Lords Sitting of 21 November 1973

Preamble
The House met at half past two of the clock (Prayers having been read earlier at the Judicial Sitting by the Lord Bishop of Chichester):
The LORD CHANCELLOR on the Woolsack.

THE LORD BISHOP OF ST. ALBANS
Robert Alexander Kennedy, Lord Bishop of St. Albans—Was (in the usual manner) introduced between the Lord Bishop of Southwark and the Lord Bishop of Hereford.

SALMON AND FRESHWATER FISHERIES IN SCOTLAND
2.35 p.m.
LORD BALFOUR OF INCHRYE: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government why, contrary to the stated intention of Her Majesty's Government to introduce legislation on the salmon and freshwater fish of Scotland, based on the White Paper, Command 4821, there was no mention of such legislation in the gracious Speech from the Throne; and whether such legislative proposals can still be expected during the present Session of Parliament.
THE LORD PRIVY SEAL (LORD WINDLESHAM): My Lords, it is still the Government's intention to introduce legislation on salmon and freshwater fisheries in Scotland as soon as the Parliamentary programme permits, but because of the many competing demands on Parliamentary time it is unlikely that it will be presented in the present Session of Parliament.

SCOTLAND: UNFURNISHED ACCOMMODATION SURVEY
LORD STRATHCLYDE: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government the purpose and estimated cost of the inquiry by the Social Survey Division of the Office of Population Censuses and Surveys, with the assistance of interviewers from Research Services of Great Britain Limited, on behalf of the Scottish Development Department.
LORD WINDLESHAM: My Lords, this sample survey is being conducted throughout Scotland to provide information about privately rented unfurnished accommodation and about the households occupying accommodation of this kind.
LORD STRATHCLYDE: My Lords, is my noble friend not aware that the information which is being gathered by visits and also by questioning the tenants is already available in the files of the local authorities, and that in these circumstances this inquiry is absolutely unnecessary and unwarranted?
LORD WINDLESHAM: My Lords, it will be known to the House that my noble friend, the Minister of State for Scotland, is better acquainted than I am with these matters. If there are supplementary questions, it might be better if he answered them.
THE MINISTER OF STATE, SCOTTISH OFFICE (LORD POLWARTH): My Lords, I apologise for not being in my place when the noble Lord asked the Question. I must apologise to him particularly, in person. I cannot agree regarding the information being available in the files of the local authority. That may be so in the case of local authority, publicly-owned, housing; but I am informed that with privately-owned rented accommodation that information is not available.
LORD STRATHCLYDE: My Lords, I am sorry, but it seems to me that my noble friend has been misinformed. I should like to ask him further, in what way does he anticipate that the housing

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situation in Scotland will be improved as a result of this survey which is intended to provide a list of privately-owned unfurnished accommodations?
LORD POLWARTH: My Lords, as I think your Lordships have already been informed, considerable changes are going on in this sector of the housing market, and if we are to introduce the necessary policies to improve and increase the supply of this housing we must have the information about it in the first place.
THE EARL OF LAUDERDALE: My Lords, is it not the case that valuation rolls contain all this information?
LORD POLWARTH: No, my Lords.

SECOND HOMES SURVEY
2.39 p.m.
THE EARL OF DUDLEY: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government:

(a) whether they intend to publish the finding of the Second Homes Survey for which questionnaires have been sent out by the Department of the Environment; and

(b) what total sum of public money has been allocated and authorised by them to meet the anticipated cost of the survey.

THE PARLIAMENTARY UNDER-SECRETARY OF STATE, DEPARTMENT OF THE ENVIRONMENT (BARONESS YOUNG): My Lords, I understand that the South West Economic Planning Council intend to publish the results of the study of second homes in the South West Region which they have asked the Economic Planning Board to undertake for them. The extra cost to public funds of the survey is not expected to exceed £4,000.
THE EARL OF DUDLEY: My Lords, I thank the noble Baroness for the unfailing courtesy of her reply. May I ask her to bear in mind that the recipients of this questionnaire—and I would tell your Lordships that I was one—would have justifiable cause for concern at some of the questions asked in the document, and also to bear in mind that if this survey
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was undertaken in the public interest, it would be very much better for the findings to be published, while preserving the anonymity of those who replied to the questions.
BARONESS YOUNG: My Lords, I should like to give an assurance that the survey was carried out upon an entirely voluntary basis and there was no obligation on anyone to fill in the form. Furthermore, all the information that has been collected will be treated as confidential and will not be passed on to any other people or other Government Departments. In view, however, of the concern that has been expressed by my noble friend on this matter, I will draw his remarks to the attention of my right honourable friend the Secretary of State.
THE EARL OF SELKIRK: My Lords, could the noble Baroness say what the word "confidential" means in this sense? It means, I take it, that the information will not be published. Does it mean that the forms will be confined to the narrow circle of the Department of the Environment?
BARONESS YOUNG: My Lords, the information that is collected on the forms will be published, but the actual forms themselves will be destroyed. The only thing available to anybody will be what appears publicly.
LORD LEATHERLAND: My Lords, does not the noble Baroness think that it would be much better in the interest of the country if the Government, rather than conducting social surveys and sending out questionnaires, got down to the job of encouraging the building of more houses instead of cutting them down, as they did last year, to the lowest total for 10 years?
BARONESS YOUNG: My Lords, a great deal of interest has been expressed on the subject of second homes, and this survey was undertaken to try to obtain some information about them.
LORD LEATHERLAND: My Lords, does not the noble Baroness think that some attention ought to be given to the people who want first homes?
BARONESS YOUNG: My Lords, a great deal of attention is being given to that subject.
VISCOUNT ST. DAVIDS: My Lords, did the noble Baroness say that this survey was costing only £4,000? How is this done? What can one buy for £4,000 nowadays?
BARONESS YOUNG: My Lords, the noble Viscount did hear me correctly. I said in my original Answer that the cost was not expected to exceed £4,000.

MIDDLE EAST PEACE-KEEPING FORCE
LORD SHINWELL: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether any request has come from any of the parties concerned actively in the Middle East conflict that British forces should take part in a peace-keeping force.
EARL FERRERS: My Lords, the composition of the peace-keeping force which in our view will be needed to guarantee a Middle East settlement will be a matter for the negotiations which have yet to begin. It would be premature for the parties to solicit participation in such a force, when the basic principles have yet to be considered.
LORD SHINWELL: My Lords, is that not an astonishing reply? Is it not rather strange that Egypt has not requested Her Majesty's Government to provide a contribution to the peace-keeping force, in view of the repeated statements by his right honourable friend the Foreign Secretary of Her Majesty's Government's anxiety to make a contribution? Have we annoyed the Egyptians in some fashion? If so, what is the trouble?
EARL FERRERS: My Lords, the only way in which we can effectively contribute to such a force is if we are asked to do so, and it is the desire of Her Majesty's Government to play their full part in such a force if they are requested.
LORD SHINWELL: My Lords, does the noble Earl understand that I fully agree with him about that? But can he explain why it is that his right honourable friend on more than one occasion (I have read about it in the newspapers)
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has almost fallen over backwards in his desire to inform Egypt, and presumably those associated with Egypt, of Her Majesty's Government's anxiety, the anxiety of this country, to make a contribution; and yet there has been no reaction? Surely there must be something wrong.
EARL FERRERS: My Lords, as the noble Lord, Lord Shinwell, knows, it is a long-term business to set up a peace-keeping force in that area, and consultations and discussions have yet to start. I suggest to the noble Lord that it would be premature for any country to say that they would be part of a force if in fact the force has not been discussed or decided upon by the countries mainly interested.
LORD BLYTON: My Lords, is the Minister aware that as Britain is not persona grata with Israel, in the light of that fact they will not tolerate British troops in any peace-keeping force in the Middle East?
EARL FERRERS: My Lords, I suggest to the noble Lord, Lord Blyton, that that is a slightly premature speculation. We must wait to see which way events go. All I would refer the noble Lord to is the fact that if called upon to take part in such a force, we shall be happy to do so.
LORD WADE: My Lords, is it not a fact that it is for the United Nations to decide upon who should be called upon to take art in a peace-keeping force?
EARL FERRERS: My Lords, that may be so; but first of all you have to get the consultations started. Everyone is at the moment engaged on this very point; that is, who should take part in these consultations. I suggest that it is quite impossible to decide who should be part of a force until you have had discussions to consider the possibilities of such a force.
LORD WIGG: My Lords, is it not a fact that the Foreign Secretary has learned by experience that his broadcasts and his actions following the Suez debacle have shown that it is necessary for this country to be on terms of at least understanding with the Islamic countries, including Egypt; and, having learned his lesson, he realises now where the interest

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of this country really lies and, despite what is being said, is following that policy out, certainly with my wholehearted support?
EARL FERRERS: My Lords, it is the undoubted desire of my right honourable friend to see that, above all, peace comes to that part of the world. We recognise that there are many different factions, some of them it sometimes seems almost irreconcilable. It is in order to try to reconcile these different factions that my right honourable friend is carrying out this policy.
LORD SHINWELL: My Lords, is the noble Earl aware that, astonished as I am that Egypt has made no request for Her Majesty's Government to make a contribution, I am even more astonished—and I should like his comment about this—at the statement made by my noble friend Lord Wigg?
EARL FERRERS: My Lords, I am astonished at the fact that the two noble Lords are taking totally opposing views. It merely brings into sharp relief the problem which my noble friend has in trying to steer a straight course.
LORD SLATER: My Lords, can the noble Earl say what intimation Her Majesty's Government have been given that they will be invited to take part in any consultations that take place?
EARL FERRERS: My Lords, we have no guarantee of that at all.

CROWN AGENTS
EARL ST. ALDWYN: My Lords, with the leave of the House, my noble friend Lord Ferrers will be making a Statement at a convenient moment after 3.30 p.m. on the future of the Crown Agents.

NORTH SEA OIL AND GAS
2.48 p.m.
LORD BALOGH LORD BALOGH rose to call attention to the Report of the Public Accounts Committee of the House of Commons on North Sea oil and gas; and to move for Papers. The noble Lord said: My Lords,
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I beg to move the Motion standing in my name. I cannot complain. Lucan said in one of his better verses:
"Victrix causa deis placuit sed victa Catoni".
If my case at the moment is still a losing one, or partly a losing one, I cannot complain about the Goddess Fortuna, for my name and my Motion have turned up for the third time on the top of the list, and at least somebody favours me upstairs. I want to call attention, now reinforced by one of the most brilliant Reports ever written by a House of Commons Committee, to my complaint, and to call attention to one of the most scandalous and costly derelictions of duty by Ministers and their official advisers to safeguard like good trustees, just like ordinary businessmen, the interests and the wealth which was entrusted to their care.
My Lords, before I analyse this situation, may I eliminate the newest of red herrings which overwhelms the scent by its own odour? This is the talk of the renewed and increased need (and justification of past misdeeds) to appease not merely the Arabs but also the oil companies because of the oil shortage threatened by the Arabs' sabotage of the West. Nothing could be more misguided. The advantage of the North Sea, with its political stability, is tremendously increased as a result of Arab confiscations, restrictions and other chicaneries. With their hold on Arab oil steadily weakening, the oil companies, the international giants, planning in the long run, must know that the best way would obviously be to exploit as much as they are allowed of Arab oil and keep as much British oil in reserve as possible. The higher the price which we allow them to get, the greater the cash flow from the North Sea, the less they are then dependent on North Sea production and the more they will restrict it. If then the new argument is that we should be nice to the oil companies because of the Arabs, that is just one more of those things which have beset sanity over this question in the last five years. I do not speak in a partisan spirit. This is evidenced by the fact that my Front Bench did not feel inclined to support this complaint of mine or to support the Report of the Committee, and none of them is on the speakers' list. I quite see their point.
LORD SHEPHERD: My Lords, I am sorry that the noble Lord has spoken in that way. I hope he will appreciate that we from this Front Bench have taken part in two recent debates on energy. There are two debates this afternoon, and we felt that if we were to put up two Front Bench speakers on both debates it would be rather unfair to other noble Lords who might want to take part in the debates. It is certainly no reflection, either on the noble Lord or on the importance of the subject he is raising.
LORD BALOGH: My Lords, I am sure it is not a reflection on me. As I say, I do not speak in a partisan spirit. Some of the Labour Ministers, and especially Mr. Marsh, have been as much, and perhaps more, responsible for this scandal; and he at any rate was well advised as a Minister—I was one of the advisers! They were warned at every step what to do and what not to do. One would expect Mr. Davies, who has spent a large part of his life looking at the world from the up-turned nozzle of a petrol tank, to do this sort of thing, but I very much regret that Mr. Walker, who is, after all, an extremely precocious millionaire of his own making, should in this case have been persuaded by his officials.
However, just as there were, and are, bad men in this multi-million or multi-billion "cops and robbers" story, so there are also heroes; and shining there is the Report of the P.A.C., to which I should like to call attention. Shining also is Mr. Harold Lever, the Chairman of the Committee, who initiated this inquiry, and Edmund Dell, who was mainly responsible for writing the Report. The Report is important far beyond its immediate intent, vitally important though that is for Britain's future prosperity and balance of payments, as I shall show. The Report marks a step towards effective democracy, inasmuch as it was the elected members of that Committee who insisted that this complicated case should be thoroughly investigated and aired. This created a precedent, a warning to bureaucrats that their follies would not go unnoticed and unpunished.
I shall not go over the details of the case; I have done so before and now evidence is available in this extremely
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interesting Report. That the Report should be so successful shows that cross-examination of experts, of official advisees, by experts is absolutely essential. The only thing I find extremely odd and rather objectionable, if I may say so, is that the P.A.C. has no professional advisers except the Civil Service, some of whom are retired and some of whom have obviously been engaged in this business itself. I shall not pursue that matter further. In the cross-examination it is shown in paragraph after paragraph of the Report that Ministers and, even more so, Parliament, have been deliberately and grievously misled about facts. First, they have been misled about the probable importance of the finds; secondly, about the steady decrease of risk; thirdly, about the sufficiency of legal safeguards of the interests of the nation; fourthly, about the likely profit rate which will result; and fifthly, about the possibility of taxing some of the profits. They were also misled about the horrible gash, the chasm in our tax laws, contrary to the recommendation of the Inland Revenue, through which even the insufficient tax-take would have drained, if not cascaded, away. While I sympathise with the argument that profits earned through a successful strike must carry losses arising from the unsuccessful ones, there is a limit beyond which profits become a scandal.
Finally, whereas in the case of gas there were adequate powers to secure the interests of the nation, these powers were deliberately disregarded and thus by now must be considered as discarded altogether. These powers lay in the right of the Gas Council (now the Corporation) to appeal to the Minister if, in their opinion, a reasonable price was not offered by the oil companies. This implied, among other things, the right to inspect the books to ascertain the true situation. As we have heard from the noble Lord, Lord Drumalbyn—and a more courteous sparring partner I cannot imagine—they do not know: nobody knows. The Committee says that no cost figures have been communicated. This is the more astonishing since the two public corporations are members of two of the most important consortia. Nevertheless, no figures are available to the Minister. What on earth do the Ministry think they are doing?

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I shall now examine my case under these headings. Relating to the importance of the finds, I will quote the best United States oil banking estimate—and one ought to go not to the oil companies but to the bankers who are in touch with the oil companies, because the oil companies must disclose the truth (if ever they do disclose it) to their bankers; and these bankers are candid. There is a much greater openness of government in America, as we see from the Watergate case, than there is in this country. I was in Texas last week, preparing myself for this debate; and there is no doubt they think that by the end of the 1970s there will be available 4 million barrels a day, or 200 million tons a year. We have now screwed up the Ministry from 50 (or 25 as they thought at first) to 100. In their Report it is 135, and the true figure is 200. The same sort of understatement, of course, occurred in the case of gas. At the most conservative estimate this gusher should last for at least 20 years. It seems a simple matter of arithmetic to calculate the amount of wealth that this represents. Even prior to the Arab attack upon Israel at only 3 dollars and 5 cents a barrel the total wealth available would be roughly 95,000 million dollars—equivalent to something between £30,000 million and £40,000 million. Lately the price has doubled and it will probably rise still further. In all probability, it will never return to the pre-Israel war level. At this rate, oil alone will be worth between 150 million and 200 million dollars, or up to between £80,000 million and £100,000 million. This is almost twice our national income. It is vastly in excess of anything which we could have hoped for, and we did not take steps to use it prudently.
In all public relations exercises the immense cost of getting this oil has been stressed. The oil production costs in the North Sea, with the inclement climate and restricted working year, are very much higher. But let us keep our sense of proportion. The ex-Chairman of Shell, Mr. Barran, estimated—and a sigh of unbelieving astonishment went up in the world—that it would cost a £1,000 per barrel a day to establish these oil fields. This is something like 15 times the cost elsewhere. What we ought to ask is: how do these costs compare with the value of
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the thing found? Here it is very interesting. If we say that the cost would be £4,000 million for 200 million tons, what we receive for 200 million tons a year would cost something like £2 billion or £3 billion per year.
Some doubt has arisen even about this estimate, partly because it does not take into account the fact that we learn by doing it. Therefore the cost of repetitive mechanical exercises such as laying pipes, boring holes, and so on, decreases—learning by doing. Also, in the case of Ekofisk more has had to be revealed to the unsuspecting public than is revealed here. Figures were quoted for the cost of Ekofisk which are, roughly speaking, half the figure given by Mr. Barran. But why quibble about a few thousand million pounds? We are confronted with figures of between £60,000 million and £80,000 million over 20 years. The cost figure of £4,000 million or £8,000 million does not matter. The fact is that nine-tenths, maybe only 85 per cent., or only 80 per cent., will be profits. Even those figures are so colossal as to numb the mind. This has also been confirmed by the Public Accounts Committee. They said that each dollar per barrel, or 7 dollars per ton, adds some 1·4 billion dollars—or some £500 million—to the profits of the oil companies. This is what we have to take into account. We must familiarise ourselves with these figures.
Up to date, the consequences on the oil profits of the miscarried Arab attack would therefore amount, if we were producing at the 200 million tons rate, to £1,725 million per annum. There are well-documented estimates by Mr. Odell which are much greater, but I do not want to base my case on them because the case can be made without them. This absolute refusal to accept the reality when it is so favourable to Britain—especially Scotland —has led to terrible consequences because the Ministry were anxious not to publish high figures, not to be proved wrong on overestimates, and therefore they underestimated the situation. I can see that, but of course it had, as I have said, terrible consequences. First of all, it left British industry, which was accustomed to believing British official statements, wholly unprepared to profit by the spin-off. Even now we have hardly any major scheme which has been landed by Britain. We build ports, we make pipes for the

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land line; but when it comes to underwater pipes—these tremendous structures —what has not gone to Japan and France has gone to Holland and Norway.
Ministers were misled about the risks involved. This comes out very clearly in the cross-examination of the Permanent Under-Secretary, who said that the Minister was not informed when the second lot of the fourth round was let. On the first lot something like £46 million had been received. This had terrible consequences. If the true magnitude of the find had been realised, obviously one would have also realised that the risks were steadily decreasing; and the chances of finding oil were steadily improving. Did the Ministry at this time stiffen the terms against oil companies as they were absolutely entitled to do? Not at all. They gave better terms when the risks diminished. Insistence on having public corporation participation in these ventures steadily decreased. We screwed it up to 50 per cent.; there was an enormous heave during the Labour Government, and then it collapsed. Decreasing risks and increasing profits: this is the tale of the complete lack of economic knowledge of the Ministry.
May I, in this context, mention one absolutely fantastic sideline? The Secretary of State, in an exchange which I will not quote, said to me that he thought it would be a good thing to pay the French high prices for gas because that would prevent its misuse. Imagine, my Lords! Ever since Ricardo, some 170 years ago, we knew what rent was, and we knew that natural resources carried rent with them. The rent can be appropriated by the producer; it can be appropriated by the consumer, or by the State. But the price to charge to the consumer of a natural resource which is in a natural monopoly situation has nothing to do with what is given to the oil companies. The Frigg field—a very apt name !—was given away to the French under conditions which are nothing less than scandalous. One cannot even say that it was "Pompidou's poodle"—I do not know what sort of animal it was. As the oil countries became more and more aware of the importance of their natural resources and the dependence, at any rate in the short term, of the Western civilisation on oil, they took increasingly strin-
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gent steps to secure their interest. They took the following steps. These were the Arabs about whom the Foreign Office always said, "Don't let us be beastly to the oil companies, let the Arabs learn from us." They thought the Arabs could not invent tortures for the oil companies; they can invent tortures for almost anything.
The first of these safeguards was the so-called posted price. Most large oil companies are wholly integrated; that is, they control every single aspect of the process, from crude oil to the pump. Naturally, very little buying and selling of the crude oil or intermediate products takes place. They are transferred at the price agreed within the company, and that price will be so arranged that, wholly legitimately and legally—I must say I have no complaints against oil companies whatever: they behave like ordinary good businessmen, and very good businessmen they are—the oil companies minimise the tax liability. So should I; of course I should; everybody would, legally. The posted price therefore is an estimate of what the price should have been had there been an open market, had there been transactions between willing buyers and willing sellers. It is an absolutely essential device, even if they plead it has been misused on the Gulf to squeeze more money out of the West on the basis of the monopoly dependence of the West on oil. There is no safeguard of this type in our system at all, except for gas—and I will say in a minute what we have done about gas. The Norwegians have it, the Venezuelans have it, and I must say I should not mind being called a blue-eyed Arab, as the Norwegians are called now in intimate circles, if I could be certain that my country's interest would be safeguarded.
The second way of safeguarding the nation's interest is through acquiring participation. This can be done in two ways: you can participate after the event or before the event. Participation after the event was carried out by the Norwegians; that is to say, they have the right to finance from the production point onwards, investment into production facilities. The finding of the oil is left to the oil companies; the oil is found, and then the State participates. I have not seen that the Norwegians have

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been, so to speak, intimidating the oil companies. They have recently had very good offers indeed for their oil. It would also ease the finance problem because, of course, in the North Sea the exploration expenses are much less than the exploitation expenses, and in the exploitation expenses the State would participate on the basis on a borrowing rate of, shall we say, 6½ per cent. or 7 per cent., in the Eurodollar market of 10 per cent., and will get something like 60 or 70 per cent. per annum profit.
However, the taxation system was such that, even if they had incurred liability to corporation tax, they would not have to pay tax. Why not? Because the oil companies have been, as a result of these to-ings and fro-ings in the Gulf, paying out very much higher nominal prices to the oil States than they were receiving internally from their refineries and their transportation ends; that is to say, there was a tax loss accumulating, and the amount of tax loss accumulated by last year amounted to £1,500 million and it was accumulating at that rate well before the war at £470 million. It must now be accumulating at some colossal figure, because what was lost in quantity has been much more than made up in price—maybe £1,000 million per annum. So the whole of the evidence given by the Ministry to the Committee was completely misleading. They said that by 1980 at least full corporation tax would be paid, and only the most close cross-examination disclosed that that was not the case. Indeed, the Chancellor of the Exchequer at the last Budget promised that he would stop this gulf, this chapter, this sink-hole of our future. As I understand it, there are certain difficulties which even the noble and learned Lord the Lord Chancellor, it seems, finds it difficult to overcome. I must say I am very astonished at that. Nevertheless, I think, on the whole, that perhaps we shall get something and we shall save some £6 billion to £8 billion there. So far as cash receipts are concerned, I have I think justified my naturalisation as a British citizen.
Finally, there is royalty. This is fixed at 12 per cent. This is either too much or too little: it is too much for small fields and too little for large fields, and it ought to be changed just as we should have a type of special agreement on the Nor-
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wegian example. Let me now deal with another red herring. Very much has been made by the oil companies and their supporters not only of the risk, which as we have seen was steadily decreasing, but also about the true value, the low value of the finds. This was achieved with a very neat trick. They applied the so-called discounted cash flow calculation to the oil finds. The discounted cash flow is calculated on how much you sell each year; and you discount that figure for the present and add the thing together and, according to them, that is the present value of the find. Now, of course, if you do this in the case of a motor car or machine tools, which in five years' time will be absolutely obsolescent or worn out, this is a perfectly legitimate way of choosing between investment, but you cannot do this to an oilfield of £60 billion to £80 billion in value and therefore write off the whole of the value of all the oil in the ground after ten years—because at 15 or 20 per cent. discount rate you get one hundred parts by 15 years.
There was a very interesting demonstration of this fact when Keynes bought a house for King's College. He bought it with a 998 year lease and the Ministry of Agriculture in their expert economic knowledge asked him to provide a sinking fund; so Maynard sent a halfpenny stamp to their great expert and said, "My dear Sir, will you apply in 2865," or whatever it was, "the sinking fund as to £1,000 for the house and as to £3,365,989,201.0.11½d to the reduction of the National Debt." This is the sort of method which the oil companies want us to adopt with the oilfields. I must say I do not go with them. It may be that the noble Lord, Lord Drumalbyn, will give better examples than this. The value of the oilfield has to be estimated by seeing how much it costs to develop adding the rate of interest, and then seeing how many years gusher will completely amortise it. On that basis, of course, the profit rates which would come, even if 56¾ per cent. tax and royalty is taken into account, would still be 50 per cent. or 60 per cent. per annum. I should have thought it has to be renegotiated.
What is the solution? I very much hope that even at this late hour the oil companies, if not the Government, will reflect on the injuries inflicted on Britain

