Lords Sitting of 4 June 1980

Preamble
The House met at half-past two of the clock: The LORD CHANCELLOR on the Woolsack.
Prayers—Read by the Lord Bishop of Hereford.

COMPANY LAW: ECC REPORT
Lord PLOWDEN: 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 they agree with the conclusions of the Report of the European Communities Committee on Company Law: Scissions (43rd Report, H.L. 206) that there is inadequate justification for the draft directive on scissions, that the Council of Ministers should consult both the European Parliament and the Economic and Social Committee before proceeding on the matter, and that the Government should press within the Council for amendment.
The MINISTER of STATE, DEPARTMENT of INDUSTRY (Viscount Trenchard): My Lords, Her Majesty's Government welcome the committee's conclusions on the European Communities draft directive on divisions of public limited liability companies, and agree that the need for Community action on this subject has not been satisfactorily established. Her Majesty's Government would have seen advantage in an up-to-date opinion on this matter from the European Parliament and the Economic and Social Committee. Her Majesty's Government will continue to present these views within the Council. We have taken careful note of the options which the Select Committee on European Communities suggested were open to the Government, and we envisage putting forward an amendment on the lines which the committee proposed.
Lord PLOWDEN: My Lords, while thanking the noble Viscount for that reply, may I ask whether he can say whether the Government are satisfied with the
1414
apparently haphazard way in which the different proposals in the Community's company law programme are brought forward, and, if not, what action he proposes they should take?
Viscount TRENCHARD: My Lords, my right honourable friend the Secretary of State for Trade is in correspondence with the commissioners concerned on whether a better degree of priorities and order and method can be drawn up in relation to dealing with harmonisation of company law questions. At this stage, since those discussions are continuing, I prefer not to elaborate further.
Lord DERWENT: My Lords, may I apologise for my ignorance, but can my noble friend tell me what "scissions" are?
Viscount TRENCHARD: My Lords, I can assure my noble friend that, in spite of having been in industry for a long time, I had no idea either. In fact, a scission is the ceasing to exist of a limited liability company; instead of the original company, which ceases to exist, one, two or more new companies spring up and the liabilities and assets of the original company are split between these companies. The original company goes out of existence without going into liquidation. I have tried to get my staff to trace an instance of this process having occurred in the United Kingdom, and I have been unable to unearth a scission.
Lord DERWENT: My Lords, may I thank the noble Viscount, and I shall read that answer with the greatest care.
Lord ROBERTHALL: My Lords, in view of the tremendous amount of time and effort involved, not only of the Members of your Lordships' House but of civil servants and all the bodies which give evidence to us, may I ask whether the Government think that that time and effort which is being put in on the whole company law programme is justified?
Viscount TRENCHARD: My Lords, I think the Government have been in support of important measures on company law and on company law harmonisation where these affect the objects of the EEC. But, as I have already indicated, we are critical, as indeed the European Communities

1415
Committee over which the noble Lord, Lord Plowden, presides have been, of the apparently somewhat indiscriminate way in which some proposals for harmonisation of law are followed apparently for the sake of harmonisation itself. One has to add that we have to make sure that we have understood the views of other members of the Community to whom these things may be more important than they are to us; and in regard to a proposal such as this, which may not affect us to any great degree, we must not put ourselves in the position of stopping harmonisation which may help other states.
Lord HARMAR-NICHOLLS: My Lords, is my noble friend aware that his Answer to this Question provides one of the rare occasions on which the Government have said that they would welcome the help of the European Parliament in trying to arrive at some answer to this question? Is there any channel from the Government to their representatives in the European Parliament to let them know officially that that is the home Government's wish, in order to arrive at proper harmonisation on matters such as this?
Viscount TRENCHARD: My Lords, I think my noble friend spends a lot of his time ensuring that such channels are kept perpetually open.
Lord BRUCE of DONINGTON: My Lords, is the noble Viscount aware that we on this side of the House would very much endorse the observations that fell from the lips of the noble Lord, Lord Harmar-Nicholls, on this matter. We, in particular, welcome the noble Viscount's reference to the need for consulting the Economic and Social Committee. Will the noble Viscount agree that this particular body is all too frequently ignored by the Council of Ministers, and, I am bound to add, also by the Commission? This is a typical matter which would merit their detailed attention.
Viscount TRENCHARD: My Lords, I think I must quickly explain that both these bodies, the European Parliament and the Economic and Social Committee, were consulted when a proposal on scissions was included in the third directive. There is an argument thus to
1416
say that they have already been consulted. It is the Government's view that consultation on this now expanded and separate draft directive should go back to those two bodies.
Lord ELWYN-JONES: My Lords, would the Minister say what consultations take place with British lawyers in the formulation of these ideas, many of which are good, but many deplorable?
Viscount TRENCHARD: My Lords, I shall write to the noble and learned Lord on the specific question of the channels of communication. However, I am sure that they are well and truly open and that we do consult the legal profession in all periods leading up to consultation with the EEC on these matters.
Lord BROWNLOW: My Lords, much as I have appreciated everything that the noble Viscount has so far said on behalf of the Government, I should like him to say a little more, not on the subject of this directive on scissions, but on the subject of the procedure followed in this case, and its implications for scrutiny both within the European Community and Westminster. I should like to ask the noble Viscount whether he is content with advice which says that, when a phrase—a clause—is taken out of a draft directive and then expanded into a separate directive, there really is no need to consult the European Parliament and the Economic and Social Committee or to publish the expanded text in the Official Journal, thus by-passing the usual procedures for scrutiny in Westminster? If, as I imagine, the Government do not approve of this, will they take steps to prevent its recurrence in future? Was it inadvertence or through failure to accept the procedures that this strange procedure was followed?
Viscount TRENCHARD: My Lords, I have already covered the question of whether the procedure has been correctly followed and I think that it is a mute point under the instruments of the EEC. We are pressing the point that, as it is a mute point, renewed consultations should take place. I shall be delighted to answer the noble Lord's detailed questions by letter or in another way.
The LORD PRESIDENT of the COUNCIL (Lord Soames): My Lords,

1417
in view of the fact that we have for some time been discussing something which, according to my noble friend Lord Trenchard, does not in fact exist, perhaps it would be better if we moved on.

THE GENOCIDE CONVENTION AND THE PLO
2.46 p.m.
Lord JANNER: 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 what steps have been taken by the United Nations and the Lebanese Government to observe the Genocide Convention (which was ratified by Lebanon without reservation) to prevent the PLO, which is committed to the destruction of Israel by violence and whose headquarters are in Beirut, from carrying on its operations from South Lebanon against inhabitants of Israel.
The SECRETARY of STATE for FOREIGN and COMMONWEALTH AFFAIRS (Lord Carrington): My Lords, the Government deplore all acts of terrorism but the Genocide Convention does not cover terrorist attacks against Israel such as those to which the noble Lord refers.
Lord JANNER: My Lords, surely the noble Lord has not studied or appreciated the effect of the legislation which has been carried out by the Lebanese Government who, since 1969, have entered into agreements allowing the PLO and its murderous assassinating companions to act freely in South Lebanon? Lebanon agreed to refrain from appointing a police force in that area to prevent those with the definite object of destroying a state, which is absolutely contrary to the Genocide Convention.
Lord CARRINGTON: My Lords, the convention on the crime of genocide was adopted by the General Assembly on 9th December 1948. It was aimed not at individual acts of terrorism but to cope with the question of genocide in the aftermath of the Second World War.
Lord JANNER: My Lords, with the greatest respect, is the noble Lord suggesting that the groups to which the Genocide Convention refers—a convention which we have ratified and which Lebanon ratified without a single dissenting voice—do not include the elimination of a group like a state? Surely that is nonsense, is it not?
Lord CARRINGTON: My Lords, I do not think that the Genocide Convention applies to the acts of terrorism to which the noble Lord draws attention.
Lord BALLANTRAE: My Lords, would it be relevant or irrelevant for the noble Lord, Lord Janner—whose Questions along these lines are now very familiar to us all—to address a Question to the Government Front Bench asking what steps should be taken by the United Nations to deter the assassination of Arab mayors on the West Bank?
Lord CARRINGTON: My Lords, if that Question was addressed to me, perhaps I might answer it by saying that in the original Answer to the Question I said that the Government deplored all acts of terrorism.

GREEK STUDENTS: HIGHER EDUCATION FEES
2.48 p.m.
Lord STEWART of FULHAM: 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 Greek students entering higher education in Great Britain this autumn will be required to pay full overseas students' fees or will be treated as EEC students.
The MINISTER of STATE, DEPARTMENT of EDUCATION and SCIENCE (Baroness Young): My Lords, Greek students beginning courses on or after 1st September this year will be liable to pay full cost fees. The intention is that these students should be treated as EEC students and thus qualify for the home rates of tuition fee with effect from 1st September 1981.
Lord STEWART of FULHAM: My Lords, as Greece adheres to the Community on 1st January 1981, ought not these students to be entitled to pay EEC rates at least for two terms out of three in the coming academic year?
Baroness YOUNG: My Lords, tuition fees are fixed for a full academic year and it is not regarded as appropriate to make this distinction in the first year. They will be on home fees as from September 1981.
Baroness DAVID: My Lords, I should like to ask the Minister whether the fees are collected for the whole year in one sweep. Surely they are paid termly, in which case it would be perfectly easy to make a different arrangement?
Baroness YOUNG: My Lords, it is a Government decision that the home fee will be charged after the accession of Greece to the EEC, which takes place in January 1981. From September, for the next academic year, they will be treated as home fee payers, but for this year it has been decided that they must pay the full overseas fee.
Lord NUGENT of GUILDFORD: My Lords, can my noble friend tell the House whether, in the event, the sharp raising of fees to overseas students has seriously decreased the number entering? Is it not a fact that the number of applicants has not fallen all that far below what it was before? Perhaps it is a reflection on the value of what they get here?
Baroness YOUNG: My Lords, the latest retuns from UCCA show that there has been a drop of 12 per cent. compared with the number of applications for March 1979, but the drop is only one of 6 per cent. compared with the number of applications in 1978. I think that it reflects the statement of the noble Lord, that university education in this country is of excellent value.
Lord CHALFONT: My Lords, at the risk of seeming to be simple-minded, may I ask why, if the fees are fixed from the beginning of the academic year, they cannot be fixed on the basis that on 1st January 1981 Greece will be a member of the Common Market?
Baroness YOUNG: My Lords, the fact is that the cost of a concession to Greek students in 1980–81 would be £1–5 million, and this is a matter which we have decided we cannot accept this coming year.
Lord KALDOR: My Lords, as Greece will become a member of the EEC in the middle of an academic year, cannot the Government split the difference and charge a proportion of the EEC fees and the other fees?
Baroness YOUNG: My Lords, I have noted what the noble Lord has said. It is, of course, true that all other EEC students will pay the home fees as from this September, but we have taken a decision on the Greek students.
Lord STEWART of FULHAM: My Lords, when the noble Baroness says that it will not be appropriate to deal with the fees on a yearly basis, by that does she mean anything more than it has not been done before and that she lacks the imagination and generosity needed to deal with this problem?
Baroness YOUNG: My Lords, I think that we shall deal with the problem better by not using exaggerated adjectives in connection with it. The fact is that tuition fees are fixed from the beginning of the academic year.
Baroness LLEWELYN-DAVIES of HASTOE: My Lords, in view of the feeling all round the House on this subject, can we ask the noble Baroness to use her very great persuasive powers with her colleagues to change the zenophobic approach which has been taken on this subject, including our own Commonwealth?
Baroness YOUNG: My Lords, I am very well aware of the strong feelings of this House on the whole subject of overseas students. We had a major debate on this matter before Christmas in which the Government's policy was set out. As I have already indicated, we have gone into this matter very thoroughly. We have come to a decision that we can offer the home fees to Greek students once Greece is a member of the EEC, which will be in January 1981. We have looked at the financing of this and have come to

1421
our conclusion on the basis of the costs that would be saved. We believe that we have made the right decision. As always, we shall note what the House of Lords says.
Baroness DAVID: My Lords, will not the Government take a fresh look at this whole subject in the light of the Third Report from the Foreign Affairs Select Committee, which has just reported and which is highly critical of the present policy?
Baroness YOUNG: My Lords, I think that the most encouraging sign about our present policy is the number of applications that we still receive from overseas students. Perhaps I might remind the noble Baroness that if the numbers of overseas students dropped considerably more than they have done, they would only then reach the number of overseas students that the former Administration expected to have in our universities next year.
Lord GLADWYN: My Lords, is not the estimate of the number of applications purely provisional? Surely there is no reason to attach undue importance to it, as it may be one way or the other in a month or two's time.
Baroness YOUNG: My Lords, I can answer questions only on the basis of the facts as we know them, but we have no reason for thinking that the position this year is other than as I have described it.

THE CIVIL SERVICE: WEALTH-CREATION SECTORS
2.54 p.m.
Lord SANDFORD: 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 in seeking greater efficiency and further economy in the Civil Service they will regard as a special category those parts of the service directly involved in encouraging wealth creation, particularly in supporting small businesses.
Lord SOAMES: My Lords, in seeking greater efficiency and further economy in the Civil Service, Ministers will be looking across all the activities of their departments. Their detailed plans will take into account both the need for those activities and the scope for making them both simpler and more efficient.
Lord SANDFORD: My Lords, I am most grateful to my noble friend for that reply. Will he also agree that, in a number of services which contribute directly to the efficiency of wealth-creating organisations in this country, it is also a question of choosing the pace at which reductions, if they are to be made, are in fact made? My noble friend will perhaps recall the Agricultural Development Advisory Service, over which he once presided, as being a service which cannot easily be removed at a stroke.
Lord SOAMES: My Lords, of course my noble friend will appreciate that this is very much a matter for the individual Ministers concerned. It is not for the judgment of the Minister responsible for the day-to-day happenings in the Civil Service Department as to what should be cut or run down in which department. However, I know that my right honourable friend the Secretary of State will, of course, take note of what my noble friend has said.
Lord PEART: My Lords, will the noble Lord remember that he still has a major responsibility, as I had when holding his present office? The noble Lord, Lord Sandford, has mentioned agriculture. We are worried about it, because in one period at a stroke the Conservative Government destroyed the morale of the advisory service by restrictions. I know that the noble Lord agrees with me.
Lord SOAMES: My Lords, what the noble Lord is talking about happened such a long time ago that I do not remember it, so I do not agree with him.
Lord SHINWELL: My Lords, can the noble Lord explain why the Government have decided to dispense with the services of a body of civil servants, and that we now discover that there is a section responsible for wealth creation? What is

1423
this wealth creation about? Can he explain the matter to me?
Lord SOAMES: My Lords, the noble Lord, Lord Shinwell, will understand that it was not I who tabled the Question. My noble friend Lord Sandford refers particularly to supporting small businesses, which are certainly very wealth-creative.
Lord WHADDON: My Lords, will the noble Lord not agree that the Council for Small Industries in Rural Areas, COSIRA, has shown outstanding returns in terms of value for money? Will he take a firm stand against any intention from his friends to cut down on COSIRA? Indeed, does he not feel that we should be justified in setting up an urban version of COSIRA to help small firms in the towns?
Lord SOAMES: My Lords, I know that the noble Lord will understand me when I say that my noble friend the Minister of State for Industry will, I am sure, take note of what he says. Of course, he will. However, it is not for me to say whether or not a certain priority will be given within a department to one aspect or another of its work.

BUSINESS: TRANSPORT BILL REPORT STAGE
Lord DENHAM: My Lords, it may be for the convenience of your Lordships if I announce that it will now be necessary for the House to sit on Friday, 6th June, at 11 a.m., to conclude the Report stage of the Transport Bill.

