened its doors to international trade and investment; it has allowed in the free market. It is now reaping the benefits of a booming economy. Of course there are problems and there will be more changes, perhaps to the system of government in China, but I do not share the fashionable pessimism that China may disintegrate, nor do I believe that anyone can turn back the clock on the reforms initiated by Deng Xiaoping.
We must continue to develop the profound and realistic relationship with China for the 21st century for which my right hon. Friend the Foreign Secretary called last November. Nothing less would do justice to the interests and responsibilities that Britain and China share as leading players on the world's political and economic stages. I am grateful for the endorsement that the House has given our efforts to maintain the momentum of that relationship.
When I visited Peking last July, I took part in the ministerial dialogue with China, which is an important part of our policy. I was able to see for myself, as have other hon. Members, the benefits that the open-door policy has created for the Chinese people and the

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opportunities that it has opened up for British traders and investors. I can assure hon. Members who have not been to China recently that if the statistics of China's recent economic expansion are impressive, the reality is even more startling.
I believe that there is no sensible alternative for Britain to a policy of engagement with China across the range of our common interests, to which right hon. Friend the Foreign Secretary referred in his opening speech.
Several right hon. and hon. Members, including the hon. Member for Livingston (Mr. Cook), in his very thoughtful speech, echoed the concern about human rights expressed by my right hon. Friend the Foreign Secretary. I agree with my right hon. Friend the Member for Old Bexley and Sidcup (Sir E. Heath) that we do not seek to lecture or impose extraneous values on the Chinese people, but we are deeply concerned about the abuse of basic human rights which have been accepted as universal. The protection and advancement of those rights must be a cornerstone of our policy.
The hon. Member for Rotherham (Mr. MacShane) seemed to think that the Opposition care more about freedom and human rights in China than others. I assure him that nothing could be further from the truth. We regularly raise those matters with the Chinese authorities. My noble Friend Lord Howe and his delegation visited China and made practical proposals for improvement that we urged the Chinese authorities to implement. We joined our European Union partners in raising those matters with the United Nations Commission on Human Rights.
Mr. MacShane: Can the Minister name the last Chinese citizen about whom human rights matters were raised?
Mr. Goodlad: My right hon. Friend the Foreign Secretary gave four names to Mr. Qian Qichen last week, and I did the same last year. That is a continuing process.
We aim not at confrontation but at establishing a calm and serious dialogue with the Chinese authorities. Only through dialogue can we hope to influence their practices and to encourage reforms.
Several hon. Members referred to Tibet, where everything is extremely unsatisfactory. We are deeply concerned about human rights abuses in Tibet and threats to Tibetan identity. My right hon. Friends the Prime Minister and the Foreign Secretary have met the Dalai Lama, who is a most distinguished spiritual figure. We have urged the Chinese authorities to commence a dialogue With the Tibetans, without preconditions. I urge them again to do so—I am sure with the support of the House.
I do not want to give the House the impression that all our contacts with China are confrontational. I am grateful to my right hon. Friend the Member for Mid-Sussex (Mr. Renton) for drawing attention to the valuable co-operative work of the British Council in China and Hong Kong, which is making an important contribution to our trade and cultural objectives. I assure my right hon. Friend that that work will continue to have our full support.
I assure the hon. Member for Workington (Mr. Campbell-Savours) that we are conscious of the importance of promoting knowledge of China among young people. Many British universities already run
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Chinese courses, often including time spent in Chinese institutions such as Peking and Shanghai universities and Taiwan. As China's economic and political importance grows, more students will be attracted to acquire a deeper knowledge of China.
My hon. Friends the Members for Corby (Mr. Powell) and for Romsey and Waterside (Mr. Colvin) made powerful pleas to consider our links with Taiwan. Like my right hon. Friend the Member for Guildford, my hon. Friend the Member for Corby drew attention to Taiwan's impressive economic success, high education standards and high savings rates. Equally welcome is Taiwan's steady development of democratic structures. I agree that those achievements deserve to be better known in this country.
Although we have no diplomatic relations with Taiwan, we actively promote economic, cultural and educational links. Eight British Ministers have paid private visits to Taiwan to pursue those objectives. British organisations in Taiwan have expanded and reorganised in the British trade and cultural office, which was until recently directed by Mr. Philip Morrice—to whom my hon. Friend the Member for Corby paid generous tribute. That office now has seven front-line commercial staff dedicated to helping British business men.