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by the ignorantly reckless and heedlessly stupid bureaucracy, and freely offer a renegotiation of the licences to bring them in line with the reality of the relationship between the oil-producing host countries and the companies: a reality as seen by even the most primitive Arab sheikh. I should sincerely like to avoid at this stage anything like nationalisation. The record of the Ministry and of the Gas Council and the Corporation is a severe warning to enthusiasts of nationalisation who hope that all would be well by taking over a complicated and technically extremely difficult operation, when the Ministry's total ignorance has been well demonstrated and the Corporation as a purchasing agent has visibly acted like an inefficient exploiting private monopoly.
The aims of the negotiation should be to secure, apart from the Corporation tax, which if the assurance of the Chancellor of the Exchequer can be believed may be effective, a variable royalty between 5 per cent. and 15 per cent. so as not to interfere with the exploitation of smaller finds. There should also be a carried interest for the State of between 30 per cent. and 60 per cent., as in Norway with the State financing its share of investment.
It would be essential to concentrate the participation both in the existing consortia and in the consortia to be formed in the future to a special Hydrocarbon Corporation directly owned by the State, which should not merely serve as a training ground for British management and technicians but also be the recipient of the participation payments which it must hand over to the Treasury. It will not do to subsidise gas and coal in this indirect way by the cession of the participation of the State in profit-making undertakings in oil. If the companies should not prove willing to renegotiate, then a barrelage tax should be imposed. This should not be a fixed barrelage tax, as this would severely discriminate against small fields. It should be a variable barrelage tax based on the cost of the various fields and the current price. I do not believe that in this respect the Committee's recommendations could not be improved on.
Finally, I must ask, as everybody who has knowledge of this affair must ask: Why did this happen? I feel it is due
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partly to ignorance and partly to influence. The ignorance partly comes from the Arabists in the Foreign Office, who since the 1930s have been preaching the doctrine, "Don't let's be beastly to the oil companies"—I have discussed that—and partly of course there is the ignorance of the Petroleum Department. Secondly, there is influence. The British Civil Service is singularly free, relative to other countries, and with only a few lapses now and again, of direct corruption. No specific douceurs are paid for specific compliance. There is, however, in this country, a type of impermissible influence through the increasing tendency (most lately shown by the Crown Agents) of civil servants joining private companies in whose affairs they have been active in their official job, do not wish to go into this matter further. I am sure this has to be looked at most severely, and I beg whoever is the Minister responsible for the Civil Service Department to take this matter very seriously indeed. Its importance cannot be overstressed in a situation in which the State increasingly interferes and directs private interests.
If nothing else, this lamentable story also proves ad nauseam that the creation of monster Ministries must be reconsidered. They were set up to reduce the number of Ministers in the Cabinet. This is not a valid reason. It was an expensive mistake. I do not believe that there is a man alive, or even that a man ever existed, who could administer the Department of Trade and Industry in a satisfactory manner. Like a cancerous growth which has reached into the vitals of the State, it must be excised and divided. My Lords, I beg to move for Papers.
LORD CLIFFORD OF CHUDLEIGH: My Lords, before the noble Lord sits down, I wonder whether he realises, in fairness to his own Front Bench, that two of them took part in my debate on this subject a fortnight ago: the noble Lord, Lord Hoy, and the noble Lord, Lord Shepherd. Further, the noble Lord, Lord Balogh, was the only noble Lord I wrote to before that debate who had not even the courtesy to reply. Finally, I am very pleased to see the noble Lord, Lord Polwarth, here to-day. I know he was in London a fortnight ago. If the noble Lord, Lord Balogh, has read that debate he will see that I went some way on the points he has made.
3.26 p.m.
LORD HARVEY OF PRESTBURY: My Lords, both Houses of Parliament have had a number of debates on this very important subject, and I have no doubt that many more will follow in the years ahead. Following the noble Lord on successive Governments with their responsibility for the terms of exploration with the oil companies, it occurred to me to wonder whether the noble Lord, Lord Balogh, in his period as adviser to Mr. Harold Wilson, had a hand in advising him on what ought to be done. I do not know. He did not declare an interest in that respect. He did not have to.
LORD BALOGH: My Lords, I beg the noble Lord's pardon and I am sure it is my English which is responsible. I thought that in my speech I specifically dealt with that point.
LORD HARVEY OF PRESTBURY: My Lords, if the noble Lord did, I beg his pardon. I tried to listen and follow, and I did not actually hear this point, but I shall read it, I hope, in Hansard to-morrow. But I think that the Public Accounts Committee Report is really quite a fantastic Report. One may not agree with all of that Report, but there is a tremendous amount of detail in it. It was encouraging to see that in the 1971–72 Account there is included over £45 million in respect of application fees for the granting of licences.
The Committee recommend that:
"The Government should take action substantially to improve the effective tax yield from operations on the Continental Shelf, and should consider among other methods, the possibility of imposing a system of quantity taxation."
Something clearly needs to be done to get a better return from this national asset by tightening up on the legislation on oil taxation and the terms of the future licensing of oil properties I think that the noble Lord will go with me in that respect.
However, it is understandable that before any discoveries had been made, and when the potentialities of the Continental Shelf were unknown, the initial system of licensing in 1964 should be liberal and financially attractive, as an encouragement to the oil companies to embark on exploration and development in highly risky and inhospitable waters. Nobody knew; there was very little to
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go on. There had been discovery of gas in Holland off the Dutch coast, and that was all there was. But in my view there is a great need for the oil companies to have more than adequate finance for investment. I question, even taking into account all their wealth, whether they have the finance, and Governments have got to be involved. I do not think Governments should undertake this venture on their own, as the noble Lord said. It should not be nationalised; it is an asset which should be exploited by Government and industry combined. There is a danger that the pendulum could swing too far in the opposite and wrong direction, not only to complete public ownership but, perhaps, just as dangerous, to the point where the price exacted by the State militates against the necessary investment by the oil companies.
In February of this year, Mr. Hill, the Managing Director of Phillips Petroleum Products Limited, said:
"No company, no matter how big on paper, can continue to show the kind of meagre return on investment that a number of oil companies have been showing in recent years."
On this, my Lords, if I may expand my remarks rather more than the noble Lord, Lord Balogh, one of the best bonuses that comes out of this whole exploration is the 20,000-odd new jobs for those who are living in Scotland. That is tremendous. But it was not until 1969 that oil was actually discovered in the North Sea—only four years ago—and while one is critical about speeding matters up (and I shall have a few things to say about that later) I think great strides have been made. There were three losses of rigs in the early days and no one should under-estimate the problems. We can all cast our minds back to pictures of helicopters taking the crews off the rigs in gales, and so on.
In my view, the report is right in concluding that the United Kingdom tax revenue from Continental Shelf operations should be pre-empted by the tax demands of Administrations elsewhere in the world, and that for tax purposes capital allowances on extraneous activities such as tanker operations elsewhere should be used to offset profits on Continental Shelf operations. I think this needs to be put right. But having said that, I agree more or less with the figures, so far as we know them, which the noble Lord quoted. Something like 10,000 million barrels of

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recoverable oil (some of that to be proved) is available. That should give 2 million barrels a day by the end of this decade. It should fulfill the British requirement to something like 75 or 80 per cent., and if gas gives us 1,500 million to 2,000 million cubic feet per day then we are sitting very pretty indeed. But there should be even larger quantities than this. I am sure, from what one hears, that oil will be discovered elsewhere around these Islands.
On the other hand, I want to point out to your Lordships some of the problems which are well known, although I do not think they can be re-emphasised too often. First, the shortage of materials, not only in this country but all over the world. I heard this morning that there is a shortage of cardboard packing cases; one cannot get plaster board, chemicals are in short supply—in fact in every commodity you look for, there is a long delivery date, including steel. The Government must give the highest priority to this operation. It must have a top priority, as during the war when we were building Spitfires and Hurricanes. I believe we have to apply the same methods to directing our energies to the North-East. These shortages of materials are bringing about delays in construction. Then there are the difficulties with planning permission and a whole lot of political problems thrown in for good measure. One must add to this the fact that drilling has taken place in depths of water previously not known. Gales of over 100 m.p.h. at the beginning of this week damaged two rigs.
Furthermore, in East Scotland there is an acute shortage of housing. Here I would say to my noble friends that the first priority must be to build more homes on the East coast of Scotland, because it the homes are not there, there will be nowhere for the workers to live. I also foresee a problem in getting workers. Not many of them want this, perhaps dangerous, dirty work, stuck away up in the North-East of Scotland. I hope they will be well rewarded, but, if not, could not men be recruited from Southern Europe? In my view all these things must be tackled vigorously by the Government and I should like to hear more about the planning of the details to get this operation moving. I say again that unless the houses are built we shall
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not get the workers to go there. It will be the same problem as in the South-East of England, where workers are unable to buy a home.
Taking into account all these problems and to avoid overheating the economy in East Scotland, there is no time to be lost in co-ordinating every one of these problems. There are many committees at work—I do not know how many; probably too many—and no doubt my noble friend Lord Polwarth is applying his energies to these problems. What we have seen of him here and what he is achieving is very impressive. But has not the time come for a change? I was listening to the noble Lord, Lord Robens, on the radio early this morning when he emphasised again that he thought there ought to an Energy Commission. Maybe he is right. He has had a long experience in these matters and I have a great respect for him. But I believe what we really need is a Minister of Cabinet rank who will tackle all these affairs himself and direct all his energies to it. To see this matter being run by an enormous Ministry like the D.T.I. I do not think is "on". I think we need a separate Minister to tackle the problems, to give his whole time to them and to have the ear of the Prime Minister in demanding what he requires—houses and so on.
While respecting the problems of the environment, these things can sometimes go too far. I respect them myself, and nobody wants to see the Scottish coastline ruined in the process. I think most Government Departments are aware of this, but the Government should not stop onshore developments of support facilities from taking place. We must go on with it. Far too much is at stake, including the jobs in Scotland and the other points which I have already mentioned. We have seen what happened in the United States of America, where Congress held up the laying of the pipeline in Alaska for over two years. They have wasted two years and we do not want to see that happen here.
Is enough being done in the shipyards and other yards on fabrication of rigs and equipment? It is estimated that something like 20 to 50 platforms will be required in the next ten years. Just imagine, my Lords, what it could do for the workers of Britain and our economy if a good percentage of these could be

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made in this country instead of the work having to go abroad. I should like to hear from my noble friend whether our shipyards are still accepting attractive contracts for ships and tankers instead of applying themselves to this new technology of building rigs and platforms and thus sending the work abroad?
What are the plans for additional refineries? Are these in hand at the end of the day? The Prime Minister stated only on Monday of this week that we should have a fuel shortage well into the 'eighties, and that is what we have to take to heart. There is no time to be lost. The future standards of living of our people depend upon the speed of the cutting out of red tape to ensure that in the foreseeable future the country has the energy it requires. If we deal efficiently with all these problems then I believe in Britain, with an abundance of coal under our soil and the new capital investment programme outlined a year ago by the Government, the coal industry holds out a great promise if we can satisfy the men who are working in the mines. That is thanks to Government action last year.
We have deep harbours all round our coastline. The country's technology is second to none. I believe that if we could get busy and really apply ourselves and get the right spirit among the workers and the people who are running these industries, Britain could be, in a matter of seven or eight years, one of the most prosperous countries in the world.

CROWN AGENTS: FUTURE OPERATIONS
3.40 p.m.
EARL FERRERS: My Lords, it might be to the convenience of your Lordships if I were now to repeat a Statement which is at present being made in another place by my right honourable friend the Minister for Overseas Development. The Statement is as follows:
"With your permission, Mr. Speaker, and that of the House, I would like to make a further Statement about the Crown Agents.
"In my Statement last year I said that I welcomed the findings of Sir Matthew Stevenson's Committee that
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the interests of the Crown Agents' Principals and others would best be served by the continuation of the whole range of services which the Crown Agents provide. I also accepted recommendations that the status, structure and responsibility for the Crown Agents should be clearly defined, and that they should bear an appropriate liability to taxation.
"The Crown Agents originally came into being primarily to provide certain financial and purchasing services in Britain for countries which were then dependent. The range of their services, conducted on a non-profit-making basis and contributing to the development of the countries concerned, has been progressively made available to a large number of countries, most of them now independent. The scope of their activities has also been extended to cover a wide range of technical and financial services.
"The Crown Agents have adapted their organisation and structure over the years in order to meet these widening requirements, and in particular have established certain of their services on the basis of fully-owned subsidiary companies staffed by Crown Agents personnel. In the light of the Stevenson Report, I have agreed that this process should be extended by the establishment of further wholly-owned subsidiary companies to deal with the specialised financial services of the Crown Agents. The boards of management of those companies will include non-executive directors appointed after consultation with me, as well as executive directors drawn from the Crown Agents staff. The Crown Agents intend that the investment policy pursued by these companies should be generally in accord with the trustee analogy and should be fully consistent with their name and standing. These subsidiary companies will be subject to taxation in the normal way, and arrangements are also being made to bring any profits which may be made by the Headquarters' organisation itself within the scope of normal taxation.
"The Crown Agents will, as in the past, be appointed by the Secretary of State, or by myself acting on his behalf, for the purpose of carrying out the

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various services on behalf of the overseas Principals. They will thus remain answerable finally to Ministers, but it is not my desire or intention to disturb the traditional practice under which the operations of the Crown Agents on behalf of their overseas Principals have been discharged on a basis of nonintervention by Ministers.
"In the future, as in the past, the scale and scope of the Crown Agents' operations will depend on the confidence which overseas Governments and authorities repose in the organisation. That confidence is fully reflected in the present scale of operations, and I am particularly anxious that the arrangements I have mentioned, which are designed to produce a more readily comprehensible structure and to define the various functions more clearly, should in no way disturb that confidence. I have made this clear to the main overseas Principals when informing them of the outline of the new arrangements.
"Finally, I should once again like to take this opportunity of thanking Sir Matthew Stevenson and his Committee for their Report, and of sincerely endorsing the tributes which they paid to the work of the Crown Agents."
LORD SHEPHERD: My Lords, the House is indeed indebted to the noble Earl for repeating this important Statement. I am sure he will be the first to agree that it raises matters of considerable importance, not only so far as Her Majesty's Government are concerned, but also with regard to the many independent countries and territories which use the services of the Crown Agents. Therefore perhaps we may at some suitable time have an opportunity to debate this Statement and the proposals of Her Majesty's Government.
I would like to confirm on behalf of my noble friends the full confidence that we have in the Crown Agents. Perhaps this is best illustrated by the very size of the business that independent territories place with the Crown Agents, running into some billions of pounds a year. There have been difficulties, and those occasions are still fresh in our minds. Whether the proposals in the Statement will satisfactorily deal with
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them and prevent their recurrence I am not sure. I must say that I am still unhappy at the idea of the Secretary of State appointing the Crown Agents, and now the non-executive and executive directors to the subsidiary companies. Of course, at the end of the day they are finally answerable to the Minister but, as I understand it, the Crown Agents are not required at any stage to report to the Secretary of State. I appreciate the difficulty, but this is one of the areas where I think it would be well worth while to consider whether we can have greater accountability of the Crown Agents to the Minister without in any way infringing the obvious freedom that they require in doing business on behalf of their overseas clients.
May I ask the noble Earl to say a little more with regard to the trustee standards that the Government would expect of these subsidiaries in their investment programme? If he could give further information perhaps some of our doubts might disappear. However, I think this is not the occasion when we should pursue this matter too earnestly with the Minister, but we should seek an opportunity of debating the proposals at a later stage.
LORD BEAUMONT OF WHITLEY: My Lords, I, too, would thank the noble Earl for repeating the Statement. I am sure that it represents a step forward, but I am not sure whether it is a sufficient step forward. The one question I should like to ask concerns a point which was not made in the Statement but which I feel should have been considered. Have not the Government considered again the question of the name of the Crown Agents? Is it not very wrong that a body which, among other things, trades in arms, and which is accountable in its trading only to its clients, should appear to the world at large to be an agent of Her Majesty's Government? Is it not true that this title now no longer bears any relation seriously to their function? If the object of some of the changes is to make the whole set-up more comprehensible, as the noble Earl said, would not a change of name help? Finally, do the Government not remember the extreme embarrassment caused during the Nigerian civil war by the misunderstanding as to the name and nature of the

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Crown Agents? If they have not already considered this point, will they not do so fairly soon?
EARL FERRERS: My Lords, may I reply first to those two noble Lords? I would thank both the noble Lords, Lord Shepherd and Lord Beaumont, for what they have said. I agree with the noble Lord, Lord Shepherd, that this is probably not the right time to go into too much detail with regard to the Crown Agents, both in reference to what their propositions are in the future and to any details with regard to the past. It is in order to try to put them on a new and better footing that my right honourable friend thought it prudent to make this Statement to make it clear what the situation is.
The noble Lord, Lord Shepherd, wondered whether the Crown Agents should be more answerable to Ministers. Of course, the present pattern is to be altered slightly by incorporating further operations of the Crown Agents to provide a more suitable structure while still retaining scope for flexibility and adaptation. This should enable the Crown Agents to discharge the responsibilities they have accepted on behalf of their overseas principals. Of course, constitutionally the Crown Agents derive their status from the Crown and are charged with the responsibility of acting as agents to their overseas principals. The overseas principals employ such of the Crown Agents services as they desire, and the Crown Agents are answerable to them for executing their commissions. In that respect, the noble Lord will realise that answerability to the Crown for things for which they are directly answerable to their principals could cause problems.
The noble Lord also said he would have liked more information with regard to the analogy of the trustees to which I referred. Quite honestly, the best I can do in answering that point is to draw attention to the actual words used in the Statement, because this is important:
"The Crown Agents intend that the investment policy pursued by these companies should be generally in accord with the trustee analogy and should be fully consistent with their name and standing."
While I accept the noble Lord's concern over this point, I think that now would not be the right moment to go into great
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detail as to how this should generally be done.
The noble Lord, Lord Beaumont, said that "Crown Agents" was the wrong name, for the reasons he gave. One accepts that the Crown Agents are in a unique position in this respect. I would tell the noble Lord that it is not the intention to change the name, and I would suggest to him that if we did change the name, which is well known in many countries throughout the world, and well respected, the result would be less advantageous rather than more advantageous.
3.50 p.m.
LORD PEDDIE: My Lords, as one who has put down a series of Questions over the past year or more relating to the activities of the Crown Agents and their lack of public accountability, I welcome this Statement. I was particularly interested, as was my noble friend, in the statement made that investment policy would be in accordance with a trustee analogy and fully consistent with their name and standing. That, I think, is the whole "guts" of the Statement that has been made. I appreciate the answer given to my noble friend, that is not possible to give a full description of precisely what that means. I take it at its face value, and I welcome it. At the same time I would appreciate, along with my colleagues, the opportunity of a full-scale discussion in this House on the whole range of activities of the Crown Agents. I need say no more at this stage. I think it is indicative of the influence of both Houses that they have directed attention to this organisation, which is capable of doing great good work but, due to the lack of adequate public accountability, has on more than one occasion, in my opinion, operated in a manner that runs counter to the Government's broad prices and incomes policy. Therefore I join with my noble friend in urging that at the earliest possible moment opportunity be given to this House to have a full discussion of all the implications of the Stevenson Report.
EARL FERRERS: My Lords, I appreciate the interest which the noble Lord has shown in this subject, and indeed his knowledge of the whole situation. I am quite certain that if he and the noble Lord, Lord Shepherd wish to consider the possibility of a debate on this matter, it

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can be arranged through the usual channels.
THE EARL OF SELKIRK: My Lords, may I, as one who raised the question for the first time, I think in either House, two and a half years ago, on the whole congratulate the Government on the speed with which they have acted. It is a very complex question—I recognise that; and I have always recognised the value of the work of the Crown Agents. I am not clear, however, what is the nature of the responsibility they are to have in future. I do not know whether the Stevenson Report is to be published. Are we going to have a White, Paper? I would have thought it impossible to give freedom of action and at the same time have complete Ministerial responsibility. I think it is quite right that these should be separated; I accept that. But it was not at all clear from what the Minister said exactly how that was going to operate. I would make one other point. I do not altogether approve of the extension of Crown patronage which seems to come into this. I think it is probably rather a pity and, I would have thought, quite unnecessary. I would, frankly, have liked to see some body of trustees to whom they would be responsible, and I think, too, with some legal personalities. I do not know whether the noble Earl can add anything at this time, but I think it might be worth while to have a further discussion later.
EARL FERRERS: My Lords, again the points my noble friend has raised are the kind of points that could much more easily be discussed in the type of debate which has been mentioned. I would tell the noble Earl, Lord Selkirk, that the Stevenson Report will not in fact be published because of the positions of the overseas principals with whom the Crown Agents are in a relationship of confidence. Clearly it would be difficult, when consultations have gone on between the Crown Agents and their principals, for a Report which took these matters into account to be published. Nor is it the intention to publish a White Paper, because again there are responsibilities between the Government and the Crown Agents which also have degrees of confidentiality. The purpose of
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this Statement is to indicate, as best possible, the lines that will be taken and the way in which the Crown Agents will operate in the future.
LORD WIGG: My Lords, would the Minister be good enough to tell us whether the status of the staff has altered, whether there will be any redundancies, and whether the staff associations concerned have been consulted? And would he give us an assurance that one of the reasons which have actuated the Government to take these steps is not that they are doing what Lord Gardiner suggested yesterday was being done with the Land Registry, that having given a promise at the General Election to reduce the number of civil servants this is the way they are bringing it about?
EARL FERRERS: My Lords, I can assure the noble Lord, Lord Wigg, that nothing in the Statement changes the position of the staff employed by the Crown Agents.
LORD BALOGH: My Lords, will the noble Earl tell us whether, in future, Estacode, however inadequate it is, will apply to the personnel of the Crown Agents?
EARL FERRERS: My Lords, I repeat that nothing that has been said in the Statement will affect the position of those employed by the Crown Agents.
LORD BALOGH: My Lords, is it not true that the lack of such regulations has affected the operations, unfavourably from my point of view, of the Agents.
EARL FERRERS: My Lords, I will certainly look into the point which the noble Lord, Lord Balogh, has raised, and if I have not covered it satisfactorily I will write to him.
LORD BARNBY: My Lords, in view of the very large sums of overseas money that are normally on deposit with the Crown Agents, and therefore the concern about the relationship of sterling to other currencies, can he say whether these large sums, which have suffered such loss by devaluation in the past, now attract the same partial guarantee which is attracted by certain classes of other foreign deposits in this country—that is to say, guarantees of indemnity by the Government in view of possible loss?
EARL FERRERS: My Lords, I think that is a question of detail with which I should not like at this particular juncture to get involved. But I can assure my noble friend that the work which has been done by the Crown Agents in respect of overseas principals will continue.
LORD WIGG: My Lords, would the Minister be good enough to answer the second part of my question and assure us that no member of the staff is in danger of redundancy as a result of the change in Government policy?
EARL FERRERS: My Lords, what I said to the noble Lord, Lord Wigg, was that their situation would not be changed as the result of this step, but I certainly would not be prepared either to confirm or deny that there would be any changes in actual management.
LORD WIGG: My Lords, is the Minister saying that, in taking a step of this kind, the Government have not consulted the professional organisations concerned, and are so regardless of the fears of the staff that there may be redundancy that to-day, on behalf of the Government, he cannot say whether there will or not be redundancy? Is that the way to run a railroad?
EARL FERRERS: My Lords, it is certainly not the way to run a railroad. What I was suggesting to the noble Lord was that, in view of the concern which has been expressed over a number of months, the Statement indicates the way in which the Crown Agents will be run in the future, how certain areas are now becoming incorporated, as opposed to being just under the auspices of the Crown Agents. I would not be prepared to comment in any detail—and I do not think the noble Lord would expect me to—with regard to the individual day-to-day management or employment of labour other than to say that anything I have said in the Statement does not alter the position of those who are employed by the Crown Agents.
LORD BROCKWAY: My Lords, I am sorry to detain the noble Earl, but I have stood up six times. I have a Question on the Order Paper asking for the Statement which he has now made, and I am grateful to him for having made this Statement. We have to debate this
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matter, but may I just say that the necessity for some accountability from the Crown Agents has often been illustrated. During the Nigerian civil war the Crown Agents were placing orders for arms which would not have been known to anyone if it were not for the fact that I had obtained its internal secret bulletin and was able to expose this. Obviously, when the Crown Agents are making orders of that kind it ought to be known to the public and Parliament of this country as well as to those who are making the orders and the Crown Agents themselves.
EARL FERRERS: My Lords, the noble Lord, Lord Brockway, has put his finger on the very point, which is the confidentiality between the Crown Agents and their principals. It is on the basis of this confidentiality that the Crown Agents have in the past managed to succeed, and managed to build up the trade that they have in fact built up. Once one starts to display this confidentiality to other people, then confidence in the Crown Agents is likely to diminish. It is in order to try to get the correct balance between, on the one hand, the confidentiality between the principal and the Crown Agents and, on the other, the responsibility of the Crown Agents to the Minister, that my right honourable friend has made this Statement in an endeavour to satisfy this very point.

NORTH SEA OIL AND GAS
4.2 p.m.
Debate resumed.
LORD TANLAW: My Lords, with, I understand, only 98 minutes left of this debate, I have no wish to curtail the maiden speech of the noble Viscount, Lord Brookeborough, which I look forward to; therefore, I shall be as brief as possible. The noble Lord, Lord Balogh is not at this moment in his seat, but perhaps he will not mind if I overlook the usual courtesy of thanking him for the opportunity of engaging in this debate. I feel that it should be said at this stage that a debate of this short length is hardly long enough to get the maximum out of this really excellent first Report from the Committee of Public Accounts. I should say for the Record that I believe that the Public Accounts Committee is perhaps one of the most important tools for the

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protection of the Governmental system that exists in this country to-day.
In spite of its rather dull description, this Report can teach us a number of lesson that we can learn to great effect with regard to the future energy policy of this country. The noble Lord, Lord Harvey of Prestbury, spoke in his speech at the beginning of this debate about an Energy Commission. It will be no surprise to noble Lords that I raise this subject once again from these Benches. If an Energy Commission along the lines proposed from the Liberal Benches some time ago had been used to carry out these delicate and difficult negotiations with the oil companies, a lot of the criticism put forward in this Report would not be there to-day. Besides the noble Lord, Lord Robens of Woldingham, the Royal Society has also come out with a suggestion that there is a real need for an Energy Commission, with perhaps an energy Miniser to look after the problems of energy in this country.
It also might be worth drawing your Lordship's attention to the fact that this Report is in two parts; one, which the noble Lord, Lord Balogh, mentioned, was the cross-examination, or the " dialogue " as I call it, and the other is the written and printed facts and figures produced by the Department. One point that struck me when I read this Report was the immense value of having a direct question answered directly by a civil servant concerning the subject we are discussing to-day, energy. All along from these Benches and elsewhere we have asked many question, some of them most searching, and we have made predictions which have been proved correct by this Report. The answers that we have had from the Government have been noncommittal and uninformative. I feel that reading a direct answer to a question put to a civil servant on this subject takes us an enormous step forward in understanding the subject as a whole.
I go further than that; I have felt that there are times in your Lordships' House when I have entered a debate, often with no more than a Whitaker's Almanack to assist me in the figures, that the debate has carried on, often based on wrong assumptions and facts produced by us on the Opposition Benches because we do not have the real facts. I suggest to the Minister that in view of this
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Report of the Committee of Public Accounts, in any future debates on energy, because of the seriousness of the national situation, they should allow Opposition speakers to approach the civil servants and ask them, if necessary under oath, certain questions in order that we may start a debate with some of the facts. I regret to say that I feel that some of the speeches that I have made, and I am sure other noble Lords, are not worth reporting in Hansard because we have been presenting our speeches on facts that do not exist, as we have not had the relevant information available. I feel that the time has come when the Government need all the help they can get, from wherever they can get it, to help this country out of the present energy situation. I should like to think that this help will be forthcoming in the future.
THE MINISTER WITHOUT PORTFOLIO (LORD DRUMALBYN): My Lords, while that may have been true in the early stages, quite a number of documents have been published by the Department of Trade and Industry. There is, for example, the document on the reserves of oil and gas of the United Kingdom shelf. There was another one dealing with getting the oil, which gave full facts and figures. I do not think that that lack of facts now applies to anything like the extent that it inevitably did in the early stages.
LORD TANLAW: My Lords, I thank the noble Lord the Minister for his intervention. I would ask only one question which springs to mind: have the Government an energy policy and, if so, what is it? This is the kind of thing that is a useful tool for starting a debate on energy, oil, or gas. I should like to hear the noble Lord's comments on the suggestion made once more for an Energy Commission, and it is put forward not only for oil and gas in the North Sea but also for the negotiations with the coalmining industry, the Gas Board, and anything connected with energy, such as the Electricity Generating Boards. This Commission should be formed as soon as possible as a matter of great urgency. I should like to think that the Energy Commission, if it is formed, would be able to negotiate the next round of talks with the oil companies, and to negotiate the next round of terms based on perhaps knowledge of the errors that were made