INDUSTRIAL PRODUCTIVITY
2.58 p.m.
Lord SCHON: My Lords, I rise to call the attention of your Lordships:
"to the urgent need for industry to increase productivity substantially in the interest of the country as a whole; and to move for Papers ".
We see regularly in the newspapers, and particularly on Sundays, gloomy assessments of our economic situation. I am now retired from day-to-day business management, but the news I hear from
1424
friends who are actively engaged in industry is not encouraging. I do not want to repeat examples of what I am told, but in the general atmosphere of worldwide economic and political problems one is naturally inclined to be worried.
During my recent travels on the Continent I have also heard of the problems in other industrial countries. I would say that the two most important issues which are raised—and I speak here about industrial countries like Germany—are problems connected with the availability of energy, and the social problems arising from the introduction of the micro-processor. The introduction of the micro-processor is in many ways comparable to the effects years ago of the introduction of the electric motor which, looking at it now from a distance in time, was relatively painless and advantageous—possibly because in those days they did not have so many sociologists, economists and philosophers to comment about the problem. However, what is important is that I cannot get away from the fact that our competitors are introducing micro-processors and we will have to do likewise to remain in the game.
We are in a much better position than other industrial countries with regard to sources of energy. We have reason to believe that we have enough oil to cover the bulk of our requirements up to the end of the century, and we may even have a surplus for export in the next few years. We also have large reserves of coal. Still, during the first quarter of this year we were running at an annual balance of payments deficit of £2 billion. I am frightened to think what this balance of payments deficit would have been if we had had to import all our oil. That is one of the reasons why I have put down this Motion. To emphasise the point even more strongly, the fact that we have the oil conceals the seriousness of the situation.
There is a psychological factor which increases my apprehension. I was the co-founder of a chemical company in Cumberland, where I lived for 27 years during and after the war. In the mid-fifties I was chairman and chief executive of this company, which employed well over 2,000 people. On one occasion when we were faced with the improving performance of our foreign competitors I complained about the lethargy of the

1425
people I worked with. I had the honour and privilege to have the late Sir Henry Tizard as a non-executive member of my board, and while I was complaining he said to me, and I quote verbatim, "Schon, remember, the British are unique in one respect: they get worried only when the water is over their head; all other people get worried when the water gets up to their chin". Much later I was told another way of putting it: "The British sec the writing on the wall only when they have their backs to it".
If we accept that we are facing a difficult economic position, and if industry as the main creator of wealth has to improve its performance, we have to get moving now. In industry it takes a long time to get from the planning stage to the point where you can show profitable industrial achievement. We are in the unique position among industrial countries of being self-sufficient in oil and may possibly have a surplus in the 'eighties, but according to some of the present forecasts, we may become net importers of oil again in the 'nineties. The decade we have just entered therefore gives us our last chance to put our house in order.
Another reason why I have put this Motion forward is that, in my years in industry, I have seen that when the British are properly motivated and properly led they can hold their own with any foreign competitors, and the others can choose the weapons. I am anxious to approach this subject not on a party political basis but genuinely from the Cross-Benches and, above all, from the point of view of the country as a whole. I hasten to add that if my remarks appear too excessively patriotic, they should not be misinterpreted. What I am trying to say is motivated by self-interest. My family and my substance are here in this country and, as I have said on previous occasions, I owe a debt to this country which gave me hospitality at a time when I needed it. Moreover, I still believe that this country can play a major role in world affairs, but only if we are economically strong.
There are so many things to be done to improve our position. In the first instance, we have to increase exports and reduce imports. In this country the salesman does not really have the social standing he ought to have. We will have
1426
to promote our salesmen to the senior service. This, inter alia, should express itself in the importance which is attached to the feedback from the market place to the production manager in regard to the design and quality features required.
When I first entered business I learned that the customer is the boss, and that the experienced buyer looks for quality, price and service. I have been in direct contact with industry in this country for 41 years. I joined the National Research Development Corporation as a board member in 1967 and retired in 1979 after serving 10 years as its chairman, so I had a front seat, giving me the opportunity to assess the capabilities available in Britain to be innovative and to produce goods of the right design and quality.
With regard to price, which is based on cost, here we have problems. We are notoriously low in productivity. The strength of the pound is often used as an excuse for our lack of competitiveness, particularly in exports. When it comes to service, Britain has lost its reputation for reliability of delivery. Our record of industrial unrest is well known. This leads the buyer to doubt whether we can give service, because service depends inter alia on uninterrupted deliveries. It is reported that, in the first quarter of this year, days lost through strikes were up by 40 per cent. to 9–2 million working days, but to add insult to injury the publication of the figures in the Department of Employment Gazette was delayed by industrial dispute.
Despite all this, I am confident we can provide the right quality, price and service if only we would co-operate with each other. We have to bury the distrust and look at each other as human beings and partners. For too long management and unions have referred to each other as "we" and "they". What we have to learn is that "we" means all of us and "they" means our competitors, especially those abroad. This is the philosophy which our most successful foreign competitors adopt. I am certain on this point because I have heard about the relationship between unions and management in countries such as Germany and Austria. I am not arguing about the fact that every human being should have the right to withdraw his labour, but we have to realise that you cannot get rich

1427
by stopping work. I recently heard an eminent trade union leader on the Continent explaining in depth that to ask for more pay without more production is inflationary, and inflation is a forerunner of unemployment. He emphasised that if production had been increased it was his task to see to it that the men he represented would get a fair share of the additional wealth created.
We have also to bear in mind that the more sophisticated our industrial machinery gets, and the more capital-intensive industry becomes, the more important it is that plant should be fully used and not allowed to stand idle. Some plants deteriorate when they are not working; but all plants are a cost item in the price make-up of the end product, whether they are in use or not.
I am not claiming that my pronoucements are new, but what J am asking is whether we can put the message over that the time has come for everyone to realise that continuity of production is essential if we want to get more business. Let us work together in industry to match our competitors' efforts, which is, after all, in our own interest. Let us put the message over that we destroy our credibility whenever we talk about strikes, whenever we appear to be in conflict and when we fight among ourselves. Let us not forget that by 1979 the United Kingdom share of world trade had shrunk to almost one-third of what it was in the early 'fifties.
Many of our problems are due to the fact that, ever since the war, jealousy and envy have become prime motivating forces. I accept that jealousy and envy are strong motivators, but I am equally sure that they are never constructive. For the majority of human beings the two constructive motivators are, putting it crudely, the carrot and the stick. The high taxation that we have experienced since the war has reduced the carrot to insignificance, and unconditional social security has removed the stick. If management performance has been poor—and it has often been very poor indeed—the removal of the carrot has been partly responsible.
Obviously I am in favour of social welfare and therefore I wish for support and social security to be extended to
1428
those who are in need. I cannot overlook the fact that some of us are marginally cleverer than others. Some of us are willing to work harder than others. We can, as individuals, develop policies democratically together, but in industry, certainly, execution has to be on the basis of line responsibility. Able people—and we have got them—will perform best within the framework of a genuine meritocracy.
I know from my own experience in industry that we often accuse workers of being lazy and having no consideration for the importance of increasing productivity. I have found that much of the underlying opposition to increased productivity is due to a subconscious effort by the employees not to work themselves or their mates out of a job. I appreciate this point. The question therefore is, how can we increase productivity without reducing jobs? The only answer is to increase the volume of sales.
In order to increase productivity you also have to have a high and continuous rate of investment. And in order to increase investment you have to have profitability, which some of our foreign competitors have certainly achieved. We in this country must take responsibility for having created a low productivity, low wage, low profit, high cost economy. I have to admit that I do not know how, or where, to break the vicious circle. I am in favour of high wages, provided they are directly related to output. High output and high wages have some synergy, because if people are earning more, they can buy more, and that helps to provide the absorption basis for high productivity.
I appreciate that it is difficult to reduce all the points I have made to a common denominator. The problem becomes even more difficult when one bears in mind that unemployment is rising, and in this environment it is difficult to improve industrial relations. I have implied that wage restraint is essential if we are to achieve a reduction in inflation, which will in turn reduce the risk of unemployment. The question is: how do we convince each other that it is in our interest to co-operate and to make every possible effort to create an environment where we produce more, and, above all, where we sell more?
I am fully aware that I have been able

1429
to make only a few suggestions on what we should do to overcome our present difficulties, but I am sure that the wise counsel which those noble Lords who are to follow me will put forward will provide the basis for further thought and action, and that is why I have put down this Motion. My Lords, I beg to move for Papers.
3.13 p.m.
Lord BRUCE of DONINGTON: My Lords, your Lordships will be grateful to the noble Lord, Lord Schon, for having moved this Motion this afternoon, because it affords us an opportunity to consider in depth one of the greatest problems which confronts the United Kingdom at the present time. There is a tendency for productivity and the necessity for increased productivity to be discussed within a broad general political context. Everyone agrees that it is necessary to work harder. Much emphasis is laid on the need for incentives. Much importance is attached to the retarding effect of restrictive practices and to the general undesirability of any kind of bad industrial relationships.
I venture to suggest that in discussing the problem within that broad ambit, we are probably unlikely to arrive at any constructive solutions to it, and, with your Lordships' indulgence, I shall seek to narrow the points at issue, and to look at them rather more closely, so that we know the real areas in which some action needs to be taken.
Although in British industry we tend to be a little hypochondriac, we have to face the position where a very large number of our companies are functioning at profitability—I use the word "profitability"—and therefore productivity levels that quite easily match those of our leading competitors. If when your Lordships have time you refer to the Sixth Report on Competition Policy issued by the European Economic Commission, you will find that there are there listed the names of the 50 most profitable companies in Europe.
I say "profitable" because, in arriving at the order of profitability, regard has been taken not only of the total net profits earned, but also of the net profit/sales ratio, the net profit/own capital
1430
employed ratio, the cash flow/sales ratio, and the cash flow/own capital ratio. Of the 50 companies listed, no less than 25 were British companies, earning £1,270 million net profit in the year to which the report refers—
Viscount TRENCHARD: My Lords, will the noble Lord allow me to ask him how many of those British companies are multinationals, and can he say whether or not he is speaking of their worldwide profits?
Lord BRUCE of DONINGTON: No, my Lords; one is speaking solely of profits within the United Kingdom. The industries covered in this connection are electrical machinery, domestic appliances, electronics, pharmaceuticals, cosmetics, alcoholic and non-alcoholic beverages, building materials, paper, packaging, textiles, motor vehicles, accessories, rubber, tyres, plastics, aircraft, mining, oil, food products, construction, energy and power utilities, glass, pottery, china, and mechanical engineering. That covers a very wide spectrum of industrial activity in this country—
Lord HARMAR-NICHOLLS: My Lords, I am sorry to interrupt the noble Lord, but I think that this point is very important because it completely alters one's own thinking. Is the noble Lord saying that the 20 or so firms that he has quoted as being in the top 50 have had their earnings in this country separated from their multinational earnings, and that it is the United Kingdom earnings that put them in that top bracket?—because that is not the information that has been given to some of us from other sources.
Lord BRUCE of DONINGTON: My Lords, I am not in a position to particularise on that point because it is not disclosed in the European Economic Commission's Report. However, what I am satisfied on is that those companies are essentially under British management. They are British companies, and even if one made allowance for a certain degree of multinational income within them, nevertheless that does nothing to detract from the fact that these are British companies and that they in fact compete successfully with our leading competitors

1431
in Europe and indeed in the United States.
Incidentally, I am fortified in that by an observation which fell from the lips of the Secretary of State himself, Sir Keith Joseph, speaking in sunny California last week, as reported in the Daily Telegraph (which, as the House knows, is the house journal of the Conservative Party), on 30th May last. It said:
"Sir Keith also said strikes and bad industrial relations were almost unknown in modern British industries like electronics ".
Then he said:
"Combine British lower wage rates with American high-productivity standards and labour costs become very competitive indeed ".
He also went on to say:
"In Britain you will find plenty of skilled and adaptable labour".
I think it has to be faced—not only faced, but accepted with admiration and gratitude—that there are quite a large number of companies in the United Kingdom, employing British managements, British directors and British operatives, which are in fact functioning fully up to competitive standards. I do not think any noble Lord would deny that. Also, in the field of farming, of course, there is once again a fairly high degree of productivity, which, as the noble Viscount, Lord Eccles, explained, quite correctly, in the debate in this House on 3rd July 1978, arises largely from the comparatively personal circumstances in which farmers and farm workers operate under conditions of innovation and under conditions of a reasonably assured market.
The question one has to ask here is this. Are the workers in the profitable industries any different in physique, in temperament, in character, in dexterity, in ability or in endurance from those who work in the unprofitable industries? What different, unique characteristics do those who work in the unprofitable and less productive industries have which are not present in those who work in the productive industries? Even the trade union structure is common to them all. In those areas which are covered by the profitable industries to which I have referred there are the same unions represented as in the less productive industries—the Transport and General Workers,
1432
the Municipal Workers, the Electrical Trades Union, the Amalgamated Engineering Society and so on. They are all represented right across the spectrum, and they are all spread right across the country geographically.
What, therefore, marks the difference between those industries which are so fortunately productive and competitive and those which are not? I would venture to suggest that one of the factors which we have now to take seriously into account is the quality of management. The production of goods is very often highlighted by reference to only the point of production at which the operative actually produces the particular article or the particular service; and the inference which is very often drawn from that is that if by some means you can get the worker at the point of production, actually engaged in the operation, to put greater energy and drive into it, then somehow productivity is going to increase.
Nobody will deny that greater effort at the point of production would have that result, but what that tends to obscure is the whole process of production, which encompasses very much more than the labour which is expended at the point of operation. Indeed, Lord Schon in his speech laid very great emphasis—and I think the House would agree with him—on the necessity to up-grade salesmen. Because, of course, there can be no smooth production, and therefore no sustained productivity, unless the flow of orders into a particular firm or into a particular company is sustained, and, if possible, increased. I very often think that Her Majesty's Government might bear that point in mind in their public expenditure cuts, which consist very largely of material and service purchases from outside firms and companies.
The whole production process not only involves working at the points at which the various operations are accomplished; it involves research, including market research, and it involves design. Let us take design as an example. What holdups can ensue, what unnecessary production effort can be expended and therefore what increased unit costs there can be, if there is a faulty design of the article, or series of articles or objects, to be produced—articles which, had they been properly designed, would have required

1433
far Jess operation and far fewer machine changes. In other words, an article has to be designed not only for the sake of appearance but also for ease of production.
Lord Schon mentioned investment, and I will not touch on that, except to say that many of us who have some memory of Lord Ryder's report on British Leyland will recall with some melancholy that, out of the £74 million profits earned within a period of five years, no less than £70 million was distributed by way of dividend and £4 million only devoted to investment, with the consequent obsolescence of the plant and the machinery which lies at the very root of many of British Leyland's problems today. There is also the question of finance; and there is the question of production planning and progress. Unless production planning and progress is carried out satisfactorily, no amount of extra effort at the point of production is going to result in increased productivity. This has to be done properly. Plant layouts have to be satisfactory; otherwise, there is unnecessary movement.
One of the aspects involved in any large process of production is materials-handling, and it is my own experience, as one who has been accustomed to applying work studies to various sections of British industry, that the materials-handling situation in very large sections of British industry as such is so disgraceful as to enhance the unit costs of the articles which are subsequently produced. Then, also, there is the other point of inspection. This is important, too, because unless inspection is carried out properly then delays can occur at a later stage about which the ordinary operative can do nothing at all if a faulty article arrives for him to perform the next function upon.
In short, those who talk about the necessity to increase productivity, rather than tending (and I put it no higher than that) to blame the whole thing on to the operative, would do far better to examine the whole structure, which, of course, is what the directors or the leaders of the various firms are there to do. There are three types of industrialist, and they are all self-styled. There are, at the top of the list, captains of industry; there are then what are euphemistically described as leading industrialists; and the third grade
1434
is the mere industrialist. Some of these gentlemen—not those, like the noble Lord, Lord Schon, and many others, who are engaged in successful industries—might do well, before they call themselves industrialists on the basis of a membership of the Institute of Directors, to acquaint themselves in greater detail with what actually happens on the factory floor before they begin wholesale denunciations of the workers themselves and the trade unions which represent them.
As any student of factory procedure knows, and as anybody who has indulged in the practice of work study should know, all the functions within a factory are categorised under five heads: the operation itself, the time spent in inspection or verification, time spent in moving, time for delay, which sometimes occurs through no fault of the operative himself, and time that the object itself is held in store, whether a sub-assembly store, a buffer stock or whatever. The whole production process, even in an office, can be categorised in varying degrees and in varying numbers over those five categories of activity.
Where excess costs arise they arise from the time spent in collecting materials, in cleaning, in lost time because of no materials being available or because of faulty materials or because of subassemblies not arriving on time, machine breakdown, power failure or unclear instructions on the original operating instructions and, sometimes, because of interrupted priorities. In small or medium-sized firms, very often a director will interrupt the complete production process in order to establish a new priority to please somebody he has met over lunch or somebody who phoned and pressed their claims on him. That results in a loss of productive time.
Then there is the question of the unbalanced team: the working up to manufacturing the products that have finally to be assembled can be done only on the basis of having balanced teams of carefully-selected individuals who can perform their work in reasonable time, so that there is smooth production all the way through the line and all the way through the further processes. Finally, there is the time lost through maintenance.