The Government already review links with Taiwan. We are determined to take all practical steps to expand our cultural and commercial interests there, and the record speaks for itself. Expanding exports, 9,000 students, and nine out of 10 manufacturing investments in Europe from Taiwan come to the UK: all that is impressive and welcome progress.
My right hon. Friend the Member for Guildford referred to the issuing of visas. One consequence of our policy of not recognising Taiwan as a state is that we cannot recognise the travel documents issued there as passports. Our practice, which is by no means unique, is to place our visas on a separate certificate of identity. I do not think that that can be seen as a serious impediment to the growth of our commercial links with Taiwan, which are flourishing, as are Taiwan's links with Japan, which has the same practice on visas. That practice in no way retards the issue of visas through the British trade and cultural office in Taipei, which is normally done within 72 hours. In view of the interest in the House tonight, I can assure my right hon. Friend that our minds are not closed. We keep the matter under review, particularly in the light of practice elsewhere.
Hong Kong is, of course, at the heart of our relations with China. I have known Hong Kong well for most of my adult life and have a deep and abiding affection for the territory and its people, as have—as we have seen tonight—many other hon. Members. We are very alive to our continuing responsibilities towards the 3.5 million Hong Kong people who will continue to be entitled to a British passport. For reasons of self-interest and of decency and honour, the Government's first priority will continue to be to do their best by Hong Kong.
Hong Kong's continued prosperity and stability are also very much in the interests of the People's Republic of China. We do not always see eye to eye on all aspects of the future of Hong Kong. Sometimes we have disagreed quite sharply, but we both share a strong interest in Hong Kong's success beyond 1997, on the basis of the joint declaration, to which we are both committed.

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Many right hon. and hon. Members referred to the development of representative government in Hong Kong. Nearly all, including, notably, the hon. Member for Livingston, approved of what we had done. The hon. Gentleman suggested, as have others, that the development may have been a little too late. I was not a member of the Government between 1974 and 1979, or, indeed, between 1970 and 1974, but I am sure that those who were responsible in those days had good reasons for their decisions.
My right hon. Friend the Member for Old Bexley and Sidcup was sceptical about the development of representative government, but I cannot help noting that he has not always been so. When the House debated the joint declaration in December 1984, on the development of representative government within Hong Kong, he said:
"I agree with the right hon. Member for Leeds, East that we must do our utmost to achieve proper, working representative government there by the time the handover takes place, but I cannot agree with the right hon. Gentleman's comments about not rushing things. With only 12 years to develop representative government, the question of rushing or not rushing does not arise. What I believe will do more harm than anything is the suggestion, as the tone of the White Paper implies, that we are doing this rather grudgingly."
My right hon. Friend went on to say:
"Far greater than any danger of haste is the danger of not having fully representative working government with experience by the time the handover takes place."—[Official Report, 5 December 1984; Vol. 69, c. 405.]
In fact, since we started negotiating with the Chinese early in the 1980s we have always proceeded in developing representative government in Hong Kong, in line with Hong Kong opinion. As the hon. Member for Livingston said, that opinion has been shaped by two major events: the negotiation of the joint declaration and what happened in China in 1989. The joint declaration provides that the Legislative Council shall be constituted by elections. The Basic Law is clear about the pace of increase in directly elected Members—20 in the first legislature, 24 in the second and 30 in the third—but, as my right hon. Friend the Member for Guildford made clear, we are now where we are.
There is no good reason for China to dismantle the electoral arrangements, which so clearly command the confidence of the Hong Kong community—as the turnout in elections hitherto has shown—the confidence of this House and the confidence of the Foreign Affairs Select Committee, which went into the matter thoroughly.
My right hon. Friend the Member for Old Bexley and Sidcup referred to the 1990 exchanges on constitutional development. The exchanges between Britain and China in early 1990 did not add up to an understanding about political developments in Hong Kong. We released the texts of the relevant exchanges in 1992. They showed that there was no such agreement, that we were dissatisfied with China's proposals for the number of directly elected seats on LegCo and that there was no consensus between us on the composition of the election committee.