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in the negotiations to which we are committed at the moment.
This brings me briefly to a completely different point raised by the noble Lord, Lord Balogh, concerning tax. I am not a tax expert but I should like to make two general points. The first point is—and I hope that the noble Lord, Lord Balogh, will agree with me on this—that any form of taxation that is considered in the light of this Report from the Committee of Public Accounts is not going to be in any way retroactive, or is not going to be in any way so aggressive or hostile, or interpreted as such by the oil companies, that they may have to reconsider their future operations in this country. The noble Lord, Lord Balogh, is laughing, but he has only just returned from the States and he must be well aware of the fact that the Americans are looking very closely at, and in fact have already begun, offshore oil exploration themselves—and they are as hard-headed as, perhaps the noble Lord, Lord Balogh.
LORD BALOGH: Of course I am, my Lords. But may I just correct the noble Lord? The Americans began exploration and exploitation of the Shelf some 25 years ago. That is why they have been so successful in doing their business here. That is why we have employed them. So far as taxation is concerned, if you reduce the profits from, roughly speaking, 200 per cent. of the investment to, roughly speaking, 25 per cent. of the investment, that is not a frightfully killing affair.
LORD TANLAW: My Lords, I take the noble Lord's points—or one of them, anyway. It is perhaps more true to say that the Americans are looking again, and more actively, at further off-shore exploration and exploitation of their resources, and if it proves to them less costly to develop their own off-shore exploration than to develop the ones in the North Sea because they have been frightened off by too much taxation by this country, then I feel that some of the future we are looking to will not be quite so well assured
But, my Lords, I do not see any real risk in this. I feel that, with the recent increase in crude oil prices—and here I agree with the noble Lord, Lord Balogh —a barrelage tax would be very suitable,
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but nothing more drastic until the next round of negotiations with the oil companies. I am glad to see the noble Lord, Lord Polwarth, on the Front Bench, and perhaps he will be able to help me. Will the noble Lord consider some form of participation in the equity of the oil companies as part of the next round of negotiations? I think it is too late to undo what has already been done contractually with the oil companies, but in the light of the Norwegian negotiations I should like to see options, perhaps, as part of the package of the next round of negotiations with the oil companies. If those options are taken up, I should like to see the share capital retained in the Scottish Development Corporation, which has been put forward by us on these Benches as a Scottish company to develop oil in Scotland. I feel that one of its assets should perhaps be some of the equity of the oil companies which are exploring in Scottish waters. It is too late to do that now—I must make that quite clear—but I should like it to be seriously considered by the Government in their future negotiations.
I see that the time is moving on, my Lords, and I want just to conclude by reminding the noble Lord the Minister of the three points which I have just made. The first is that in his speech in reply to this debate perhaps he will give some clear guidance on whether the Government are going to form an Energy Commission or whether they are definitely not going to form an Energy Commission. The second point I should like the Minister to answer is this. In view of the Report of the Public Accounts Committee, will the noble Lord the Minister consider some method—I have mentioned one in this brief intervention—by which civil servants are able to advise us verbally of some facts before we enter upon a debate of this kind? Thirdly and finally, before the next round of negotiations with the oil companies will the noble Lord the Minister say whether the Scottish Development Corporation will be considered a proper trustee for any equity participation in the oil companies exploring in Scottish waters?
LORD MOWBRAY AND STOURTON: My Lords, I apologise for intervening before the noble Lord, Lord Wynne-Jones, speaks, but I think it would be for the

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convenience of the House if I pointed out that this short debate, which starited at 2.48 this afternoon, was interrupted by the Statement on Crown Agents, and that that Statement took 23 minutes. Therefore, the 2½ hours will end at 5.41.
4.15 p.m.
LORD WYNNE-JONES: My Lords, I am grateful to the noble Lord for giving me that extra time, which I promise the House I shall not take. We are indebted to my noble friend Lord Balogh for initiating this debate—and who better, indeed, to initiate it? Because over the last few years he has taken the most prominent part in pressing for information on matters concerned with North Sea oil, and now that we have available to us the Report of the Public Accounts Committee we find that a great deal of what my noble friend used to hint at is indeed verified.
My noble friend has called attention to the problems of North Sea oil and its exploitation. One of the important matters to-day is rapidity of exploitation, because until the last few years we might have argued that we had all the time in the world to develop the resources of the North Sea, but it has now become abundantly clear that we have not got this time, that we must have North Sea oil quickly, and that in order to get it quickly we have got to put an immense amount of resources into the building of the pipelines and into the doing of all the work that is necessary. I believe that the estimate is that not less than £300 million a year will be required in order to develop the resources of the North Sea, and if we are to do it quickly it may be that we shall need to spend more than that sum. Of course, we say that this does not matter because it is left in the hands of companies, and the companies can do it. But, my Lords, the companies do what happens to be to them most profitable at the time: they do not necessarily do what is most valuable and important for the country at the time. Therefore, it is extremely important that we should have what the noble Lord, Lord Tanlaw, has referred to, namely, a body which is capable of laying down a proper fuel policy, so that we know what we are going to do and we can insist that it be done.
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We are faced to-day, not with a choice between a large number of different sources of energy, as we were, or thought we were, a few years ago, when we could cheerfully say, "We need not produce so much coal because we can make it up with oil; if we do not have the oil, we can have nuclear energy; if we do not have that, we can have gas from the North Sea", and all sorts of things like that. To-day we are in a different position. The position now is a very serious one, a very grave one indeed, because our production of coal is dwindling. It has been falling steadily, and, as I mentioned in our last debate on this matter, unless we put between £1,000 million and £2,000 million of extra capital into the development of new mines, we shall not be able to maintain our present rate of supply of coal, let alone increase it. It is perfectly true, as the noble Lord, Lord Harvey, just mentioned, that in the Bill that was before us some time ago the Government made extra money available for the mines. But this is not really concerned with new mines; it is almost entirely concerned with dealing with the present state of affairs in the mines, in order to ensure that the mines have sufficient resources to keep themselves going at all. What is now wanted is a further £1,000 million to £2,000 million put into the industry in order to open up new mines, so that we shall be able to increase our production of coal. When one remembers that we are trying to do this at the same time as there is required an increased rate of exploitation of the new resources of the North Sea, one can see that over the next few years an immense amount of capital will have to be put into our fuel resources.
We also have the problem of the nuclear energy industry; and here we do not even know what the Government propose to do. All we know is that the one set of nuclear stations that we have in this country, the Magnox stations, have been working well and that they have been quite successful, but that they are not by modern technical standards up to modern requirements. We have the A.G.R. which was going to be a big improvement. The advanced gas reactor is an improvement on Magnox. The only point is that it has not been built. We are still in the position that the A.G.R.s are not in production because difficulties have arisen which have not been properly solved. This is not something peculiar to this country. The

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Americans, with their light water reactor which they have been able to sell all over the world, have run into considerable difficulties and practically all their stations have been late in development. Most of this is due to the fact that one is dealing with one of the most advanced and one of the most dangerous technologies in the world. The problems are immense, and although on a small scale they can be solved, we still have not highly successfully solved them on a large scale; so that nuclear energy, much as we may want it, is still something we are not able to get in order to cope with the problem that faces us at once: the problem of shortage of energy.
Incidentally, even if the problems of actually building these stations are solved and we are able to build them quickly and to build ones with a higher technical performance, we are still faced with the difficulty that with a nuclear station there is waste. When one has only one or two stations, there is not a serious problem in disposing of waste; but when people are talking about practically the whole of the energy production of the world being by nuclear power then they must recognise that the amount of waste produced is so enormous that it would be a major problem to know how to dispose of it. A 1,000-megawatt station produces radioactive waste which is equivalent, when evaporated and put in compressed form, to a cylinder about 5 feet in diameter and 12 feet high. This is from a highly radioactive material which is produced by one single station every year. If one imagines thousands of stations, one can see that the problem of disposing of this waste will be considerable. The Americans have tried putting the waste into disused salt mines and so on; but if there is a water leakage in them, then one gets into serious trouble. So we are faced with the absolute necessity of ensuring that we have oil and coal; in other words, that we have hydrocarbons available because they still remain, and will remain probably for the rest of this century, the most important source of energy.
We must therefore have a proper policy for dealing with it. This cannot be done if we insist on treating each one of these separately. My noble friend Lord Balogh put forward the idea of a hydrocarbons commission to deal with the whole of the hydrocarbon field and the noble Lord,
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Lord Tanlaw, put forward the idea of a general fuel commission. I suggest that we need both: the hydrocarbon commission in order to deal with the oil and natural gas resources and the fuel commission in order to deal with the whole problem of fuel. There ought to be a Minister of Fuel. At the present time, fuel, which is absolutely vital to the whole community, is being treated as of less importance than almost anything else.
We have largely ignored the obvious escalation in costs which have been predicted by a number of people. The American National Petroleum Council have looked at the position and they give figures for the whole costs of oil to all importing countries in the world. The figure for 1970 is 17 billion dollars. That is the total world cost of importing oil. Of that amount, 7 billion dollars were taken by the OPEC countries in the form of tax, royalties and so on. In 1972, whereas the total amount of oil purchased by the importing countries had gone up by something like 11 per cent., the cost had risen from 17 billion dollars to 24 billion dollars, and the amount taken by the OPEC countries had risen to 12 billion dollars. Their estimate—and this estimate has nothing to do with the changed situation: it was an earlier estimate—was that by 1980, whereas the total importation by the consuming countries would have risen by something like 70 per cent. the cost would have gone up from the 17 billion dollars figure of 1970 to 83 billion dollars. Of that, 63 billion dollars would have been retained by the OPEC countries.
In other words, there has been a dramatic change in the whole world position with regard to oil. It is a very natural change. It is because the exporting countries have begun to realise their strength and, by working together, they are in a position now to demand what they want. This should have been obvious, and in fact in a certain sense it has been obvious, but we have not acted on it. The consequence will be grave both from the point of view of oil importation and from the point of view of the vast capital resources which will be held by the OPEC countries. With these resources they can practically dominate large fields of operation. This will be a matter of very great significance to all of us. Unless we are prepared to take the action necessary to protect our own resources in the same way as the

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exporting countries have been protecting their resources, we shall find ourselves in a hopeless position. So I strongly support the proposals put forward by my noble friend Lord Balogh.
4.29 p.m.
VISCOUNT BROOKEBOROUGH: My Lords, it is an awesome experience for anybody to speak in a Chamber such as this as a new Member. It is made more awesome in that I, as an Ulster man, am being sandwiched between so many Scotsmen, because what I am going to say will concern both Northern Ireland and Scotland. I must humbly ask for your Lordships' indulgence to speak so soon after I first set foot in this Chamber; but, to be fair to myself, I have tried on many occasions to come to your Lordships' House but, whether through the fog of weather or my mental fog, I have, until three weeks ago, totally failed to get here. Even to-day I lefty home at 6 o'clock and spent from 10 o'clock to 12 o'clock circling over London Airport. Therefore I ask for your indulgence in speaking so soon. I should have liked, when here, to have had the opportunity to absorb more of the atmosphere and to have heard somebody else having the same awesome experience as I am having to-day. I therefore ask your Lordships to be tolerant of any lapses that I may make. When I first came into this Chamber, my Lords, it gave me great pride, because it is a very simple occasion to be required to take an Oath of Allegiance to Her Majesty the Queen. I did that with immense pride, because sadly in another place, where I am Chief Whip and an elected Member, that allegiance is no longer required.
I have a further plea to your Lordships. I should like to widen the debate to cover the North West approaches to the British Isles. That is the area to the West of Scotland and to the North of Northern Ireland. It is, in oil company terms I believe, called the North West Approaches. My acquaintance with minerals and oil deposits has been of some years, because I had the honour to be in the Ministry of Commerce in the Government of Northern Ireland. I also had the honour to pilot through a most excellent bit of legislation for the mineral development of Northern Ireland up to the three-mile limit outside the coast. It is a bit of legislation which,
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among many other bits of legislation, leaves me proud to have had the experience I have had of the fifty years of devolved government in Northern Ireland.
Now, the area of the Continental Shelf to the North of Northern Ireland has the same geological structure as that area in which oil deposits are at present being found; and, furthermore, I understand there have in fact been two rock samples that have shown the rock to be of the same ago as those in the North Sea. While ten years ago it might have been pure speculation to hope that there would be oil discoveries in the North Sea, now, with the absolute certainty and more and more discoveries occurring, I think we can look with considerable optimism to the area to the North of Northern Ireland becoming an addition to our very large reserves of off-shore oil. It is now a better chance than just a hope. It is interesting that the Canadian Government Report says that the United Kingdom is third in the league of proven off-shore oil reserves, and second in natural gas. So the industry we are concerned with is not a fly-by-night one; it is a vast industry from which the whole of Ireland and the whole of the United Kingdom may benefit, not least the part of the United Kingdom I come from. This is a great opportunity, and we should exploit it. The fact that the Suez crisis has come along and added an incentive should not cloud our judgment, and we should make sure that we exploit not only the oil but the total industry that is derived from it.
Your Lordships will be aware of the strategic position of Northern Ireland in relation to the North West Approaches Continental Shelf. We have a developed coastline, we have a very good infrastructure; but I would ask the Government to make sure that in its thoughts it prepares the infrastructure for what most be a revolution—and when one looks at the benefit that would accrue to Scotland, it is an industrial revolution. Your Lordships may not be aware that the Northern Ireland Government has negotiated with our Government here a royalty agreement by which Northern Ireland will benefit from a small royalty from all the oil and natural gas found off-shore. In return for this, Her Majesty's Government—our Government here—will operate the licensing system by

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which they grant licences off the North coast of Northern Ireland and the North coast of Scotland. That places a tremendous responsibility on Her Majesty's Government because it is so easy to be out of sight and out of mind.
I would ask the Government to make sure that Northern Ireland will not be out of sight and out of mind in granting those licences, because in the order in which they are granted we shall get a tremendous influence on the development of the infrastructure and the servicing industry to service the oil rigs which are going to work in difficult and deep waters. I therefore ask the Government to bear this point in mind, and to make sure that the licences are granted in such an order that Northern Ireland as well as Scotland will benefit. Since the noble Lords who both follow me and preceded me will be asking for Scotland to be included, I would say that we do not ask for anything in preference to Scotland; we ask for the same. So the responsibility on Her Majesty's Government to see to it that these licences are granted in the same order is a responsibility which I feel confident they will discharge in the usual honourable way.
The Northern Ireland Government has appointed a Northern Ireland Finance Committee which, in its turn, appointed management consultants to advise the Government on how Northern Ireland industry could benefit from the existence of off-shore oil. They have recommended that steps should be taken to safeguard the local industry to make sure that the local industry benefits throughout. Having regard to the depth of the deposits, if they are deposits, and the depth of the seabed on the Western Approaches, which is very great and the weather is extremely bad, there is a vast area of technology that must be applied and improved. If we are to allow the American industry to dominate this, then the industry itself will be of little lasting value to us, except in the exploitation and extraction of oil. The benefit to the country I come from must rest on the servicing industry and the development of technology in that area to make sure that the oil rigs and other well-head equipment is developed.
So, in concluding, I should like to ask the Government whether they have examined the question of the possibility
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of building oil rigs in Northern Ireland. One very large rig was built there by Harland & Wolff. I should like to make sure the Government will consult the Northern Ireland Government, and ensure that the granting of these licences is such as will benefit us. I should like the Government to consider more aid to the industry on the technological side, to see whether we cannot get an exploration and exploitation before 1980–which I gather is the present predicted date. I wonder whether the Government would consider making some agreement by which a percentage of the purchases for the servicing of the industry should be restricted to products produced within the United Kingdom.
Your Lordships will be aware of the importance of strategy. This is a matter of both geography and resources. I would submit that the importance of the strategic position of Northern Ireland is still just as great as it ever was in the time of war, or at any other time. May I take completely out of context a compliment which was paid to Northern Ireland by Sir Winston Churchill:
"But for the loyalty of Northern Ireland… the light which now shines so strongly… would have been quenched."
In 1980 we may be glad of that.
4.39 p.m.
VISCOUNT THURSO: My Lords, I have the one purely pleasant task this afternoon, the one purely delightful source of words, and that is to congratulate the noble Viscount, Lord Brooke-borough, on his excellent maiden speech. This is an unadulterated pleasure, because not only do we in your Lordships' House gain someone with his obvious interest, sincerity and ability, but Northern Ireland gains a spokesman in your Lordships' House who I am sure will do great things for their various causes and will look after the interests of Northern Ireland at every opportunity. As a Scotsman, I wish him luck. I wish the Irish luck. I wish them a lot more luck than we in Scotland have had over the question of North Sea oil.
I would agree with the only Englishman who is taking part in the debate this afternoon that this is indeed a fantastic Report that we are debating to-day, and a fantastic indictment of the Government. There are sixteen counts on which the

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Government are found to be wanting, and two recommendations which are a real rap across the knuckles for them. I hope that they are listening to this. I am only sorry that the man who is described in his office as the Minister responsible for all oil development affecting Scotland, the noble Lord, Lord Polworth, is not sitting here throughout the debate and has not thought fit to take part in it to deal with the way in which we in Scotland feel; namely, that we have been probably more let down than many other parts of the United Kingdom in this matter of the give-away of the oil on our Continental Shelf. It really is shocking. If words fail me, they do not fail the Committee. The Committee have set it down in black and white under 16 headings. I hope that the Government will read, mark, learn and inwardly digest what they have said. Under two headings, at least, the Committee have had to draw the attention of the Government to the fact that we, of all the developed and under-developed countries of the world, have made the worst bargain yet. I hope that they will take these points to heart. It is not too late to do something about it. It is not too late to listen to the advice given by the Committee. It is not too late to listen to the advice given by the noble Lord, Lord Balogh, or to the advice given in the other speeches that we have heard this afternoon.
My Lords, I should like to draw attention to one or two points which have been raised by other speakers, arid particularly the point raised by the noble Lord, Lord Balogh, when he said that we have not had anything like the kind of spin-off of major schemes that we should have from the development of oil in the North Sea. This, again, is why I am sorry that the noble Lord, Lord Polwarth, is not here. The noble Lord should be listening to this debate, and I hope that he will read in Hansard what has been said. We need much more effort to be made to ensure that there is spin-off in industry, because it is not solely a question of grabbing the black gold from the bottom of the sea, but also a question of building something out of this; of using the fact that there is oil there; that there is a source of energy which can be used not only as energy, but also to provide spin-off and technology in
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industry and so on. In building up the underdeveloped parts of Britain, building up places like Scotland and Northern Ireland and helping us with our problems, this is an immensely valuable thing. I wish that the Minister responsible for all oil developments affecting Scotland was here to hear me say this. No doubt the noble Lord, Lord Drumalbyn, has heard what I have had to say, and I hope that he will pass on to his colleagues how bitterly we in Scotland feel about this, and how we hope to see some action and some real results from the Minister responsible for all oil developments affecting Scotland.
My noble friend Lord Tanlaw and the noble Lord, Lord Harvey of Prestbury, have drawn our attention to the importance of an energy commission of some kind. We now see the importance of planning our energy requirements in this country. Any scientist who has studied environment, development or anything of that kind will say right away that the first consideration in deciding what can or cannot happen to a community and to its environment is the question of energy. If there is to be a certain standard of living available, the first thing you must know is how you will meet the energy requirements of that standard of living. I am afraid that we in this country have gone on for too long blandly assuming that energy will always be there; that somebody will always bring up the coal out of the mines, and somebody will always bring the oil out of some oil well and kindly sell it to us, and that we shall never run out of the energy required to maintain our standard of living, our technology and the growth of our economy. That is something that we cannot in any way assume. We have to work for it and guard it.
We have in the North Sea on our Continental Shelf this priceless asset of oil. A few years ago we did not know that we had it, but now we do know and we must learn the lesson: we must not waste it or let it be frittered away or given away and we must not let it be sold too cheaply. My Lords, I urge the Government, as other speakers have done, to make sure that not only do we seek in any further negotiations better terms for the exploration and exploitation of oil, but that we seek to get even better terms if we can from the exploitation of oil in

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those areas where exploration has already started and where oil is already known to exist.
My Lords, I do not want to go on for too long in this debate. It is a short debate. It does not need to be a long debate, because the points we are talking about are all set out in the Report. What I, and we on these Benches, want to do is forcibly to draw the attention of the Government to the very bad job indeed which they have done in this country so far in this matter, and to say to them that forgiveness will come from us in your Lordships' House and the people of this country at the ballot boxes only if they turn round now and show that they understand how badly they have handled things; that they intend to handle things better in the future; and to show that they have read, marked, learned and inwardly digested this First Report of the Committee of Public Accounts.
4.50 p.m.
THE EARL OF LAUDERDALE: My Lords, I should like to follow the noble Viscount, Lord Thurso (I was about to call him my noble friend, because I regard him as such although we sit on opposite sides of your Lordships' House), in offering my congratulations to the noble Viscount, Lord Brookeborough, on a quite exceptional maiden speech. I hope that, as an Ulsterman amid Scots, he does not feel himself to be a stranger. Many Scots in the South-West of Scotland have their origins in Ulster and many Ulstermen have their origins in the South-West of Scotland; and together we regard ourselves as part—the best part—of the Celtic fringe of the British Isles. I was much interested in the very interesting and timely attention which he drew to the North-Western Approaches, a phrase which I think has not hitherto been used, at any rate in this House, to describe the area of Continental Shelf reaching out to grid beyond Rockall. It is a subject to which I shall return presently.
The noble Lord, Lord Balogh, gave us some 39 minutes of his wisdom. But I cannot help remarking that one cannot carve satisfactorily in butter, and I found there was some element of confusion in what he had to say. First of all, on the so-called collapse of the endeavours to
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get the public sector involved in offshore exploration, the fact is of course that the third round was largely a flop just because of the public sector requirement. Secondly, there were references to reserves which appear to me to be baffling—but then I always find it difficult to follow the noble Lord's academic mastery of figures. It has been said that figures, like eyeglasses, blur everything they do not make clear.
One theme has been common to this debate, as it was to the debate on energy that we had the week before last: namely, that the noble Lords, Lord Balogh, Lord Harvey of Prestbury, Lord Tanlaw and Lord Wynne-Jones, and now the noble Viscount, Lord Thurso, have all argued the case for setting up an Energy Commission, or a Hydrocarbons Commission. or for a separate Ministry to be set up to deal with these things, presumably with its own representation in the Cabinet. I would add my own name to that formidable list. I believe the case has been resisted up to now, and resisted on inadequate grounds; but the case has to be made. On the other hand, I regret that I cannot follow what I must describe as the Caithnessian hyperbole of the noble Viscount, Lord Thurso, in his indictment of this "shocking giveaway" which he mentions as being listed by the Public Accounts Committee in some 16 counts. I have been through these 16 counts. I found one recommendation at the end, and I am not at all sure that those 16 counts are valid.
However, may I come first to the first recommendation, which is that the Government should substantially improve the tax yield? Seldom has a recommendation by a Select Committee (which was made on February 14) been accepted with such alacrity by a Government—because it was less than three weeks later that the Chancellor of the Exchequer, in his Budget Statement, accepted that this must he dealt with; and he gave certain undertakings. My anxiety is whether he went too far. I am afraid that a precedent is apt to embalm a principle, and what the Chancellor does will stay. I also ask myself whether politicians can ever resist the temptation to make money quickly. We should beware of such splenetic and frenetic reactions once oil has been found. We must surely make quite sure that oil firms domiciled

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in the United Kingdom are not at a positive disadvantage in competing elsewhere for crude oil resources overseas. After all, they have to compete, for example, with the C.F.P. in France, and also with the Spanish and Japanese oil industries, each one of which is nursed along, protected and assisted, if not subsidised outright, by its own Government.
One of the suggestions in the body of the Report takes us back to the whole question of the desirability or otherwise of a public auction for licences next time round. Of course the attraction is that this is quick and easy money for the Treasury. But what really matters is abundant oil for the economy. Let us take the £21 million that Shell paid for what proved to be, in the end, an unrewarding block in the North. Money spent like that in an auction is money taken out of the cash-flow that could and should, and desirably would, go to drilling. Had that £21 million been put to drilling it might well have driven eight holes in a couple of years and might well have identified a field which might have had the capacity of, say, 200,000 barrels a day, which, at £1 a barrel, represents £73 million a year. We should really keep our heads about this auction proposal. It may not be the real answer, particularly when the oil industry suffers from a cash-flow problem.
Then there is the question of a volume tax which is recommended by the P.A.C. This is suggested against a background, to which I shall come in a moment, that the best blocks have already been licensed. If the best blocks have been licensed, then it is in our interest to make the licences for the remaining less attractive blocks that much more attractive; because our interest is not to milk the industry but to get the oil. So there is a case here for fiscal incentives for exploration rather than fiscal penalties on production.
The mother of mischief, according to a Scottish proverb, may be no bigger than a midge's wing, and I find that in this Report we have one or two nuggets of opinion which are highly contentious. For example, in Annex 8, a paper put in by D.T.I., we have the statement that the Department, as the recipient of information from all licensees, has a more comprehensive picture of the geology of
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the Shelf than any individual company or group of companies. The statement then goes on to refer to Annex 2 on page 35, which shows how the Department's technical resources have been strengthened, so, as it says,
"providing the necessary expertise to monitor and interpret with the aid of the I.G.S."
What do the figures show? That at the time this evidence was given to the Committee the Department had 9 (I repeat, 9), and no more than 9, technical experts. We have since learnt, from the answers given by my noble friend Lord Drumalbyn to questions in this House, that that number has reached 18. But the figure of 18 experts, as a team, is only about twice what a major oil company would employ on a single field. Yet these 18 experts have the responsibility of helping to frame policy, of making suggestions to Ministers on policy, with regard to the entire Continental Shelf right around the United Kingdom. It is obvious that they are not sufficient in number, however high their quality.
This manifest under-staffing is no doubt to be considered responsible for the controversial assertion made in paragraph 87 of the Report, where we are told that the most promising areas of the North Sea have already been allocated. This, of course, the Committee regard as a matter of concern. But I wonder whether the Committee have properly seized themselves of the evidence on which that statement was based. Sir Robert Marshall's evidence, at Question 220, gives a slightly different slant, when he says this:
"The greater part of what at present looks the most prospective area.… has been allocated".
Then he qualified that, at Question 223, in these words:
"It is a majority of what on present knowledge looks to be the best part".
The point is whether the Ministry knew or could know last January, or even now, whether the best areas have yet been allocated. The view there expressed is at any rate challenged by eminent figures within the oil industry. But the statement of the D.T.I. in Annex 8 goes on to say that basins West of the United Kingdom, which of course include those to which my noble friend Lord Brooke-borough referred in his exceptional speech, other than those West of Shetland and in the Western Approaches, the Celtic