1435
All these matters are under the control of management. In the 25 companies to which I have referred, and in many others, companies which function quite well and which must be above average in the whole of British industry, these are matters that receive careful attention by all enlightened managements. One of the greatest services that the Government could perform for industry where industry needs to be informed—and, in a very large number of fields, clearly it does—is to draw to their more specific attention the magnificent work of the British Institute of Management and the British Productivity Council.
I have in front of me a work which was prepared under those auspices as long ago as 1954 in collaboration with one of Britain's most successful companies, Imperial Chemical Industries. If the industrialists read this, read the documents that have succeeded it and assimilated them and if members of the Government attended a seminar to be arranged on their behalf by the British Institute of Management and the British Productivity Council, they would begin to have a rather greater insight into how productivity can be increased than is evident from the very broad, sometimes spiteful, political utterances that they may make. For their part, they should accomplish everything they can to ensure that these two bodies receive the prestige to which their efforts in the last 30 or 40 years have entitled them.
I return briefly to the question of restrictive practices. I would not wish to avoid it. Restrictive practices arise essentially from two main sources. The first is fear and uncertainty—something that is comparatively unknown to those of your Lordships and many outside who are accustomed to more secure and comfortable circumstances. Secondly, restrictive practices and bad industrial relationships are due to a degree of cussedness and resentment which operatives very often feel and which have three basic causes. I make the point seriously. First, they arise in many cases from a contempt for the more obvious incompetence of some managements with whom they are in contact and, secondly, the cussedness and bad feeling can arise from a sense of frustration about unremedied deficiencies in organisation and procedures
1436
to which management's attention has been repeatedly drawn without any result. Thirdly, they can arise from anger at the social arrogance of some of these managements who presume to lecture them on the virtues that they themselves do not obviously possess, bearing in mind some of them—and where the cap fits it can be worn—have very little direct knowledge of what goes on on the factory floor. These are all matters which cause resentment and cause fear.
The reason I have addressed your Lordships in these terms this afternoon is because I fear—to use the words of those who are responsible for the introduction of the new Employment Bill, in order, as they say, to redress the balance—that the balance of denunciation of the ordinary working man in this country has gone too far and that it needs to be balanced by a proper regard to even more crucial deficiencies among some—and I repeat: if the cap fits it can be worn—managements.
To this situation, regrettably, the Govenrnment are contributing very little. The Government's present policies are harassing all businesses, whether they be small or large, successful or unsuccessful. There is no doubt that the high-interest policy to which they have persistently and dogmatically kept is, as we are talking now, having a disastrous effect on productivity in the United Kingdom. In support, I would quote the warning repeated in the Financial Times by the chief of Vickers. Sir Peter Matthews says:
"Industry is not infinitely elastic. As a business shrinks it reaches a point from which recovery is either not possible or extremely slow. Many companies are forced to devote all their attention to the immediate impact of today's orders, cash flow and profits."
As I hope, the noble Lord, Lord Schon, would endorse, the concentration on those more immediate objectives to the point of grave apprehension does not produce a factory atmosphere in which productivity can continue to grow confidently or in which increases in productivity can occur at all. I hope therefore that the noble Viscount will not take it amiss when I say to him that many of his fellow industrialists in the outside world, whether or not members of the CBI, and many supporters of his in this House and in the other place, are becoming increasingly apprehensive that the whole

1437
social climate within which, ultimately, production must take place in this country is becoming steadily poisoned by the dogmas to which the Government are so tenaciously holding. May I express the hope that even at this late hour the Government will be able to pursue and announce policies that are constructive in their purpose, that are non-diversive and encourage all the people of our country, whether engaged in management or on the shop floor, in a common productive purpose for the future prosperity of our country?
3.40 p.m.
Lord ROCHESTER: My Lords, from these Benches I should like first to join in thanking and indeed congratulating the noble Lord, Lord Schon, on having selected as the subject for this debate the need in the national interest to increase our productivity substantially. He could not in my view have chosen a matter more vital for our future. I particularly liked the way in which he treated this concept of "us" and "them". How right he was to suggest that we have somehow to get into the way of thinking of all of" us "as being together and of" them "as being our international competitors.
It is significant, too, that the noble Lord, Lord Sieff of Brimpton, should have decided to make his maiden speech today on this subject. This is surely an indication of the importance that he and his great company attach to the problem. I understand that there is one day in the week when, if one tries to enter one of his stores at nine o'clock in the morning, one cannot get in. The reason is that for the first half hour on that morning managers and supervisors consult and communicate with their staff. On the face of it, the time so spent must seem to be entirely unproductive; but I dare say that in fact in the long run the half hour or so spent contributes more to increased productivity than any other half hour in the week. However that may be, it is better that the noble Lord himself should add anything further that he may wish to say on that subject. We on these Benches—and I am sure that I speak for noble Lords throughout the House—look forward to his speech. I am only sorry that I shall not be in a position to congratulate him upon it after he has made it.
1438
Regarding the remarks of the noble Lord, Lord Bruce of Donington, as someone who, until not so long ago, was a manager, I do not think that I am in the best position to counter what it was that he had to say. But if he will allow me to say so, I think that the line he was taking regarding management really does not contribute very much to the elimination of this problem of "us" and "them", to which the noble Lord, Lord Schon, was referring.
As regards his comments on profitability and productivity, aside from the questions that were asked of him by the noble Viscount, Lord Trenchard, and the noble Lord, Lord Harmar-Nicholls, it by no means follows that, because so many of our leading companies are as profitable as are many of the major European companies, their productivity is as good. Many of our companies remain profitable relative to our international competitors despite relatively low levels of productivity rather than because we are, in that particular regard, on terms with our competitors.
It is nearly two years since the noble Viscount, Lord Amory, introduced a debate in the House on much the same subject. In doing so, he said that he believed the level of our productivity was the most serious of our economic problems because it lay at the root of most of the others, and it was likely to prove in his view the most intractable of them all. It was in keeping with the wisdom and experience that we have come to expect of the noble Viscount that, in framing his Motion on that occasion, he related productivity to employment in such a way as to indicate his belief that new job opportunities could not precede but only follow improved productivity.
Just how serious and intractable the problem remains can be judged from the fact that many people still do not understand even the difference in meaning between productivity—whether that is measured as sales per employee, as I think the noble Lord, Lord Schon, would measure it, or as value added per employee—on the one hand, and production on the other. For example, from people who should know better we still hear calls for more investment of capital or for the employment of more people, without any apparent recognition that because we

1439
are a nation that is dependent on foreign trade, the investment of that capital and the employment of those people can be justified only if they provide a return that keeps us internationally competitive.
In my view, our productivity will increase substantially only through a change in attitude of ordinary working people which derives from a clearer understanding of economic realities such as those. On the need for this understanding and the means by which this can be achieved, I think I have said enough in our discussions on the Industry Bill. The noble Viscount, Lord Trenchard, may feel that I have said too much; but at least he and I are agreed on the importance of the subject, and that whatever part Government legislation and encouragement should play in that process, it is primarily one in which management should take the lead within industry. There have recently been some welcome signs, I suggest, in British Leyland, in the British Steel Corporation and, if I may dare to say so at this time, on the part of the Central Electricity Generating Board in the Isle of Grain, of that lead being given and being followed.
I will now add only one point arising from my earlier experience as a manager in a large company in trying to overcome resistance to improved productivity on the part of employees. It is that this resistance often proves in practice to be due to factors such as fear—and on that point I very much agree with what the noble Lord, Lord Bruce, had to say—habit; failure of communication; poor relationships and lack of trust. If such obstacles are to be overcome, this can only be done through frank discussion between management and employees or their representatives, starting from the perceptions not of those who are seeking to effect the change but of those who are to be affected by it.
If low productivity is indeed the most intractable of our industrial problems, then I suggest that continuing wage/cost inflation contributes very greatly to it. The main weapon which the Government are using to conquer inflation is the control of the money supply. On this matter, Professor Sir Henry Phelps Brown, whom I greatly admire as the author of the pamphlet Where Do Rises
1440
in Pay Come From?, recently made a number of most discerning points in a letter to The Times. I am indebted to him for a good deal of what I next want to say, although it will not take very long.
What cannot be foretold is how, over the next few years, people are actually going to respond to monetary restraint. The Government appear to think that the contraction of demand, increased unemployment and bankruptcies of firms which look like being the effects, if not the purpose, of their policies will bring about a lasting change of attitude. But is that what will really happen? Suppose that the coming recession, deepened by Government action, succeeds in reducing the level of pay increases and that after two or three years the vigorous revival of industry that is envisaged occurs: what reason is there to believe that pent-up pay claims will not then be let loose again in just the same way as has happened, it must be acknowledged, in the past following incomes policies which have, after all, been only makeshift affairs?
Moreover, in the meantime monetarism will not work constructively for, if restraint is not to be enforced indefinitely by unemployment, it must come to be accepted voluntarily through understanding; and a weighty argument in favour of a renewed attempt to develop an incomes policy is that it is educative and not divisive and that through tripartite, if your Lordships will forgive the word, meetings at the highest level and the development of procedures for working through the problem, incomes policy rests on an appeal to reason and the spread of information. Monetarism, by contrast, relies on impersonal market forces in a field of human relations and it deals with fellow countrymen at arms' length. In the view of Sir Henry Phelps Brown, neither monetarism nor incomes policy offers the immediate prospect of instituting a lasting order. An incomes policy works towards a change in attitude without which, in the long run, order cannot be kept.
For my part, I believe that in order to increase the nation's productivity what we now need to do in this field is, through consultation between representatives of the Government, of employers, trade unions and possibly others, to get as near

1441
as possible to agreement on two points: first, on long-term procedures for pay determination. For example, as the late Sir John Methven argued, the annual pay round should be conducted over a period much shorter than at present, and negotiations in the public sector should come at the end so that they follow those in the private sector where market considerations have to apply.
The second point on which I suggest there is need to seek agreement is broadly what, having regard to our productivity—or lack of productivity—the country can afford by way of overall pay increases. Here an essential element in the process is that discussion should be so conducted as to enable the public at large to gain a clearer understanding of what is at stake before a decision is taken by the Government. It is not necessary, nor, it seems to me, desirable, that a bargain should be struck. What is necessary is consultation. I accept that in formulating an incomes policy the last stage would be the most difficult on how to gain sufficient acceptance not of course of some rigid norm but on general guidelines, so that in a field where until now there has been no restraint on short-term interest these guidelines can if necessary be enforced with all the authority that Parliament can bring to bear.
So as not to beg the most awkward question of all, in the last resort, what sanctions should the Government use to ensure that their counter-inflation guidelines are not breached? Should the instruments to be used be taxation, the removal of immunity from legal suit of those taking industrial action to breach the guidelines, or what? I shall not attempt to answer those questions now but, just because they are extremely difficult ones, that does not seem to me to be a sufficient reason for not beginning to face up to them now in case before long they do have to be answered. Surely this Government, more than any, would be wise at least to prepare for themselves a fallback position more accommodating to improvements in productivity than the ice-hard rigidity of the total pay freeze that they may otherwise have to introduce before long. If their monetary measures fail over the next few years the only alternative to incomes policy that I can see is the imposition of widespread
1442
import controls. Those, in my view, would certainly not help to increase our productivity.
I am sorry to have introduced in turn what may seem to be a somewhat controversial note into this debate. I have done so only because in my view the need to increase productivity is not separable in the long run for the questions of pay, prices and employment; and sooner or later I believe we shall all have to come to that realisation.
3.57 p.m.
Lord SIEFF of BR1MPTON: My Lords, I should like to thank the noble Lord, Lord Rochester, for his generous remarks. As I rise for the first time, I am deeply conscious that my father made his maiden speech on productivity 14 years ago in your Lordships' House. I am sure your Lordships will show me the same indulgence as you extended to him. I beg your Lordships' forbearance for quoting what he then said, which was as follows:
"Lying at the core of our economic problem is the need for a special attitude of mind on the part of those engaged in industry and commerce, and an understanding of sensible co-operation. To break down the element of fear, suspicion and insecurity is a very difficult thing to do when dealing with human relations, but it has to be done if industry is to reach the high degree of efficiency which we all desire. "(Official Report, 26/4/66; col. 71).
Looking back over these last 14 years, I see only very modest progress. Our present standard of living is due in no small measure to our oil and gas production, and not, I regret, to a generally good economic performance. The noble Lord, Lord Schon, has done a public service to call attention once again to the urgent need to increase productivity. I believe your Lordships welcome contributions to your debates based on personal experience. What I have to say is largely based on my experience with one firm, in which I have worked for nearly 50 years; but such progess as we have made would not have been possible without close co-operation with many companies in the field of manufacture, agriculture, building, transport and with many scientific and technological institutions. But, above all else, our progress and high level of productivity are due to the co-operation which has been built up

1443
between management and all other employees.
What have I learned in these nearly 50 years? The creation of wealth for all to share demands a high working performance of everyone and needs cooperation, not confrontation, between managers and other employees. Conflict solves nothing and benefits nobody except those who want to change our economic and social system in favour of some other system of a totalitarian nature, whether of the Left or the Right, and under such régimes living standards are low generally and progress and productivity poor. The great majority of people in the United Kingdom are moderate, law abiding and ready to work together, but most want to be treated as responsible individuals who merit respect. Many feel that they have a constructive contribution to make, and most of them have.
The kind of industrial leadership indispensable to a modern democratic society can only exist if top management is seen by its deeds to be committed to implementing in practice a policy of good human relationships with all employees. I use the term "good human relations" rather than the more commonly used term "industrial relations" because we are human beings at work; we are not industrial beings. Human relations in industry should, for example, cover the problem of the individual at work, his or her health wellbeing and progress, the working environment, profit sharing, It implies—and this is very important—good communications both up and down. These areas, additional to wage bargaining, are often inadequately covered by today's industrial relations procedures. It is my experience that all senior management, be it Government, trade union, private enterprise or nationalised industry, sincerely believe in the importance of good human relations. But, in fact, some top management merely pays lip service to it and does nothing about it; others believe in it, but do not know how to implement it. But those who understand and implement such a policy invariably create an environment where people work hard, work well and work together, where productivity is high, and the organisations concerned are progressive and profitable. They are creators of wealth in which everyone shares.
1444
So management must recognise and implement its social responsibilities. But, if they do so, equally union leaders and employees have to recognise their responsibilities and obligations as well as accepting the benefits such a policy brings. I am glad to say that many do so. But unless the leaders of industry and trade unions pursue tenaciously but with patience a policy of good human relations and cooperation, we must not be surprised if our national productivity, our competitiveness, our standard of living and the quality of life fail to improve.
There is another problem which both sides of industry must tackle together; that is, the high and growing level of unemployment. During the last three months I have visited 14 major factories employing many thousands. They are concerned mainly with clothing production and food processing. They are modern and all have high productivity. All have one thing in common; investments in recent years of tens of millions of pounds into the most modern methods of production, computers, mechanisation and automation. Without this investment these plants would not have achieved their high level of productivity and profitability. They would not have been able to compete in either home or export markets. But there is a necessary corollary. This increased efficiency and high productivity almost invariably means that more is produced to a higher standard of quality with fewer people, so unemployment increases at least temporarily. If, however, the businesses concerned do not improve their efficiency and productivity, eventually they will lose their markets, cease to be viable, close down and everyone becomes unemployed. We have seen many examples of this in the past 20 years.
It is natural in such circumstances that some employees and some union leaders resist the introduction of modern methods and cling to outdated systems, which for a short time maintain unemployment, but in the end lead to greater unemployment as firms shut down. We must face up to this fact. How do we tackle the twin problems of increased productivity and unemployment? I cannot offer a solution, but I have one suggestion which could increase employment and alleviate the problem: that is, the development of entirely new industries based on modern

1445
technology for which there is, and will be, a growing market.
I should like to refer to the report of the Joint Working Party on Biotechnology, published by the Government in March this year. With your Lordships' permission, I will quote from the summary of conclusions and recommendations of these distinguished scientists and industrialists:
"We envisage biotechnology—the application of biological organisms, systems or processes to manufacturing and service industries—as creating wholly novel industries with low fossil energy demands which will be of key importance to the world economy in the next century. Over the next two decades biotechnology will affect a wide range of activities such as food and animal feed production, provision of chemical feedstocks, alternative energy sources, waste recycling, pollution control and medical and veterinary care. For the United Kingdom, biotechnology is an area of high technology with large potential growth offering opportunities for the renewal of various existing industries and the creation of new ones. It can be used by both "large and small businesses",
The summary continues:
"British industry must respond faster to the challenge presented and grasp these opportunities to develop new products and processes and supply equipment and reagents in both home and overseas markets. Regrettably, by comparison with our competitors. West Germany, Japan, the United States, investment is low and opportunities have been missed".
That is part of the summary of the report. I do not think that this report has received the publicity or the attention which it deserves. Biotechnology, which includes such developments as genetic engineering, could well be in the 80s and 90s what electronics have been in the 60s and 70s. For example, just as penicillin was the result of the application of biotechnology in its early stages, the production of interferon—about which so much has been written in recent months—on a commercial scale, with its huge potential demand, may well result from the application of modern biotechnology.
The working party, under the chairmanship of Dr. Spinks, made a considerable number of recommendations which, if implemented, would result in a well-organised and co-ordinated effort, not just by the research councils but including the universities, the Government, the CBI, many industries and trade associations specified in the report. I am told that the amount of money involved to give this impetus to the new high technological development is initially extremely modest
1446
and that later finance should be self-generating.
I believe that it is along these lines of identifying and opening up new opportunities for far-reaching innovations that one answer will be found to improve production, to develop the economic growth that the country needs, and to provide employment. But a high level of productivity in long-established industries which are now very sophisticated, or in the new industries of the near future, demands co-operation between all concerned, and this in no small measure depends upon management's attitude to human relations in industry. There is much that we can do to help ourselves.
4.11 p.m.
The Earl of SHANNON: My Lords, I regard myself as most particularly fortunate, in that it has fallen to my lot to be the first speaker to have a chance to congratulate the noble Lord, Lord Sieff of Brimpton, on his excellent maiden speech. He brings to your Lordships' House his great wealth of commercial and industrial experience, which is typified in the internationally famous company which he chairs with, I understand, great personal involvement, in that he arrives in his office before 8 o'clock in the morning every day.
That company's success is largely due not only to this exemplary management and the personnel relations, which he has described to your Lordships, but also to their enlightened system of strict quality control which they exercise over the products they sell, and the advice and guidance which they give to the manufacturers who supply them. It is this outlook which is an example so badly needed in many spheres of British industry and which qualifies him, as I know your Lordships will agree, as a major contributor in this afternoon's debate. I am sure I speak for all your Lordships when I say that I hope he will not confine himself to this debate alone, and that we shall often on future occasions have the benefit of his wise advice.
Like others, 1, too, should like to express my thanks to the noble Lord, Lord Schon, for introducing this debate this afternoon. We all ought to thank the noble Lord for keeping us talking about productivity. Too many of us say,