The exchanges were inconclusive and, therefore, left us free to make our own proposals, consistent with the Basic Law, the joint declaration and the agreements and understandings between us—and that we did, for discussion. It is a matter for regret that after 17 rounds of talks it was impossible to reach agreement.
There is no hard evidence of China discriminating against British business interests. British exports to China increased by 72 per cent. in 1993 and by a further 14 per
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cent. in 1994. This country is the largest European Union investor in the PRC. Vice-Premier Qian Qichen only last week underlined to us the value of our bilateral trade links and the complementarity of the two economies. Chinese leaders have continually emphasised in public that there would be no discrimination against British business. To do so would be outside the terms of the China-European Union co-operation agreements and the spirit of China's World Trade Organisation application. I hope that no one in the House will accuse those Chinese leaders of bad faith when they continually repeat that there will be no discrimination against British business.
The hon. Member for Rotherham suggested that the Governor should be here for this debate, as the Minister for Hong Kong. My right hon. Friend the Foreign Secretary and, I suppose, the Government would be surprised to hear the Governor described as a Minister; indeed, he might have difficulty gaining access to the House. However, I want to take this opportunity to join in the tributes paid to the Governor from both sides of the House. He is an enormously distinguished Governor of Hong Kong—the best whom we could possibly have.
The Government fully support the Governor in carrying out his important task. I know that the House joins me in extending support to him. He has been performing his duties in Hong Kong with the skill and the energy that we would all expect of him. Indeed, earlier today he was doing his democratic duty by answering questions in LegCo.
My right hon. Friends the Members for Old Bexley and Sidcup, for Mid-Sussex and for Guildford and the hon. Member for Livingston all mentioned the Court of Final Appeal. We have always said that we want to establish it on the basis of agreement with China. Expert talks on the Bill are under way in Hong Kong, both today and tomorrow. We continue to urge China to give its early support to the Bill, which would implement the 1991 agreement. We are going the extra mile in an attempt to reach agreement, but we and Hong Kong cannot wait for ever for it to be enacted.
The hon. Member for Livingston expressed concern about wastage in the public services. My hon. Friend the Member for Birmingham, Edgbaston (Dame J. Knight) expressed concern about corruption in Hong Kong, as did my hon. Friend the Member for Eastbourne (Mr. Waterson) and others. I know that the whole House will join me in paying tribute to the integrity and efficiency of the public services in Hong Kong, especially the civil service and police. I reassure the House that wastage rates are low, but a number of officers may leave the civil service before 1997 owing to localisation, and others in Hong Kong will be entitled to retire before 30 June 1997. The Hong Kong Government have made plans to ensure that any vacancies that arise are filled by capable and experienced officers.
The right hon. Member for Tweeddale, Ettrick and Lauderdale (Sir D. Steel) rightly urged us not to leave behind in Hong Kong emergency powers that a future regime could abuse. He will be pleased to know that the Hong Kong Government are reviewing their emergency powers as part of the on-going review of laws that might affect press freedom. Those laws involve complex issues and need careful study, but the Hong Kong Government are committed to completing the exercise before 30 June 1997.

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Several right hon. and hon. Members, including the right hon. Member for Tweeddale, Ettrick and Lauderdale, and the hon. Members for Rotherham and for Ilford, South (Mr. Gapes), raised the application to Hong Kong of the international covenants on civil and political rights, and on economic, social and cultural rights. We are clear that China has an obligation under the joint declaration to ensure that provisions of the international covenants, as they apply to Hong Kong, remain in force after 1997. The obligation includes the requirement to report to the United Nations.
We have made our views clear to China. In November, we explained our position to the committee on economic, social and cultural rights. One way to implement the reporting obligations would be for China to accede to the covenants in respect of the whole of its territory. We would welcome Chinese accession and we have said so to China. Alternatively, it would be feasible for China to assume the reporting obligations under the covenants in respect of Hong Kong only. We shall continue to work for a satisfactory resolution of that issue.