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Sea, are,"small and unlikely to contain large reserves of petroleum". That is the view expressed by the Department's experts last January. But since then a great deal more exploration has been done. There are at least two sources which I know standing in high regard in the oil industry which take a different view. There is one of the world's well-known firms of petroleum reserve engineers, Messrs. Gaffney, Cline, a British firm, who said last summer that in their view something between 30 per cent. and 50 per cent., of the potential hydrocarbon reserves within the British area, that is, reaching out to Rockall but South of the 62nd parallel, have still not even been licensed. Another firm of leading British consultants only the other day presented a map, which I have here, to the Petroleum Exploration Society of Great Britain. It shows clearly that there is an enormous amount of new potential to be had in the Minches, the Irish Sea, West of Ireland and even out beyond Rockall. That estimate is a serious, responsible professional estimate delivered to a highly professional audience by one of the leading firms of consultants in this field. Plainly, there are three conclusions to be drawn. The first is the golden rule that there are no golden rules. The second is that it is too soon to cry havoc, and the third is that we should beware of any complacency or maybe lack of knowledge due to lack of staff on the part of the D.T.I.
One of the most critical questions which arises out of this Report is how, when hampered by a shortage of personnel which is clamant and affects the oil companies as well as the Government, the universities and everybody, it is possible for the D.T.I. to get and digest better information. One suggestion that I hope my noble friend Lord Drumalbyn will take note of and pass on to the Department is this: when operating companies drill or undertake seismic surveys the D.T.I. should not only have it fed to them in miles of crude data as is done now; in addition the operating companies should be required to give the Ministry the contour maps which they themselves draw on the basis of the surveys. That would enormously foreshorten the labour task now falling upon the D.T.I. and which may not, in fact, be fully discharged.
The Public Accounts Committee, in such a valuable survey of the whole field,
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curiously omitted one aspect, which is the problem of getting oil ashore. I should like to ask my noble friend whether he would have the Department look into this and at some suitable time no doubt he will give us a reply; I refer to the problem of pipeline provision on the North Sea bed. What is the policy of the Government in that regard? From the Forties field B.P. are taking a pipeline to Cruden Bay. One understands that it will now be of a capacity only to take their own oil and not to take the oil of anybody else as it was originally designed to do. Mobil from the Beryl field are planning a pipe to St. Fergus Head. This in turn will, believe it or not, cross a pipeline proposed by Occidental from the Piper field to the island of Flotta in the Orkneys. Is it really prudent that we should have several pipelines all designed separately, then run by independent and separate interests? What about the other fields that we want to get into production and whose reserves may be marginal unless they can be brought in a common user pipe? There are questions of the minimum security hazard, questions of the minimum capital cost to the economy, of the minimum claim on national resources, of the minimum requirement for onshore facilities and the minimum environmental hazards.
My Lords, time is running on and I do not want to delay your Lordships more than is absolutely necessary, particularly as one wants to leave a fair chance to the Minister to wind up. But before sitting down may I raise one other matter with regard to a future round. The tendency has been to consider that the companies that matter are the majors. It may well be that the smaller companies, whose possibilities of getting into the business depends on a farm-out, may well in future provide a considerable and useful addition to our national investment. Surely it is important that in the next round there should be such incentives as will encourage the smaller companies to go for farm-ins when the "majors", having made a find, concentrate their cash flow on that and require the support of the smaller companies on the basis of a farm-out to complete their drilling programme.
I had hoped to come back to the question of estimated reserves hut, alas! I have not the time now to say what I wanted to say to the noble Lord, Lord

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Balogh, except that the estimation of reserves of a field is an exceedingly complicated operation. It is really an operation in long division. You take the broad area of the field as measured by the various step-out wells that have been driven. You then multiply it by the porosity percentage which, to take a particular case, is 0·278–it really means it is divided. You then multiply it by the volume of water space in the oil bearing strata, which may well be 15 per cent., requiring a multiple of 0·85. That together gives an estimate of the gross sub-surface volume of oil. This must then be multiplied by the percentage recovery efficiency expected, which could well require a multiple of 0·43. I stress that I am quoting from a particular example of a particular field. This again needs to be multiplied by a shrinkage factor which may be as much as 0·91. The point of my reading out those figures is to illustrate the considerable complexity that is involved in estimating reserves, and the very considerable hazards that derive from generalisations upon them.
My Lords, nobody ever did anything foolish except from some very strong principle. But do not let us be too clever, either. Cunning is the dark sanctuary of incapacity. We simply have to face two or three hard facts. We cannot run our economy as we now know it without any early or ample supply—and this is common ground. The only people who get it are the oil companies, who may very well find lusher pastures elsewhere. Other countries want their expertise just as much as we do.
5.10 p.m.
THE MINISTER WITHOUT PORTFOLIO (LORD DRUMALBYN): My Lords, first of all I would congratulate my noble friend Lord Brookeborough on what really was an outstanding and very re-remarkable performance. I admire tremendously the clarity and conviction with which he delivered his speech, but, as he himself made clear, this was because it was based not only on thought but on experience. It is quite certain that he will be a tremendous asset to this House and I welcome him very much. May I just say one word to him on what he has said in his speech? He asked that Northern Ireland should not be out
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of sight and out of mind, and that it should be able to take full advantage of the infrastructure and service industries. The Offshore Supplies Office looks after Northern Ireland, as well as the rest of the country, and is well aware of the possibilities there, and I hope that they will be fully developed. I entirely agree with all the points made by the noble Viscount in his speech and I hope that Northern Ireland will be as fortunate as Eastern Scotland has been in the discoveries that may be made.
My Lords, I must congratulate the noble Lord, Lord Balogh, on his success in drawing first place in the ballot for the debate to-day, and in bringing before your Lorsdhips once again the subject of North Sea oil and gas. I even wonder if he should not now be called "Lord Ballot". The subject, of course, goes a little wider than the North Sea, since we are concerned with the exploration and exploitation of our resources in other areas of the United Kingdom Continental Shelf, including Northern Ireland, and also on land, in particular with the Celtic Sea and the Western approaches.
The noble Lord did not refer very much to the Treasury's reply to the Report from the Committee on Public Accounts of which your Lordships will, I am sure, be aware. It was presented to the House at the end of last week and I made a point of sending the noble Lord a copy, which I hope he received. But having congratulated him I am bound to say that I have listened to the figures he gave with considerable reserve as regards both his facts and his estimates. For one thing, I see no reason for preferring the estimates of United States bankers to those of ourselves. He said that the United States bankers thought that we should be getting from the North Sea in 1980 about 200 million tons. My Lords, we shall not be getting 200 million tons—if we do get them—until the companies have drilled the wells. No one can get the oil until then; and further drilling is necessary to prove that it is commercial. Nor can this be done in a very short time and the oil brought on stream. There is a league time of several years—five years or more—before peak production is reached, so that the rate of discovery in the next year or so will need to be considerable in order to

1105
achieve anything like the figure mentioned, and even more to sustain it at that rate. Yet the noble Lord has been basing many of his calculations on that assumption. It has also to be remembered that oilfields are generally on peak for only a few years and in the 1980s production from those so far discovered will fall sharply below their expected peak level of 70 million tons.
The noble Lord, Lord Balogh, like other noble Lords, very much underestimates the expertise which the Department of Trade and Industry possesses. Earlier this year my right honourable friend the Secretary of State decided to set up two divisions within the Department of Trade and Industry to deal with oil matters: the Oil Policy Division, to look after the international oil scene and home oil policies, such as refineries, stocks and prices, and the Petroleum Production Division, to look after all aspects of indigenous production both on-shore and off-shore. This second division now has a staff of about 50 who are responsible for licensing policy and current operation from both the administrative and technical aspects, as well as a number of diverse and important related matters such as pollution, safety, health and offshore pipelines. The technical staff have been increased as activity on the Shelf has increased, and a further substantial increase is planned for next year which will double the number of technical staff available to the Department.
My Lords, I have a very short time indeed. I have taken very careful note of what my noble friend has said and I shall study it and shall deal with it. The specialist resources of all the personnel in the field are fully and most effectively deployed. I must say that the noble Lord has made repeated attacks on the staff of the Petroleum Division which is responsible for North Sea petroleum matters. I assure the noble Lord that these charges are completely unfounded. We are all extremely proud of our Civil Service and I believe that the Department of Trade and industry, and the Petroleum Division, for that matter, are equal to anyone. They are certainly a model for the world and I hope that the noble Lord will not allow his own antagonism to cloud his judgment.
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The noble Lord, Lord Tanlaw, again suggested an Energy Commission. This is a matter that was raised in the debate on February 28 and again on November 7, and I can only repeat once more the reasons, which we still find very cogent, we see against the establishment of such a body. It is hard to see what powers such a body could have which are not already available to a Government Minister. All the skills and information which are needed for formulating an energy policy are already available to Ministers and their Departments and there is always a danger of unnecessarily complicating lines of responsibility. Finally —and this I would say particularly to the noble Lord, Lord Wynne-Jones, if he were in his place—the national importance of energy matters, which is so much underlined by present events in the oil world, inevitably raises political decisions, and it is hard to see how any Government could step back from their responsibilities by setting up an Energy Commission to stand between themselves and the industry. This is surely very much brought home and reinforced by the present situation. It is simply not true that fuel is being treated as of less importance than anything else.
My Lords, my noble friend Lord Polwarth has been criticised, and I think ought to make it clear that he has direct responsibility, under the Secretary of State for Scotland. for those aspects of oil development which fall within the responsibility of the Scottish Office, and participates fully in consideration of policy matters relating to North Sea oil for which the Secretary of State for Trade and Industry is responsible. He is supported by a task force of senior officials in the Scottish Office, the Department of Trade and Industry and other United Kingdom Departments concerned, and I am glad to see him here at the moment.
Noble Lords—particularly, I think, my noble friend Lord Harvey of Prestbury—asked about housing in the North East. I would reassure him that a massive programme is under way in the North and North East of Scotland by local authorities and the Scottish Special Housing Association. So far, over 3,200 houses, representing a capital investment of about £30 million, have been authorised to he erected by the Scottish Special Housing Association in areas affected by

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oil-related developments. About 750 are expected to be completed by the end of 1974, and no limit has been placed on the number of houses which local authorities may build to meet the needs of their areas. To stimulate and coordinate action, the Secretary of State has set up the Moray Firth Working Party, chaired and serviced by the Scottish Office, which has among other things arranged joint housing programmes which will maximise output during the period of pressure in the construction industry. I agree entirely with my noble friend on the need to speed development.
I should like to go on now to deal with what the noble Lord, Lord Balogh, has been saying. As the noble Lord has said, recent developments in the Middle East, which result in higher prices for a large proportion of the oil we currently import, and possible reductions in the supply, have demonstrated the very special significance which our own indigenous sources of energy will have on the future of this country. Let me assure him that the Government are at least as determined as he is to ensure that the maximum advantage is taken of the special position in the Western World in which this country now finds itself.
As stated in the Treasury Minute of the Public Accounts Committee Report, which is the subject of this Motion, the Government have been making a full review of licensing policy. It was already under way when the Committee reported, as the Treasury Minute states, and is still in progress. In the course of the review the Government are taking full account of the conclusions and recommendations of the Report as well as of recent national and international developments. As the review is still in progress, noble Lords will appreciate that I cannot say anything to-day about the measures relating to the exploitation of petroleum on the United Kingdom Continental Shelf which were envisaged in the gracious Speech from the Throne. A Statement will be made to Parliament as soon as the review is completed. But our objectives are clear: first, to continue rapid and thorough exploration while paying due attention to the environment, and this requires a balance to be struck between the interests of revenue and an adequate incentive to the
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licensee to explore and develop. I very much agree with what my noble friend Lord Harvey of Prestbury said: that it is necessary not to let the pendulum swing too far; one has to achieve a just balance in this matter. Secondly, to get for the nation as a whole a fair return from the depletion of what is a national resource; and thirdly, to ensure that British industry receives a full and fair opportunity to compete.
I can assure the noble Lord that in the review we are taking very careful note of the Public Accounts Committee's two recommendations and of their 16 new conclusions, to which the noble Viscount, Lord Thurso, referred—if I may say so, in a speech that I thought generated a little more unnecessary heat rather than light—and also of other points that have arisen in the public discussion of North Sea policy, which their Report helped to provoke. We are indeed grateful to the Committee for the important and interesting points which they have raised; and I agree that it was a very well-thought-out Report. Opinions, of course, may differ on some of their points, but they nevertheless deserve careful study. It was clearly the Committee's desire, as it was that of the noble Lord, Lord Balogh, that the nation as a whole should receive the fullest possible benefit from our North Sea resources. I cannot anticipate what action we shall take on their specific proposals; that must await the outcome of the review. All I can say is that the Government share this desire.
May I, in passing, welcome very much the stout assertion of Britain's rights to receive her share of the proceeds of North Sea oil and gas, which I understand the noble Lord made at the Conference organised by the Financial Times and Petroleum Times in Houston, Texas. That was also attended by, my honourable the Minister for Industrial Development, and he made it clear at that time in the course of his speech, which I may say is published in this week's Trade and Industry, that we are already estimated to be getting about 50 per cent. of the orders for supplies for this industry. That is not bad going after a quite short number of years. So I do not think that the strictures of Lord Thurso on this matter are justifiable, especially when one remembers that we are also supplying 90 per cent. of the

1109
gas requirements of this country with natural gas. I do not think it can be claimed that we have handled the situation badly; I think exactly the contrary is the truth.
My Lords, the fact that we have not yet announced the final outcome of our review is in no way holding up the rate of exploration and exploitation of our resources. At present about 17 exploration rigs are actively engaged in drilling in the North Sea, and next year we expect still more. Over 200 wells still remain to be drilled in areas for which licences have been already issued. As Lord Balogh is aware, no date has yet been fixed for a new round of licensing, but I can assure your Lordships that there is no question of a new round before the results of the review are announced. I have already advised the noble Lord on this.
One of the principal matters considered by the Public Accounts Committee was the taxation of oil company profits. They drew attention in particular to the likelihood that under present arrangements the United Kingdom Exchequer would receive little tax revenue from profits arising from Continental Shelf oil production during this decade, because for tax purposes (and this is a point Lord Balogh brought out) losses incurred by the oil companies in their trade in oil in other parts of the world can be set off against these profits. Noble Lords will recall that shortly after the publication of the Committee's Report the Chancellor of the Exchequer announced in his Budget Statement that the Government accepted the Committee's recommendation that they
"should take action substantially to improve the effective tax yield from operations on the continental shelf".
Consultations with the industry on the practical problems involved are well under way, and the Government intend to introduce the necessary legislation in next year's Finance Bill. The Chancellor has made clear that deferring the legislation until next year because of the need for consultation will not result in any loss to the Exchequer.
The first oil field was declared commercial only two years ago. Since then a further eight fields have been declared commercially worth exploiting and a
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number of other promising finds have been made. We now seem assured of achieving production of 70 million tons in 1980, although at this stage we have no grounds for revising the forecasts set earlier this year of 70 to 100 million tons in that year. The rate of production in the early years will depend upon the solution of a number of technical and other problems which arise as the industry reaches the limits of current technology.
It would be unrealistic to expect North Sea oil to provide any significant contribution to solving our problems next year, or even in 1975. The outlook for oil supplies, indeed, the prospects of North Sea oil, at the time when the licences were issued were very different from what they are to-day. As the Treasury Minute says:
"a misjudgment which made the terms of the licensing too severe would have reduced the scale of exploration, which has in the event produced such striking and beneficial results."
The importance to the United Kingdom economy of this rapid development of our resources, resulting from the policy followed by successive Governments, is obvious. North Sea oil is now expected to provide the equivalent of about two-thirds of United Kingdom demand at that time. Last year imports cost us about £1,000 million, mostly in foreign exchange, and these costs will be increased substantially as a result of the recent rise in prices. Estimating the saving to the balance of payments in any particular year is the subject of a very wide margin of error, but in 1980 the saving could be well over £1,000 million.
North Sea developments have already created about 9,000 jobs in the United Kingdom, and a further 10,000 are in prospect. These figures relate only to those created directly by oil developments and exclude any multiplier factor for indirect job creation. The benefit to the economy by the expenditure of the oil companies is also significant. They estimate that by the end of this year they will have spent over £1,000 million on off-shore exploration and development. As the noble Lord said, the future market was estimated in the IMEG Report to be worth £300 million a year on average for the next decade. As noble Lords are aware, we have established the Offshore

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Supplies Office to ensure that British industry is fully aware of all the opportunities.
As I have said, there are practical difficulties in dealing with the problem of artificial losses in oil transactions. It was for this reason that the Chancellor wanted to consult the industry. However, the Government have made it clear that they are determined to prevent the artificial losses arising overseas being set against North Sea profits for corporation tax purposes.
My Lords, I hope that I have covered as much ground as is possible in the time. I should have liked to speak for longer, for indeed I have a good deal more I should like to say. But I hope that the noble Lord will feel that he has done the House a service in raising this matter and I hope that we have managed in the course of this debate to put things in perspective.
5.30 p.m.
LORD BALOGH: My Lords, as a sparring partner the noble Lord is a very pleasant experience, and I thank him for his courtesy in sitting down and allowing me a little time to speak. I will not indulge in the usual formalities, although I must apologise to the noble Viscount, Lord Brookeborough, for not being here for part of his speech. But I had to go and check Hansard. He will know how important that is for one's future reputation.
May I first say to the noble Lord, Lord Drumalbyn, that I entirely agree with his outline of the strategic targets for his Ministry? They could not have been better formulated: to secure a rapid exploration and expansion of oil; to get the maximum benefit to the balance of payments. These are things for which I have fought for six years. It is when it comes to the implementation that we face certain difficulties, and these difficulties have been very much increased by the noble Earl, Lord Lauderdale, whose speech, if I may say so, with great humility, reminded me of the tactics of a cuttlefish; that is to say, so many arguments of brilliance thrown about that the cause which I have been trying to explain disappeared in opaque darkness.
THE EARL OF LAUDERDALE: My Lords, will the noble Lord permit me to
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interrupt him for a moment? He used the "cuttlefish" analogy last time: I hoped that he might find another animal this time.
LORD BALOGH: My Lords, the noble Lord is so convincing. I think he first gave a "wigging" to the P.A.C. for saying that they had overestimated the finds. Then he gave them a further "wigging", saying that there was very much more oil to be found in those parts which have not been licensed—as though that was an argument against the P.A.C. conclusions and not an argument strengthening them.
I was most amused by the fact that when the noble Lord, Lord Tanlaw, asked for more information the noble Lord, Lord Drumalbyn, came out with the surprising answer that a very large amount of information has already been given. Yet for instance, we do not know a thing about costs; we do not know a thing about the prices, and from my point of view I cannot reconcile his estimates with the truth. There is the Frigg field, which is French. Apparently we have paid 5·6p per hundred cubic feet, plus an oil clause which means that the oil doubles, the gas doubles and that means that the Frigg field now will cost something like 10p, which is worse than the old Algerian frozen gas purchase and is absolutely out of this world from the point of view of the French.
This is what these great economic and technological experts in the Ministry ought to sit down and work out. The balance of payments of this country will not be improved by that part of either the expenditure or the profits of the oil companies which is not coming home here. In the case, for instance, of the Frigg field the total profit will be transferred to the French. This profit (if the report in the Financial Times on prices is right; and when the Financial Times and The Times have the same report I feel that there might be something in it) might be, in my opinion, at the rate of some 200 per cent. per annum on investment. That is what we do not know. I may be wrong, but we have not been given intelligent figures which show that the interests of this country are well handled.
LORD DRUMALBYN: My Lords, if the noble Lord will forgive me, I am afraid we have now gone five minutes over our time.
LORD BALOGH: My Lords, I have five minutes still to go. I am sorry, but I cannot give the noble Lord those five minutes.
LORD DRUMALBYN: My Lords, I am afraid that I made a mistake in my calculation of the time and sat down too soon.
LORD BALOGH: My Lords, I think the Minister always underestimates.
In regard to the oilfields I agree with the noble Earl, Lord Lauderdale, that it is very difficult to estimate, but Professor Odell has shown that in the leading fields of the world there has been an underestimation of one to ten. I dare say that this field is so completely different, as the Department would have it, although it is unlikely to be very different; and if our experiences with the North Sea are similar to the experiences of the Americans in the Panhandle, as Churchill said, first it is a trickle, then it is a stream and then it is a torrent. That was the American experience, and I hope it will be our experience.
I want to say one word more to the noble Lord, Lord Drumalbyn, who attacked me for being too severe on his staff. I will not mention names, because that would be improper, but I should like him to make a little inquiry, again by his experts—perhaps in this case his sociological experts—as to how many of the heads of the Petroleum Department joined the petroleum industry, or industries which are connected with the petroleum industry, and how many offers there have been made in the last five years to members and heads of the Petroleum Department to join the major oil companies in very high offices. If he then writes to me and says that he is still convinced that what he has said to-day is right, I will accept it; but not before.
It seems to me that this is one of the great historical junctures. If the British will not seize this opportunity to get themselves out of trouble I fear that the combination of our social problems with our economic problems will be such that the awful decline such as that predicted by Lord Rothschild will in fact occur. This is the one great opportunity of a lifetime for this country to pull themselves out of their rut, and I do not think the
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opportunity will recur. For heaven's sake! let us get together and try to use it.
THE DEPUTY SPEAKER (LORD ALPORT): Does the noble Lord wish to withdraw his Motion for Papers?
LORD BALOGH: Yes.
Motion for Papers, by leave, with drawn.

STUDENTS' GRANTS
5.40 p.m.
BARONESS BIRK BARONESS BIRK rose to draw attention to the continuing inadequacy of students' grants; and to move for Papers. The noble Baroness said: My Lords, I beg to move the Motion standing in my name on the Order Paper. I raise this topic to-day because I believe that financial difficulties in the universities and even in other places of further education are ominous, and since this is the month when Stage 1 of the negotiations for the new triennium is taking place, it is also the right moment to discuss it. I am aware that the plight of the students is not a popular cause. However, that does not make it any less right. Directly they are mentioned, the "Oh, students!" syndrome is set off. Indeed, as a Governor and an ex-student of the London School of Economics, I often find that the mention of L.S.E. sets off the "Oh, L.S.E.!" syndrome, too. It is true that a small minority of students make nuisances of themselves beyond the realms of tolerant justification and in doing so receive publicity which really is not merited. However, as a third-year student said to me yesterday, "Lots of kids are away from home for the first time and sometimes they lose their heads. You have to remember this." Pressing for change and using protest as a means to do so is built into the fabric of our society, and it would be wrong if this did not continue.
Higher education provides an opportunity not only for training the mind but also for testing our ideas. Two matters are most important. First, if we really believe that further education has value not only to the individual but also to society, then surely it is madness to spoil the educational loaf for a small financial crumb. The Prime Minister has constantly stressed the need for more capital investment in industry and technology. What better investment could

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there possibly be than in those who will be formulating the future for us? Since no civilised society can exist on industry and technology alone, the creative talent and liveliness of mind and spirit in the whole range of arts and sciences must have the chance of being tapped by higher education. The benefits are indisputable. But the trouble is that the cost always comes before the benefits, and as Governments are notoriously instant, priorities so often go wrong. I agree we cannot afford everything and there are many things that I, like others, would wish to see done, but instead of cheeseparing on education, I would suggest the vast sums expended on Concorde, Maplin and the Channel Tunnel indicate we are living beyond our national income.
Secondly, I am very concerned that many of the half million students to-day (and the Government plans to increase the number considerably, to something in the realm of three-quarters of a million by 1981) emerge from the system alienated from the society which will be depending on their intellectual and social responsibility, because they feel they have really had a bad deal. I am not suggesting that students should be cosseted any more than any other section of the community, but without the grave financial stresses which beset so many of them to-day, they still face the academic and social stresses which are part of not only being a student, but of growing up and developing, particularly for those who come from poorer homes without a strong educational background. These students often find that it takes them a lot of time to settle down in whatever area of study they are undertaking. It is not really as though they, and those who speak for them, are asking for the economic moon. Indeed, what we are discussing is really "peanuts" in terms of national expenditure. The payment of higher grants has been constantly supported by the Committee of Vice-Chancellors and Principals, a highly respectable body which can hardly be described as revolutionary. As recently as last month, the Committee issued a Press statement expressing concern that the situation had become acute over the last two years.
It also seems to me a very depressing fact that there is so much time and effort spent at the moment within the universities and some of the other places of further education on battling over this subject, when the energy of the students themselves, the staff and the vice-chancellors could be far better employed on other matters which are of more direct interest to the universities and to the students. It also means that some of the things that we were always "going on about" when I was a student now take second place while students are protesting—unfortunately, but it is necessary—on their own behalf.
My Lords, there is no time to go into the history of grants, except to question whether the Anderson Committee Report which laid down the principles of the grant system is now being discarded. Perhaps the Minister will deal with this point when he replies. At present, the full student's grant is £520 a year for London, Oxford and Cambridge, and £486 for everywhere else collected together and known as "elsewhere". Continuing inflation has greatly eroded the grant so the present full grant represents 67 per cent. in purchasing power of the 1968 grant and 56 per cent. of the grant in 1962. I really think the National Union of Students is right when it says that in money terms the grant has risen by 45 per cent., but in value has dropped by more than 25 per cent. This is based on the 1972 figures. Since then, the cost of living has risen even further. In addition, the £20 increase which was given last May not only does not even begin to catch on to the tail of inflation, but gives no protection against the 3 per cent. rise in food prices last month which, as we all know, is the highest that they have seen in the last 20 years.
Food is an extremely important part of a student's budget. The student health physician of the London School of Economics told me the other day how concerned he was about the increasing number of students who are not eating enough, mainly those who are living in "digs", cooking for themselves, since they find it difficult even to afford the refectory charges, although the L.S.E. refectory runs at a loss of about £10,000 a year. I found on inquiry, although the figures