1447
"Of course, productivity is one of the main answers to our troubles. But there's nothing new or wonderful about that—nothing startling. We all know that. Let's talk about something else". It is most important that the noble Lord, Lord Schon, is wanting to keep us talking about productivity until somebody does something about it, and we should not start talking about something else.
There are many aspects of productivity, as previous speakers have already reminded us, and we all know that it is one of our major factors in defeating inflation. Much of our inflation is due to the fact that we have become accustomed to paying ourselves what we want; not what we are worth. I am afraid that there have been decades of weak government which have allowed this to happen, and we are now paying for it with inflation.
Whether the present Government's action is appropriate, I should like to leave the major political parties to argue among themselves. Personally, I believe that their actions are undoubtedly right. But as to whether the treatment is too right, too late, I suppose we shall have to wait and see whether the patient dies before it is cured. However emotionally upsetting it must be to those who spent at least a generation in satisfying social consciences out of the public purse, I think that the Government are right in avoiding, so far as possible, cutting assistance to the wealth-producing areas. If those wealth-producing areas collapse, then there will be nothing at all left for the socially satisfying, wealth-consuming areas.
As an indication of the international state of inflation, it might be interesting to look for a moment at the rates of improvement in productivity and pay for the fourth quarters of 1976 and 1979 respectively, those being the latest figures that I have been able to obtain. The United States improved productivity on a basis of output per person per hour by 2–2 per cent., yet they paid themselves 8 per cent. more for doing it. Japan improved productivity by 5–2 per cent. and paid themselves 5–3 per cent. more—nicely balanced. France improved productivity by 5–5 per cent. and paid themselves 13–1 per cent. for doing it. Germany
1448
improved by 3–6 per cent. and paid themselves 5–9 per cent. for doing it. Italy improved by 3–1 per cent. and paid themselves 17–9 per cent. for doing it—nearly 5¾ times as much as the improvement. The United Kingdom improved by 1.1 per cent. and we paid ourselves 14–4 per cent. more for doing it. We were, therefore, paying ourselves 13 times as much as we were really worth in improvement. Compare that, my Lords, with Italy's 5¾ times.
All this makes it obvious why we have inflation. So what are we to do about it? The solution is obviously not simple. There is no one universal panacea, and we have heard many good suggestions from previous speakers. We have touched on the subjects of labour relations, management, investment, rates of interest and bureaucracy crushing struggling small firms, but because of my own particular interest I should like to concentrate on the subject of innovation and the adoption of new technology.
I must emphasise that, in itself, it cannot be a sole, or even necessarily a major, answer, as any investment in new technology is immediately handicapped, unless steps are taken to use new equipment to the full and not leave it gathering dust and overhead charges for whatever product it produces, until the single shift condescends to come back and start work again. As a country, we are good at producing new technology. We are bad at adopting it in our industry, and we are equally bad at using it to its full potential, when, and if, we do adopt it.
I suspect that to-day in British industry there is far too much, of an attitude of saying "Well, let's shorten sail, batten down the hatches and wait till the storm blows over". I suggest that, even with this shortening of sail and battening down of hatches, industry will not survive this storm. It will steadily go down, unless it actively takes steps to get out of the storm and does not just wait for it to blow over. As the noble Lord, Lord Schon, has told us, this time it is for real. This is our last chance. This is not one of those periodic crises which we have had in recent years, which appeared to come and go—yet did not really go—and which mainly seemed to provide a stage for the major political parties to shout at each other. Each said the other was worse than itself and that the fault was really

1449
that of those who supported the other party. However much fun this has given to professional politicians, it does not help industry at all.
I suppose it must be a sign of advancing years, but I must observe that over the last few decades the captains and kings have departed, leaving the children to lead us. Oh, for real national leaders! Still, we must make the best of what we have got and try to instil some sense of national purpose throughout much of our industry unless we are prepared to abandon our present standard of living, to opt out and to become a nation of tourist guides, showing rich Chinese, Mongolians, Formosans and everyone else over England's green, pleasant and once great land as our only means of support, perhaps assisted by selling the remains of our North Sea oil to nations better able to use it than ourselves.
Nobody likes change. The adoption of new technology is bound to mean change and is bound to cause resistance. It is perhaps an unfortunate fact of life for some, that if there is to be unemployment through the use of new technology it is better by far to adopt the new technology and to be able to pay for the resulting unemployment than the alternative of not adopting the new technology and being unable to pay for the unemployment caused by being internationally uncompetitive in our industry. In fact, we have no choice.
However, not all new technology causes unemployment, but where it does we must have the wherewithal, through the wealth created by being internationally competitive, to absorb the unemployment either in new industry, as the noble Lord, Lord Sieff, has just told us, or in new or existing service industries. If I may quote the last director of the National Computing Centre, he said:
"If at the turn of the century we had decided against using the internal combustion engine on our roads on the basis of the number of ostlers it would put out of business, we would never have had a motor industry, or its ancillary service employment, or a competitive system of getting goods around the country ".
In direct terms of new technology giving rise to new employment, may I ask your Lordships to consider this one small example? Development over the last 30 years has produced the small bore tubing and glandless pumps which have
1450
enabled central heating to be afforded by the average householder. This has created some 80,000 jobs in this new industry, jobs which did not exist 30 years ago. And the manufacture of ancillary control systems accounts for a turnover of another £100 million a year, with the creation of some 5,000 new jobs that certainly did not exist before 1950. That is only one example.
I should like to conclude by asking Her Majesty's Government one question. I suspect, I am afraid, that I know the answer and that it is going to be, "Nobody; we just muddle through as we always have". But in asking the question may I leave the thought with Her Majesty's Government that they might like to put in train the necessary actions that in future might provide a different answer to the same question.
As we spend very large sums of public money on research in universities, for a long time there has been agitation that their research should be industrially orientated. The Science Research Council responded with various schemes. Various universities, with varying degrees of success, have assisted industry, sometimes very successfully, with their facilities. I am not asking that any of this should be abandoned; I am not asking that the universities should be told what to do. What I am asking is this: is there anyone to whom the Minister can point his finger and say, "That is the person who has the responsibility for looking at the great wealth of results of university research, assessing their potential value to industry and taking steps to get them implemented?".
I know that the National Research Development Corporation has done much work in this field; so have research associations; so have private consultants; so have the requirements boards of the Department of Industry; and so have the universities themselves. However, the question is not, who has been doing it? but, who has the direct responsibility for seeing that this great national asset, in a field in which I would suggest that we are really rather good, is put to the best national advantage? The Department of Education and Science do not have this direct responsibility and I do not think that there is anybody who does. So my question could be an invitation to the

1451
noble Viscount who will be speaking on behalf of Her Majesty's Government in this debate to answer, "There is nobody, but I will accept it on behalf of the Department of Industry". For, in my opinion, that is where this responsibility should rightly and most profitably lie.
I hope that I shall be able to stay until the end of the debate. However, I have another long-standing engagement. If, therefore, I have to leave before the debate finishes, I trust that your Lordships will forgive me.
4.27 p.m.
Lord BOWDEN: My Lords, may I add my voice to those who have thanked the noble Lord who initiated this debate, thus allowing us to discuss this important subject this afternoon. There can be few, if any, men in the world more fitted to introduce a debate such as this. He came to this country impoverished, with nothing but his genius. He created industries and made districts of England, which might otherwise have been impoverished at this moment, relatively well off. I think that the country as a whole is greatly indebted to the noble Lord for the work he has done, just as this House is indebted to him for allowing us to debate the subject this afternoon.
I am also very grateful for the opportunity to congratulate the noble Lord, Lord Sieff of Brimpton, on a perfectly magnificent maiden speech. His firm is one of the most extraordinary achievements of this or any other country. I remember thinking to myself when I was last in Moscow, that were they to open up there they would do more to introduce true democracy into a communist country than anything else that could possibly be imagined under any circumstances. The noble Lord's speech was interesting, informative, and, so far as I was concerned, very precious. Therefore, I hope that we shall have many opportunities to hear him speak again.
Whenever I have the opportunity to discuss these matters with your Lordships, I like to try to concentrate on a particular and perhaps rather fundamental but most material subject. Therefore, I should like to discuss briefly some of the implications of the Government's policy as we have
1452
observed it in action so far, the most important one being the imposition of spending cuts. What have these done for industry? I should like to revert once again to the question of what they have done for the preservation of the infrastructure of the community upon which industry depends. On the last occasion upon which I addressed your Lordships I referred to an enormous hole, the size of a double-decker bus, which had appeared in Oxford Road, Manchester, on account of the collapse of one of the main sewers. Your Lordships will be glad to know, I am sure, that in the months that have elapsed since then the hole has been mended; but, unfortunately, another hole almost exactly as big has arrived in the middle of Market Street, Manchester, very near to one of the main department stores well-known to the noble Lord, Lord Sieff.
These catastrophes, for they are little less, are due to a wilful neglect on the part of many Governments of what in my day used to be called preventive maintenance. It is not enough to wait till the roof falls in before you mend the tiles; it is not enough to wait until successive large streets in Manchester fall in before you mend the sewers. Governments have in effect saved money by wilfully reducing the limited funds which are available to the community at large for the preservation of the main items of the infrastructure upon which civilised life depends.
I was talking the other day to one of the men responsible for the maintenance of the roads in a southern county of this country, which perhaps ought to be nameless. He told me that on present plans he hopes to be able to resurface the subordinate roads once every 325 years. I know from my classical readings that when the Roman Empire started to collapse the first sign of neglect was in the decay of the ordinary small roads along which ordinary commerce moved, while they kept the main roads along which the legions could march in proper working order. We are following this remarkable historical precedent 2,000 years later.
I think it deplorable that any Government—and I am not criticising this one more than any other—should have been so neglectful over a period of many years of what one can best call preventive maintenance of the infrastructure on which

1453
the whole community, including industry, depends. I have said in this House before, and I repeat it, that I believe in fact that the total cost of neglect can be great and catastrophic, but the total net cost of doing the work is very much less than people usually think, because of the fact that the men who are now unemployed could put their lives to good use. Furthermore, the machinery which is now rusting away could be brought out and properly used. I believe the net cost of doing some of the work so urgently needed would be relatively small.
It is a curious thing to say, but it may well turn out that the best buy open to the Government today might be, let us say, to mend the sewers in Wigan. I do not know. But the Government must take this sort of possibility seriously and contemplate the thought that by saving small sums of money in this way they are laying up not treasure in heaven but catastrophe on earth in the very near future. No great community can survive unless the infrastructure of roads, of drains, of water, electricity and gas are all kept in some reasonable state of repair. The Government are going to allow these things to decay at their peril. It is this sort of thing more than anything else, in my experience of Manchester and its environment, which discourages ordinary working people. They think to themselves "What is the use?". That is point number one.
The next point I should like to take up is the point made by the noble Lord, Lord Bruce of Donington. He spoke of the great profitability of English firms. The question of the profitability of English firms is at the moment a matter for vigorous, violent and passionate dispute among the accountants responsible for computing it. I would mention just one or two cases; for example, the case of TCI. I was lunching with the chairman and the finance directors a few months ago and they told me that if they calculated their profits in the usual way which the Government requires, namely the historic costs, they made 19½ per cent. on invested capital. But they also said that if they did the sums in such a way that they allowed appropriately for inflation, they made 5 per cent. of their capital. I want to know, if it is at all possible, from the noble Viscount who is winding up, on what basis the Government are going to
1454
tax these firms in future. And in particular I should like to ask the noble Lord, Lord Bruce, to let me know, perhaps in writing, whether 1CI was in the category of profitable firms, and, if so, on what basis was it calculated.
Another very large textile firm, well-known to your Lordships, made a profit of £16½ million, according to one basis of calculation. According to the other basis it lost £44 million. I have to say to you, my Lords, because I think it is desperately important, that we have in effect been taxing companies, and we have been encouraging them to pay out dividends, on profits they have not actually earned. The reason has been that we have obsessively insisted on the use of historic cost accounting long after the fact that it was misleading and dangerous had become apparent. J hope that, now that the accountants have at last come to some decision, the noble Viscount who winds up will be able to tell us on what basis taxes will be levied next year. It makes all the difference if you are taxed as if you have made £16½ million profit when in fact you have lost £4½ million instead.
I discussed this problem with the noble Lord, Lord Stokes, when he was chairman of British Leyland. He told me, and I am sure he was right, that in the last year before they were finally taken over the company made a loss of £45 million, but it was taxed as if it had made a profit of £50 million. I cannot elaborate on the details but Mr. Healey had not then introduced his allowance on stock appreciation.
Lord BRUCE of DONINGTON: My Lords, if the noble Lord will forgive me for intervening, will he tell the House whether he is aware of the provisions of Schedule 5 to the Finance Act 1976 and whether he has taken that into account?
Lord BOWDEN: My Lords, I am afraid I could not understand it, and I would be awfully grateful if the noble Viscount who is to wind up would say quite simply "We are to tax on historic costs" or "We are to tax on inflation accounting profits". It is a simple question and a simple answer. I may mention too that the EEC has published a complicated document on the nature of

1455
company accounts, from which I cannot discover what they really recommend.
The main point I want to make is that we are, perhaps not unreasonably, almost to the exclusion of all other matters, obsessed by inflation. There is no doubt that inflation is extraordinarily important and dangerous, but J regard it as being less important and less dangerous than the increase in unemployment which I see around me in the part of the country from which I come. Once a man has lost his job, once he has failed in fact even to do a day's work, the opportunity has gone forever. But inflation seems to me very often to be an abstract thing, and it seems often to be associated with the kind of individual who boasted, at a time when he was the blue-eyed boy of the party opposite, that he did not expect to make things, he made money instead.
We must never forget that the real things which matter are nearly all physical, material things, and that inflation does not of itself reduce the amount of coal in the ground or the skill of the workers. It may, if it is allowed to do so, destroy the companies for which they work, and it does so not because it is of itself dangerous but because combined with a system of accounting which never allowed for it it has produced a capital levy which has taken the capital of British industry ever since the end of the war.
When I was briefly a member of the Government in 1965 I was given a sight of a Treasury paper on the total amount of capital invested at that time in British Industry. They had compared the total amount of capital invested in British industry in 1952 and the amount invested in 1962. There had been an intensive investment programme throughout the whole of that decade, but the amount of money taken out of British industry because of taxes based on profits which did not really exist, was greater than the total investment which had been made during that time. In other words, there had been a capital levy even in the days when inflation was running at about 3 or 4 per cent., which was of itself enough to take out all the capital which was then being put in. Now that inflation has mounted, as it has done, goodness only knows what will happen to the capital in British industry.
1456
We were told when I last looked at the figures that the nominal profits that British industry was making had risen to about 16 per cent. and the real profits were down to about 1.5 per cent. That was the situation last year, but I have not seen the figures for this year. It was upon that large, inflated, misleading and unreal profit that British industry was taxed and it was for that reason that it lost its capital to the Chancellor of the Exchequer. Moreover, that is why we have had a capital levy of enormous size wholly unknown to the people responsible for levying it and totally destructive to British industry in the meanwhile.
I hope that the Government will be able to take some positive steps to persuade people that it is worth while working, that there can still be opportunities for people, that companies can still be profitable in a real sense, and that the infrastructure upon which all these vast enterprises depend will be retained so that people can have some pride in the cities in which they live.
Sometimes I think that we speak almost as theologians. I listened to yesterday's debate which I found fascinating intellectually and in every other way, but in my view it was devoid of content in the sense that it did not impinge on any world that I knew or understood. The right reverend prelate who has just come in to the Chamber will doubtless remind us of the days when considering the nature of the Holy Trinity, someone declared the Father incomprehensible, the Son incomprehensible and the Holy Ghost incomprehensible; and yet there are not three incomprehensibles, but one incomprehensible! I cannot help thinking that people listening to some of the debates that we have had on the nature of the relationships between management and their employees will take the view that those debates have been as obscure in their conclusions as anything ever enunciated by the mediaeval schoolmen.
We are discussing a desperately urgent problem. I know of young men who cannot get jobs. They are competent, hardworking and ambitious people, but they are being destroyed by this situation. One of the reasons for it is that the Government have decided to save money by cutting back on their capital invest-

1457
ment programme. They have not supported industry, for example, in some of the contracts for the defence programme.
We speak of our failure to seize opportunities. I am sure that your Lordships must know the terrible story of what is probably the greatest invention that British industry has had to boast of for many years. The inventor was awarded the Nobel Prize for his invention, which was a new mechanism for X-ray scanning the body which produced a much more detailed analysis than could be had in the ordinary way. The company which supported him did extremely well and sold the machines in the United States, until President Nixon cut back on hospital spending. What happened, my Lords? We closed the business down and sold it off to the States. Could there ever be a greater opportunity which was more totally muffed by British industry? It was compelled to cope with taxation based on a system which I have said is meaningless. The Governor of the Bank of England said about a month ago that most profits these days are non-existent and illusory. But, let us think of it: a great inventor wins the Nobel Prize; he thinks that an industry will be based upon the work which he has done, but he finds that it is sold to the United States.
We cannot go on like this. We are failing—we are talking about abstractions. I try to bring our debates back to concrete matters like drains upon which, in the end, the whole of our society depends. We neglect them at our peril and we do so, I believe, in the totally illusory belief that if we could once conquer inflation everything else will be all right. I fear that by the time we have conquered it there will be nothing left!
4.45 p.m.
Viscount AMORY: My Lords, I always enjoy the opportunity of listening to the noble Lord, Lord Bowden. I remember very well when he wrung our withers with the sad story of the sewer in Manchester. When I realised that I was to follow him on the list of speakers this afternoon I rushed to the Library to read up about sewers but, of course, the noble Lord, Lord Bowden, has talked about something else. However, he told us a great many things that it is right we should
1458
listen to with respect. I disagreed with him when he described inflation as "an abstract thing". I think, in general terms, that it is very far from that.
I have no general quarrel with the remarks of the noble Lord, Lord Bruce of Donington. I thought that he deployed his considerable knowledge and experience of industry with skill until he came to his peroration, and there I must disagree with him sharply. But, we are all allowed a little licence with our perorations and they do not really matter because your Lordships, in my experience, never listen to them! However, I think that the noble Lord, Lord Bruce, was perfectly right to stress the importance of salesmanship, which I believe is not one of our strongest national points.
It was a real privilege to listen to my noble friend Lord Sieff of Brimpton, who is one of the ablest commercial managers in the country, and to find him in such magnificent form. How much we all look forward to hearing him on many occasions in the future. I have one sad matter to report to your Lordships—namely, that a year or two ago, I think as the noble Lord knows, my girth was found to be two inches in excess of the maximum circumference which the noble Lord's great company's research department had told him was reasonable for a civilised adult of my age, with the result that I had to go to another emporium to obtain the garments which I shall proudly, but with some regret, display to your Lordships if your Lordships would like me to do so!
I am sure that we shall all want to express our real gratitude to the noble Lord, Lord Schon, for introducing this vitally important matter to us this afternoon and for speaking with his great knowledge and authority. It was a pleasure to listen to a master entrepreneur, if I may so describe him, because that is a quality which we so much need in this country.
The noble Lord, Lord Rochester, was good enough to refer to a debate we held in this House nearly two years ago, and was kind enough to mention that I had expressed an opinion on that occasion that our level of productivity in relation to our international competitors was likely to prove the most intractable of our economic problems. Since then I am