As my right hon. Friend the Foreign Secretary said, the Hong Kong Government are committed to an on-going programme to amend laws that affect press freedom. We support that commitment, as do my hon. Friend the Member for Sutton and Cheam (Lady Olga Maitland) and others. Nine provisions of three Ordinances on broadcasting have been amended. One provision of the summary offences Ordinance has also been amended. A Bill has been introduced in LegCo to amend seven more provisions in two Ordinances. Out of 41 legislative provisions that needed amendment, the Hong Kong Government have already acted on 17, and amendments to a further 11 provisions in seven Ordinances will be introduced in May.
The right hon. Member for Tweeddale, Ettrick and Lauderdale and the hon. Member for Ilford, South
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mentioned ethnic minorities in Hong Kong. I assure the House that the position of ethnic minority British dependent territory citizens who have the right of abode only in Hong Kong is secure. The joint declaration on the Basic Law provides for their right of abode in Hong Kong after 1997. The Government have given the commitment that if, against all expectations, members of the non-Chinese ethnic communities ever come under pressure to leave Hong Kong and have nowhere else to go, the Government of the day would consider with considerable and particular sympathy any request for admission to the UK.
Other hon. Members raised the issue of the wives and widows of ex-service men in Hong Kong. The Government recognise the special contribution made by ex-service men; hence the special arrangements made to allow their spouses, to whom the Home Secretary has written individually, unrestricted access to the UK. No scope exists under nationality legislation to grant them citizenship while they remain in Hong Kong.
The next few years will be momentous ones for China and Hong Kong. For both, they will be years of transition. In China, there will be political and economic changes that will determine that country's course and character in the early decades of the next century. The world will be watching to see how the high promise of "one country, two systems" is turned into reality.
I have no doubt that Hong Kong's continuing prosperity and stability are there to be secured, but it will be for the present and future sovereign powers, separately and jointly working more closely together, to achieve that. Her Majesty's Government intend to co-operate fully with China in bringing about a smooth transition. We intend to stick by Hong Kong through the next 800 days and beyond. We shall remain committed to Hong Kong, as my right hon. Friend the Member for Guildford has said, up to and beyond the transfer of sovereignty.
It being Ten o'clock, the motion for the Adjournment of the House lapsed, without Question put.

Education (Staffordshire)
Motion made, and Question proposed, That this House do now adjourn.—[Mr. Lightbown.]
10 pm
Mr. William Cash: The issue of education is of critical importance to the future prospects of our children and to the quality of our national life for generations to come, both economically and culturally. It should not be used as a political football.
I have asked for the debate because we need to set the framework of a balanced analysis of the state of education in my constituency. Because it is a function of Staffordshire county council, the circumstances of my constituents are determined by the education policy decided by the Labour county council in the broader national education context.
There are many excellent teachers and schools in my constituency, and we must do all in our power to offer pupils the best education that can be provided, with the help of parents, teachers, head teachers and governors.
I do not disguise my concern, which I have made clear in the past, about the way in which standard spending assessments and area cost adjustments work to the disadvantage of some counties such as Staffordshire. The 1994 new earnings survey suggests that average overall' earnings in the south-east are 24 per cent. higher than they are in the west midlands. Within the south-east, earnings are higher still in Greater London, but, even excluding London, earnings in the rest of the south-east are 12 per cent. higher than in the west midlands.
One of the factors used in calculating the standard spending assessment is the area cost adjustment, which assumes that authorities have to match the rates of pay in competing occupations if they are to recruit and retain the staff whom they require. For example, the standard spending assessment for Surrey, whose population is about the same as that of Staffordshire, is increased by £60.7 million.
It seems reasonable to point out that there is a common pay spine for teachers throughout the country, and there is little competition between their employers and those in the general labour market. Similarly, people pay about the same in interest rates and mortgages, although houses generally are less expensive in the west midlands than in the south-east. I cannot suppose that food and other such items cost less in supermarkets and shops in the west midlands than in the country as a whole.
According to an independent analysis that I have received, details of unit cost expenditure in schools for 1992–93 suggest that teaching staff costs in Staffordshire are no lower than in the counties outside London that benefit from the area cost adjustment. It seems that the balance between counties such as Surrey and counties such as Staffordshire needs to be corrected.