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vary, that losses are fairly constant in universities all over the country. I have also had a breakdown of expenditure given to me by the Rector of Imperial College for students living in hall. They consider the costs there are on the fairly low side. Students pay a rental of £3·75 a week. Where else in London or outside could you find such a low figure for rental? That works out at £116 a year on the basis of the 30 or 32 weeks in college. They pay £217 a year for food, which again is based on the current refectory prices and does not reflect what it would cost outside; £75 for books, which is a high item in any student's expenditure today, and £60 for clothing, laundry and so on. They have £93 for pocket money covering the whole year, and including the cost of joining in various activities at university which really are part of one's education, as well as leisure activities. There is £17 for travel, which is not high for the London area. The total comes to £634·25. As Sir Brian Flowers pointed out, if the economic rent were charged it would be £15 more. Students who are not living in halls of residence, and these are the majority, are generally worse off, unless they live at home; if they do, the comparable full amount is £390. But in the period since the last review we have seen the rents for unfurnished tenancies rise by about 40 per cent. and for furnished tenancies, which are those which are naturally most used by students, by 60 per cent.
In addition to these points, we come to the anomalies in the system. I hope that the Minister will be able to give us some good news about these to-night. First of all, those whose parents' residual income starts at £1,500 a year get less support from their local authorities, since their parents are suposed to make up the rest. The fact is that they do not do so in far more cases than appear to be realised. Whether or not the Ministry has the figures on this I do not know, but if they have not they should find out all over the country; I have only been able to do so in a small way and with the help of the Nottingham University, which carried out a survey among 431 graduates representing a 10 per cent. sample. I have some information in this field. They find that 32 per cent. were on the full L.E.A. grant, and 43 per cent. received parental contributions ranging from £23 to £557
1118
a year to make up the full grant. But this term 25 per cent., with contributions ranging from £5 to £93, which averages out at £31 to £32, did not receive their contribution, and this is a great deal of money, even if you take the £31 to £32, when you are really on short measure and short rations.
The students were also asked to state in the questionnaire the reasons why this was so, if they knew. Some of them said that their parents could not afford to pay; some said that they did not want to ask them to support them, often because they felt that they could not afford it, even though they had been rated on this basis. Many others said that they and their parents did not see why people over 18 should be a continual parental burden. I would remind your Lordships that we have now made 18 the age of majority. In a survey at the Bristol University this year it was there discovered that 5 per cent. of those whose grants were based on a parental contribution were over £100 short. Similarly, talking to students in London one seems to find the same story repeated. I find this rather alarming. This has a much wider aspect than the immediate question of student grants. We know that there are many difficulties in growing up, tensions that arise due to what we generally call the generation gap, but if in addition to this we have this kind of tension within the family, all I can say is that it then becomes socially divisive and creates trouble between children and parents which really ought not to arise, and about which we should do something.
What then happens to those students whose grants fall short? Well, they scrimp and scrape. They are, many of them, underfed. And they work during the vacations. I have no objection to and do not disagree with students working during vacations, particularly the long vacation, but it should be remembered that during the short vacations they have work to do themselves; they have tasks that are set. It is very difficult, if you are not in a Hall of Residence, in these days of very short housing, to give up rooms, especially in the London area; you usually have to keep them on and try to sub-let in between.
So far as work in the vacation is concerned, I should like to read out a telegram which I received when I arrived this afternoon:
"The Association of Veterinary Students strongly supports your Motion and would remind you that veterinary students have particular difficulties because of the requirement to see veterinary practice during vacations when other students supplement their grants by working."
I imagine there are other groups of students in this category.
Another of the anomalies is that the Anderson Committee when it reported made no distinction between men and women students, but in 1968 married women became a different category, and now receive a grant of £295 if they are living with their husbands, which is £95 less than that of other students living at home. It may be a good thing—I certainly think it is but I doubt whether the Minister will agree with me—to encourage young people to make sure they are compatible before they jump into wedlock, but I find it difficult to believe that the Department wants to encourage "shacking up" by giving married women a much lower grant as a matrimonial deterrent. In view of the statement in the Government document Equal Opportunities for Men and Women which we debated last week, and the Government's stand in that document on student grants and sex equality, it surely is time that this matter ceased to be under consideration and was equalised immediately. I hope that the Minister to-day is going to take this very good opportunity to announce that this in fact is so when he replies.
Then there are the discretionary grants. This is very important and often gets overlooked. When we are talking about students I think that very often many people are inclined to think we are talking only about university students, but we are not. We are also talking about a great number of students who are accepted for a course which is not a degree course or equivalent, where the local authorities have a mandatory duty to make grants to them (and this includes teacher training), but for the other courses where a local authority can discriminate as to the grant. This seems to me to be grossly unfair, because there are a number of cases, with which I will neither bore your Lordships nor take up your time,
1120
where in adjoining authorities a student will get a grant in one but in the other one next door, through the geographical misfortune of living there, he would not. Since in April, 1974, all mandatory grants will attract 90 per cent. Central Government support, it would seem to me to be a good moment to make sure that recognised courses in a recognised establishment should also receive a mandatory grant. This would help all those students on evening courses. It would also help students doing Open University courses, where they have to incur considerable expense in travelling to tutorials as well as the other work involved. This would not cost, to start with, very much more than £1 million, but it is very important, it seems to me, socially by enabling people who have perhaps missed out socially and environmentally in their young years to participate in further education; they would then have a chance of outweighing the disadvantages.
Fourthly, there also seems to me to be a very big problem over the postgraduate grants; it is the post-graduates on whom further research depends, and they certainly are very under-granted. It means that many people with valuable and original contributions to make have to forgo their study—and again I have, I am sorry to say, a great many examples of this which have been sent to me only in the last week—and take a job in industry.
Finally, in these anomalies, there is the whole question of accommodation, which I have no time to go into, but it seems to me we have to start looking at the most economical way of providing more accommodation for students. Rather than throwing figures into the financial arena which will probably be out of date tomorrow, and although at this moment it appears that the critical short-fall is, at least, £150, the way I see it the whole grant system needs re-structuring. Grants should be assessed annually in relation to a student's cost of living index this varies considerably from the general index, so that it is difficult to use that. Students have to spend a much greater amount on books which are not included anyway in the general index, and less on other things. I think that London needs a special grant for both undergraduates and post-graduates, and should not just be lumped with Oxford and Cambridge,

1121
particularly because of the difficulties of travel and accommodation. When a young person is 18 he or she is an adult and should be treated as such, therefore we should do away with the parental contribution in its present form.
I should like to see the dependent child's allowance abolished for taxation purposes at 18, and that amount used for taxation, because once young persons of 18 are working they are working on their own, but if they are in part-time or full-time education they should be supplemented by way of a grant. They should not be in the position of having to be an adult on the one hand but considered a dependent child on the other. This is quite wrong.
In the interim, if this does not cover the financial side well enough, I would suggest that those parents of children in higher education whose income is something in the nature of £5,000 or £6,000 a year, should be subject to selective taxation. I know of all the shrieks about this idea, but this Government pride themselves on an imaginative approach to taxation, and it should not be beyond the wit of man— or in this case woman—and the Treasury to work something out. After all, it would be less complicated than a loan, to which I am entirely opposed but which many people support, and the difficulties in administering a loan, and also collecting it, would be far greater. We are a credit crazy society, and for young people to start with a debt hanging round their neck, and then have to spend a certain amount of time trying to evade it, seems practically and morally quite wrong.
Finally, in January of this year, the Prime Minister, in speaking to the Society of Education Officers, addressed himself to two self-inflicted examination questions. First,
"Does our present system of education prepare individuals adequately for the kind of life which they will lead after they leave school or college?".
Secondly,
"Does education help us to strengthen the cohesion and improve the quality of our society."
The answer to both should be "Yes", but I am doubtful whether at the moment one can say that. But both of these are implied aims towards which we all
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ought to be moving, and I hope we are. However, these aims are threatened by the continuing inadequacy of the grants for education, and particularly of student grants. This is really only a small piece of financial grit, but it is a very irritating form of grit which is wearing at the educational gears and stopping us in our progress to top gear in education, which I think is what we all want to see. My Lords, I beg to move for Papers.
6.3 p.m.
BARONESS SEEAR: My Lords, I am speaking this evening primarily as a university teacher about university students, and I will be brief. I want first to draw the attention of the House to certain notable differences in the approach to university education in this country and in a number of other countries, because I believe that often when people are thinking about the financing of students they draw their arguments from what goes on in the United States or in certain European countries. We, rightly or wrongly—and I think rightly—have still, despite the extension of numbers, a selective approach to university education. It is competitive. It is not there by virtue merely of having passed at a minimum level a given examination. Therefore, in this sense we are deliberately setting out to attract the cream. We also try to keep our university education in a very short period of time. Our normal degree is still a three-year degree, and this is unusual in the world as a whole.
Taking these two points together, I submit that it means that we are asking our youngsters, the best we can find, to work very hard for a relatively short period of time. I do not go along with the idea that it is quite a good thing for them to spend a good deal of time supplementing their grants by taking jobs, either during the week, which is what a great many of them do at the present time, or even during the vacation period. I know that it is becoming customary to say that it does them no harm to work during vacation, particularly during the long vacation, as the noble Baroness just said: but they have a very great deal of their own work to do, and their own work is getting on with their studies and not exploring the inside of Woolworth's, serving across the counter, however entertaining that experience may be. They get plenty of experience of life

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in one way or another in being students; they do not need to get it by taking jobs round the corner.
At the present time, particularly in London, which is an area where I have direct experience so far as students are concerned, they simply have not enough money to do the work that they are supposed to be doing. They are being paid the grant they are getting to do this work and presumably we want them to do it by having got them to university. They have not been getting enough money to do this without either cutting down on tile food and essentials that they ought to have or by supplementing it by work. This seems to me to be extraordinarily poor economy. We want them to get on with the job which is their job. I do not go the whole way with the students in saying that they ought to have a student wage, but I do not want them to live penuriously. I think that with reasonable frugality they ought to be able to spend most of the year, and certainly all term time, concentrating on what they are supposed to be doing. There are all too many of them who do not realise the reading they are supposed to do. It is not sensible, when we have this still highly selective approach towards students and cram it into a short period of time, and have still, thank goodness! high standards in our universities, to weaken their own attack on their studies by cutting down the grant and limiting it, with the expectation which is now growing up in a great many people that, after all, it is quite easy for them to get a job and earn on the side. That is a stupid way of doing it.
Although I am not taking the line of the student wage, we have to remember that these young men particularly, and young women as well, are comparing themselves with their own school-fellows who have gone into a job. The average wage of a man now is £42 per week, and this average is calculated to the age of 21. A lot of their old school friends have gone into jobs in which they are able to support a standard of living way above that that the students are able to get. I do not think that the money should be the same, because the students, if they are any good, know that they are going to be able to earn a great deal more than this; but to have such a big
1124
gap between the standard of living of the students and the standard of living of the youngsters in a job is very unwise. It is discouraging some of the youngsters, particularly from families where university education is not customary, from going on to the higher education which they can take and which we need them to take, because they see how much better they do if they go straight into a job.
That being so, there are four points to which I should like to draw your attention. As the noble Baroness, Lady Birk, has said, the triennial review is just starting, but on the last occasion the students settled for an unreasonably low base line in their negotiations with the authorities. I cannot speak for them, but I think that your Lordships would find that many of the people concerned with those negotiations, and not only on the students' side, now recognise that this is so. So let us start this time with a realistic base line in terms of the grants. Secondly, here I would very much support the point that the noble Baroness made about a student cost index and an annual review. What has caused so much trouble over the last period has been the rate of inflation and the fact that such increases that have been given have not anything like caught up with the rate of inflation but have fallen right behind the rise in prices. Let us make a decent job of it and have a reasonable base rate, and an annual review based on a student index.
I also think it is time that we got rid of the parental contribution, for the reason that the noble Baroness gave: that students are now adults, like all the rest of the population, at the age of 18 and for a special reason which your Lordships will perhaps not be surprised that I want to point out: that the parental income limit undoubtedly to-day bears hard on girls. It is still true that in a family where there are two or three youngsters still at school or of university age, there are many parents who say, "We will put our money in for the boy, and the girl can take a secretarial course", or something of the kind. It is very tempting; and it is very tempting for the girl to go along with it and to feel, "In our family there really is not enough money to go round for both my brothers and myself, and, after all, there is the boyfriend up the road, so I will not push too

1125
hard". So, once again, the girls get left behind in those families from which a parental contribution is demanded. It is also true, as I know from experience, that quite often parents do not pay up for one reason or another, and when this happens the student really it in a very poor position indeed.
Finally, once again I should like to plead for the married woman student living at home. I know a great many of us have said this before—I have myself said it a number of times on previous occasions, and I am sure other people will say it to-night—but we know that a great many women, when they were leaving school as girls, did not take the courses they were capable of taking, and we know that they are now coming back in large numbers. We also know that they are a very important potential of the people that we need in the professions and occupations which require a university training. For the wife who has to make considerable adjustments at home and who has to persuade her husband, who may or may not be supporting her in her effort, it is highly discouraging in her attempt to take training in order to get back into the labour market at the level at which she is capable. It is very hard indeed for her if, in addition to having to make the adjustments at home, which often involve the husband in a certain amount of inconvenience, she has to say, "On top of this I am going to present you with a bill for a couple of hundred pounds a year". That is bound to lead to quite a number of them either not starting, or giving up because the going is too tough. So I very much hope that the Government will concede that the married woman living at home should be, as the Anderson Committee originally intended, treated in exactly the same way as any other student.
6.12 p.m.
BARONESS PHILLIPS: My Lords, I must begin by apologising to the House, to the Minister and to my noble friend who introduced this debate that I have a previously made appointment. I am not going to say that it is a meeting: it is some culture from which I feel I shall benefit. It would have been very unfortunate, I think, if there had not been a spokesman from the Front Bench of the Opposition. Indeed, I believe my col-
1126
leagues incurred some strictures on the occasion of the previous debate, although I am quite sure that my noble friend would not do that to me.
My Lords, with such a star-studded list of speakers and with such an able introduction, followed again by a splendid contribution by the noble Baroness, Lady Seear, I feel there is little for me to do other than to underline some of the points which have been made but I should like to hearten the Minister by beginning with a compliment to the Department, because I was delighted to see that they had announced that there was to be an increase in the dependant's allowance. I seem to recollect that in the last Government I had the rather difficult task of trying to introduce this, and that I received a roasting from the noble Lord, Lord Aberdare, and, so far as I recall, from my noble friend Lady Summerskill. So I am very glad to see that at any rate Her Majesty's Government have dealt with the problem of the dependant's allowance.
The noble Baroness, Lady Birk, outlined the problem of students to-day. As is the case with the other two noble Baronesses, I have been in touch mainly with students living in London, and it may be that the London situation is peculiar. Nevertheless, we have to recognise that a very large number of students are in London. Unlike the other two noble Baronesses, my concern has been with the students in the teacher-training colleges, and we read from the literature issued by the Department that there has been a notable increase in the number of students entering teacher-training colleges —a statement which gave me great delight. It will be tragic if some of these girls who have come forward to take training to become the teachers we so desperately need are unable to stay the course because they see the temptation of going out to earn, very easily and very quickly, a wage of £28 to £32 a week as a typist.
If we look at the booklet which describes the grants to students in teacher-training establishments, we see that those in lodgings in London receive £500 for their student year. This includes, I note, travelling at £15 a year. My Lords, I did a quick calculation of my own travelling expenses, and I probably live as near the House as any of your Lordships. Coming from Fulham costs me 40p per

1127
day, which works out at about £62 for 30 weeks. This seems to me a far cry from £15; and I was rather interested to hear the noble Baroness, Lady Birk, give the figure of £17 as a travelling allowance. I should be interested to know where one would start and where one would end, travelling at such a low rate these days within the London Transport system. The £500 also includes £54 for equipment and other materials. I have recently had a book given to me for inspection—not a book that one would say was peculiar to any particular type of student, but a general educational work which all students should have. It cost £4.50. My Lords, it is easy to say that one should borrow these books. We all recall from our student days that any book we wished to borrow was always on loan to somebody else who wanted it at the same time; and one must have the books to be able to take the course. If you are a specialist—P.E., music or art—your costs are even higher.
I would appeal to the Government to change the system, as the noble Baroness, Lady Birk, has already emphasised, from that of some grants being discretionary and some being mandatory. The system of discretionary grants means—and we all know cases like this—that one local education authority will be generous and another education authority will be not only less than generous but perhaps even not give the student anything at all. It puts the student entirely at the mercy of a particular local education authority. The group receiving discretionary grants is very much larger than is probably appreciated. Most of the students in the residential adult education colleges of course receive discretionary awards, and they are in fact doing a particularly useful kind of study. There are some figures which have been prepared which show that 81 local education authorities helped these particular students by mandatory grants; 19 gave them discretionary grants, not at the same level; 16 gave them very much less; and 7 had what they called "another policy", which I would suggest to your Lordships probably means even less.
I think, too, that the anomalies which have been outlined need to be considered carefully. If we look at this question of the parental contribution, it is indeed a
1128
curious idea that a student at 18 is still dependent upon his or her parents, and that they must have been supporting themselves for three years. Since we have raised the school-leaving age to 16 this seems to be difficult, if not impossible. But we see rather curious cases which seem to show that within this system one cannot win. We have the case of the student who was a post-graduate in the teacher-training scheme. She received her grant: based on her father's earnings, which varied from year to year because of his type of employment. She was given a final assessment at the end of her post-graduate year, and then in the following year, when it was discovered that her father's earnings were a little more, she was asked to repay quite a substantial amount. The complicated correspondence seems to me to suggest the high cost of operating any kind of means test, and this is no exception. Then, at the other end of the scale we have the young man who had worked for three years before entering college but who was regarded as dependent because part of his earnings had been during his period with Voluntary Service Overseas and he had not received £7·50 per week, which is the amount specified by the Department of Education. So it seems to me that whatever way one tries in this particular situation, one cannot win.
The time has come for all students to be dealt with by a national system of mandatory awards. All students over the age of 16, whether in further education, in teacher training, in art or technical colleges should be eligible for grant prescribed by national regulations. I should like to underline what the noble Baroness said: that we save money on our educational system at our peril.
6.20 p.m.
LORD GRIDLEY: My Lords, I rise with a certain amount of trepidation, having to follow three noble Baronesses in this debate. I hope I shall not be responsible for introducing anything like a discordant note about anything said by the previous speakers. I am grateful to the noble Baroness, Lady Birk, for raising the subject of student grants as I think that this is an extraordinarily important matter in the present circumstances of my country. I have an interest to declare. I am a parent. I have a

1129
daughter who is at Oxford, at St. Hilda's College, and who is in receipt of a grant. It is with considerable interest that I have listened to the comments made this evening. What depressed me was that one might think, listening to the previous speeches, that we had made no progress in this country in respect of education over the last 25 years. Looking back over that time surely one would think that our youth have some reason to be grateful for the facilities that exist to-day. Surely it is not enough that we should bring to the attention of this House only the difficulties which exist; it should also be pointed out that they have inherited something worth while and therefore it is up to them to make a contribution towards it. I make that point at the outset as this is a controversial subject.
To my way of thinking, students can be extraordinarily interesting and extraordinarily exasperating. I do not suppose that the "squares" (if you wish so to call us) of my generation are amused—and I know that the noble Baroness, Lady Birk, has referred to what I am going to say— to see our police, with the burdens facing them at the present time, with trouble in this country and in Ireland and possibly with picketing on strikebound areas, having to lift student protesters off the road or to take certain action at sit-ins. Our public watch on television the marching, shouting processions and the police supervision. To look at those television pictures, to see those smiling, shouting faces one would need a great deal of persuasion to be convinced that those students were hungry and suffering. It is fair to make that point. I think it is also fair to say that there has not been quite so much marching and protesting in recent weeks as in the past.
My Lords, what situation do we face now? The picture I have painted of students is not helpful to them and it is not helpful to those who would support them in requests for increased grants. It is the people of this country who pay for these grants. We must bear that in mind. I think that the noble Baroness, Lady Birk, suggested in her speech some form of additional taxes to be raised; so that this matter affects the people who pay the taxes. I am merely putting to your Lordships that if people receive grants
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for university education they owe us a responsibility in that respect. Knowing the difficulties facing us at the present time, people outside the House, people who perhaps have not had the benefit of a university education, ask: "Why should we continue to subsidise irresponsibility?"
BARONESS SEEAR: My Lords, I wonder whether the noble Lord, coming from an institution which, of all the colleges in the country, has been most associated with student disturbances, is going to tell us that at the height of the disturbances at the L.S.E. our library was full of people not joining in the disturbances but getting on with their work. Their activities attracted no attention at all from the mass media or the Press.
LORD GRIDLEY: My Lords, I am grateful to the noble Baroness for bringing up that point. I am not trying to indicate that I do not realise that certain disturbances have gone on in the universities and that there have been outside elements. I realise that. I am trying to point out that if people have a chance of going to university, they should bear the responsibility which goes with it. We have to pay for these things. While it is being suggested in this House to-night that grants should be increased, there have been speeches made over the last few days pointing to the fact that we have lost 400,000 in the production of cars. This, in terms of the industry's exports, represents a loss of something like £400 million. That is the situation.
I should like to say something about the grant figures. In my own case, I am divulging my daughter's position. She is at Oxford and therefore gets a grant of £520 per annum. Of this, £90 per term has to be given to the college for board and lodging, representing £270 for the year. The student is left with £250 on which to live. But she and other students with whom she is friendly have been able to obtain work quite easily and to get well paid during part of their holidays. I do not feel that these activities have in any way interfered with their studies. At the present time, and in the situation facing us in this country, I find it extremely difficult to find any justification for increasing student grants. But I would favour the appointment of a Committee of some kind to go into the various

1131
anomalies, to see whether injustices exist and to rectify the financial difficulties where these are revealed. But I feel that we have to be sensible about this and that we must make our students sensible. They are the people who will be taking over responsibility from us when we are incapable of exercising our influence any further. I feel that in considering the future of universities and of students in this country one must bring a sensible outlook to bear on the problems which exist. One should not look at the matter as though it is the poor students who suffer all the time. I cannot agree with that viewpoint.
BARONESS BIRK: My Lords, before the noble Lord sits down, may I just put in a question, in case he is not here at the end of the debate? He was talking about irresponsble students and saying that we should not increase their grant. Is he disputing the figures, the size of the grant and the point of inflation, or does he really think it quite right that students should not be able to manage on their grants?
LORD GRIDLEY: My Lords, I thank the noble Baroness for that question. Of course I do not think it right that a student should not be able to manage, but I should like to be convinced of this. I am not convinced at the moment with what I have seen at Oxford and Cambridge. Wherever I have been, I have seen a lot of students who seem to find it possible to find outside work and they are extremely well paid, and there are many jobs going around at the present moment. That has been my experience.
6.31 p.m.
LORD ENERGLYN: My Lords, I should like to thank my noble friend the Baroness for bringing this subject before your Lordships' House. As she has pointed out, this is an excellent place in which to discuss a subject of this kind. I must declare an interest: I can see it only as a don dealing with undergraduates. So all my remarks are exclusively related to undergraduate life.
As I see it, the grants are not really a problem, but rather a facet of a situation which has risen as a result, as the noble Lord has just said, of the very praiseworthy development of adult education in this country. We can refer now, of
1132
course, to adult education in university life, since we are dealing with young people who are mainly over the age of 18 and, as such, wish to be treated as adults. Some of them would like to see a salaried scheme, possibly like an apprenticeship salary in industry, because, as they might justifiably argue, they are passing through an apprenticeship into positions of responsibility in later life. But many of them reject that salaried idea because they see attached to it a political activity to which they do not wish to subscribe. They can see within it the danger of their more politically minded colleagues indulging in trade union techniques; and they do not want that to dominate what, after all, is to them a precious area wherein they can indulge in absolute freedom of thought.
I have mixed with these young men and women for a very long time. I am sure that what they tell me is from the depths of their hearts, and that they are proud also to belong to this unique institution in the world, the British university. There is nothing like it anywhere in the world as a place where young people can indulge freely in thought. This is why they are very cautious about selecting one form of grant-in-aid in preference to another. For example, I remember being in a crowd of undergraduates, and we were talking, naturally, about how poor we all were. I said, "Supposing we cut off all aid to emerging countries, we should have enough money to solve your problems. Would you agree?" To a man and woman they naturally refused to consider that. This really, I think, reflects the true characteristic of the British undergraduate.
It seems to me that the complexities we have heard referred to can perhaps be dealt with more proficiently by others than myself, but I would ask that the Minister keeps in mind—and I hope he will forgive me for being donnish in suggesting that he keeps these three things in mind—three facets of this situation. The first is that, whatever we do so far as grants are concerned, we must preserve the independence and the individualism of the British university; and remember, at all times, that they operate under individual Royal Charters. So any wild idea of collectivising them is "not on". The second thing I would

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ask the Minister to remember is that we have some well-tried organisations in this country, among them that well-tried and honourable organisation called the University Grants Committee. It is a Committee which receives money from the Treasury and directs it into the university without strings. It is this lifeline of finance which retains the independence and the integrity of our British universities.
The third point may seem at first sight superficial and trivial, but I would remind your Lordships that the university is a place full of scholars who can be classified only as graduates and undergraduates. The undergraduates are not students in the sense of young people attending school. They are entitled to this title "undergraduate", because along with it goes the grant to which the noble Lord, Lord Gridley, referred earlier. They recognise that we should enhance it; and therefore, I make a very strong plea, so far as the occupants of the universities are concerned, that they be referred to, in future, as "graduates" and "undergraduates".
Finally, my Lords, bearing these three facets in mind, may I suggest that this situation can be remedied by accepting, I think, what most students would want, and that is equality in the award, and that each potential undergraduate should receive a basic reward, regardless of the parental background? Moreover, as the noble Baroness, Lady Phillips, has said, this should be done on a national basis. If it were done on a national basis, it would remove a large area of complicated administration at Government and local government levels. I therefore return to this wise, well-tried and honourable institution called the University Grants Committee, and I suggest that the recent efforts they have made to remedy many of the defects in our financial structure equip them to be the body to look at this situation. I would suggest to the Minister that if the University Grants Committee were charged with the task of looking at this situation they would emerge with a pattern of financial support and development which would meet the situation, complicated though it is, as we see it at the present time.
6.39 p.m.
LORD ANNAN: My Lords, I am sure that anyone engaged in higher education,
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as I am, must be grateful to the noble Baroness, Lady Birk, for having raised this topic this evening, and opening it with a speech which showed how much hard work she had done, and how well she had briefed herself. What we have to recognise, in respect of the present state of students grants, is that the Anderson principle is at stake. By the "Anderson principle", I mean that principle which was laid down in the Report of Sir Colin Anderson's Committee on student grants, and which established that every student should be able to have a basic grant which covered the maintenance costs of his higher education. Now the reason why this principle may well be discarded is because it was breached in 1967 at the time of the devaluation. At that time, student grants were deliberately not raised by the full amount. Ever since then the grant has lagged behind the right level. There is another reason why the principle may be discarded. The three parties engaged in the negotiations that are going on at this moment about the level of student grants have divergent interests. These three bodies are, first, the National Union of Students; second, the Vice-Chancellors' Committee, and the local authorities who have to administer the institutions to which students belong; and third, the Government.
Let me take the first of these three groups, the National Union of Students. What are their interests? I am not privy to the counsels of the N.U.S. They are at this moment engaged on the first two stages of negotiation, in which the Vice-Chancellors Committee is not concerned. But I have a shrewd suspicion that their priorities are different from those of the Vice-Chancellors. The Vice-Chancellors, as I shall explain, are interested in the level of the basic grant more than anything else. But the National Union of Students are, quite reasonably, not concerned solely with the basic grant because their constituency is far wider than the universities. They represent the large number of students in the polytechnics, colleges of education, colleges of art— now being absorbed in the polytechnics —and in the colleges of further education. Their priorities are different from those of the authorities of all these institutions.
One of the things which I suspect they are putting very high on their list is to

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make discretionary grants into mandatory grants, so that a local authority is compelled to pay a grant to a student who is attending a college of art just as much as it is compelled to pay a grant to a student who is attending a university. The second thing which I suspect they are very interested in, to which the noble Baroness, Lady Birk, referred, is the abolition of the parental means test. This, as we know, they are arguing could be done if children's allowances were removed. They are also concerned with the question of equal grants for wives; they are in effect imploring the Government no longer to go on scandalously encouraging cohabitation in our places of higher education. They are also asking for higher grants for study abroad, which have been badly hit by devaluation. Then they are asking for an annual review of the grant, so that grants are not eaten away during a triennium by inflation. I think we should note here that students up to date have been the only group in the institutions of higher education who are not to some extent protected against inflation. They are the only people who cannot get their level of support reasonably frequently reviewed.
Then, my Lords, they are interested in removing anomalies. Here I should like to thank those speakers who have spoken about the particular difficulties of the students living in London. I do not want myself this evening to make a special plea for the London student except in one case, and that is for the London postgraduate student. I would ask that his case be looked into. The situation is simply this. A post-graduate student is allowed to earn a certain amount over and above his grant. He receives £695 per annum. and he is allowed to earn a further £175 per annum, which he usually does through teaching in his institution —though only a few are offered such teaching. Unlike the undergraduate, he is not allowed to earn more than a certain amount. His total earnings are limited and have a ceiling put upon them. In London, the post-graduate receives no more than a post-graduate anywhere else. He is the sole person who receives no London allowance. Academic staff receive a London allowance; undergraduates receive a differential if they
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are in a London university; and of course the technical staff receive a London allowance. This is an anomaly which I should hope the Minister can give us an assurance will be looked at. Unlike the noble Baroness, Lady Birk, I do not expect the Minister this evening to give us assurances that all the points we have raised will be implemented at once. That cannot possibly be done while the negotiations with the National Union of Students are going on. But what I should like an assurance about is that this particular point about the post-graduate student in London will be borne in mind by the Government whether or not it has been raised in the negotiations. So much for the side of the students.
Now, my Lords, let me turn to the side of the Vice-Chancellors. What concerns a Vice-Chancellor, or a director of a polytechnic or a local authority is the level of the basic grant. This basic grant other than at London and Oxford and Cambridge is about £100 below what it should be. The Vice-Chancellors—and here I can speak only for them—are entirely behind the National Union of Students' campaign for better grants as a whole. But what they are primarily interested in is the basic grant, to which the National Union of Students will not necessarily give top priority. Why are the Vice-Chancellors so interested in this basic grant? Because university finance rests on the assumption that students must be able to find money for the very modest meals served in refectories; to find money for the growing rate of rents in lodgings; and to find money for the rents of halls of residence or rooming houses run by universities. If they cannot find the money for these purposes. then a particular part of university finance is deeply distorted.
Let me give your Lordships an example of why it is distorted. Some time ago the University Grants Committee informed universities that they were no longer prepared to find money for student residence, and they told the universities that they must borrow this money on the open market. But the University Grants Committee said: "We will give you an incentive to go out and borrow in that we will give you a small subsidy towards the rate of interest at which you will have to borrow". So the universities did this. They went out and borrowed on the open