1459
afraid that any progress that has been made has been minimal and hard to identify.
Whether our productivity is measured per person employed or per unit of new invested capital, our performance is relatively bad. Until we can get our productivity up, it is useless to talk about higher standards of living. In fact, there is no escape from a fall in our national standard of living. Let us hope it will prove only temporary. Not even the bonanza of North Sea oil can prevent it happening.
Twenty or 30 years ago our productivity was rising, though even then—now that we can look back on all the statistics—it was not rising so fast as that of some of our competitors. Unfortunately, as the noble Lord, Lord Schon, said, it is much easier to secure increases in productivity when business is expanding—and today it is contracting. Why is production contracting? In our case I think the main reason must be cost inflation, with its accompanying price increases. I say "cost inflation" because this time it cannot be what we used to call "demand inflation" 20 or 25 years ago, or more.
Of course other reasons play a part—world recession, the strength of sterling, import penetration; but in my opinion these are subsidiary to the main problem. We are suffering really from three diseases: inflation, low productivity and unemployment. When a patient suffers from more than one complaint simultaneously a good doctor sees whether one is symptomatic of or consequential on one of the others, and he treats the one which he believes is the fundamental cause. It is clear that on that analogy inflation is the cause and unemployment the serious symptom. If the cause can be eliminated the symptom will become less grievous. I believe the present Government have got their main priorities right. The prerequisite for bringing down unemployment must be the breaking of the vicious circle of inflation, to which the noble Lord, Lord Schon, referred. Without that, attempts to promote more employment will be frustrated.
Part of the cure is within our national control; part, such as the increases in oil prices, is not. But what are the main
1460
factors involved in combating our own internal cost inflation? Surely two stand out: one, a strict control of the money supply, which is not so easy as it sounds. To control the volume in its varied forms today is hard enough, but to measure the velocity of circulation must be still harder. In my opinion, strict control of the money supply by itself is not enough. If that were the only instrument applied to remedy inflation, by the time it had worked sufficiently, as is often said, the patient might be dead. One must be very careful in applying a tourniquet.
The other factor, surely, is the rate at which money incomes increase regardless of productivity. I believe that we as a nation now accept in theory that the standard of living we can expect will be what we can earn by our own efforts; but we still seem to expect that as inflation brings with it price increases we can fairly expect our own individual incomes to rise, at least by the same amount as the cost of living rises, and so insulate ourselves from the effects of inflation. That is a most dangerous delusion. Sadly, in our present circumstances, increases in wages and salaries equal to the rise in the cost of living index without corresponding increases in productivity is a sure recipe for continuing or even aggravating inflation. So temporarily our national standard of living has to come down. Indeed, it is coming down and it must do so—we will hope only temporarily.
Now I come to a factor which I want to deal with fairly and carefully—the attitude of our trade unions. I do not enjoy, and never have enjoyed, what is sometimes called "union bashing". When I was in industry I always, I hope, gave ready recognition to trade unions within our plants. I recognised their traditional role to work for their members' benefit. But, like others of us, they are by nature very conservative. With respect, they tend to pursue their members' short-term interests at the expense of their long-term interests. This often leads them to fight for levels of manning which are excessive and unrealistic in terms of what modern technology requires and other nations employ. So their traditional efforts are out of line with their members' real interests, and often result in their members being priced out of the market, thus resulting in additional unemployment.

1461
What I am asking them to do is something which I realise will be very hard for them in view of their long traditions. It is no less than to accept a new role; to set out positively to help promote an increase in the efficiency of industry and thereby the security of their members' employment and real wages. That is the only way in which their members' real earnings can be got on to an upward path. Today, sadly, the policies of unions are often working in the opposite direction.
But, my Lords, you will ask, am I making this demand for a drastic change of attitude on the part of the trade unions alone? No, I am not. I suppose I have been something of a consensus man all my life. It is almost a dirty word, according to some of the fashions of today, but my experience in life has led me to believe that if one wants the people one is working with to pay attention to one's views, one must be sure that they are given an equally full opportunity to express their own views and, as far as is feasible, to participate in whatever cooperative effort may be needed in the common interest. So, there is a very real responsibility falling on management to manage efficiently, as the noble Lord, Lord Sieff of Brimpton, so well brought out in his speech, and the noble Lord, Lord Bruce of Donington, referred to, and I do not deny that in any way whatever. The responsibility of management is to secure that everyone employed takes as full a part as can be devised in the fortunes of the company, in the interests of all.
When human relations—and I agree with the noble Lord, Lord Sieff, that that is a better phrase than "industrial relations"—are really good, such an attitude comes almost naturally. Many companies are working really hard to bring about such relations. As the noble Lord, Lord Bruce, acknowledged, many are highly efficient but some still cannot believe that these human relations objectives are attainable. It is as usual a problem of mutual respect and of bringing the performance of the average nearer to the level of the best.
Finally, what of the Government's role? It goes without saying that with their responsibility for the supervision
1462
of the economy as a whole their task is clearly to try, within their proper responsibilities, to create the economic conditions most favourable to industrial and commercial expansion without inflation. It is a strategic role and the less they get involved themselves in the details of industrial administration, the better.
I see my noble friend Lord Harmar-Nicholls, in his place. I have mentioned before in this House something he said in an earlier debate which made a deep impression on me, when he reminded us that we have 800,000 small businesses in the country. If we can create conditions in which each of those businesses can feel a legitimate confidence in the future, sufficient to enable each to take on one more employee, it would make an enormous impression on the sad volume of our employment today. These are the conditions which alone will lead to the upsurge of new investment in British industry, which we all yearn to see.
One thing which it is very important to get understood is that higher productivity does not usually mean harder or more laborious work or longer hours, but more effective work. In the businesses that I knew best I had no complaint to make about idleness or laziness on the part of operatives on the shop floor. It was quite the contrary. Occasionally I perhaps felt grieved about their loyalties to out-of-date methods of which I, myself, may sometimes have been guilty.
No one can pretend that we are yet combining our national strengths or all pulling in the same direction. On the contrary, we are dividing and exhausting our strength by sectional conflict and meaningless disputes. Our friends overseas, who respect our character and believe in our potentialities, are amazed and concerned at our suicidal antics. The time has come for us to take a grip on ourselves, and, by a national effort and a combined national resolution, to correct our failings—a task which I believe is well within our powers—and show the world again that example in industry and commerce which it used to be our proud boast to display.
5.2 p.m.
Lord SPENS: My Lords, I want to add my congratulations to those already

1463
given to the noble Lord, Lord Sieff of Brimpton, on his maiden speech. It was a marvellous speech to listen to and it made a deep impression on me on two counts. First, he suggested that we use the phrase "human relations" rather than the phrase "industrial relations". Briefly, I should like to tell of an example of the human relations which emanated from the noble Lord's firm. A cousin of mine worked in that firm for many years; he then became ill and the firm looked after him; when he died the firm took care of his widow. We could not expect greater human relations than that. The noble Lord's other suggestion was that new industries based on the new technological progress that is taking place must be encouraged. I am quite certain that that is something which we must all watch and help.
I should also like to congratulate my noble friend Lord Schon on introducing this debate. I think that it was inspired by the closing words of the maiden speech of the noble Lord, Lord Scanlon, which was made on 27th February. At column 1365, he said:
"In my view we have but a short five or 10 years in which to re-establish ourselves as a leading industrial nation".
Those words hit the headlines in the press and certainly made a profound impression on all who heard them, because, as we all know, the noble Lord, Lord Scanlon, is a very great expert in his own field of engineering and the engineering trade unions.
I come to productivity. It is very easy to think of productivity as just a question of getting the workers to work harder. I agree with the remarks made by the noble Lord, Lord Bruce of Donington, that it is not only the workers who have to work harder. They do; they work very hard. Of course, they must ensure that the quality of their work is maintained. But in order to have increased productivity, everyone must work harder; not only the workers, but management, the unions and the Government.
I should like to suggest how I think we can achieve that from those other three sources. First and foremost is management. Management must have the overall responsibility for obtaining higher productivity from its workers. I believe that at
1464
present management is failing to communicate sufficiently with the shop floor. That comes out more particularly when one considers that nearly all strikes happen in the largest industries, where the distance between the top level of management and the shop floor is very great, or in the public services, where again the distance between the top floor and the shop floor is very great. There is very seldom a strike in a small industrial firm where management knows its workers, knows all about them and is continually watching how they behave and how their families behave, and looking after them in the way that the firm of the noble Lord, Lord Sieff, always does for its employees.
Therefore, I believe that management must take a great responsibility for increases of productivity. It was very pleasing when I was at a meeting of our Select Committee which was trying to find remedies for long-term unemployment, for me to hear Sir John Greenborough and his fellow officers from the CBI give evidence before us. We spoke about this problem of communication in management, and Sir John Greenborough told us that it was a subject which the CBI was taking very seriously indeed. They consider that it is now almost the most important subject with which they have to deal—to try to get management more professional than it has been in the past. So management must take a very great responsibility for obtaining greater productivity.
I then come to the unions. They also have to do their share. What comes to mind immediately is the problem of their restrictive attitudes. In a way, the noble Lord, Lord Bruce of Donington, dealt with those points, but he did not convince me that that was all that mattered. There is still a much too restrictive, even almost a Luddite, attitude in some unions about the introduction of new technology, and an example of that was brought to my attention only to-day, although I would have known about it had I read the relevant law report in The Times on 4th March.
The matter was brought to my attention by somebody who knew I would be taking part in this debate. It is the case of a company called Health Computing Limited, which failed to get an interim injunction

1465
against NALGO when they were trying to introduce computing services into the National Health Service and would, if they had been able to do so, have saved the NHS millions of pounds. But NALGO refused to work with them and instructed its members not to give any orders to that firm and not to act with any products which the firm received. That application for an interim injunction failed because of the huge immunity of the unions in civil law, a subject which we are discussing on the new Employment Bill. The result of that failure to get an interim injunction has been that that firm has now gone to America, so we shall not get the benefits which it could have given to us if the union had not been so utterly restrictive in its attitude. I feel that the unions must change their minds over restrictive attitudes.
The unions are also letting down their members by trying to keep people on in unproductive jobs. As we have heard from earlier speakers, including the noble Lord, Lord Sieff of Brimpton, that in the end leads only to the failure of the firm concerned. Instead, they should be helping those of their members who must become redundant to find new jobs, and what worries me about the whole nature of trade unionism to-day is that it is far too paternalistic. You join a union and the union looks after you so long as you are in employment and a member of that union. You do not have to bother to think for yourself. But now, when huge redundancies are occuring and employees are receiving quite large sums in redundancy payments, they do not know what to do; there is nobody there to help them either to set up for themselves or find other jobs. They wait for somebody to come along and offer them another job rather than going out to look for one. That, I believe, is because the unions have been looking after them too carefully, so not enabling them to take decisions of their own. Therefore the unions should be responsible in a great way for helping to increase productivity.
When we come to the role of the Government, even the present Government, with their almost laissez faire attitude concerning industry, have several responsibilities. First, they must give leadership, not only at the very top but far lower down the line, and I should like to think that part of that leadership will enable the Government
1466
to encourage the suggestion made by the noble Lord, Lord Sieff, that new industries based on the new technology will be developed. Leadership is necessary there, and of course I am thinking in particular of the problem of the microcomputer manufacturing corporation Inmos, which is still awaiting a decision from Government about its future. That is not leadership. We need leadership quickly.
The Government should also be ready to help some of our industries which are quite flourishing but suddenly find themselves seriously affected by imports from other countries, and I am thinking in particular of the fishing industry and our apple growers, troubled by the French. When the French people were troubled by our lamb they took action straight away. What are we doing for our apple growers and the fishing industry? Nothing at all. The Government might consider introducing some form of emergency procedure—which the Americans have and which they are quite prepared to use temporarily—to prohibit imports for a short time, put an extra tariff on imports or in some way stop the large flow of imports of a particular character for a temporary period. The old Defence of the Realm Act might even be the base on which such an idea could be founded.
I have already spoken for too long. I had intended to talk about one area in which I think industry could help itself—that is, by making use of the rail freight system—but I do not have time to develop that now, so I will leave it to a later debate.
5.18 p.m.
Lord RHODES: My Lords, we are grateful to the noble Lord, Lord Schon, for raising this subject. It is nearly 30 years since he came to the Board of Trade when I was the Minister there pleading for assistance from the Government to start that wonderful enterprise that bears part of his name. In those days he did not have quite as big an expanse of shirt and I do not think he knew anything about Marks & Spencer. Suffice it to say that what was agreed between Government and the Schons has reflected not only great credit on the Schon family but also on the then Government who made it possible.
The noble Lord, Lord Sieff of Brimpton, is one of the latest candidates for us to take notice of in this House, and may I say how

1467
much we all enjoyed listening to him, because behind his speech were years and years of practical experience of a family whose name is renowned throughout the world. I echo what the noble Viscount, Lord Amory, said: that it would be marvellous if the noble Lord came to this House and spoke often on a subject that he knows so well.
A few years ago I attended the 100th anniversary celebrations of the Co-op Bank at the Mansion House and after the reception on the first floor I gravitated in order to see if I could find anybody to talk to. There I met a man who had created an empire in the mail order field. I knew him when he was in Manchester, and I asked, "How's the manufacturing part of your concern going on?" He replied, "It isn't. Only a fool manufactures today". I have never forgotten that; it hurt me. I have been working in manufactures now for 73 years, because I started when I was 12, and during the whole of that time I have never seen a situation as serious or as severe as that which arises today and that will have its effect on the people of this country for years ahead. It is now that industry wants some backing, support, leadership, understanding, and some statements that will help it.
The noble Lord, Lord Sieff, said that he had visited 14 factories during the past few months. Well, in my humble way I have visited three factories during the last 10 days. I started off at a factory that normally exports 80 per cent. of its products. As I went through the works I could see various things which could have been improved from the productivity point of view. But the stark fact was, and is, that that firm has no more than three weeks' orders. It is not so much productivity they want at the moment; it is orders.
We have heard about this question of productivity time and time again for years. We are reciting the same kind of points that we have recited for years. Perhaps the odd new point comes out, such as the suggestion of the noble Lord, Lord Sieff, about what should happen to the findings of the Spinks Committee—matters of that kind. But what we have never really got down to is understanding, and being able to cope with, the results
1468
of productivity; because every productivity deal really means that there is someone along the line who cannot accept its provisions because they will put him out of work. The noble Lord, Lord Sieff, was right; this is part of human nature. It is very difficult to get people to agree to their own redundancy.
I visited firm No. 2 on Monday of this week. I went through the factory. I know the type of product that they make—and have done ever since I was a lad. One could not improve the productivity of that factory wherever one went in the world. It is superb. They asked me to go there. I did not know why they had asked me to go, but I soon found out. They had foremen, managers, directors and customers to meet me. That firm is producing primarily for the home market. Now because of monetary policy, on the one hand, and free collective bargaining, on the other, the home section has not suffered as much as the exports section. Why do I say that?—because the figures show it.
Do your Lordships realise that two months ago this country was for the first time a net importer of manufactured goods? In 1965 we exported three times as much as we imported, and gradually throughout the years the figure has come down until two months ago, when we were importing more than we were exporting. This is an absolute scandal for a country that is supposed to be a manufacturing country. It is shameful for everybody. We should bear the responsibility.
The firm's home trade order books are not as short as their export order books. But what is happening? The noble Lord, Lord Sieff, knows this better than anybody. The manufacturers' customers are being forced out of business for a variety of reasons, whether they be high interest rates or the inability to export because of the value of the pound. Everybody connected with the second firm that I visited had grave apprehensions as to what is to happen because in the last three months two or three of their important customers have gone out of business.
My third visit was to a large company with millions to spend on research, backing it up with money where their