There is also the question of the broad link between the public sector borrowing requirement and the SSAs. While we were suffering the worst effects of the exchange rate mechanism, to which I was so opposed, our PSBR rose to £50 billion. As the Government wish to reduce the PSBR, they also seek to limit public expenditure. Hence, control of public expenditure is mirrored in a tight settlement for local authorities. However, I was heartened
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to note that the Secretary of State for Education recently gave a strong hint that there will be extra money for schools in the November Budget, so things seem to be looking brighter.
Staffordshire county council recently gave us a final comparison for SSA per secondary pupil in 1994–95. That gave a figure of £2,679 for Surrey, including an additional area cost adjustment of 11.6 per cent., whereas the figure for Staffordshire was £2,398 per secondary pupil. Staffordshire has no area cost adjustment, and has a capping limit of only 0.11 per cent. above its SSA. It concluded that spending more than its SSA on education could be achieved only by spending less on other services—or, crucially, the council admits that it could spend more on education by using reserves and balances.
We are given to understand that in Staffordshire there are reserves of about £60 million. Those are uncapped, and it seems that they could be used for education. Why are the reserves so high, and why are they not used to prevent the prospective loss of teachers from the schools in my constituency?
The director of education recently wrote a letter saying that £7.5 million from the reserves would be used. Why is more not being used? He sent me a table showing the schools in my constituency which he says are likely to lose staff. Those include the loss of 1.9 teachers at St. Lawrence, Gnosall, 1.6 at Tillington Manor county school, 1.3 at Blessed William Howard and as many as 5.3 in Sir Graham Balfour. Those and other losses seem avoidable.
Staffordshire's education standard spending assessment for 1995–96 has been set at £348.79 million, which is 1.2 per cent. higher than the equivalent figure in 1994–95, in line with the national average increase. Under local management of schools, Staffordshire is obliged to delegate control of much of the money that it allocates for schools to the governing bodies of those schools. That is done under the general schools budget. In 1994–95, Staffordshire's GSB was the worst of any county. This is unacceptable.
We also find that we have the third lowest amount of money delegated to school level of any county, with an aggregated schools budget per pupil of £1,570, compared to £1,700 in Surrey. It seems that the county council is allocating too much for non-teaching matters. Is it possible that the county is putting money into reserves for transfer to Stoke-on-Trent when local government reorganisation takes place? Does it not still have a wholly disproportionate amount of money allocated to nursery school education in Stoke-on-Trent compared to the rest of the county put together?
Some years ago, I raised that matter with the district auditor, and I discovered that the differential is as much as 5:1, which he strongly criticised as unfair to parts of the county such as my constituency. I hope that taking Stoke out of the county, for which I have long campaigned and which is due to happen thanks to Government policy, will help to redress the unfairness that was revealed.
Even allowing for the problems posed by the SSA and the area cost adjustment, there can be no excuse for the deplorable results and pupil-teacher ratios in Staffordshire. In 1994, only 38.1 per cent. of 15–year-olds in Staffordshire obtained five or more GCSE grades A to C, compared with the national average of 43.3 per cent.

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The performance at A-level was also below the national average. We have the second worst pupil-teacher ratio of any county, which in January 1994 was 19.75.
In the latest survey of counties showing those who have left school with no results at all, Staffordshire ranked the fifth worst. For class sizes, Staffordshire is below average. Its primary schools have an average class size of 27.7 children, whereas in England as a whole it is 26.9. In secondary schools, the average is 22.1 children, whereas for the whole of England it is 21.4. Is it the case that the county pursues a policy of hardly ever, if at all, sacking bad teachers?
The Labour county council has much to answer for. It simply is not possible for it to explain all that away by reference to the SSA and area cost adjustment. The local government elections on 4 May may be elections for boroughs and districts, but it should be remembered that the county, the Labour county council, is responsible for 90 per cent. of the council tax bill which is demanded of our ratepayers and our voters.
The voters should not overlook that, especially as the excellent Conservative Stafford borough council is reducing its share of the amount that it calls on for the council tax, whereas the county, the Labour county council, is increasing its amount of precept by £17, and the education costs of the county are approximately 70. per cent. of its overall budget.
I am seeking meetings with the county education officers, parents, teachers and heads to address the crucial issues affecting my constituents and to try to work out a balanced and objective solution based on facts and analysis. I well remember that, in the run-up to the 1992 general election—my colleagues and other Conservative Members of Parliament in Staffordshire remember it extremely well too, because some of them received as many as 2,000 letters—Opposition parties created great fear throughout my constituency and elsewhere about school budgets and loss of teachers.