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market. They erected halls of residence; and of course they have to charge in the rents for these halls of residence not merely the rent which is needed to maintain the hall of residence, but the money for the repayment of the debt and the interest on that debt. Therefore there are bound to be higher rents in those halls of residence. If we do not get a correct basic grant for our students, then they will be unable to pay the rent in university residences. I suspect, also, that they will be unable to pay the going rents for lodgings in most big cities to-day.
I come now, my Lords, to the third party in the negotiations; namely, the Government. The Government hold out a bag of gold, and they say to the N.U.S.: "Here is a bag of gold. What will you spend it on? It is entirely up to you to choose" The last time that question was put to the N.U.S. they chose the fringe benefits. In saying that, I am not denigrating them. But they did not put as their top priority the basic grant. That was why we found rent strikes and refectory sit-ins and universities faced with a situation they were powerless to resolve.
May I here interpolate a suggestion for the Minister to consider? He could, I think, help institutions of higher education such as universities if his Department were able to treat refectories as generously, in terms of certain matters of finance, as hospital refectories and canteen are treated. These financial matters are rather complicated, concerning as they do the writing-off of equipment, and I hope the Minister will excuse me for not going into detail. All I am asking at the moment is whether we can have in our refectories the same rules as operate in hospitals under the Department of Health.
The difficulty is that refectories in universities have been treated very much under the terms of the 1925 Act governing the Oxford and Cambridge colleges. Under that Act, one of the concerns of the Government of the day was to ensure that the colleges of Oxford and Cambridge did not use their endowments to enable their Fellows to dine every night off oysters. In my institution, I hasten to assure the Minister, no oyster has been seen for very many "ears; the only delicacies I can think of are the squids, which are used in neurobiological
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research. But it is really ludicrous to go on treating refectories in universities and other institutions of higher education in the same way as they were treated in 1925, when very stringent restrictions were put upon college kitchens in order that they might not use endowments as subsidies.
To-day under the U.G.C. rules, refectories and halls of residence must also pay their way, and that is why the universities must charge the full price. The noble Baroness, Lady Birk, referred, quite rightly, to the fact that some refectories do make losses. My Lords, it is true that they do make losses at times, because occasionally it is not possible for them to put up prices quickly enough to meet rising costs. But the fact that some make losses is quite a different thing from subsiding a refectory. I hope that no-one will leave this debate thinking that universities are able to subsidise their refectories out of the grants they get for teaching and research. That is the last thing they wish to do, and it is the last thing they will do. I think it is very important that that point should be realised, because I began my speech by referring to the fact that the Anderson principle was at stake.
I must say that the Vice-Chancellors are in no doubt about one thing. If, at the end of the negotiations, the Government are unable to raise the basic grant by the full amount and the Anderson principle is finally breached, then the Vice-Chancellors' Committee will undoubtedly make their view known to the public that Anderson is dead. They will then say that in view of this fact they expect students to earn in the holidays, and this will become part of the whole business of being a student. That will be a major change of principle.
We all know that students do earn in the holidays. Here I should like to refer in closing to the courageous speech of the noble Lord, Lord Gridley. I did not think it received universal approbation in your Lordships' House this evening, and I am sure that it would be very unpopular if delivered in universities and other institutions of higher education; but I think it is good that such a speech was made, because it expressed a point of view that is well known to me in industry and also in organised labour—though I

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do not mean to imply that the trade union movement itself would back that speech. However, certainly many men in the working class would say that students are well off and that there is no need for grants to be as high as they are. All I would say in reply is that one of the things the Anderson principle managed to establish was that in this country we have a higher percentage of working-class students than in any other European country. Such students are the ones who will be seriously affected. We shall find a decline in their numbers, and indeed a decline in the total numbers of students who go to institutions of higher education, if the grants are not kept to a reasonable level. If we really find ourselves in a position where those in higher education are only the ones who have been brought up to believe that that is the natural place for them to go because the jobs they are destined for are those which naturally demand higher education, I think the country will be the loser. I am also certain that the universities would also be the losers. I should like to close on that note and ask the Minister whether he will be good enough to bring the points I have mentioned to the attention of his right honourable friend the Secretary of State.
LORD GRIDLEY: My Lords, before the noble Lord sits down, may I ask a question of him? I must first thank him for having said what he did about my own speech. In view of his great experience and the really magnificent speech he has just made, I should like to put a point to him about the payments which parents are required to make as a contribution towards the grants made by the authorities. Is the noble Lord saying that some parents do not make a contribution to their children who are going to university? If so, has he any evidence that this is happening on a fairly large scale—that the contributions which parents should make towards students' education is in fact not being paid? Secondly, I should like to ask: is the noble Lord making out a case that it is more expensive in London and that therefore the grant should be greater for London than for Oxford or Cambridge? I believe that is what he is saying.
LORD ANNAN: My Lords, the answer to the first question is, I am afraid, undoubtedly, Yes. There are a great many parents who are expected to contribute to the grants which their children get but who do not do so. Sometimes this can be for perfectly understandable reasons: because a parent may have two, and sometimes even three, children at institutions of higher education. One can see that in such cases a parent would be very hard pressed, even though allowance is made for this in the Anderson principle; but am afraid there is a great deal of evidence to that effect.
With regard to the noble Lord's second question, I was referring mainly to the post-graduate student. I think here the case is unassailable. As regards the undergraduate student, I think a very strong case could be made out for a differential between London and Oxford and Cambridge, but I was not pressing for this in my speech.
6.59 p.m.
BARONESS STOCKS: My Lords, may I say at the outset that I am not referring to post-graduate students' grants or to the work of post-graduate students, but to first degree students at universities. My noble friend Lady Birk has made it quite clear that in order to preserve what is regarded as a civilised life for students in the modern world it is necessary for them to work in the vacations. and in spite of our regrettable level of unemployment, they are, surprisingly, always able to do. The noble Baroness also made it clear that this does not apply to veterinary students, because they are required to work during vacations. Also, I think it does not apply to medical students or engineers. But I am thinking in terms of first year undergraduate students working for first degrees.
Only this morning I read in the Daily Telegraph that the University Grants Committee has issued a directive to universities to point out that owing to the dearth of applicants for places in science faculties, there is great pressure on the arts subjects, on the humanities, social science, psychology, English and history. I can throw some light on the reasons for that preference but I will not do it now because it would be slightly controversial. That is the situation. What does a student in the modern world require for a civilised existence? As my noble friend

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pointed out, a student requires food of course, and a capacity for responding decently to changing fashions in dress; perhaps cigarettes, but certainly a high degree of mobility, because students to-day are extremely mobile. They like to move in large numbers all over the country, either supporting demonstrations by other students, or supporting the mass picketing by trade unions for which they have a natural sympathy. It is clear that under present grants they cannot do those things easily.
May I widen my remarks to embrace the whole university system as it is at present. My accusation against the universities is that, like poor Jim Jay in De La Mare's poem, they have got stuck fast in yesterday. They have inherited a pattern of terms and vacations which were relevant to Oxford and Cambridge in the latter part of the last century. Then Oxford and Cambridge were regarded by some as the necessary preparation for one of the learned professions, and were regarded by many as finishing schools for the rich, providing social amenities. Any reader of Trollope will be able to fill in that picture. But why, oh why! has it been necessary that that pattern of terms and vacations should be handed from Oxbridge, to Redbrick and from Redbrick to the glass and concrete universities which have proliferated all over the county under the inspiration of the noble Lord, Lord Robbins? It seems unnecessary for that prolongation of university life, the first degrees, to be perpetuated now in our universities. If we did not perpetuate it we could perfectly well afford to pay the kind of grants which my noble friend Lady Birk regards as necessary. It can be done. It was done during the War, in my own college of Westfield, when we fitted our three-year degree course into two years without, I am convinced, any loss of academic standard or the quality of the degrees which resulted. That is something which could, and should, be done at the present time and in the present climate of opinion.
Finally, my Lords—yes, finally—we must remember that the public purse is not infinitely expandable, though it can be replenished from time to time by the printing of quantities of paper notes. We must face the question of priorities. At the moment we are spending quixotically
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on the universities and on buildings which are used for part of the year and not used for the rest of the year. We are starving the Police Service, we are starving the National Health Service, and it is time that we began to look in terms of priorities. I hope to goodness that we shall.
7.5 p.m.
LORD BOWDEN: My Lords, may I begin by thanking the noble Baroness, Lady Birk, for initiating this extremely important debate. So much of what has been said is accepted by everyone; there can be no doubt in the mind of anyone who has tried to cope with students that their basic grant is too small. The Vice-Chancellors' Committee has raid so many times, as the noble Lord, Lord Annan, has reminded us, and it went on record a couple of years ago at that time as saying that the total sum which was given in grants was at least £20 million less than necessary in its considered view. It is anomalous that students should find that they are earning less than half as much as the part-time cleaners who clean the hall, for example; or about a third as much as their own contemporaries, who, having left school at the same age, have gone into industry, or business. They find it extremely puzzling and very humiliating that they should be so hard up. There is no doubt at all that their present standard of living is lower than one should reasonably expect in a civilised society.
Although this is certainly true, far more important are other problems which have been raised already this evening; the parental contribution and the discrimination against married women and against those students who do not attend universities. The parental contribution is levied on all parents whose disposable income is greater than £1,500 a year, which is considerably less than the average income earned by ordinary people. In other words, the parental contribution begins when people's salaries are in fact very small.
It is undoubtedly and deplorably true to say that a large number of students do not receive anything at all from their parents. I have been shocked because it is common in my own university. It is true to say as a generalisation that students who are the children of the very poor are not so badly off; they manage more or less on their grant, small though

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it is. Students who are children of the very rich do quite well, because their parents usually make up the grant to something approaching its original value, and perhaps even more than that. But it is the ordinary middle-class parents, whose income is anything between £1,500 and £3,000 or £4,000 a year, who so often fail to make up the students' grants either because they cannot or will not. We have many cases of hardship which have been a great source of distress to everyone who has seen them.
I am sure that students are right to press for some system which makes it unnecessary for them to persuade their parents to give them money they can ill afford. Many students resent the fact that they should have to approach their parents —with whom maybe they are not on particularly good terms—and ask for what they regard as charity. I would even go so far as to say that when my own daughters went to college they resented the fact that I should be asked to pay their grant for them. Although they knew I did not begrudge it, they felt it was wrong that I should have to pay. This view is widespread among students. It does them credit, but it is a great source of difficulty and hardship among students that so many fail to get the parental grant.
The question of married students has been raised already many times. We seem to feel that it is wrong for girls to get married at the age of 20 or 21 if they are at university, although, as we well know, the average age for marriage among girls outside university is such that many of them expect to be married before they are out of their teens. If women students get married they lose heavily financially. So either they get married and conceal the fact, which is a very serious crime, or some of them fail to get married but cohabit nevertheless. The Minister will remember from his previous incarnation, that St. John once told us that "The wages of sin is death" Today, in 1973, under a Tory Government it is £4 a week.
I feel that this is an intolerable situation, and I hope that the Government will be able to do something about it, even if they cannot make an announcement this evening. The question of grants is really very complicated. Engineers and physiotherapists have to work for 45 weeks a
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year and cannot possibly spare time to earn anything. Students who have to go abroad find themselves acutely embarrassed because their grant of £500 in 1968 is today worth no more than £350 in either France or Germany, and no student can live on it. We have cases—and they are all too frequent, I am afraid—of students who had to apply for supplementary benefits in order to make it possible for them to live during the vacation. It is clear that the social security system was never devised in the expectation that students would have to depend upon it, but in one of my own halls no fewer than 38 students applied. Nearly all of them got grants because the social security people were more sympathetic and more understanding than the local education authorities had been.
There is real evidence of considerable financial hardship—frequently, and very courageously, borne by students who feel that they must somehow stick it out and who will not complain, whatever the difficulties they have to accept. It is quite wrong to say, as the noble Lord opposite said a moment ago, that students are irresponsible and demanding. Thy are neither the one nor the other. My own student body have been extraordinarily sensible and they have never demanded or expected more than they should reasonably be given.
LORD GRIDLEY: My Lords, may I ask the noble Lord a question on that point? My picture of students protesting in front of television with banners and so on was not with the idea of exhibiting them as being irresponsible or anything like that. Of course they can do that kind of thing. The point I was trying to make was that if they come now to the Government or to the country and say that they want more grant, that sort of behaviour operates against them and against having sympathy with them in getting their grants.
LORD BOWDEN: My Lords, is it very often true to say that it is not until the television camera rises and the men say, "Let us have some action" that the riot starts.
I should like to re-emphasise one point made by the noble Lord, Lord Annan, the vexatious question of the financing of student halls. Students have said many times that they do not want the kind of

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luxury which was common in Oxford and Cambridge in my own youth. They are well content with a most modest hostel type of hall. But it is not possible to pay for a hall out of the funds which students can afford to pay if they have to pay the mortgage. In the old days, students lived in a hall built by someone like Henry VI. To-day, the university is required to build it on land in the middle of a city, at great expense, and to borrow the money to pay for it, It has to charge students a rent which covers the mortgage as well as everything else. We have found that if we get the maximum sum which the Grants Committee can give us, and pay mortgage on the assumption that bank rate is 10½ per cent. (as it was not long ago) the whole of that part of the student grant which is expected to pay for board and lodging would be spent on lodging and nothing would be left for food at all. This is the situation with which the universities are confronted. They have to provide somewhere for their students to live, and the system does not allow them to do it at a rate which students can afford to pay. Some old and very good luxurious hostels have already been paid for, but students have to pay the mortgage on the very much more simple, spartan hall which is now being built. The Government should look at this problem.
The noble Lord, Lord Annan, mentioned university refectories. We have in my own institution a large number of craftsmen and workmen of all kinds. We have to provide a works canteen for these people on a scale which is normal in factories in the district. We find that our students have to pay much more for their meals than the workmen do—again an extraordinary anomaly which one would like to remedy. I do not believe that it is enough to subsidise the refectories. A large number of students do not eat there regularly, and it is far more important that students should have a grant which makes it possible for them to live, as so many of them have to do, in lodgings or at home, or wherever they please. The question of the Anderson principle is acutely important and I fear that the Government have repudiated it but have lacked the political courage to say so. If this is true it is deplorable. I hope very much that the Minister will assure us that it is not so.
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Now, my Lords, I should like, if I may, since this topic has not been mentioned, to refer briefly to the effect that the student grant reductions have already had on universities and on their expansion. For many years, as your Lordships will remember, the number of students entering universities has grown much faster than anyone had foreseen; but this situation changed dramatically about three years ago. The number of students entering universities last year and the year before was significantly lower than had been foreseen, and in 1974 I think it likely to be about the same as it was in 1973 although a forecast of a 5 per cent. increase had been made by statisticians who knew the number of children who would he leaving school that year. I have talked to many headmasters who have told me that some of their brightest boys no longer want to come to college because they do not think the advantages which come from graduation are worth the financial sacrifices which they have to make while studying.
This decline in student population, which is not very great in total, masks some catastrophic declines in the recruitment to certain departments in universities. These departments are those particularly concerned with the education of people who intend to go into industry and make things which can be sold on world markets. I refer to mechanical engineering, chemical engineering, chemistry and, most of all, metallurgy. Most undergraduate schools of chemistry in the country are half empty at this moment. Postgraduate schools are still not doing too badly, but the decline in entrants to undergraduate schools has been quite sudden and quite catastrophic. This year, for example, my own school, which I can take as typical and which has nearly always recruited about 140 undergraduates a year, recruited 67. Our school of chemical engineering was the largest in Europe for many years. It used to recruit about 110 students a year but it recruited 37 students this year. This catastrophic decline is matched by a decline in schools of mechanical engineering.
But the worst case I think of is the decline in students of metallurgy. I think this is because the metallurgical industries suffered a slump a year or two earlier

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than the chemical industries did, and students who wish to read metallurgy are very much influenced by their prospects of employment and by the circumstances in which they will live while they are in college. In my own institution we have room for about 36 undergraduates a year: this year we recruited six. The University of Birmingham has two schools of metallurgy. This year they recruited 11 students between them. The total number of graduates in metallurgy last year in the whole of this country was 200; the number in Russia was 5,000; the number in Japan was nearly 3,000.
I now find myself recapitulating arguments put forward by the Barlow Committee which said in 1946 that British industry cannot hope to compete on world markets unless it has an adequate number of engineers and technologists. The British Steel Corporation is about to spend about £3,000 million on modernising itself. This is a sum of money so gargantuan that it would pay for Maplin, for the Channel Tunnel and for the Concorde put together twice over. It is a sum of money which, if it is invested properly, can transform our industry and make it competitive in the world. But, my Lords, there are not going to be any metallurgists, there are not going to be enough mechanical engineers, to use the steel when it has been manufactured. There are not going to be enough chemical engineers to make chemical plant for British industry when the steel is available. These are very grievous possibilities.
It is quite extraordinary that a subject such as metallurgy, which is of crucial importance to the industry of this country, should have suddenly collapsed and almost disappeared. Let us hope that the decline will be followed by an equally rapid increase in the next few years. I have no means of knowing whether it will or will not. All I can tell your Lordships is that when I have spoken to schoolboys and asked them why they do not become mechanical engineers, or chemical engineers or metallurgists, they all say the same: It is ridiculous to lose so much while we are in college when we have no guarantee of a really successful career thereafter.
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It is notorious that bad news travels much faster than goods news. Two years ago the I.C.I. almost overnight reduced its annual recruitment of chemists from 600 to 70. Similarly, I.C.L. reduced their recruitment of electronics engineers from 493 to 50, again almost overnight. This sort of news travels fast and discourages would-be chemists or electrical engineers or chemical engineers, and this is another reason why some important university departments are half empty. I beg the Government to believe that, unless the student grants are improved, and prospects for employment are known to be better than they have been, the bright future of universities will never materialise and the enormous investments which have been made in British industry will be totally profitless.
My Lords, these are very weighty matters and I cannot do justice to them this evening, but I beg your Lordships to believe that the students' grants are too small; that they are much too small in those cases where the students have to depend on parental grants; that they cannot possibly attract married women —and married women are going to play an increasing role in our community. I do not think that the full significance of the decline in recruitment in some university departments has been grasped by the Department of Education. I do not believe that the effect of a sudden shortage of graduates emerging from the universities and able to take their proper role in productive industry, has been admitted, accepted or understood; but it will be inevitable unless and until the students believe they have a fair deal while they are in college and reasonable prospects thereafter.
7.23 p.m.
LORD WYNNE-JONES: My Lords, the sombre remarks with which the noble Lord, Lord Bowden, has just concluded explain why this topic is of such importance to us to-day. The noble Baroness, Lady Birk, has put before us this subject at a time when it is most appropriate. The argument which is so often made about students and which was made extremely ably by the noble Lord, Lord Gridley, is that students frequently behave in irresponsible ways and create an image which is deplorable and reacts against any claim that is put forward on their behalf. One does not really expect young

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people at that age to behave with the greatest shrewdness in putting forward their claims. It might well be that if they were playing the matter very shrewdly they would take a different line, but they are behaving in a very normal and natural way. However much one may deplore some of the things they do, nevertheless they are the actions which they take because they believe in them.
It is important to realise that the grant which is made to a student by the State is not made because we think that that is a nice young man, or that that is a nice young woman, and we want to keep him or her for three years without having to do any work. That is not why the grant is made. The grant is made because it is essential for the future of the country that people should be well trained and well educated. In the old days before grants were made by the State, these grants came from the parents because the parents wanted their children to have the education; they believed it would be good for them and that they would serve the country better after they had been well educated. Furthermore, there were benevolent trusts which gave money as well in this way, and later came some scholarships. When I went to university, if one did not get a scholarship, or if one had not parents wealthy enough to support one, the only way of getting through university was by saying that one intended to be a teacher. Then you received a teacher's training grant for three years and had to promise that at the end of that time you would be a teacher. It was later found out that this promise was often impossible to enforce, and always difficult to enforce, and consequently the situation depended very much upon whether or not the student happened to feel he had a sense of obligation in the matter.
We now realise, and have done for a long time, that the whole future of the country depends upon having people who are well trained in a whole variety of ways. The noble Lord, Lord Bowden, has just pointed out the importance of certain types of training which students are not now undertaking, and how much we are going to suffer because of this. It would be disastrous for the country if we were to cut down the supply of highly trained people. This supply comes through the universities; it happens
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through the polytechnics; it happens through training colleges and in a variety of other ways. It is essential for us to realise, also, that the pattern of higher education has been changing enormously over the last few years. To-day it covers a range which it did not cover 25 or 40 years ago. It is now much wider, and the polytechnics to-day are playing an extremely important part in the whole advance of higher education. I would myself guess, and indeed hope, that in the next twenty years or so the polytechnics may take in many more students than universities take in. I have no doubt from what I have seen of them—and I am closely associated with one—that they do the job extremely well.
It is interesting to note that, owing to the peculiarities of our financing system in this country, the polytechnics do not come under quite the same type of pressure as universities do. The students of course do, because they get the same student grant, but some of the problems which the noble Lord, Lord Annan, has mentioned, which are extremely important ones, as I well know—those about university halls of residence and also the catering facilities in universities—do not arise in the same form in the polytechnics because the financing of a polytechnic is not done like university financing. Polytechnics get a grant direct. It is through the local authority, but in the end it comes through a pooling system and from the Government. They get a grant direct for putting up buildings. They can put up halls of residence without needing to have benefactions or without having to go and raise the money on the open market.
I remember that when I was in America some years ago I found that there the building of halls of residence, and indeed of most university buildings, took place in quite a different way from ours, because if a State wants to have university buildings, such as halls of residence, then it raises a loan, and does so at an extremely low rate. I asked how it was possible to raise a loan at 2½ per cent., and the answer was that that was quite possible because if one subscribed to that loan one did not have to pay income tax upon the interest on the loan. Consequently, wealthy people put their money into State loans for putting up university buildings, and they do not have

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to pay income tax on it. We do not have a system of that sort, and consequently when a university is forced, as universities are to-day, to borrow money in order to put up halls of residence, they cannot possibly have students coming in at fees which are possible for the student to afford and also make the hall of residence viable economically. Therefore, they are in real difficulty to-day. It is this sort of thing which is putting immense pressure both upon the students and upon the universities.
I am sure we were all very grateful to the noble Lord, Lord Annan, for explaining in such detail where the difference comes between the attitude of a university administrator (and of course the University Grants Committee) and the student. They are quite different attitudes for this very simple reason: that one is concerned with the administrative problem of meeting high interest charges and of making the place run in a solvent way, and the other is, quite naturally, concerned with having an income that can meet the costs which it is expected to bear.
I think it must be quite clear that it makes no sense at all to have a grants system where the grants are inadequate to meet the basic needs of students. It seems to me that it is nonsense to have such a system. Therefore the Government must surely look at this matter carefully and see how they can make the grant adequate to meet the actual costs which students necessarily have to bear. If they prefer to do it by saying that they will relieve the universities or polytechnics, or whatever they may be, of all those charges which make them raise their costs, that is one possible way of doing it; but clearly, however they do it they must make the grant to the student adequate to meet his basic needs.
Clearly one must realise, as has been said earlier in the debate, that the student is someone who is not being kept in luxury by the community. If a student, on the average, were to go and take a paid job, he would get something like, say, £35 a week. Instead of that he is accepting a grant which is more like £500 a year. In other words, he is accepting a grant which is little more than one half what he would get if he
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were earning money, and this is a real deterrent to the working class boy or girl.
I can well remember some years back when I was living in Newcastle and I was in the university there, my wife, who was on the City Council, was talking to a woman whose boy was at the local grammar school. This boy was doing quite well, but his mother decided that she could not afford to keep the boy on at school and for him to go to university. My wife begged her to keep him on and said, "Look, he has excellent opportunities. From what I understand he has done very well at school, he has every chance of getting good 'A' Levels and of going on to the university and doing well". But the reply was "He can go out now and earn so much, whereas if he stays on at school I have got to continue to pay for him, and if he goes to the university he will only get half of what he would be getting in a paid job."
This state of affairs applies all over the world. A few years ago the Carnegie Trust in America made a careful analysis of the costs of running a university and the costs of keeping students. It pointed out in the end that, contrary to popular belief, the student was really subsidising society over the period of his training, and so far from the student being someone who is being given money for nothing he is working hard over this period—probably harder than he does at any other time in his life—and at the end of that time he will be someone of much greater importance and value to the community than he was before he took his university training.
If one looks at what happens in other countries one finds that our system of grants—and I think it was the noble Lord, Lord Annan, who referred to this —means that a higher percentage of students come from the working class than in other European countries. I quote from the latest O.E.C.D Observer, and the figures are as follows: in France, in 1968, the ratio of students from what they call the upper stratum and the lower stratum of society was 28 to 1; in Germany in 1964 it was 48 to 1; in the Netherlands in 1964 it was 45 to 1; in this country in 1970 it was 5 to 1. That is a sensational difference, and it means that this country has been doing a far better job in educating the intelligent

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young people in the country who are capable of benefiting from education. We can go a lot further, I have no doubt, but at least we have made a much better job of it so far than have other European countries. It would be a tragedy if we went back on it. We have an opportunity in this country of continuing to set a high standard and an excellent pattern of higher education—I deliberately do not use the term "university education" because I do not think we ought to discriminate between university education and polytechnic education and in fact all forms of higher education. I think we are setting a good pattern and can improve on it, but in order to do this we must be certain that we encourage our students to go through. We must, therefore, pay them adequate grants and also, as has been repeatedly pointed out this evening, we must remove the discriminatory clauses.
7.38 p.m.
LORD BALERNO: My Lords, I should like to thank the noble Baroness, Lady Birk, for giving us this opportunity, and also to tell her that in Scotland all student grants are mandated. There are no discretionary grants there, and we are very puzzled and amused by the great variation in grants that occurs in the case of students from England who come up to Scottish universities. I think it would be a good idea if the Scottish principle were applied throughout.
The noble Lord, Lord Wynne-Jones, put up a very strong plea in support of the noble Lord, Lord Annan, on the Sir Colin Anderson principle. I think this should be given the most serious consideration by the Government, with a base grant for all. However, I would say that one might perhaps base the grant on the academic time that has to be spent because, as the noble Baroness, Lady Birk, indicated in regard to veterinary students, and as the noble Baroness, Lady Stocks, indicated in regard to medical students and engineers, they do not have opportunities for remunerative work in the vacation. Their professions require them to do their work throughout the vacations. Therefore I certainly think they are entitled to a larger grant, based on the extra time spent.
I most certainly strongly support the noble Lord, Lord Annan, in his plea for
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refectories. Speaking as a biologist, one knows that young animals must be properly fed. If they get their feed, good and proper, through the subsidising of the refectory they will be very much better students, although they may be more vigorous in protest. But there are, especially among the women students, those who will sacrifice for other things, perhaps adornment, quite a lot of the money which they should be spending on food. It appears that there might be a change of heart from the U.G.C. in the matter of the running of residences. Should that happen to be so, I ask the Government to give it every encouragement.
My Lords, there is one important question I want to ask the Government, namely, is there another nation in the world which treats its students more generously than does ours? I doubt it. We should remember this in any discussion we have on the subject. It is a very complex subject, and I know that everything depends on getting the priorities right. I do not envy the Government at all in having to come to a decision here, with so many varieties and so many improbables, but I wish them the best of luck.
7.41 p.m.
LORD CONESFORD: My Lords, I had no intention of speaking. I know the Minister wishes to answer the debate and I promise not to detain the House for more than two or three minutes. We have heard many admirable speeches. I want to make it absolutely clear that I am not suggesting for one moment that I do not wish the students' grants to be adequate for the purposes which have been outlined in those speeches. I do not wish to say a word against the plea that there should be improvements in some of the ways that have been mentioned. I desire adequate grants for students. The sole reason for my intervention is that I do not think that those who plead for more adequate grants do any good to their cause by minimising some of the outrages being committed by students against the most obvious interests of the university, such as the occupation of the administrative quarters or rendering the giving of lectures impossible, however much many of the students may desire to attend those lectures. It may be said that this is all done by a minority of the students, and I think that is true.