1469
mouth is. They are ordering new machinery at colossal expense, but they have grave doubts about whether it will be profitable due to reasons outside the ability of people in this country to correct. This situation arises because if the firm
"had been operating on Canadian costs our fuel bill would be approximately £4–9 million against an actual cost of £11–9 million, based on United Kingdom prices.
"The prices noted in the document are those which were operative on 1st April 1980, both in Canada and the United Kingdom and are converted at the current rate of exchange, which is approximately Canadian dollars 2–60 to the pound sterling".
These figures demonstrate the facts, and I have every reason to believe that they are true. That is because of the group pricing system which is permitted in the United States of America. Any amount of productivity will not bridge this gap, and this must be thoroughly understood. The gap is too big for productivity at the present moment to do anything about, and my plea this afternoon is that we should be as energetic and as determined in keeping our industries here alive, ticking and growing as the countries on the Continent, such as Germany and France, and Japan, have been in the last 20 years.
I do not want to speak for long, but I come now to another point. A friend of mine was declared bankrupt a week or two ago. He was an entrepreneur, a manufacturer. Over the years he had gradually built up first-class productivity. He had invested all his money in a plant, but, then, interest rates were at 8 per cent. He went out of business a fortnight ago because interest rates were at 18 per cent., or whatever they are. His bank manager had said, "Yes, you are an ideal person to lend money to". The same bank manager has seen him out.
Now I come to a point about which I want to make a plea, but before I do that I want to say this: growth is difficult to generate. All the time you are bedevilled by inflation. What can we do about it? I am going to make a suggestion. If you look back at the history of this problem over the last 20 years, you will see that we have had periods of free collective bargaining lasting about 18 months before an incomes policy has had to be introduced. It has happened with every Government, and it is going to happen with this one.
1470
There will be a partial U-turn before the end of the Summer Recess. Then you go on for about two or three years—look it up in your Parliamentary history—when you will again have free collective bargaining after the incomes policy has been thrown out. These have been abrupt changes, and they have been matched by abrupt changes in attitude to Government intervention, too—witness the Edward Heath scrapping of the Prices Board and the Industrial Reorganisation Corporation. Then after the familiar 18 months the Edward Heath Government brought in the Industry Act, when free enterprise policies did not work. Then, when we came into office in 1975, we set up the National Enterprise Board and introduced planning agreements—and here we are, back at the old game again.
Today, industry makes a despairing appeal for a political consensus. It stands well away from this ridiculous idea that "the other Government were wrong, before we came in". You cannot possibly have growth of the kind that we need unless there is a political consensus about some of the basic principles that we need to operate. You only need to look at the competing countries in Europe to see that what I am saying is true. Countries like France, Germany and Japan have established a political thrust behind their industrial policies which survive all Government changes, and until we can get into that kind of scene we can whistle—and it has got to be done. What has been done for France, for Germany and for Japan, surely it is not beyond the wit of man to do here. We live in desperate times. We need pluck, determination and skill; we need human understanding—all those things that go to make relationships stick. We have not got them yet. It is up to everybody to pursue such a course of conduct in what they do as to attain such an end.
5.36 p.m.
Lord NELSON of STAFFORD: My Lords, may I add my thanks to the noble Lord, Lord Schon, for introducing this debate this afternoon. I think it is a most valuable debate at just the right time on a desperately important issue and that has been emphasised in his usual vigorous way by the noble Lord, Lord Rhodes. Let us hope that this debate will help us all to understand this problem a little

1471
more thoroughly and the need for all to work together for its solution. These islands will support our population only if we are able to be successful in world trade and all noble Lords, most of whom are involved one way or another in world trade, know that this means competitiveness in price, in delivery and in design.
We had a very interesting debate a few weeks ago on the Finniston Report on the matter of the quality, supply and training of engineers. During this debate noble Lords will remember much was said about the importance of design, and I think it is very appropriate that so shortly after that we are today debating that other important issue—productivity. The noble Lord Lord Rhodes, has just emphasised the importance of this problem to manufacturing industry and I agree with him wholeheartedly.
May I remind noble Lords, to add one or two figures to those already mentioned this afternoon, that earnings in the United Kingdom increased by 14 per cent. in 1977–78, by 16 per cent. in 1978–79 and currently they look like increasing at 20 per cent. Without increased productivity, this must mean inflation. I think lack of productivity leads to inflation rather than the other way round, and in the end these increases in earnings do not mean real wages increases at all but an erosion of savings and an erosion of confidence.
These conditions are also coupled with an appreciating exchange rate with all the problems that that brings with it, including a deteriorating competitive position. I read some startling figures only two days ago which estimated that our competitiveness had decreased by 20 per cent. since 1979 and by 35 per cent. since 1976—frightening figures by any standards, my Lords, which illustrate the size and desperateness of this problem. There are many factors involved in this situation, but I believe that increased productivity is a very important one. I do not believe we can look to reaching a solution of increased competiveness by basing it on low wages policy. This must be completely unacceptable, emphasising once again that increased productivity is the only way of approaching it and all should recognise this. I am glad that an earlier speaker, the noble Lord, Lord Spens,
1472
referred to the importance of productivity in all activities. The terms of this debate relate specifically to productive industry; but the problem is not only in the productive industries but also in the non-productive activities as these are the overheads of the productive industries and therefore the principle applies throughout. I shall direct my contribution wholly within the context of productive industry.
Here may I agree with the noble Lord, Lord Bruce of Donington, in his opening statement. He referred to industrialists or industrial leaders or captains of industry. I suppose that I myself come into one of those categories—I am not sure which; but clearly one of the categories to which he referred, as being one of those who knows what it means to work on the shop floor and knows what the shop floor thinks about it. I agree with him in saying that the problem is primarily one for management. It is management's job to put this right. But having said that, may I add that it is management in co-operation with all others involved whether it be Government, trade unions or top management—and I say, "top management", because when I say it is a management problem, I mean at plant level, at business level, at factory level. I say that particularly because they are the people who know what is going on and they are people who can have the understanding of the problem of all workers involved and so obtain their co-operation. It is in fact the accumulative achievement of individual managements at that level having success in tackling their problems which creates high productivity for the nation as a whole.
Having said that what does it add up to? Looking at it from the plant level, it adds up to two things: Have you got the right plant and are you using it properly? These two are intimately tied together. If you are not using it properly, you cannot afford to buy the plant and, vice versa, you must use it properly if you are to be able to justify the investment in the new plant and maintain it and replace it. These are the factors which must be studied and looked at jointly at the workshop and plant level.
Looking first at the problem of utilisation of plant, what does this mean? You cannot afford new and modern plant unless you get maximum output from it. There are high capital charges, high

1473
standing charges associated with the plant. If you cannot maintain an adequate cash flow, you cannot maintain that plant and keep it up-to-date, nor replace it—so you must use it properly. You must get the maximum amount of hours from it with the minimum of manning levels and get the highest quality of production with minimum wastage. These are things which must be worked out together by management with the people involved at the shop floor level. My experience is that if this is done in this way it is surprising what can be achieved. You can get good plant manning and flexible working if people understand what it is about. It cannot be done from on high but by the people who know what the problem is and what is involved. There is also the question of keeping the plant running—this can be vitally important particularly on continuous process plant. This means the highest possible collaboration between the productive operators and the supporting services, whoever they may be, maintenance staff and others. Here I think there is a lot more still to be done. We must sec much closer working between those who are the so-called productive workers and those who are the support workers. They are all the same. What is the difference? In order to keep the plant going, let the productive workers and the maintenance workers work together. If there is a breakdown, everybody should work together to get it going as quickly as possible and not say or ask whose job it is. This is where I think, looking at continental experience, some of the biggest advances can be made without any serious loss of jobs or anything else, thus ensuring better utilisation of the plant that we have.
I should now like to touch on the question of plant investment. Modern plant is sophisticated—that has already been mentioned—and costs a lot of money. I am glad that reference was made earlier—I think by the noble Lord, Lord Bowden, who is no longer in his place—to the question of depreciation of plant and to the tax treatment. You cannot afford plant unless you make money, and for this you must have profit; you must have real profits which are profits after allowance for inflation. If there are no real profits, there is no cash flow, and if there is no cash flow there is no investment. This is a very important matter. I hope
1474
that the Government will be looking at this problem. It will be particularly important now that we all have to produce shortly current cost accounting figures. These will be particularly interesting from this point of view, as it will show who is making a real profit and a positive cash flow into the business. This is what will determine whether we can afford to continue the investments which are required. I think this is tremendously important.
We have a situation where higher productivity needs greater plant utilisation and greater investment, equally. You do not get this unless you get a cash flow and higher productivity. There is the vicious circle. How are we to break that vicious circle? I do not know. A number of speakers have touched on that this afternoon. This is the biggest problem of all. I would make this contribution. One hears it said that British industry is short of modern plant and investment. Up to a point, it is; but, on the other hand, it has a lot of modern plant and very good plant, so that I think the first thing is to see whether we are using properly the plant that we have. I think the answer to that is important. In the first place, the answer must be, No. Surely, therefore, the thing that we must do right now is to see if we cannot obtain greater productivity from the plant that we have. This will lead to greater competitiveness and greater cash flow, and therefore work and cash for more plant in the future.
Another problem already mentioned, if we are going to obtain the co-operation on the shop floor, is what happens to the people who are thrown out of work as a result of increased productivity. This is a real dilemma, in my opinion, and one of the major problems. When you talk about productivity there is a lot of uncertainty, there is a lot of lack of confidence, there is a lot of fear that what you mean really is redundancy and loss of jobs. In certain cases that may be the case. I think that those cases are where management has not done its job over the years—unfortunately. Where management is doing its job, where it is looking ahead and studying the problems as they arise, these things can be adjusted without the trauma of lack of confidence or future difficulties which arise. There is wastage going on all the time. There are people

1475
who want to change their jobs, there are new job opportunities coming up, there are some people who would not mind retiring earlier if given the opportunity. All these are steps that management can take whereby these matters can be moderated so that they do not blow up into a serious and intractable situation leading to the conditions touched upon by the noble Lord, Lord Bruce of Donington, in his opening speech of lack of confidence and—to put it crudely—bloody-mindedness which can come out of these things.
So it comes right back to where I started: on the shop floor, with management doing its job with the co-operation and support of all those with whom they are working. If this is done, I think that we can achieve higher productivity. I think that we must do so and only in this way, to my mind, shall we get inflation under control and get real wages maintaining their purchasing power or even increasing it. Only in this way shall we get the greater job stability that we all want to see or a reduction of unemployment through increasing competitiveness. Therefore, I support others who appeal today for everybody to pull together and realise that we are all in this problem together and that we must all seek to find its solution, because it can be found if we tackle it together.
My Lords, I must conclude by adding an apology to that of a previous speaker: I also have an engagement this evening and the time is advancing. I hope that I may be able to stay to the end of this debate, but if I do not I hope that your Lordships will excuse my absence.
Baroness GAITSKELL: My Lords, before the noble Lord sits down, may I ask him a short question? I have listened to his speech with great interest. It was fascinating. I thought that at the end he slid over the problem of unemployment rather too easily. What made him do that? There are bound to be millions of men out of work; we cannot take it quite so easily, can we?
Lord NELSON of STAFFORD: My Lords, I agree that I did slide over that because it is a very sensitive and difficult question. I think the situation can be mitigated and if people understand the
1476
problem then they will realise that higher productivity will lead in the end to a rise in employment and greater stability of employment. In the end it is the only way which will lead to the solution of the unemployment problem, but there is a difficult interim period which can only be surmounted by people understanding what it is all about.
5.53 p.m.
Lord HANKEY: My Lords, how valuable it is that we have people like my noble friend Lord Schon and the noble Lord who has just sat down, who can give their vast experience in industry to Parliament and, in particular, to your Lordships' House. We are most indebted to my noble friend and I must apologise to him that, owing to my train being late, I missed his opening words.
One answer to the interesting point raised by the noble Baroness, Lady Gaitskell, is to be found in Sweden where there is a good state of co-operation between the trade unions. When there is an industry which is declining, such as textiles, the unions co-operate in switching workers out of the declining industries as quickly as they can be trained to go into other industries which are expanding. The result of that is that the workers in the declining industries are not so numerous and can be paid more, with any luck, and the workers who are redundant are sure to find employment in other industries.
Unfortunately, we do not always seem to have that state of affairs here. I should like to think that we could move towards a state of greater co-operation between industries, between trade unions and between all sections of the community—in particular to greater co-operation between management and unions. Personally, I share the view which has been expressed by so many people in this debate that if we have an atmosphere of confrontation throughout industry we are never going to get a rise of productivity. I entirely agree with the noble Lord, Lord Rhodes, whose speeches are always so very stimulating, that we should try to get a better state of co-operation between the political parties.
There ought to be certain issues on which all parties are agreed. After all, for the most part, we agree about the main

1477
lines of foreign policy. We agree about many defence questions. There is a lot of agreement regarding the work of the Home Office. I should have thought that in this matter of restoring the earning capacity of the United Kingdom there must be vast areas where our common interest ought to come out and bring us together.
An enormous amount of work has been done by OECD and, before that, by OEEC, on measuring productivity in precise ways and in bringing together all the scientific elements of a study of productivity. I should like to quote the latest figures for the decade 1969 to 1979 because they really are alarming—and I mean really alarming. The productivity of Japan has increased by an average annual rate of change over that whole decade of 5–2 per cent., France by 3–5 per cent., Germany by 3–6 per cent., Italy by 2–6 per cent., and the United Kingdom comes nearly last with 1–5 per cent.
I want to add a point that I made in a previous speech though not with this particular statistic. The United States is behind the United Kingdom with an average rate of increase of productivity over the decade of only 0–7 per cent. If this continues, the United States will suffer the same fate as the United Kingdom. This would be really disastrous for the world in which we live.
So, my Lords, what is going to be done about this trend? One has to look around. One lesson that comes out from the fascinating debate to which we have listened today is that this is a very wide problem. I should like to widen it a little further if I may do so without being boring. A great many of our Ministers have not been very interested in production. They are interested in the financial and social aspects. I am not speaking about a particular political party; this goes for all parties. Many of them regard economics as rather a bore. If we could persuade Ministers to be more interested in production, that would really be very helpful. I do not think that it is sufficient just to get the financial aspects right. If one gets the financial aspects wrong—which we have done in an alarming degree over the past 10 years—everything goes to pot. But is one gets the financial aspects right—and I hope that the present
1478
Government are going to do this, and they have my warmest good wishes—it does not follow that everything else is going to be right unless one knocks away the props that stop the ship moving on the slipway—and there are an awful lot of them.
Businessmen with whom I have been in considerable touch are extremely worried about the instability of public policy. This is partly a reflection of the confrontation policies to which my noble friend Lord Rhodes drew attention. They never know which way things are going. Taxes change in an alarming way and they are always in trouble with planning delays. Any ecology group which can object to anything seems to be able to hold things up and even disrupt the public inquiries before a factory can be built. It is very alarming to the businessman; he does not know whether he is coming or going. This has a great effect on the low level of investment which is now typical of our country.
I should like to come back to the Government for a moment. The Government are going to have to reconcile themselves to giving leadership. A number of our colleagues in this House have said this today. I give an example. Take the fast breeder reactor, which went critical 22 years ago, to my certain knowledge—22 years ago. The prototype reactor for commercial production has been producing power for the grid for about 12 years but nothing has been done about it. Why did not the Secretary of State for Energy—it was Mr. Wedgwood Benn, I think—get on with it and get that moving? Had we had the cheap electricity which the north of Scotland has enjoyed owing to this—it is the only part of the United Kingdom where the price of electricity did not go up because it comes from the fast breeder reactor—it would have been a great help to productivity in our industry. But, no, the Ministers were worried—perhaps they were worried about the miners. I do not know what Mr. Benn's reasons were, but I protest, without being personal in any way, that the Government really should have given a lead in this matter. They have failed in their responsibilities, and I hope that the present Government will not fail to meet this challenge soon.

1479
I will come back to the Government's having a policy, but I want to come now to the trade unions. I do not know whether your Lordships saw the television broadcast about 18 months ago when a senior delegation of Soviet trade union leaders came over to this country and were received by the TUC. I have always been very interested in Russian trade unions. The TUC representatives began by welcoming their guests and saying, "Perhaps you would like to tell us what is the main function of the Russian trade unions?" The Soviet leader said: "Well, of course, it is to increase productivity". The expression of sheer amazement on the faces of our countrymen was very amusing to behold. They said to the Soviet delegation: "Surely, are you not interested in increasing the well-being of your members?" The reply was: "Oh, yes, of course we are; but how can we do that unless productivity rises?"
My Lords, when you have nationalised your production the Government want higher productivity—in fact they jolly well have to have it; otherwise everything goes down—and the trades unions have to have that too. I hope we are not going to reach the state of nationalisation like that, in spite of some ideas which are cooking in certain sections of the Labour Party, but I think there is a lesson to be learned there: that behind the Curtain they are really trying to mobilise the trade unions, and are succeeding, to increase productivity. Their productivity generally—because I am interested in Soviet industry—is amazingly low. Ours is much higher, but the fact remains that they have got a systematic approach by the trade unions to productivity, which is very helpful.
I warmly agree with everything the noble Lord, Lord Nelson, said in his very interesting speech about the importance of personal relations on the shop floor and letting the chaps get on with it with goodwill. I do not know why we cannot do more of this in our country. The list of disasters is so appalling. There was that magnificent textile factory at Skelmersdale with the most up-to-date machinery, which failed because apparently the workers in the Liverpool area would not work it properly. There is another similar factory which is also run by
1480
Courtaulds in another part of the country, which is very productive and makes a handsome profit; but in the Liverpool area it could not be done. There is the sad story of the Speke factory which closed: these are all in areas fairly close to the heart of the noble Lord, Lord Rhodes. I was very sorry when that closed, but that was also due to extremely low productivity.
I will just mention other disasters we have had. We have spent an enormous amount of money on the Llanwern Steel-works; for 18 months they could not be opened. There was the long delay over the Glasgow rail terminal some years ago—a disaster. There was delay over the Tilbury container docks. We invest money but we do not get the co-operation of the workers in getting these things going, and I believe it is necessary that somebody should try to bring the common interest we all have in this matter to focus on these problems in a productive and forward-looking way.
Turning back now to the Government, I want to say that in times of inflation it is no good thinking in terms of having a nice bank account, because it is losing its value all the time. The most valuable thing we have in a country like ours is the tremendous manufacturing capacity and skill that we possess. If you do not allow it to operate efficiently and if you allow it to be undermined slowly by one factory after another going out of action and by the new processes—my noble friend Lord Spens mentioned a very disastrous case—just going abroad to other people who develop our inventions, obviously this country is going down. It is going down: we have a growth rate of 1–1 per cent. at the moment and almost everybody else has got a higher growth rate. We are being overtaken by almost everybody and we have to do something. So I come back to what was said earlier: the Government, I think, really have to give a lead. I believe they should do even more than they are doing—and they are doing a great deal—to see what can be done to help industry.
Very encouraging developments are going on, and I want to see more of them. I would be really sorry if the Government, for what I regard as ideological reasons, abolishes the National Enterprise Board. I am not in favour of nationalisation. I think it has failed in our country, except in certain industries where it is necessary;