Yet, at the end of the financial year in question, the county had £10 million left over in its education budget. It cannot be allowed to do that again. It must use the money it has in reserves and otherwise to better effect. I await its response with interest, and that of the Minister.
What none of us wants, and what must not be allowed to occur, is a spate of unnecessary and damaging strikes. I appeal to all those in my constituency to look at the facts, weigh up the arguments and press the Labour county council to release more money from its reserves.
I shall continue to press the Government to revise the standard spending assessment, and I appeal to the teachers to repudiate strike action or similar activities that would damage education in my constituency.
10.10 pm
The Parliamentary Under-Secretary of State for Schools (Mr. Robin Squire): My hon. Friend the Member for Stafford (Mr. Cash) has done a service to his constituents and to everyone living in Staffordshire in drawing the attention of the House to his concerns about education in the county. He was supported, albeit in the silent role befitting his senior Government Whip position, by our hon. Friend the Member for Staffordshire,
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South-East (Mr. Lightbown), although I could sense that my hon. Friend the Member for Stafford was drawing great strength from that strong, brooding, silent presence.
In particular, my hon. Friend the Member for Stafford did well towards the end of his speech to remind the House of the track record of Staffordshire some few years ago. In the words of one or more of my Home Office equivalent Ministers, it has "previous" in this respect, and it was wise of my hon. Friend to have put that on record.
My hon. Friend expressed concern about the level of resources made available by Government for education, so I make it clear from the start that, as far as education expenditure is concerned, Staffordshire county council, like every other local authority, is responsible for setting its own budget and deciding its priorities between, and within, services. The council has the final say on how much is spent on education and how much is spent elsewhere.
My hon. Friend said that Staffordshire has been forced to cut millions of pounds from its education budget in the current financial year. There is no reason why that should happen. The Government have provided for Staffordshire's education standard spending assessment to increase by 1.2 per cent. this year and, under the capping rules, it can spend 0.5 per cent. more in 1995–96 than in 1994–95. In total, Staffordshire is able to spend more than £582 million on all its services.
What does talk about cuts mean? The county council is not cutting what it is spending: it is drawing up a shopping list of additional spending and then cutting back on what it would ideally like to spend, if it could buy all the items on that list. Everyone in the public sector and in business faces the same problem, and the solution is to become more efficient. To say that there must be cover for all salary, price and volume changes is as inappropriate as to say that there is no scope for efficiency gains.
It is not unreasonable for Ministers to expect authorities to help fund education by becoming more efficient. Authorities continue to spend vast amounts of money on running their education departments. The recent Audit Commission report found scope for saving more than £500 million on the pay bill of local authorities' administrative and clerical staff. In addition, in a previous report, it found scope for saving more than £30 million by rationalising special schools. It is also not unreasonable for the Government to expect schools to use their balances or reserves, as my hon. Friend said, where appropriate, to help to offset the cost of providing education.
No information on individual school balances at the end of 1994–95 is yet available, but at the end of 1993–94, primary schools in Staffordshire had balances that amounted, in total, to 5.03 per cent. of their budget shares, while secondary schools had balances of 3.07 per cent. Although I accept that those are lower than the national averages in each case, in total they are still substantial amounts. Schools need to consider what they should sensibly hold as a result of planning, not simply by chance. They cannot easily complain that they were underfunded during that time.
If reserves are not available for particular schools, they need to pay special attention to their management of resources. They may, however, also wish to suggest to the authority that its local management of schools scheme might be amended for future years in order to change the distribution of funds.

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Authorities have scope for efficiency savings by seeking a better balance between supply and demand in school places. The level of surplus capacity across the country is still too high, and there is therefore still scope for authorities to remove surplus places. In Staffordshire's case, the authority reported more than 20,000 empty places in primary schools in January 1994. That is nearly one fifth of the total number of primary places in the authority. I accept that in Staffordshire, as in other authorities, not all of those places are removable. Some are needed for rising pupil numbers; to allow for parental preference; and to ensure that schools are accessible, particularly in rural areas.