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I happen to have worked fairly hard myself for the universities. I was on the promoting body of one of the new universities and did my utmost to raise money for that university to get greater comforts for the students, but when I see very often the minority of students being allowed effectively to stop the work of the university by occupation, sit-ins, by riotous prevention of lectures and even, which I feel very strongly about, by preventing in their spare time students from hearing any representative of a Party that is not approved by the majority of the Left Wing opinion in that university, I am appalled. That is the negation of the work of the universities. It may be said that that is nothing against the plea introduced by the noble Baroness—
LORD ANNAN: If the noble Lord will forgive me for interrupting. I totally agree with what he says about the interruption of someone whose political views one does not approve of, but nevertheless I would remind him that in his time as an undergraduate, though not at his university, as we see from Lord Davidson's memoirs, there was a case when Keir Hardie was to address a meeting of the Fabian Society at Cambridge. He was kidnapped at the station, locked in a room by Lord David-son's friends, was released and allowed to address his audience in the Corn Exchange. The meeting was broken up by the rapid despatch of stink bombs. I would only say that this is not a new phenomenon in our universities. The only difference is that the menace seems to be directed now against the Conservative Party where once it was directed against the Labour Party.
LORD CONESFORD: My Lords, I have the greatest respect for the speech that the noble Lord made in the debate. I know there have been troubles in universities before. Even in my day at Oxford it was once my job and that of others to protect and obtain safe passage for a rather famous Prime Minister, but it was safely accomplished. The difference between the outrages then and the student outrages now is that then they were not justified by something calling itself the National Union of Students. What appalls me about this is that they are still considered the appropriate body to negotiate. So far as I can see, they have not taken the trouble to object to the outrages that
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I have mentioned, the stopping of the work of the university by the occupation of premises, the intervening in industrial disputes and so on. I deplore that not least because it tells against the true interests of students. I believe it is a minority. The National Union of Students ought not to try to justify that minority but should try to prevent them from committing their outrages.
7.49 p.m.
THE PARLIAMENTARY UNDERSECRETARY OF STATE, DEPARTMENT OF EDUCATION AND SCIENCE (LORD SANDFORD): My Lords, education does not bring me to this Dispatch Box as frequently as the environment did, but it is enchanting when I do get here to find myself answering a debate introduced by a succession of four gracious noble Baronesses in turn. I am sure we are all grateful to the noble Baroness, Lady Birk, for raising this issue to-night. It gives myself and my colleagues in the Department of Education and Science and the students in the National Union of Students, who together are at this time reviewing this matter, the benefit of your Lordships' views. It does so in the same weeks as the National Union of Students will be conferring, as they will be on Friday.
My Lords, whereas I agree with several noble Lords, like my noble friends who have just spoken and the noble Lord, Lord Wynne-Jones, that there are some students who are quite exasperating in their behaviour and do in fact spoil the good case that all students should have their grants reconsidered, I cannot agree with the noble Baroness, Lady Birk, that students as a whole class are unpopular, or that they are as a whole class alienated from society. I think we need to get out of our minds the picture created by the bad behaviour of this minority. I have no time, and will not attempt, to cover all the points that have been mentioned in this debate. I hope the noble Lord, Lord Annan, and the noble Lord, Lord Bowden, will excuse me if I do not deal with the problem of refectories, although that has a bearing on the subject but that is not to say that the points I do not mention will not be considered. Where I can do so happily in some cases, I will write to the noble Lords concerned.
But to get back to the remarks themselves.

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The basis of the present system of review is this. There is a study in depth once every three years of the changes which have taken place in the students' cost of living. The levels of the various grants to which students are entitled are then adjusted in the light of these changes and the new rates are announced for the next three years. The National Union of Students has asked that in order to combat the difficulties arising from rising costs the rates should be adjusted annually on the basis of a student cost-of-living index. The noble Baroness, Lady Seear, will be glad to know that I can confirm that this proposal is, along with other suggestions, being considered during the current review. But in practice, as I will show in a minute, the Government have tempered the wind of inflation throughout this three year period, and particularly in the last year of the current triennium, by interim increases in the rate of grant.
At the last review, three years ago, the Government provided £76 million for improvements in the grant structure, and most of this, though not all, went into improvements in the basic grant rates. For example, the level of grant for students living away from home to attend universities other than Oxford, Cambridge and London—and perhaps that is the expression I could use without the tongue-twisting prelude throughout the rest of my speech that is, those attending provincial universities other than those three —was raised by 13·1 per cent. in the first year, from £380 to £430; by 3·5 per cent. in the second year, from £430 to £445; and by 4·5 per cent. in the third year, from £445 to £465. In addition, considerable improvements were made in the system of parental contributions.
The Government recognised, however, earlier this year, that in spite of these improvements both students and parents were beginning to experience difficulties because of the rate of inflation. In consequence, we introduced a package of further improvements to apply in the current academic year, the third year of the triennium, in addition to those already agreed and announced. The main items of this package were an additional £20 per annum, raising the grant from £465 to £485, a f0075rther 4½ per cent., on the main rates of ordinary maintenance grant and a further substantial improvement in the parental contribution system.
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Looking at the effects of all that, in the three years as a whole students living away from home and attending provincial universities will have had their rates of grant raised from £380 to £485, and I hope the noble Lord, Lord Bowden, will agree that that is by no stretch of the imagination a reduction. That is an increase of 27·6 per cent., compared with an increase of 28·5 per cent., fractionally more, in the Retail Price Index over a similar period of time. I do not think that can be described as trailing miles behind the rise in prices and the cost of living. The total allocation of public funds to mandatory and teacher training awards has risen during that period from £107 million per annum in 1970–71 to an estimated £144 million for 1973–74, or over 34 per cent. I think we can say that that is rather more than "peanuts"; it is quite a considerable sum and quite a considerable percentage. Side by side with that, the level of residual income at which parental contributions are expected was raised from £900 per annum to £1,500 per annum, a rise of 67 per cent., compared with a rise in the average earnings index of 43 per cent. over the same period. I would say, and I hope your Lordships will agree, that bearing in mind the constraints to which everyone has been subject over the past 12 months, neither the students nor the parents have done too badly.
Now I come to the current review. At the time these interim measures were announced the Government also announced their intentions of embarking upon the next review to cover the period 1974–77. I should like to confirm what the noble Lord, Lord Annan, has already said, that this review is now under way. The National Union of Students were invited, as they were in the previous review, to take part in the exercise to ascertain the changes which had taken place in the student cost of living over the previous three years, that is between September, 1970, and September, 1973. They accepted this invitation on the condition that certain other changes in the student support system which they wanted to see would also be discussed. In consequence of that, two parallel working parties, consisting of members of the Education Department and the N.U.S., were set up and began work as long ago as the end of July. These working parties

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have been meeting regularly since then and will be completing their work within the next two or three weeks. The Government will then be in a position to consider how much money it would be fair to make available to students in the coming triennium.
Now I turn to one or two, but I am afraid not all, of the special topics which have been raised during the debate. The first one is parental contributions. Having made the points that I have just made, of course I accept the force of all that has been said, and I would not claim that all students have been relieved of all financial hardship—far from it. One outstanding problem is the one mentioned by the noble Baroness, Lady Birk, and others —that of students whose parents do not pay the full assessed parental contribution. There is no legal obligation on parents to pay this contribution, and, as I have said in earlier debates, we do not consider, and nor, I imagine, would the noble Lord, Lord Bowden, that it would be right to legislate in a matter which is essentially domestic in character.
LORD BOWDEN: My Lords, may I make one observation which may amuse the noble Lord. I believe that in Germany not only is it obligatory for the parents to pay, but obligatory for a parent who runs a large Mercedes to provide his son with a small one.
LORD SANDFORD: Well, my Lords, that is a point to note. It has also been suggested that since parents of students in full-time education receive tax relief the contribution might be raised through the tax system. We have considered this, but there are a number of real difficulties and we have concluded that that scheme would not be workable. Another suggestion is that a voluntary loan scheme should be set up, available for students whose parents do not make their contribution; but I think this, too, is open to objection, in that many parents who now make their contribution, if they knew about this suggestion would refrain from doing so. The point here is that it would also mainly benefit the better-off parents rather than benefiting, as we want to do and as we are doing at the moment, the poorer working class parents, whom the noble Lord, Lord Annan, and the noble Lord, Lord Wynne-Jones, rightly
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have very much in mind. Our fear is that it would not be long before the whole parental contribution system was undermined.
Of course, it has been said by many before, and not a few to-night, that we should in fact take the deliberate step of abolishing the whole parental contribution system. While there are attractions in this suggestion, the hard fact remains that to do so would require something over £60 million, and as the noble Lord, Lord Energlyn, recognised (and so did the noble Baroness, Lady Stocks) if such a sum were available there are many other areas which might qualify for higher priority. What I should like to do is to take the opportunity to-night to ask those parents who do not at present hand over to their student sons or daughters the assessed contribution to think carefully about the hardship this can cause their children. My Department has recently sent a letter to all authorities asking them to ensure that all parents are told directly of the amount of their contribution and are made fully aware of their responsibility to pay this sum to their children.
I turn briefly to discretionary awards. Attention has been drawn to the problem which arises in this field in respect of courses other than teacher training and below degree standard. We recognise that this system can result in different treatment of students, depending on the policy of the local education authority responsible for their award. I believe that these differences have been exaggerated, though I would not deny their existence. Our information is that most authorities, in exercising their discretion—and I recognise this—in fact pay the full mandatory rates of grant for students on Higher National and other advanced courses. But at the lower levels there is such a wide diversity in the length, standard and aims of courses and the needs of the individual students that it is essential that local education authorities should have a degree of flexbility. Nevertheless, my right honourable friend has, in the past, reminded local education authorities of the undesirability of wide variations of practice in dealing with students in similar circumstances, and discussions are now proceeding with the local authority associations with a view to issuing more detailed guidelines. At the same time the review

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and discussions with the N.U.S. are covering this subject also.
I think that I have time to deal with only one other topic raised in the course of this valuable debate—the grants for married students. If your Lordships will agree, I will shirk the questions on the ethics of "shacking up", the doctrine of holy matrimony, and the exact computations of the "wages of sin" in monetary terms, and just turn to the issue of the special rate of grant for married women students, which is quite complicated enough. The first point I should like to make is a simple one, and it is that the wife who has to study away from home, or whose husband is himself a student or incapacitated and dependent upon her, presently receives the full rate of grant. It is only where the student is living with her husband in their own home that she receives a lower rate. I would put to your Lordships that this is not so entirely unreasonable for the mature student whose husband is earning a salary sufficient to maintain the family adequately. In these circumstances the current rate of grant of £295 represents a very useful tax-free addition to the family budget. And it has to be borne in mind that the husband's income is not taken into account in this computation. However, for the young student with a husband still making his way in his chosen career, the situation, we recognise, may well be more difficult. I recognise the strong feelings which exist about this grant, and I see the force of the points that have been made about it; and I can promise that we shall be giving special attention to this aspect too in the current review.
I am anxious to conclude in order to give the noble Baroness a moment or two to reply to the debate. I believe that I have shown that this Government are well aware of the problems with which students are confronted, and that they recognise the need for an adequate system of students' support. They are, in fact, engaged in a review to that end at this very moment. But this Government, as any Government would have to do, also have to bear in mind the demands which this makes upon the taxpayer and the ratepayer. As the noble Baroness said, we cannot afford everything we should like to have. The present cost to public funds of awards to students taking advanced courses is increasing every year. The
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students have the opportunity of participating fully in the fact-finding work of the present review and, furthermore, of working with members of my Department in costing their various other proposals. I am sure that this co-operation between the student representatives and the Government will work to the advantage of the students and will ensure that their needs are accurately ascertained, sympathetically considered, and, in the end, fairly met.
8.5 p.m.
BARONESS BIRK: My Lords, I am grateful to the noble Lord the Minister for his reply. However, he will not he surprised if I am not happy about it all, and with a great deal of it I do not agree. I will not raise all the points again. On the basis of raising the grant generally, the figures that he gave, although I am sure they are accurate, all started from too low a base some time ago, and that is where it has gone wrong. So far as the parental contribution is concerned, I find it difficult to accept that it is impossible to do what we have suggested. Anything is possible for the Government if they make up their mind to do it. This subject needs to be looked at again, and I am glad that the noble Lord said that the door is not quite shut, because I think it is not only a financial problem but a very deep social problem. So far as the discretionary grants are concerned, all I can hope is that we shall move towards the mandatory system, because so far as concerns further education that is how it has to end up.
I agree with those noble Lords who condemned the sort of violence and prevention of freedom of speech that happen from time to time, but those of us who did not stress this aspect were not minimising it but we were really putting it in proportion. I should be happy if from time to time the N.U.S. itself came out openly and condemned some of these practices. Perhaps that is asking too much. But earlier, when I knew this subject was coming up and I found that these students were having demonstrations on the Royal Wedding day, I thought, "My goodness! Who needs enemies? Save me from my friends!". There is a great deal of misjudgment. In conclusion, I should like to thank all noble Lords who have joined in the debate. I am delighted that we have had such a distinguished array of speakers. I again thank the Minister for

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his courtesy and for his perhaps unsatisfactory, but very nicely put, replies. I beg leave to withdraw my Motion for Papers.
Motion for Papers, by leave, withdrawn.

NATIONAL HEALTH SERVICE REORGANISATION: EFFECTS ON STAFF
8.7 p.m.
LORD REIGATE LORD REIGATE rose to ask Her Majesty's Government whether they are aware of the dissatisfaction and concern amongst various grades of staff affected by the reorganisation of the National Health Service. The noble Lord said: My Lords, I feel that, in the traditional phrase, I ought to apologise for detaining your Lordships at this late hour, and particularly my noble friend the Minister of State. Many of the remarks that I have to make are of rather a technical nature, and those who are not acquainted with the workings of the National Health Service may be a little baffled by some of my remarks. The reorganised National Health Service starts afresh in April, 1974. It goes without saying that all of us wish it well. It is to no one's interest that it should fail, or that the transition should not be smooth. I hope that my noble friend is not going to accuse me of being in any way unhelpful, as he seemed to suggest to one noble Baroness in a question and answer exchange the other day.
The smooth change-over on the appointed day depends not on doctors or nurses, or even ancillary workers, but, above all, on the administrative staff, using the word "administrative" in its widest sense—the nursing administrators, treasurers and so on. They, and they alone, can make or break the reorganisation. It is to them that my Question refers, because their morale at the moment is very low and there is frankly a crisis of confidence inside the Service. I am sure that my noble friend knows that I am not exaggerating and that it is not an occasion for any kind of cheery optimism that "It will all be all right on the day."
I know that the Secretary of State has received representations on various matters from the Royal College of Nursing, the Teaching Hospitals Association (not normally a very militant body), the Insti-
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tute of Health Service Administrators and the National Association of Local Government Officers, as well as individual protests from employing authorities and members of the staff. Many of these relate to the procedures of the Staff Commission, and it is to that that I wish to devote the first part of my remarks. The Staff Commission was set up—
"to take any steps considered appropriate for the purpose of selecting and recruiting to Regional and Area Health Authorities persons suitable for employment."
It was agreed after consultation with various bodies that the Staff Commission should also do the job of short-listing for certain key posts. This was in the interests of a smooth and, above all, a swift transition. I cannot but feel that NALGO and some of the others who agreed may now regret their acquiescence in this procedure.
What is it that has gone wrong and caused the waves of criticism? Let me admit first of all that the Staff Commission had a very difficult job—an almost impossible one. They, after all, are not responsible for the timetable, the very strict timetable, which has to be adhered to. I am afraid that my right honourable friend the Secretary of State must bear the full blame for any difficulties which arise from the timetable. But there is much criticism of the decisions of the Staff Commission that followed.
In what may seem to be a slight digression, I should like to deal with the curious case of the postgraduate hospital staffs, which occurred last summer. The Staff Commission ruled that postgraduate hospital staffs were not eligible to enter into posts in the new, reorganised Health Service. The reason they gave was that the postgraduate hospitals are not being immediately reorganised. They are put on one side and reserved for what I might call "unhappy despatch" at a later stage, whereas, of course, the undergraduate teaching hospital boards of governors are being abolished now. But this decision to exclude them from competition forgets that this is, in effect, one single profession which is interchangeable. The average hospital secretary's career may involve transferring from an undergraduate teaching hospital group to an ordinary hospital group, to a postgraduate hospital group and so on. The result is that this small minority

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of staff is now precluded from participating in the reorganised Health Service, and they are, so to speak, left in limbo because it is unlikely that there will be very much change for some years after 1974.
This ruling of the Staff Commission seemed so unbelievable that counsel's opinion was sought and the advice received was that the Staff Commission's ruling could and would be overruled by any court of law. But, alas!, my Lords, no member affected by this was willing to jeopardise his career by taking the Staff Commission to court, and, what I think is more regrettable, no Board of Governors employing any of them was apparently prepared to support them in taking the Staff Commission to court. So the Staff Commission and the Department got away with it. There is a slight, curious sequel to which I shall refer later. But this, my Lords, is a minor issue affecting very few people, compared with the subsequent events. The major issue concerns the complaints which have been received about the short-listing procedures for the area appointments. For various reasons the regional appointments seem to have caused no difficulty and excited no criticism at all.
The task of the Staff Commission was. among other things, to safeguard the staff interests and to ensure that the senior staff of the reorganised National Health Service were of the highest possible character. If that was their task, never can the outcome have been greeted with so much dismay, as the representations to the Secretary of State show. The choices for these short lists seem to follow a very haphazard pattern. Many with heavy present responsibilities have not been short-listed; others with far less experience and responsibility have been accepted for short lists. I have had altogether about 20 cases drawn to my attention, and no doubt there are many more. I should like to cite a few, but in most cases I shall have to do it in a form obviously in which they are not identifiable. Most of the people concerned are not personally known to me, but they are vouched for by those in whom I can have confidence.
The first case is of a teaching hospital secretary not short-listed for the administrator's post in the teaching area in which his teaching hospital will be
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absorbed. He is a man outstanding in his career, of sterling work. The second case concerns a hospital group secretary who is the secretary of the joint liaison committee, the body preparing for the transition. He was not short-listed for his own area, which was a single district area; in other words, it coincided more or less with the catchment area of his present hospital. In this particular case the circumstances were even more extraordinary. He was only two or three years from retirement, and would therefore have been the ideal person to see the new area through the transitional period. The sequel is quite interesting. The new authority was so horrified at the treatment meted out to him that they have not appointed anyone from the short list, and are hoping, I imagine, to be able later to appoint this particular man.
The next case is that of a chief nursing officer, Grade 10a, which is almost as high as one can get, not short-listed for any area at all, including his own area, although the latter—that is to say, his own area—was listed in a Staff Commission circular which said that more applications would be welcomed from this area because there had been so few. Another case is that of a big city with four hospital groups. Three of the hospital secretaries have been short-listed, but not the fourth —who, as it happens, was the one who was chosen by universal consent to be the secretary of the joint liaison committee and who has therefore been preparing in advance for his own exclusion. The last case I would cite is that of a group secretary who was not short-listed for his own area, where there was a short list of five only, although the Staff Commission had decided that the short list should be seven. He was very dismayed and disappointed. However, there is a happy sequel. He was then short-listed for a teaching, hospital area—that is to say, a post of a higher grade than the one for which he had not been short-listed in his own area—and I am glad to tell your Lordships that I heard yesterday that he had been appointed.
I could cite many more cases; and I should like to emphasise that it is not only those who have not been short-listed who are dismayed, but that many of those who have been short-listed (indeed, who have been successful) are I concerned at the treatment that has been

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meted out to their friends and colleagues in what is, as everyone knows, a very small and close-knit profession. They are dismayed at the absence of rhyme or reason in the very methods by which they, the successful ones, have been preferred over their fellows.
My Lords, the volume of protest was so considerable that the Staff Commission, at the Secretary of State's instigation, decided to review its own proceedings. It issued a document which was startling in its complacency. It said that it had consulted the assessors and found nothing wrong. I can say that the only parallel in complacency is to be found in the first chapter of the Book of Genesis, where—and I quote:
"And God saw everything that he had made, and, behold, it was very good".
But God was lucky: there was no one to argue with him or to put an Unstarred Question clown in your Lordships' House.
What has in fact gone wrong? The gravamen of the Staff Commission's apologia is—and I quote their words:
"These assessments relate to new posts bearing greater responsibilities, and therefore the assessments are in no sense a reflection on the way in which these officers who have not been short-listed perform their duties".
But it is if you have borne nearly comparable responsibilities and are passed over for others with less experience and less responsibility—and particularly if you do not know the standards by which both of you have been judged.
My Lords, there is one small point. The Staff Commission chose seven as the maximum number of candidates to whom an appointing committee might do justice in one day. But why "seven" and why "one day" ? Surely that is for the appointing committee themselves to decide. And why should not anyone with local experience have been short-listed and the matter left to the new authority's discretion? What really did go wrong? I have consulted many people, including some of the assessors, some successful candidates and some unsuccessful candidates, and the consensus of opinion expressed to me gives a variety of reasons. First, the timetable, for which the Secretary of State alone is responsible—and he was warned. Second, the impersonal nature of the procedures. All these assessments are done on paper records and not by personal interview. Third,
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the size of the task and the timetable increase the danger of being misled and swayed by the references received—a hazard which is normally diminished by informal and discreet enquiries, as it were, behind the scenes. In some cases even the judgment of the assessors appears to have been overruled.
Again, the procedures for selection seem to have been very amateurish. Detailed job descriptions were sent out. These were of the simplest and the guidelines were very scanty. For example, for an area nursing officer the job specification said:
"The person appointed should be a registered nurse and have extensive experience at a senior level in nursing management".
All I can say is: "So I should hope!" Any Grade 10 nursing officer would qualify under those conditions. Lastly—and, indeed, the most important—is the total failure of the Staff Commission, no doubt deliberately, to publish the criteria on which assessments were made and candidates were judged. There have also been complaints about the failure to inform the candidates in time and there were many other minor matters with which I shall not bother your Lordships.
My Lords, what can be done to redress the position and repair some of the damage to morale? First, I think the Staff Commission must be made to publish the criteria on which its decisions were based, in fairness, if for no other reason, to the assessors who are sharing the odium of some of the very odd decisions. When my noble friend comes to speak, I wonder whether he could inform us how many of the top area positions have not been filled as of the day before yesterday. I am told that it is between 20 per cent. and 25 per cent. This leads me to suggest that the Area Health Authorities should be told at once that if they are dissatisfied with the short-list they can re-advertise and include on the new short-list anyone with local experience who is thought to be suitable. One area has rot, to my knowledge, appointed its administrator. The sequel is rather curious: they have found themselves in a rather difficult situation. They must have an administrator; so they have invited a hospital secretary in the area to act in this capacity. The fascinating thing is that in fact he is the hospital secretary of a postgraduate hospital and,

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as such, is excluded from applying and will not be available to fill the post even if he is required to do so.
I can say one word of consolation to your Lordships and to all those in the administrative staff of the Health Service. There is no fear of any unemployment. With earlier retirement, when the conditions are known, and with the interpolation of an extra tier in the Health Service, there are likely to be far more jobs than ever before. None the less, the administrative staff are not happy alt the present time. The discontent at the work of the Staff Commission extends even to those who have been successful. This malaise occurs at a bad moment. For ten years reorganisation has been talked about. Three years ago the pace quickened; and for the last two years it has been fast and furious. This has involved many administrative staff in particular in extra work. This is the moment when the Pay Board make the following astonishing statement:
"…the officer is doing work in the course of his employment to facilitate a smooth transfer of functions to the new authorities as part of his duty to ensure the efficient administration of the National Health Service."
That statement is wrong in logic and in fact. The administrative officer's duty is to his present employers who now run the National Health Service. Hospitals and Health Services do not stop dead while a Government Department chooses to re-shuffle the hierarchy. What he does for the new authorities is over and above the detailed duties and tasks that he has to carry out. I think that the statement that I have quoted is as misleading as any that could be made.
Why, then, is the National Health Service administration to be deprived of the bonus that has been allowed to their opposite numbers in local government? The reason is that the National Health Service has got caught tip with the Pay Board. I am not in any way criticising Government policy; but why was the National Health Service caught up with the Pay Board? It is because when the local government staff bonus was agreed 18 months ago, the National Health Service Whitley Council staff side was facing an unacceptable and reduced offer from the management side. Why did not the Secretary of State intervene at that moment—we know that he can—point out
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the parallel between the two services and say to the management side of the Whitley Council that the local government settlement would be acceptable so far as he was concerned for the N.H.S. staff? Such intervention would have brought the matter to a conclusion at the right moment 18 months ago, and this unfortunate incident would not have happened.
The ultimate irritant to the staff is the bland circulars which come out at almost every post from the Department telling all those concerned what to do in the interests of smooth reorganisation—forgetting that the old authorities are already overworked and understaffed, that the new authorities are dependent on the staff they are borrowing from the old authorities and that the existing task of running the National Health Service continues regardless of reorganisation.
My Lords, I apologise for the length at which I have spoken but I have tried to give something of the background to my Question. I spoke with some feeling but not, I hope, with exaggeration. I have been associated with the National Health Service for many years. I shall not be playing a part after the appointed day. In those years I have got to know many of those concerned in administration and I should like them to feel that there is someone in Parliament who can act as their spokesman, if not as their champion. Over the years I have got to know them and to admire very greatly the work they do. They do not enjoy the kudos and prestige of the doctors; they do not get the loving sympathy that the nurses rightly enjoy from the public; none the less they are the keystone of the National Health Service, and very much depends on their loyalty. In the past, their reward has been the knowledge of that fact. Their morale has always been high, and their enthusiasm great; but at the moment their morale is low—it is that of an army in retreat and that enthusiasm is ebbing. They are disillusioned with those in command. They are uncertain as to what has happened and who has blundered. They are uncertain as to where they are all heading. That is why I put this Question.
8.31 p.m.
LORD GARNSWORTHY: My Lords, the Question asked by the noble Lord, Lord Reigate, is indeed very timely. He has spoken in a very impressive manner, and I only wish that he had had a larger