1481
but I am quite certain of one thing, which is that the Government must have a tool which can be used in order to spur industry on. I think that the National Enterprise Board is such a tool and if it is abolished the Government will probably have to end by creating another. Let the tool be used to increase productivity.
Finally, I want to say that I share the view which one speaker has expressed: that the Government will almost certainly have to reconcile themselves to having some sort of policy for incomes. It was no good the last Government having an incomes policy limit of 5 per cent. I have an indexed pension and in the winter, when everybody was being told they could have only 5 per cent., my pension was indexed at a considerably higher figure. I thought that really knocked the logic out of the Government's policy, although I did not advertise it at the time. We have to be sensible about these matters: we really do.
The most important thing to be sensible about is this. The man on the shop floor has not got so much water under the keel as the director in the boardroom and when prices go up at the rate they are going up now, he is worried about the future. He does not quite know whether he will be able to pay for his motor-car, or his mortgage or other things. We have to face the fact that he is going to require an increase in wages during the year which will be somewhere approaching the increase in the retail price index. It is no good trying to avoid the question: he has to have it. At present we have a system and we say: "We don't admit that you have to have this ". All right: he goes on strike. Productivity goes to hell, we lose our markets and we fail to fulfil our delivery dates—and, having had a great deal to do with export industries, I am very conscious of this aspect. I promise your Lordships that the delay in fulfilling our export dates is one of the most telling considerations in our loss of markets.
If you run your wages system in such a way that you force this lack of productivity on industry, of course you get into trouble. And so when the Government are going to face the approaching necessity of having an incomes policy of some sort I want to make the following highly controversial suggestion. I know it is
1482
highly controversial, but I shall make it all the same. The idea should be that wages will be enabled to rise and everybody will be expected to increase wages to something like 75 per cent. of the retail price index every year. The remaining 25 per cent. will be fought for, but the fight should be made to depend on the increase of productivity in the preceding year—I repeat, the preceding year.
Only too often people have paid lip-service to productivity agreements and they have said "Oh well, we'll pay an extra 10 per cent. and that will be made up for by productivity". They do not get the productivity. It is no good making an agreement like that. The thing turns out to be inflationary. You have got to do better. You have got to base it on the increase in productivity in the preceding year. I know this can be attacked logically, but on all practical grounds I believe it would be more likely to yield results.
I know exactly what the noble Lord who is going to reply to this debate is going to say about this. He is going to say that this is a form of indexation, it is abominable, it is a sin, the Treasury will not have it and so on. But I conclude with the words of, I think, Oliver Cromwell:
"I beseech you in the bones of Christ, ye may yet think whether you are not mistaken ".
6.12 p.m.
Lord SANDFORD: I start by thanking the noble Lord, Lord Schon, for introducing this Motion; congratulating the noble Lord, Lord Sieff, on his maiden speech; and paying tribute to both of them and to other noble Lords who have taken part so far, for furnishing the debate with so much of their own valuable first-hand experience. I am not any sort of industrialist of any rank or level, and I have little or no insight into the inner workings of commerce or industry. But I take productivity to mean broadly making the most of what you've got, and to be capable of a wider interpretation than the factors of production in the actual industrial process itself.
I want to talk about making the most of the physical resources of the environment in which industry operates, making the most of human resources coming out of the schools and the colleges on which

1483
it has to draw, and making the most of the resources of the communities in which industry and commerce are set. At this time in this small island, it seems to me we cannot afford to be profligate of any aspects of our environment, particularly our land. We cannot afford to leave idle precious urban waste land which is fully serviced with roads, sewers, power supplies, even if holes develop in some of them in Manchester from time to time!
It is true that because we were first in the industrial revolution a lot of our industrial infrastructure is elderly. We cannot afford for it to be wasted. We certainly cannot afford to sterilise any more of our agricultural land for industrial development. So productivity, it seems to me, involves not just efficient use of the factors directly involved in production, but efficient use and conservation of the surrounding physical environment too, and in a way that can be sustained throughout succeeding generations.
It is for that reason that I particularly welcome the proposals recently announced by the Government for enterprise zones in which industry is going to be encouraged to make greater use of some of our inner urban areas. There are a number of measures proposed to encourage industry to go back. I should like to say, in the context of encouraging industry to make better use of our precious urban land that is lying waste at the moment, that Her Majesty's Government should also consider removing VAT from the repair and conservation of industrial and other buildings in the areas that are selected as enterprise zones. But before leaving enterprise zones I want to make the point that, of course, it is not enough merely to remove the constraining hands of bureaucracy in the enterprise zones—this is the main effect of what the Government propose. It is also necessary to inspire enterprises to go back and to make good use of them. I will return to that point.
The second resource which I am sure we must make full and better use of if we are to get a general rise in productivity are our human resources, and we must learn to develop their talents and harness them better. Others in industry and commerce are far better qualified than I am to talk about the professional craft
1484
and other skills that commerce and industry need and require from the schools and from the colleges.
I want to comment on my experience now going back three or four years in helping to deal with the problems of unemployment as they affect those young boys and girls immediately they come out of school and college, because there are a tragic number of those, who are unemployed from the very moment they leave school. Some of those, many of those, leaving school and college are undoubtedly well trained and have already the skills and crafts which industry needs. But the sad fact of the matter is that the operation with which I have been concerned—namely, the implementing of the special programme of the Manpower Service Commission for the young unemployed—revealed that a horrific number of children leave home after 16 years and leave school after 10 years not really able to write properly, not really able to read properly, not really able to count, not very willing to work, many of them hardly able to converse, and a lot of them unable to keep clear of the law. This is a sad state of affairs and it is hard to see how industry can possibly be as productive as it should be if so much of the material available to them is of this character.
But the tragedy is compounded by the fact of our experience which is that a year of proper management under one of the MSC's special programmes, undergoing training and doing work properly geared to the personal needs of these young people, is in many cases enough to make good these defects with which we find we have to deal some of these boys and girls as their come out of school. If that can be done within a year after they leave school, it does make one wonder what on earth must be going on in some of the homes, in some of the schools and at such great cost. It does seem to me to call into question the preparation of so many of our young people—not, of course, the huge majority; only a minority. It must fall considerably short of what industry and commerce require.
I turn thirdly to the resources available in the local community for the support and encouragement of enterprise in commerce and in industry. Last September, I was invited to speak at the annual dinner of the Swansea Chamber of Commerce.

1485
Heaven knows why, but I was. That chamber was established among the earliest ones in 1846 and its purpose then, as it has always been there and everywhere, was the preservation of free competitive enterprise—very much the thing we are talking about this afternoon. Indeed, that purpose it certainly fulfilled in 1846. Swansea was then the metallurgical centre for the whole world and it flourished exceedingly in that capacity for many years with many different industries contributing to its prosperity, and thanks very much to the enterprise of the famous firms established in that famous valley. Of course, there were mistakes and the derelict and polluted state of the Lower Swansea Valley today has borne testimony to some of them. But at least in that city in that century, as in so many other cities in that century in this country, the firms of Swansea were masters of their own fate. Now some things, many things, are, of course, better than they were then. But the firms in Swansea like the firms in Liverpool, Newcastle and many others of our great but depressed cities in the assisted areas, are no longer the masters of their own fate, responsible for their own destiny and success, and standing or falling on their own decisions. Much of the local employment in such places now is public service, not creating wealth at all but absorbing and consuming it, and much of the wealth-creating activity that is in those places is not indigenous. It has been imported from elsewhere and is made up of branches of larger companies whose policies are dictated from elsewhere, sometimes even from outside this country.
Of course, this kind of employment is better than no employment at all. The conditions of work are better than they were 100 years ago. But I should like to suggest to your Lordships that a whole dimension of local enterprise has been lost over the years. That is one of the factors which is leading to the problems which so many noble Lords have analysed and identified during this debate. It seems to me that before Britain can once more produce her best again, that dimension of local enterprise must be recovered and rekindled, as my noble friend Lord Amory has said.
It is for this reason that the local enterprise trust movement needs to be welcomed and encouraged. It does not
1486
matter very much whether it is stimulated, as it has been, by large firms such as Marks and Spencer, or by chambers of commerce, central Government, local government, groups of small firms or even by individual initiative. I am glad to be associated in a small way with this movement, particularly in the business of preparing young people temperamentally to appreciate its importance and to participate in its development. In fact, I look forward to joining the noble Lord, Lord Schon, in getting something more going along these lines in Cumbria before long, in the county to which he has already made such a big personal contribution.
My noble friend Lord Trenchard will know that part of the package of measures agreed in Brussels last week includes proposals to make an increase of expenditure in this country from the regional fund. He will also know of the proposals made late last year by the Commission, for the first use of the non-quota part of that fund in areas of this country which are affected by the decline of shipbuilding and steelmaking, in particular. I have given notice to my noble friend of this question, but I apologise for originally giving him the wrong reference; it was 9808/79 of last year.
It seems to me that these proposals have special and topical merit in the context of what we are talking about this evening, in that they were not designed to offer grants towards particular industrial or commercial investment projects—the normal way in which regional policies operate—but rather to be in support of strategic and comprehensive programmes of industrial revival and of regeneration of local enterprise over whole areas of actual and impending unemployment. As the noble Lord, Lord Sieff, and the noble Lord, Lord Nelson, pointed out, something of that kind—the regeneration and revival of fresh new enterprises—has to be in hand or in prospect, if the fears of those adversely affected by measured productivity are to be allayed.
Therefore, it will be interesting to hear from my noble friend, when he replies to this debate, of the extent to which Her Majesty's Government now intend to take full advantage of this proposal and others like it, and of the way in which Her Majesty's Government intend this Commission proposal to be adapted to our

1487
current national need—the need to return to much higher levels of industrial enterprise and productivity.
6.25 p.m.
Lord HOUGHTON of SOWERBY: My Lords, I must first apologise for having had to leave the Chamber for one hour earlier in the debate, but I had to keep an appointment with a Minister. Of course, I heard the admirable opening speech of the noble Lord, Lord Schon, and also the most impressive maiden speech by the noble Lord, Lord Sieff. The noble Lord, Lord Schon, entertained us for a few minutes with a couple of jokes about the characteristics of the British. Your Lordships will remember that one was that the British never see the writing on the wall, until they have got their backs to it. I brought something back from America, which I visited recently, and I will present it to the noble Lord, Lord Schon. They were saying that the future is not what it used to be. The more we ponder over that, the greater the truth we may discover in it.
We have had to use the much overworked words in the vocabulary of industry, human relations and so on. I wish that we could get rid of the term "industrial relations", and I was very grateful to the noble Lord, Lord Sieff, for proposing that. We have several days to go considering the Employment Bill. If we could make a vow to use the term "human relations", instead of "industrial relations", we might get on a little better, because that is really what it is all about.
Incidentally, I once compiled a small dictionary of the jargon of discontent, which I got from the opening words of resolutions passed by trade union conferences—This conference is alarmed, disappointed, discontented, disgusted, and so we went through the whole range of expressions of discontent. Some of it, I thought, was almost congenital or, at least, inseparable from the kind of gatherings from which it came. "Productivity" is such a pedestrian, worn part of our jargon in these matters.
We have had several suggestions made. The noble Lord, Lord Sieff, spoke of "high working performance". That is three words instead of one. As a means
1488
of alternating from one word to another, "output" is probably not a bad word to use. But, of course, "productivity" does not really define what we are talking about. In some contexts, we are talking about efficiency. In other contexts, we are talking about equipment and what people are using. What is "productivity", if all you give to a road-mender is a pickaxe? What is his productivity? He wants technology. What about the man on the pedal-cycle? What is his productivity? Are you asking him to pedal faster? He will say "Give me a motor-bike", and then he will say, "I want more pay and shorter hours". The more we talk about these simple words, the wider the range in which we have to put our thoughts.
Another word is "co-operation". It is like saying, "All we want is love", and then giving the wife a new electric sweeper to do more housework in a shorter time. We do not get these things merely by saying that they are needed or that we want them. I was very glad that the noble Lord, Lord Sieff, addressed himself very substantially to management. There is an old saying, in which there is a good deal of truth, that there are no bad soldiers, only bad generals. Certainly, management has its full share of responsibility for whatever happens in industry.
Just recently, I was asked to take the chair at a conference on the electronic office. I sat through it for the whole of the day, having made at the beginning what was described as a keynote speech. I discovered that we were talking about a neglected field of concern to us all—the offices of the land. Of those in gainful occupations, 37 per cent. are white-collar workers. We tend to think of productivity as something which is confined to the shopfloor, to the worker who is turning a machine or who is doing a manual operation of some kind. But there are aspects of productivity and efficiency in the office.
The late Lord Stamp, the father of the present noble Lord, Lord Stamp, when he was chairman of the London, Midland and Scottish Railways, said at a conference of the Royal Institute of Public Administration:
"No organisation of diversified activities can move faster than its forms will allow ".
After long experience in the Inland Revenue, I can tell your Lordships that

1489
that is as true today as it was when he said it 45 years ago. May I remind your Lordships that the coding notices in the Inland Revenue, which many of your Lordships now receive, are written by hand, on the same sort of form as when they first began to be issued in 1943? The only new technology in use in connection with Pay As You Earn is at East Kilbride in Scotland, and it has never got any further. Why? Because of the point raised by my noble friend Lord Rhodes and the noble Lord, Lord Hankey, only a few moments ago: the instability of public policy. The computerisation of Pay As You Earn was first mooted 21 years ago and it is no nearer completion today than it was then, except for the pilot scheme in East Kilbride, Scotland.
What about productivity? There are 30,000 jobs at stake, and in a moment I shall come to what may happen to them if Pay As You Earn is computerised. Let us take the Department of Health and Social Security. There have been 17 years of shilly-shallying and chopping and changing about the kind of state superannuation scheme we should have. Noble Lords should consider that over that period the Ministers concerned were the noble Lord, Lord Boyd-Carpenter, myself, Dick Crossman, Sir Keith Joseph, Barbara Castle; and I think that my noble friend Lord Gordon-Walker and my noble friend Lord Stewart of Fulham came somewhere in between. What could be expected to come out of that assortment of Ministers, with little direction as to where their Governments wanted to go on this enormously important question? So the whole of the insurance world, pension schemes, occupational interests of all sorts and kinds were held up until eventually a compromise scheme was reached. And we have now got it, 17 years afterwards. An enormous waste of money is involved.
Lord INGLEWOOD: My Lords, the noble Lord referred to Ministers who did not know where they were going. During that period, Parliamentary Secretaries, I would submit, did know where they were going. It is a pity that Ministers did not listen to them.
Lord HOUGHTON of SOWERBY: But, my Lords, they were not there long enough to get anywhere. That is the
1490
problem. I think Dick Crossman knew where he wanted to go but he did not arrive. The then Prime Minister decided to dissolve Parliament while the Crossman scheme was in full spate in the House of Commons. As the former chairman of the Public Accounts Committee, I will tell your Lordships this: it is Governments who waste money, and occasionally civil servants save it. That is something to bear in mind when we are talking about productivity in the public sector.
May I return to the electronic office, the paperless office, the fascinating prospect of just watching things happen without doing anything yourself and without seeing a single bit of paper in the waste-paper basket. But where will all the clerks have gone when this has been accomplished? There is no more cooperative section of the working community than office staffs. They give less trouble than any other section of workers, barring perhaps the clergy. We must show some concern about what is going to happen to people who are displaced by the new technology. That is why I think it is desirable for us to have some public understanding of how the country is going to get through this transitional period. We cannot criticise those who say, "I prefer to go on doing the job as I am doing it now, because if you bring in anything else I shall probably lose it". The noble Lord, Lord Sieff, said that if you cling to your old methods you will be out of work anyway. But their reply is: "If I adopt the new ones I shall still be out of work. So what?"
We have got to find the answer because the white collar unions are busy now. They have prepared interesting booklets about office technology and they have given some very good advice to their members about how they are to meet the new situation. They are told that this is the model agreement. First, so far as the ongoing requirements as to monitoring the introduction of the new technology are concerned, that is all right. Secondly, they say that they want a model agreement on employment. One of the important things about that requirement is that there will be no job loss as a result of the introduction of the system. Then they go on to say that in the light of the increased productivity anticipated, the company should agree to negotiate on a reduction of the working week towards the

1491
goal of a 30-hour week of four days without loss of pay, improvements in holidays and a lowering of the retirement age on full pension. That is the prescription for the introduction of the new technology into office life.
What are the consequences? They are not so out of this world as they might sound. If clerks are going out of big offices by the dozen or by the hundred, or even, as in the case of the Inland Revenue, by the thousand, what have we to say to those who adopt the new technology when they say, "Well, something must be conceded to those of us who embrace the new world". They want training. Well, that is understood. They want health and safety safeguards. That is understood as well. They also want machinery for dealing with grievances. And naturally they want to know why the new technology is being brought in. Improved services, new services or products, more competitive prices—there can be half a dozen reasons why the new technology would be economic and could be fully justified on the ground of profitability. But these people are not machines. They are human beings, with all the conservative reactions to change that that implies.
One thing to bear in mind in this field, and in many others, is that man is not a rational being. He is an emotional animal. His brain gives him a lot of bother and he prefers not to use it. That is why so many people believe so much nonsense; they cannot be bothered to think it out for themselves. I am beginning to think that it is not economists we want. It is anthropologists; it is socio-biologists. I am finding much more interest at the moment in reading Edward O. Wilson's On Human Nature than any I would get in reading what has been written by my noble friends on economics.
Seriously, though, how are the interests of workers to be reconciled with the need for change? Is it unemployment? Is the policy of the Government full unemployment? Is that what it is? The new leisured classes—is that what it is? If so, what are to be the conditions for the new leisured classes, those who are out of jobs because they have been replaced by new technology and who have to get through life, like the rest of us, as best they can? These are quite serious and great
1492
problems, and I do not think we are addressing ourselves sufficiently closely to them. I know that at the end of the day we are all yearning for entry into the kingdom of heaven but the probability is that when we get there the future will not be as it used to be!
6.44 p.m.
Viscount TRENCHARD: My Lords, may I add my thanks and the thanks of the Government to the noble Lord, Lord Schon, for introducing this, the latest in a long series of debates, both on productivity and on economic affairs, of which a major content has usually been discussions on productivity. In my opinion it has certainly lived up to its predecessors in the quality of the contributions that it has drawn, and I am quite sure that it will repay reading by all concerned who have listened to it and by many others who have not. That is up to this point, when, as usual, I try to sum up from notes made, rather than from a brief, and from hereon it may not be worth reading to the same extent.
The majority of comments made by all speakers—and the noble Lord, Lord Schon, was no exception, although he told us that we must get moving now—were of a longish-term nature. What is causing the problem? Why have we not put it right? What can we do to put it right? Thus I can assure the noble Lord, Lord Rhodes, that I shall come to the short-term extremely tough time which industry is undergoing, but I will come to it later. If I may, I will start by trying to reply to the debate in relation to the analysis of the British problem in a slightly longer-term way.
I agreed so much with the noble Lord, Lord Schon, when he said that we have not applied the carrot or the stick. I shall return to human nature a little later, against the background of the remarks made by the noble Lord, Lord Houghton of Sowerby, and the possibilities of changing it, but I have said on previous occasions—and I will say it again now—that I am convinced that if we had had the same degree of incentive to work, to work hard, to work rather than not to work, to take responsibility, to take risks, as the Japanese have had for 30 years, we might well be talking about the British work ethic to-day.