Even allowing for those factors, however, the level of surplus in Staffordshire is projected to remain high. On that basis, we are discussing with the authority what scope there might be to reduce surplus capacity, and to do so in ways that could release funds to be spent on pupils and not on unnecessary buildings. I know that my hon. Friends who represent Staffordshire understand and accept that approach.
I know that Staffordshire schools, like schools in other areas, will be concerned about meeting the cost of the teachers' pay award. The Government accepted the teachers' award of 2.7 per cent. on the recommendation of the independent School Teachers' Review Body. The review body acknowledged the fact that financial provision had been set on the basis that pay increases should be offset, or more than offset, by efficiency gains and increased productivity. For instance, authorities that make savings on some services can spend more on others without infringing the capping criteria.
The Government have acknowledged that the current settlement is a tough one, but many authorities have been able to achieve an increase in their budgets—including all Conservative ones—which matches or outstrips the teachers' pay award. They have said that they are meeting the pay award in full.
It is worth making the point that, although a number of local authorities claim that they cannot afford the teachers' pay award, they reached a voluntary pay settlement of more than 2 per cent. for clerical and manual staff. Of course I acknowledge that the award will place local authority budgets under pressure. The House will recognise, however, that local authorities are large and financially complex organisations, and they have a variety of means to realise the efficiency gains that are needed.
The Government consider that teachers thoroughly deserve this increase, in recognition of the excellent work they carry out in raising standards in our schools. Governors, teachers and parents, as well as the Government, are entitled to look to local authorities to give priority to front-line services, such as schools. I hope that Staffordshire county council and all others will do so.
During the consultations on teachers' pay for this year, many people expressed anxiety about the level of funding for schools next year—1996–97. As my right hon. Friend the Secretary of State for Education has said, that is an issue that Ministers collectively will be considering in the next public expenditure round, leading up to decisions to be announced in November.
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It is, of course, not possible to predict the outcome, and inevitably there will be many competing claims. I can only repeat what my right hon. Friend said recently: she has listened carefully, and will take account of all the arguments and representations made to her about the funding of schools against the background of the Prime Minister's public assurance that education will continue to be at the top of our priorities as the economy delivers further growth.
My hon. Friend properly highlighted Staffordshire's SSA, and I would be failing in my duty if I did not refer to it. I am certainly aware that Staffordshire's SSA per pupil is lower than the national average. As my hon. Friend will be aware, the SSA system sets out to provide funding for a standard level of service nationwide, Simple comparisons with other LEAs—even the LEA of my birth, Surrey—are not appropriate, because the costs of providing a standard level of education throughout the country vary.
Some of the factors that need to be taken into account are the costs of educating children in sparsely populated districts, the costs of educating children in districts that are socially or economically disadvantaged, and the large labour costs in London and the south-east. It is inevitable, therefore, that not all authorities will have such large costs, or indeed special circumstances, as other LEAs. Therefore, the poundage per pupil varies from LEA to LEA.
My hon. Friend referred specifically to the area cost adjustment. Coincidentally, as I told the House last week in a debate of some similarity, that is perhaps the most controversial aspect of the SSA system, although it allocates only about 4 per cent. of the national total of education SSAs.
None of the local authority associations questions the need for an area cost adjustment; only the way that it works is at issue. It is intended not to favour, so to speak, specific authorities, but to compensate them for the necessary additional labour and other costs that they must meet in delivering a common standard of service. That means not only teachers' salary costs, but all staffing costs. In addition, the costs of rates are greater in the south-east and in London, and LEAs in those regions have even argued that there should also be an uplift for greater rental costs.
If it is any consolation to my hon. Friend and his constituents, as he will have gathered from that last comment, the area cost adjustment is as unpopular in London and the south-east on the ground that it delivers less than it should, as it is obviously unpopular in regions such as my hon. Friend's for the reverse reason.
My hon. Friend is also rightly worried that standards of education should be maintained and improved. There is no evidence that a small SSA per pupil affects the standard of education or the ability of an LEA to deliver that education. For example, in Stockport, which receives less per pupil in its SSA than Staffordshire, 48.6 per cent. of 15–year-olds gained five or more GCSEs at grades A to C—that is the 11th highest result nationally. Staffordshire, by comparison, as my hon. Friend said, is ranked 58th, with 38.1 per cent. of 15–year-olds gaining five or more A to C grades.