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House to hear him, because the problem he has given us an opportunity of discussing is one of the greatest importance. He has spoken of the concern that exists, and the reasons for that concern among staff involved in the reorganisation of the National Health Service. He speaks as chairman of a very important teaching hospital and, as he himself has indicated, his long experience gives him undoubted authority, to speak on these matters. Since we all, as he said, wish the National Health Service to be a successful service, the whole House must surely be grateful to him for providing this opportunity not only to discuss the matters raised by his Question but to hear from the Minister such observations as will serve, if it is possible, to bring some reassurance to those who are greatly in need of it. As I think is very well known in your Lordships' House, I have an association with the National and Local Government Officers' Association, the largest organisation representing staff in the National Health Service. It is from that Association, and mainly from that experience—although not exclusively—that I speak to-night.
To the Question which is the subject of this debate the answer can only be in the affirmative: Her Majesty's Government must be aware of the concern that exists. The Minister, the noble Lord, Lord Aberdare, will, I am quite sure, be well aware of it. The noble Lord, Lord Reigate, has given a number of details, and I do not propose to give more. He has given the House an adequate number of cases. I shall, I think, be a little more general, and perhaps touch on one or two matters that he has not dealt with.
When the Bill for the reorganisation of the National Health Service was before the House I tried ,to be as constructive and helpful as possible; and I want, if I can, to be helpful to-night. I think I can best do this if I convey, as frankly as I can, what I know to be the feelings which are to-day far too prevalent among all too many who are employed in the National Health Service. There is intense irritation over the manner in which reorganisation is being carried out, as the noble Lord, Lord Reigate, has said. The manner in which the extra responsibility payment has been set aside is one
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element, and one element only. The Government may say—and I can appreciate their doing so, as was stated, I think, when we were dealing in the House with the Stirred Question tabled by the noble Lord, Lord Reigate—that the Pay Board is the authority responsible in that matter.
My Lords, that does not remove the irritation. If I may say so, there are a great many people in the National Health Service who believe that the Government cannot escape the responsibility for drawing up the incomes policy and for its phasing. To that extent I believe that note ought to be taken that the criticism is not merely of the Pay Board; there is a feeling that the Government carry some responsibility—some people feel a very considerable responsibility—and that consequently justifiable criticism is being voiced in this matter. The whole House, I think, showed its understanding the other day when the noble Lord, Lord Reigate, asked his Starred Question, as seemed to be obvious to all of us present. Beyond that issue, there is need for reassurance to staff at, I think, almost every level in the National Health Service; reassurance to staff who are desperately anxious not only about their transition to the new system, but also about their future in the next two or three years. I hope the Minister will have some words which will convey understanding of, and sympathy with, their anxiety, and indicate that problems, which have been touched upon already this evening, will be tackled with urgency and energy.
I would ask the Minister whether he feels that the Department are consulting sufficiently, and to serious purpose—because consultation needs to be meaningful. In discussing with those who speak for staff, I get the very strong impression of serious failure in consultation almost all along the line. It is this serious failure that is largely responsible, I think, for the very great frustration that exists not only among the present Health Service staff but, even more, if I may say so, among local authority staff who are due to be transferred to the new Health Service. Because, my Lords, they are used to having much more consultation than has ever been established within the Health Service itself.
As I understand the position, quite apart from the "extra responsibility" payment scandal, the failure of the

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appointment system of area staffs, and what is felt to be a general failure to reassure people that they will not suffer detriment in the new Service, the single greatest cause for what I can only call indignation has been the draft document entitled, Transitional Arrangements: Interim Management Arrangements for the new Health Authorities. This document is seen as summarising the attitude of the Department of Health toward the organisation, and suggests that they have long ago given up any hope of creating even the beginnings of a really reorganised Health Service by April, 1974. That view, my Lords, is widely held. What is clear is that senior appointments will be made and therefore everybody else will be "latched on", to use the jargon of the document to which I am referring, and for a long time to come no attempt will be made, so far as I can understand it, to provide the unified Service that, it was hoped, with improved staffing prospects and arrangements would be secured.
It seems clear, from the second paragraph of the document (I will not take your Lordships' time up by reading it) that strong central control is to be retained; that staff establishments are to be rigidly contained; and, in short, that no worthwhile amount of money is to be found for the sort of staff development which is surely so necessary if we are to have a successfully reorganised Service. It also seems clear that a beggarly amount of money is to be spent on new accommodation. Nobody would be more pleased than I if the Minister to-night could give us some figures to refute that belief. This again reflects on any serious intention to set about reorganisation and make April 1, 1974 a significant date.
My Lords, if I may sum up, too many of the staff of the National Health Service neither know where they are going nor what their prospects will be when they arrive. I think I ought to say that the trade unions which cater for the National Health Service are known to be considering what steps they might take to halt or to delay a reorganisation, as it has been put to me, with which they would express themselves as throughly disillusioned. The noble Lord, Lord Aberdare, who is to reply, will know that we all want an efficient and happy Service; I am sure that he does as much as
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any of us. I hope that in his reply he will be able to indicate that there is good reason for optimism as to the future of the Service, and, not in any spirit of complacency, as the noble Lord, Lord Reigate, said, will convey the message that problems are going to be dealt with urgently and with energy. But of this I am certain, that no useful purpose is served by ignoring the realities of the situation or by ignoring the strong feelings that exist. If criticisms can be made in a spirit of constructive good will, supported by a determination to build the new Service on the basis of willing co-operation, based on meaningful consultation with staffs and those who speak for them, the better for the future.
The noble Lord, Lord Reigate, put forward a number of ideas for consideration. I want to put forward one more, and I do so on my own personal initiative only. I think that great good could come from those at the Department responsible for dealing with this matter, including those at Ministerial level, meeting with those in the staff organisations, who are themselves having a very unhappy time because their members are so dissatisfied and thoroughly upset. I can see nothing but good coming from such a meeting, at which the whole issue of consultation, of looking at the future and securing a new approach, might be discussed purposefully and meaningfully.
My Lords, I hope that I have not spoken with any very strong feeling. I have tried to be as moderate as I can in conveying views that I know are strongly held. If I have spoken with any kind of feeling, it is rather one of sadness, because so many of us have spent so many hours in discussing the Act that has brought reorganisation about and we were hoping, although we knew that time was short, that it would be accomplished easily and happily. I hope that the noble Lord will be able to say something that will give encouragement where it is badly needed; but he will need to say a great deal if he is to achieve it.
8.45 p.m.
LORD PLATT: My Lords, we are all grateful to the noble Lord, Lord Reigate for giving us this opportunity to discuss what can only be described as an extremely sorry state of affairs. When anybody as moderate as the noble Lord,

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Lord Reigate, does this in no uncertain terms, we all listen with the greatest attention. Knowing what I do about the Health Service, I have my own reasons for knowing that he is not exaggerating in what he has said. I want to be quite brief. I could not possibly put the case before your Lordships as well as the noble Lord, Lord Reigate, has done, and I thought I would content myself with giving your Lordships a personal experience of the way the system seems to be working.
In June I received a large parcel, and after making certain that it was not a letter bomb, I opened it and found that it was a request for a reference from the Staff Advisory Committee. This was a reference not for a medical post, but for an administrative post, for somebody whom I knew well, or I should not have been asked. It was addressed in entirely impersonal terms. It was signed by nobody I recognised, a person whose name did not appear on the writing paper. It was initialled, and then came the surname, so I could not tell whether it was a Miss or a Mr. who was writing to me. It was accompanied—and here my experience differs from Lord Reigate's —by 26 pages of background information. This I tore up, but did not put in the wastepaper basket, because I sent it back to the Secretary of the Staff Advisory Committee. I sent him the reference. I said that I had given hundreds of references in my life and I expected to have some personal letter and not a form to fill up: and I did not expect to do the homework. When a registrar of a university writes to me for a reference, if he wants to tell me something about the post which I may not know it is condensed to a proper single sheet. Was it not Churchill who said:
"Give me the facts on one side of a single piece of paper. I never turn over."?
I received a most extraordinary letter in reply—quite polite—rather regretting that a personal letter was not sent, and saying (and this is what your Lordships should know):
"During the past two weeks it has been necessary to send out almost 2,000 requests for references for nearly 1,000 applicants for top posts in the new Health Service."
That is the kind of thing that they are up against. Then, with regard to the background information, it said:
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"This Committee was asked to circulate information, and it was not part of their duty to reduce it to a précis."
Well, my Lords, is it part of my duty? I acknowledged the letter, very politely of course, and I received another letter saying:
"Of course this Committee feel an obligation to see that the amount of literature sent out is reduced to a reasonable size"—
26 pages!—and then it ended up:
"As I said in my earlier letter, the background information was provided by the Department of Health and Social Security. If they had seen fit to condense it without, of course, reducing its usefulness, they would have done so."
I replied that I was sorry that I had not realised that a person in his situation was unable to make any decisions for himself, and I was sorry that I had troubled him.
My Lords, personal experiences can be boring and irrelevant unless there is some lesson to be learned from them. What I learned from this was that any organisation which attempts to deal with 2,000 requests for references in two weeks —and these were apparently concerned only with the top posts—is bound to be impersonal. It is unlikely to achieve its objects and will lead to discourtesy and muddle, which industries such as the Health Service can ill afford.
8.51 p.m.
LORD FISKE: My Lords, I am sure we are very grateful to the noble Lord, Lord Reigate, for bringing this matter before us this evening and for dealing with it in the sympathetic way he did and with such a wealth of detail, because by that means he has eased the task of those who follow him. As he spoke, I was able to confirm mentally all his various points as he went through them, and there is no doubt that there is great uneasiness among the people concerned. As one secretary of a Regional Hospital Board expressed it to me: "We should all have felt much happier and more justified if they had put all the names in a hat." This is simple, and one can laugh at it—but, my goodness! it is a criticism, is it not? So far as I can see, the general reason which is put forward as an excuse by the staff concerned is the shortness of time which is involved. Perhaps here I might add a word from this side of the Chamber that the noble Lord, Lord Reigate, might not wish to

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say from his side: that the timing, and the responsibility for the timing, is the Government's and the Government's alone. There is no question of world prices, of the E.E.C. or intransigent trade union leaders, or anything else, that can possibly be blamed. It is the business of the Government themselves to arrange their legislation and its timing.
My own experience in this field concerned the reform of London government, and as we have been finding out what has happened in regard to the Health Service, it is interesting to note that the present Secretary of State for Health and Social Security is the man who was Minister of Housing and Local Government at the time of the reform of London government. Quite honestly, we did not have these troubles when we reformed London government, which involved an enormous shifting and amalgamation of senior posts and a great deal of redundancy—which is a much greater problem to deal with, but it was dealt with in a humane way. It was dealt with efficiently because it was given time. I repeat what I said a moment or two ago, that timing is the sole responsibility of the Government, so that if there is a muddle here, they must take the blame for it.
On the introduction of all this National Health Service reorganisation we were told that one of the aims was to bring brisk modern business methods and approaches into the Health Service. This was a laudable ambition, but if it begins by alienating all the top executives who are to take part in the undertaking, then it is a very poor start for brisk business methods. Give me, every time, the good old bumbling Civil Service! I think their approach would be preferable to the kind of approach that we have seen here. So I think we must ask the Minister, when he replies, to answer the challenge about timing, and to tell us how long those people who might want to be displaced in view of the troubles that have occurred must wait for the compensation code, and whether it is possible for the Staff Commission, even at this very late stage, to devise some better method of dealing with those posts which have not already been filled.
8.56 p.m.
LADY RUTHVEN OF FREELAND: My Lords, I should like to say just a few words in support of the Question put by
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my noble friend Lord Reigate to my noble friend the Minister of State. I think there is a great deal in what has been said by all noble Lords who have spoken. I know there is much distress and worry throughout the Hospital Service concerning the reorganisation, and particularly, as my noble friend said, in the administrative section, very few of whom seem to know where their future lies—only the very top ones who have had that matter decided for them.
In my capacity as Chairman of the League of Hospital Friends, I visit quite a number of hospitals throughout the country so I hear from people on the spot. I am always taken round by the administrator, the chief nursing officer and probably members of the hospital management committee, and I know there is this very real distress over not knowing where those concerned are going and what is going to happen. They have no news of their future. I can speak from personal experience of this, since I have visited three different hospitals in the last 10 days. It has been difficult during the last 25 years to build up a good staff, because at the beginning of the Health Service we inherited some very bad administrators from the local authority hospitals. They were not as efficient as they should have been. This has all been changed, and we now have some very good, young and efficient administrators. What will happen to all of them if they are not being told, even at this late moment, where their future lies? I am frightened that they will get so disheartened that they will apply for some other job and leave the Hospital Service. They have been working extremely hard, and it really would be a terrible tragedy if the Secretary of State does not make certain that their future still lies with the Health Service.
8.58 p.m.
LORD AUCKLAND: My Lords, I should like to add a few words to what my noble friend Lord Reigate has said in initiating this very important debate, at a late hour and, alas! to a very thin House. There remain about five months between now and when the new administration is due to begin, and I should like to raise one or two questions. Section 149 of the White Paper on the National Health Service reorganisation concerns management training. I wonder whether the

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Minister can enlarge on what is said there. I have not given him notice of this question, so I do not necessarily expect an answer to-night. Is the Minister satisfied that this management training will improve the quality of those who are going to take over work, or indeed continue to work, in the new authorities? Who is to carry out this management training? Is there enough time—and this is the important point—between now and the establishent of these new authorities for such training to be given? I have yet to find anyone in the Hospital Service who is not worried about the way in which all this reorganisation is being rushed through. It is not necessarily a wrong move. I think most people will accept that the National Health Service has been in need of reorganisation for some time. I question whether enough thought has been given to this matter.
Secondly, and finally, I should like to refer to the position of the voluntary organisations. My noble friend Lady Ruthven mentioned the League of Friends. The hospital in Surrey on whose house committee I sit has a very strong League of Friends movement. The League of Friends, together with the house committees, do an enormous amount for these hospitals. There is considerable worry among administrators as to how under this new set-up there will be liaison between these two bodies. During the passage of the recent Bill (now an Act) it seems to me that all too little emphasis was given to what is going to be the future of the voluntary bodies. Whatever form reorganisation takes, the role of the voluntary bodies is vital. I hope the Minister will bear in mind the necessity of this, because between now and the appointed day time is perilously short.
9.2 p.m.
THE MINISTER or STATE, DEPARTMENT OF HEALTH AND SOCIAL SECURITY (LORD ABERDARE): My Lords, this is the first occasion since the Bill became an Act that we have had an opportunity of discussing the progress of the reorganisation of the National Health Service. I should like to say at the start how much we miss the noble Baroness, Lady Serota, because she did such a lot in a very constructive way in
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the course of the passing of the Bill, and I hope that she will find time to read Hansard. I am sure it is the wish of your Lordships that she will return very soon and give us the benefit of her always helpful advice.
BARONESS LLEWELYN-DAVIES OF HASTOE: My Lords, we on this side of the House deeply appreciate what the noble Lord has said. I should like to reassure him that my noble friend is following with passionate interest everything we do. She is making a recovery which is astonishing simply because of her own willpower. I know that it will delight her to read what the noble Lord has said.
LORD ABERDARE: My Lords, I know that her recovery has been due very much to her own willpower. But I hope that when she reads the debate she will not pay too much attention to the six noble Jeremiahs who have already spoken here, and that she may be, if not encouraged, at least convinced, as I hope your Lordships will be, that not only is the answer to my noble friend's question, "Yes: we do really understand and appreciate that there is concern among the staff", but also that we are trying to do all we can to reassure them. When we first announced proposals for the reorganisation we knew that this would be a trying time for many of the staff in the Service, especially those whose futures were being affected through their having to change jobs.
The noble Lord, Lord Garnsworthy, will remember very well—in fact he has referred to it—how deeply and how hard we tried, in the course of the passing of the Bill here, to meet his points on consultation with staff interests. We wrote several Amendments into the Bill to ensure that this consultation did happen. We have continued since then and we have consistently urged the importance of consultation at the local level by the existing authorities and by the joint liaison committees which were set up to co-ordinate local planning. In agreement with the staff side we advised local managements how to make effective arrangements, and we have asked the new authorities to continue and develop these consultations. I would emphasise that we are determined to continue with these consultations at every level. I was

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appreciative of the constructive suggestion which the noble Lord made, off his own bat, as he said, that it would be helpful if we were to meet the unions who represent the Staff Side. My right honourable friend is always the first to do what he can in the way of these meetings if they are useful; I can tell the noble Lord that he will in fact be meeting NALGO on November 29.
The noble Lord, Lord Fiske, compared this reorganisation with the reorganisation of local government, of which he has such a first-hand knowledge. I would not wish to deny that the timing must be the responsibility of the Government. On the other hand, there are all sorts of pressures on the Government which have made it extremely difficult. Perhaps the major one is the fact that there was a deadline date of April 1, 1974, owing to the fact that that was the date on which local government reorganisation had to take place. I know the noble Lord will tell me that we had responsibility for fixing that date; and that is true, too. But it has been a great difficulty, looking at it from the National Health Service itself, that we have to meet a deadline date which, so far as we were concerned, is absolutely immutable, and we have not had all the time we should have liked.
My noble friend Lord Reigate spoke on two major issues with which I shall try to deal. One of the points he mentioned concerned the temporary allowances to staff. The Administrative and Clerical Whitley Council reached agreement on temporary allowances for National Health Service reorganisation work in April, and a similar agreement was reached by the Nurses and Midwives Whitley Council. These agreements were referred to the Pay Board which, notwithstanding the fact that the Councils made supplementary submissions, ruled that these payments could not be made outside the Stage 2 pay limit. As my noble friend has said, the Board took the view that the work was appropriate to present Health Service employment and that, in the absence of provision for extra payments in their terms of service, any new payment would represent a benefit that could not be allowed outside the pay limit. My noble friend quoted one sentence from their letter. He is well
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aware of the full letter, and so, I am sure, is the noble Lord, Lord Garnsworthy.
LORD GARNSWORTHY: My Lords, I realise this is an Unstarred Question, and I do not want to interrupt very much. But did I understand the noble Lord correctly? Would the Department accept from anybody that it could possibly be in the conditions of service that people would have to do this extra work when nobody could have foreseen at the time of the appointment of many of them that this was going to take place?
LORD ABERDARE: My Lords, I can only tell the noble Lord what the Pay Board said. I do not want to waste a lot of time in quoting from this letter; I am sure the noble Lord has a copy of it—if he has not I will certainly make sure that he gets one. It is quite a long letter and goes into great detail as to why they found that they could not agree that this payment came within the Stage 2 terms. The sentence after the one which my noble friend read out, reads:
"The duties involved in the preparatory work may be new in the sense that they differ from the other listed duties of the posts concerned, but a variation in the nature of the work performed is not sufficient to qualify as the introduction of new work for the purposes of paragraph 133 of the Pay Code."
LORD REIGATE: My Lords, would my noble friend allow me to intervene? I think he has missed the point that I was trying to make. The Pay Board have the right to their own views, but I was really asking what on earth was the difference between these people and the local government staff. If the Health Service staff are not doing any extra work, why did the local government staff get a bonus at all?
LORD ABERDARE: My Lords, I think my noble friend knows that the local authority agreement was agreed before Stage 2 came into operation.
LORD GARNSWORTHY: It is really a matter of time.
LORD ABERDARE: It really is a matter of time. This has affected a great many people in a great many different occupations, and that is the worst of a statutory policy. People get caught, as the noble Lord knows very well. There are many cases where people feel hard done by. My Lords, we have made provision in the Stage 3 code for payment of

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allowances in respect of work for statutory reorganisation from November 7, and this date is in line with the other new provisions of Stage 3. The Staff Side of the Administrative and Clerical Whitley Council saw my right honourable friend on October 23. They expressed disappointment and frustration on behalf of their members and asked him to secure the implementation of the Whitley agreement from its original date, notwithstanding the Pay Board's advice. My right honourable friend promised that the Government would consider the points which were made to him. This we have done, and sympathetically, but we have concluded that payment from a date before November 6 could not be allowed without giving grounds for many other groups to claim that other additional provisions in the Stage 3 code, such as, for example, those correcting anomalies, should also be applied retrospectively. My right honourable friend has written to the Staff Side explaining this decision. The Government have taken the view that the provisions of the Pay Code should apply equally to employees in the public and private sectors and that the Government in respect of Crown servants should be bound in the same way as other employers. My Lords, we hope that arrangements can now be agreed with the Staff Side for payments to be made from November 7.
The other matter to which my noble friend and the noble Lord, Lord Garnsworthy, directed much of their remarks was the question of the Staff Commission and the short-listing procedures. The Staff Advisory Committee, which is now the Staff Commission, was set up to safeguard staff interests in the reorganisation. It was agreed after discussions with representatives of the appropriate staff organisations that the Commission should carry out respectively the advertising, assessing and short-listing for certain key posts, and I am well aware that concern has been expressed and indeed representations have been made on the subject of the short-listing for the Area Health Authorities' posts. I can only say that the Commission have considered these representations very carefully in conjunction with the assessors appointed in agreement with the staff organisations and that they issued a state-
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ment from which my noble friend quoted and which is available in the Library. He will not, I am sure, expect me to comment on the individual cases he mentioned—indeed he was saying he did not wish to make them specific—but I can tell him that during the past few weeks the 90 Area Health Authorities have been interviewing for the posts of area administrator, area treasurer and area nursing officer. In a relatively small number of cases an Area Health Authority has not felt able to make an appointment on the basis of the short list provided by the Commission.
In a somewhat larger number of cases the cross-matching of the preferences of the candidates and those of the authorities failed to produce a clear result. Because of those two factors, I understand that some 50 of the 270 Area Health Authority posts for which short-listing has been carried out by the Staff Commission will not be filled at this stage. But the Commission have now issued advice about the arrangements for filling the remaining posts. Briefly, all the eligible candidates who have not yet secured posts in their particular discipline will be informed of the vacancies remaining and invited to apply to the Area Health Authorities in question. These authorities, assisted by national assessors, will then short-list, interview and make appointments.
My Lords, I hope there can be no doubt that the task which the Staff Commission agreed to undertake in carrying out centrally the advertising, assessing and short-listing for key posts in the new Regional and Area Health Authorities was complex and therefore bound to be difficult. They agreed to undertake it only after wide discussions with staff organisations and with my Department. Indeed, it is difficult to imagine how such a task could have been carried out at all without their assistance; and I am sure that in discharging it they have acted not only properly but also with complete impartiality—I am sure my noble friend would agree with that.
He asked me again about the staffs of London postgraduate boards of governors being eligible to compete. We went into this on June 11 in answer to his Question, and he knows that the shadow Staff Commission gave its advice, that the staffs

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of the London postgraduate boards of governors, like others not affected by the reorganisation, should not be eligible for competition since their jobs were not at risk in the process of reorganisation. But I should like to make it clear that both the Staff Commission and my right honourable friend look forward to a resumption of normal recruitment policies once the immediate period of reorganisation is passed, and we expect to be receiving advice from the Staff Commission on this matter in the near future.
My noble friend suggested that criteria for posts should have been published. I think this would have been an artificial step, and I doubt whether it would be a useful one. The Commission had appointed experienced assessors. These assessors were given full details of the posts concerned, and they assessed the candidates against this background. In fact, the noble Lord, Lord Platt, seemed to think that some of the details that were given were rather too voluminous.
All noble Lords who have spoken have asked about the employment and career prospects for the future of the staff of the Service. These are becoming clearer as the new senior appointments are made. Our policy is to make orderly progress by way of uniform appointments procedures and planned timetables. The regional administrators, treasurers and medical and nursing officers have been appointed and area appointments are in progress. The regional works officer, personnel and ambulance officer posts, and the posts for administrators of family practitioner services, have now been advertised. Taking this process further, we have issued guidance on interim management arrangements, and the Staff Commission's Circular 3/73 has supplemented this by indicating those further posts which should be filled before April 1, 1974.
In the main, the arrangements for short-listing and filling these posts will be made by the new authorities, and they are now working on the necessary preparations. The field of competition for most of the posts will be regional rather than national, and the largest number of them are those at district level. I am glad to say that the important posts of district administrator, district finance officer and district nursing officer will be advertised on November 23. They will
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be followed shortly by the corresponding advertisement for the district community physician post and by others as all the necessary details become available. This is a most important stage in building up the staff of the new authorities, and we shall expect shortly to receive advice from the Staff Commission and, in respect of detailed procedures, from the national staff committees, leading to fair and orderly appointments systems for the posts to be filled after the appointed day.
I am aware that there is anxiety that employment prospects will be unduly constrained by the need to carry out the reorganisation with regard to available resources of manpower and finance—a point which the noble Lord, Lord Garnsworthy, made—but such anxiety is hardly justified in view of the developments that will be continuing in all the main branches of the health services and in the light of the overall expected staffing requirements of the new authorities. I appreciate, too, that there are questions about terms of service which are common to all the staff involved and not just those affected by the new top management structure. Proposals of transfer, compensation, protection and early retirement have all been widely circulated and many comments have been received. These have been the subject of continuing consultation with staff interests at national level, and of course the staff are anxious to see these provisions in final form.
The noble Lord, Lord Garnsworthy, spoke of a serious failure in consultation. So far as I know, there has been no failure in consultation. Where perhaps we have been subject to criticism is that in the process of consultation things have been rather slower than they might otherwise have been. But there is one matter on which I can please my noble friend, and that is that the scheme for early retirement, which has been substantially improved as a result of central consultation, is being published this week. The terms originally proposed for early retirement of senior officers have been improved, the list of eligible officers has been extended and the latest date for electing to retire has been amended to January 31, 1975, with retirements taking place in the period beginning on April 1, 1974, and ending on March 31, 1975. Besides

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allowing much greater flexibility, this has the advantage that the decision as to whether consent can be given will rest in all cases with the new authorities, and that will greatly simplify the procedure. We intend to issue the arrangements for compensation and for protection of family and conditions of service within the neat few weeks.
LORD REIGATE: My Lords, if my noble friend will permit me, when he says that consent will rest with the new authorities does he mean that the option to choose early retirement on the part of an officer is not his own to make?
LORD ABERDARE: My Lords, there are certain provisions in the agreement, which has been made with full consultation with the staff, and in exceptional circumstances a health authority can object to a man's early retirement if he is vital to the Service.
My Lords, I hope I have shown that there has been no lack of appreciation or concern for the interests of the staff. Our policy continues to be one of proceeding step by step in an orderly programme of reorganisation, securing that appointments are made in the appropriate order
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by the fairest possible means and providing as soon as possible, after full and thorough consultation with their representatives at the national level, information required by staff about posts to be filled, salaries and conditions of service. We shall certainly develop our training services, and we shall certainly need all the help we can get from voluntary organisations. If I may say so to my two noble friends behind me, I am grateful for what they had to say.
Finally, my Lords, my noble friend Lord Reigate wished the National Health Service well, and I am sure that all your Lordships, despite the criticisms heard this evening, also wish the Health Service well. We for our part, will do all we can to smooth out what I know are deep concerns.

SLAUGHTERHOUSES BILL [H.L.]
Reported from the Joint Committee on Consolidated Bills with Amendments, and recommitted to a Committee of the Whole House: Bill to be printed as amended.
House adjourned at twenty-five minutes past nine o'clock.