There is a similar pattern with post—16 results. In Stockport, the average point score for pupils taking two or more A or AS-levels is 18.8, which is the third

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greatest nationally. By comparison, Staffordshire is ranked 32nd, with an average point score of 15.7, which is below the national average of 16.7.
I would not wish to imply, and I know that my hon. Friend would not assume it from my comments, that in some way uniquely Staffordshire should be linked with Stockport. My purpose in linking the two LEAs was to draw specific and complete attention to the erroneous belief, fostered especially on the Opposition Benches, that there is a direct correlation between money spent and education results achieved.
My hon. Friend made passing reference to Stoke, which I recognise will shortly be in transit from the warm embrace of Staffordshire. He might concede, although I do not seek that he should do so tonight, that Stoke-on-Trent is a region of significant social and economic deprivation. For many years, Governments have sought to encourage authorities to give priority to deprived regions in determining their priorities for expansion of nursery provision. I can confirm that the level of nursery provision in Staffordshire does not affect its SSA—the SSAs are calculated on the basis of pupil numbers, not nursery provision.
I shall now discuss the local management of schools in Staffordshire. As hon. Members will know, local education authorities have a great deal of discretion in the way in which they arrange their LMS schemes. It is important to realise what LMS is about. It is not about the total spending on schools. It is about the distribution of that expenditure—the balance between centrally retained items and funds delegated to schools, and the distribution of those delegated funds between individual schools.
I suspect that there is not an hon. Member in the House who has not received letters from this or that school whose complaint, when analysed, is against the nature of the local LMS scheme administered by the education authority, rather than exclusively, as the writer thought when he wrote the letter, against the nature of this or that Government decision. I have received many such letters.
How much Staffordshire spends on its schools is a decision for the LEA, to be taken in the light of its other commitments, both in education and in other services. This year, Staffordshire's general schools budget amounted to £342 million, equal to £2,124 per pupil. National comparisons are not yet available for 1995–96, but it is true that in 1994–95 the general schools budget per pupil for Staffordshire, which then stood at £2,120, was the lowest of any shire LEA, and one of the lowest in the country.
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However, hon. Members should be wary of those comparisons. The size of the general school budget per pupil is affected by many factors, such as the proportion of sixth formers in LEA schools and the capital spending needs of local authorities.
Another matter of acute interest to schools is the proportion of funding delegated to them. In 1995–96, Staffordshire will be delegating to schools 92.8 per cent. of its potential schools budget, which, on the information currently available to me, is a little above the national average and ahead of the required minimum of 85 per cent.
What does that delegation represent in terms of budget share per pupil? Obviously, that varies from school to school; all LMS schemes direct funding between schools according to various factors which measure perceived need, which can result in marked differences in funding per pupil. On average, the budget share per pupil this year is £1,286 for primary pupils, £1,768 for secondary pupils and £6,267 for special schools. All those show a modest increase compared with 1994–95.
I mentioned at the outset that I thought that my hon. Friend had done a first-class job. It is particularly relevant that his debate takes place in what, in many parts of the country, is the run-up to local elections. I am sure that in Staffordshire, as across the country, he and his supporters are finding that Conservative councils use their resources efficiently.
Too often, when one analyses their spending, Labour or Labour-Liberal Democrat or Liberal Democrat councils use their money inefficiently. Sometimes, they have strange sets of priorities. As Education Minister, I shall, of course, continue to reiterate the importance of education. In saying that, I am backed by my right hon. Friend the Prime Minister, who has stated many times the importance that he attaches to education. We expect to see that priority represented and reflected across the country in the decisions of local authorities.
This has been a wide-ranging and interesting debate, and I am grateful to my hon. Friend for raising so many important issues. I very much hope and trust that, with the information that I have given him tonight, he will be able to return to his constituents and explain even more clearly than the brilliant way in which he has already, the reasons why Staffordshire may be under-performing in education terms. He can explain to them that it is up to the LEA and the governing bodies to address those problems rather than to assume that it is simply a matter for greater funding from the centre at the expense of the taxpayer, year in and year out.
Question put and agreed to.
Adjourned accordingly at twenty-nine minutes past Ten o'clock.