1493
Let me join those who have congratulated my noble friend Lord Sieff. I told him when I saw him at lunch that this was perhaps a unique occasion in that for once I was able to have the last word. Actually that is quite an unfair allegation because as a very junior manager in industry, when I wanted to challenge the policy of the noble Lord, Lord Sieff, he gave me something like three hours and a whole morning with his staff present in order to do it, and I think on that occasion he allowed me the last word. I think perhaps that sums up the unique person that he is, and I just want to add my view that his contribution to this House, which he started this afternoon, can be of immense value. I hope that somehow he will find time from all his great responsibilities to come and make a contribution on future occasions.
My Lords, perhaps in order to have the last word the only thing I found myself thinking as the noble Lord spoke—and spoke about his proved management methods in his company—was that, no matter how we try or how any other country tries, we shall not have all our companies run by Marcus Sieffs and we have to have systems which will accommodate the average and the great spread of management which one will find—and does find—in industry in every country.
In this series of debates which this House has had there has never been any difficulty in the last two years, or possibly three—before that there was some disagreement—in agreeing that the record of this country in productivity was lamentable and was very much worse than everybody else's. So I am not going to produce the new or old statistics which have been produced before, and indeed various contributors to this debate have already underlined our bad record. At the end I will make the odd point about evidence of improvement, of which I believe there is now some sign.
While there has been agreement in all these debates that our record is very much worse than that of our main industrial competitors, there has been a variety of emphases on the reasons for the poor British performance; and as the debate wore on I noted sales, marketing, design, implementation of development, but the engineers did not receive quite so much
1494
time today as usual. Normally the Members of this House who are extremely well qualified in the engineering profession add their view that this is a major cause of our lack of productivity. Then of course there are the more general ones: lack of investment has been mentioned again to-day; the standard of management, the trade unions, our human relations system. The lack of enterprise culture is very often raised and the anti-industry cult of this country has been raised in previous debates. It is the first time that I have heard the suggestion that it is due to a lack of socio-biologists, but that adds yet another possible aspect.
My noble friend Lord Amory tried to separate causes and symptoms, if I understood him correctly. He did it mainly in relation to the economy rather than the non-productive state of industry, but the two overlap. Therefore I will rest on what he said—and I believe him to be much better qualified to judge than I, with all his long experience. He said that we must keep inflation as enemy number one; that we must pull inflation up, and that, if we do not do so, unemployment will rise to a very much greater level (if I understood him correctly), and furthermore that the tough time that industry is indeed having at present is an inevitable consequence of getting the overall economic priorities right in relation to inflation.
In trying to use the medical analogy of causes and symptoms I noted down, "Let us look first at the condition of the patient"—the patient being British industry; and let us from that try to speculate on causes, on the one hand, and on symptoms, on the other hand. Before I start on this analysis, I think the American saying that anybody not confused by the issue may not have understood the situation is probably true. I believe the condition of British industry at the moment is one of very little money—for shorthand I have written "no money"—and little or no time.
Let me explain what I mean under both those headings. In describing the little or no money I find myself dealing with the point raised by the noble Lord, Lord Bruce, in relation to profitability. I will look up the EEC document that he quoted and I will communicate with him on that document. The work that my Department regards as most authoritative in com-

1495
parisons of profitability between different countries is that of Professor Hill; this is on an inflation-proof basis and refers to manufacturing industry. The last year in which this was done—because it is a scholarly work—was in fact 1975, and, although there was a small improvement in this country after that, and probably in other countries, it is generally agreed by economists that we are back to roughly the same position in 1980. The United Kingdom return on capital on an inflation-proof basis was 2–8 per cent. in that year; in the United States it was 18–6 per cent.; in Japan 13–9 per cent. and in West Germany 11 per cent.
Of course I agree with Lord Bruce that there are good companies which have maintained profitable records right up to the present time, and there are some sectors—the oil sector perhaps clearly leading at the moment—which are much stronger than others, but those are the overall figures given by what we believe is the best assessor. I believe they show very clearly that for quite a time now British manufacturing industry has been starved of profits and thus has undoubtedly been short of capital. I do not believe that this decline has been going on for a very long time as some commentators often suggest. It is true, of course, that if you measure performance by shares of market, we went down from 40 per cent. in 1880 to 29 percent. in 1913; in 1938 we had 22 per cent. of world markets; in 1955 we were still at 19 per cent.; then over the last two decades came the real slide, and we ended up with 8–8 per cent. in 1974.
Let me explain very quickly what I mean by "no time". I believe that in this country we have so complicated our management task with a mass of intervention, with a mass of legislation and in recent decades with a degree of necessity for constant trade union negotiation not found to nearly the same extent elsewhere in Europe that managers, who actually have a pretty full-time job in running a factory—and I have done that—have in fact been extremely short of time, as well as money, to attend to the longer-term matters, and even to the necessary degree of explanation and communication which has been mentioned today. This has been particularly true in our very big factories, which are a much more time-consuming job to run.
1496
They have more problems of communication, and it makes it much more difficult to reach the ideal which the noble Lord, Lord Sieff, mentioned of communicating with every employee.
If, therefore, I can suggest to your Lordships that the condition of the patient has been that he has had little or no money and less time, certainly, than his competitors overseas, let us go back to the list of possible scapegoats which have been mentioned in this debate and in others and try to separate causes from symptoms. I suggest that the symptoms of the original list clearly include the marketing and sales, the design questions and the implementation of development. The lack of investment clearly stems to a degree from the "no money" situation, although, of course, almost miraculously British industry has kept up a rate of investment not so far removed in relation to GDP from its competitor countries. So in the main the problem is the utilisation of investment. I suggest that all of those are almost certainly symptoms of the "little time" and "little money" situations. And I suggest that those have been caused by the clobbering of British industry over the last two decades with controls, price controls, income policy (to which I shall return in view of the comments made in this debate) and by the erosion of incentive and the burden of taxes.
I think a contributory cause has to be our unique trade union position which we have taken steps, debated in the House this week and again next week, to try to improve. I would not for one moment contradict the views of all those who have said that the co-operation of all employees depends upon the quality and the activity of management as well. The question of the enterprise culture and education has been well debated in the Finniston debate and I shall not go back over it today. I think that the management position does have to be dealt with to a degree. It is not true that other countries do hot have a variation of standard of management. Everything in my personal experience, and in the time I have had to supplement that in my present position, indicates that there is a big variation of management in all industrial countries.
Of course the manager is responsible for performance and there can be no

1497
gainsaying it, and thus the adage mentioned today, that there are only bad officers and no bad soldiers, is eternally correct. But you can have a situation where the officers have been discouraged, where the time available to them to improve things in the longer term has been diminished; consider the amount of consultation they have to do in order to take a single management decision. The differences here have been shown by published studies on multinational companies and the amounts of time necessary to be taken in negotiation in factories making the same product and staffed to the same management standards.
These things can make performance, particularly in our larger factories—which are the majority and do affect the overall productivity figures more than anything—else extremely difficult for average and variable management. As I said in the Finniston debate, we have undoubtedly got a shortage of technical management. I would willingly suggest that we swop some accountants, who are doing very well overseas in many areas running many companies, for some engineers, now that our tax rates are sufficiently low to be able to do it, which we could not do a few years ago; bring in engineers to fill the short-term gap while the longer-term measures are taking effect.
It has been suggested in this debate and many times before that the Government's policy is a single strand, one of controlling the money supply only. I have talked about the carrot situation and the tax incentives which we have brought back. The Employment Bill is proceeding through the House at present. Money supply is not alone in our admittedly non-interventionist policy, because we really believe that the variety of situations in industry is not assessable centrally, or to any great extent improvable centrally, except by providing the right conditions.
One other matter which is working steadily towards improvement—and I shall come to any signs of improvement in a moment—is that there really is a spreading realism throughout industry, management and on the shop floors. My noble friend Lord Amory said that our standard of living must fall. I believe that in many parts of industry which are not competitive that is a correct statement and
1498
that we do depend upon the spread of realism for that most unpalatable fact to become accepted. That contrasts slightly with the noble Lords, Lord Rochester, Lord Rhodes and Lord Hankey, who supported the incomes policy concept.
The noble Lord, Lord Rochester, described the incomes policies that have been tried in this country as makeshift affairs. I do not think that those who brought them in would be very pleased with that description. Indeed, if the noble Lord, Lord Harris of High Cross, were here I think that he would give your Lordships 2,000 years of economic history to show that no incomes policy has ever stuck for long, even when in medieval years they tourtured people in order to try to enforce them.
In contrast to the noble Lord, Lord Rhodes, I believe that it is a question not of saying that the other Government got it wrong, but that the weight of economic history is against the incomes policy route in this and in every other country. The noble Lord, Lord Rhodes, brought in other countries to support his argument, but in my view he changed the argument. Other successful countries such as Germany and Japan—and the United States has stayed with it for a second—have not had incomes policies. I have some sympathy with his thought that certainly past Governments may not have worked so closely with British industry in a national way as have those of some competitor countries. I hope, having spent 30 years in industry, that I can make a small contribution to try to improve the situation. I do not believe, and nor do the Government, that flexible incomes policies and guiding lights can solve the problem, and nor are they practical in the myriad of industrial situations in a big industrial economy such as ours.
Let me turn for a few moments to the problem of improving productivity when volume is static or even when it is being reduced. This relates very closely to the question of new technology causing job loss. From all the longer-term surveys it is perfectly clear that individual firms and parts of industry that have invested in new technology and have kept up to date are those which are employing more and not fewer people. The problem comes when both through world economic stagnation, and more particularly loss of British share

1499
of market, companies that have not invested in new technology start losing their share of market heavily. Overall in this country we have a backlog where undoubtedly in order to catch up it is not possible to adopt the suggestion of the noble Lord, Lord Schon, and say: "Increase volume and then we can increase productivity". Overall we must carry out a major de-manning in order to become competitive. It is not true of every industry or of every company. I admit that this is, indeed, the hardest human problem and the hardest thing for people to accept.
On other occasions we have discussed the various measures that we take where obvious major de-manning becomes necessary and we shall no doubt discuss them again. We have kept policies and developed some to encourage new growth, new training and retraining and to foster an increase of small businesses to try to relieve the problem and provide new employment when we pass through the short, tough time. The noble Lord, Lord Bowden, is not present, but I point out that tax next year will be on an historical basis with stock allowances still allowable, and I shall follow that matter up in writing.
Let me turn quickly to the understandable worries of the noble Lord, Lord Rhodes, about the short-term situation caused by the strong pound and the interest rates. I think that in his Budget speech my right honourable friend the Chancellor of the Exchequer showed very clearly that he understood those fully and he has given priority so that the interest rate is likely to be able to be reduced at the earliest possible date compatible with pulling up inflation. It was made clear in the last few days that the interest rate has a relationship to the strength of the pound. The strength of the pound, of course, is extremely valuable in helping to get inflation permanently, not temporarily, under control.
I turn briefly to the important point made by the noble Lord, Lord Sieff of Brimpton—these are all technological points—on biotechnology. We are spending money; we are examining the report of ACARD and of others; and we plan to come to decisions as to how much more
1500
support should be given to that area during the summer. There is no question of its importance not being recognised by the Government and I think that we shall see that develop. I am very interested in the noble Lord's remarks and view on the very pervasive effects of that new technology.
I have spoken about Inmos before, and we shall hold that decision up for only long enough to carry out responsibly, or allow others to carry out, negotiations which we would have been irresponsible not to allow. The fast reactor is receiving a great deal of research and development. Our research and development expenditure in the energy area is high. Yes, we are still strong in inventions. In the analysis of my department the trouble concerns our application post-development. That matter, rather comes back to the point—" no money ", no "time".
There are improving signs and perhaps I may quickly mention them. First, in 1979—and I have said that we cannot be held responsible for much in 1979 while noble Lords opposite have said that we should be held responsible for everything in 1979, so I think that we should split it 50–50—there was a 2 per cent. improvement in manufacturing output per employee over 1978. The Financial Times survey shows for the first time that industry is expecting to de-man to a greater extent than its volume problems would apparently require and that has been shown by the last two surveys. There are many individual examples—which time prevents me from giving, but which are known to my department—of quite substantial improvements in productivity, both in better use of existing investment and in the introduction of new technology. With the widening spread of realism, I believe that this process will continue.
I believe that we must give time for the Government's policies to encourage industry to take major steps forward to match European productivity levels. If we do that on a total scale, on my calculations we could carry the present pound exchange rate and interest rates. I believe that we must speed up this process by every means known to us. Time prevents me telling your Lordships more of the possible ways in which the Government hope to encourage that trend.
Lord SCHON: My Lords, I promise to be brief. We have had a very interesting debate. I should like to thank all noble Lords for having participated, and in particular I should like to mention my old friend the noble Lord, Lord Sieff of Brimpton. Like others who have preceded me, I should like to say that I hope that we shall hear his wise counsel often in your Lordships' House.
I have tried, in the national interest, to convey that we should produce more—and I was speaking about higher productivity—on the basis of selling more in exports, and of a reduction of imports—all that on the basis of quality, price and service. That is all I wish to say in summing up. In conclusion, once again I should like to thank all noble Lords for participating in this very important debate in this time of economic difficulties. My Lords, I beg leave to withdraw my Motion for Papers.
Motion for Papers, by leave, withdrawn.

STREET OFFENCES (AMENDMENT) BILL [H.L.]
7.12 p.m.
Lord AVEBURY: My Lords, it is about three and a half years since we last debated the proposal which is embodied in the Bill now before your Lordships' House, a proposal which I was prompted to reintroduce when I read the reports of the speech of the Home Secretary of 21st March, when he said that measures had to be taken as a matter of urgency to prevent the prison population from growing any further than it already has. He remarked in that speech that five years ago his predecessor, Mr. Roy Jenkins, had said that a prison population of 42,000 would be intolerable, and yet it had already reached a figure of 44,800. He went on:
"We shall need, and in this the courts have their part to play, to see that prisons are not allowed to remain cluttered up with trivial and inadequate offenders who are no real threat, to anyone, except possibly themselves, but whose presence helps to create the extremely acute pressures which afflict our prisons today and all who work in them ".
I could not agree more with the remarks of the Home Secretary.
1502
However, I think that if Parliament enacts laws which provide that terms of imprisonment can be imposed for any particular offence, we are obliged to set aside resources adequate to accommodate the resulting prison population. If, on the other hand, Parliament would like the courts to impose lesser sentences for a particular offence, or none at all, it is up to us to say so clearly.
Therefore, this Bill would have the effect of abolishing imprisonment for soliciting and would thus relieve the women's prisons of some 300 women a year who are either sent there directly on conviction of an offence under Section 1 of the Street Offences Act, or are sent there in default of payment of a fine for the same offence.
According to the figures for 1978 published in the Criminal Statistics for England and Wales, 245 women were sent to prison directly on conviction of the offence, and the noble Lord, Lord Belstead, was good enough to give me figures in answer to a Question the other day showing that an additional 90 women were taken to prison during that year in default of a payment of a fine for the same offence. According to another Answer given to me by the noble Lord on 16th May, there were 411 women in Holloway prison on 31st March this year, occupying accommodation intended for 245 persons; and in Risley the position was, he said, even worse: 175 women in accommodation that was mant for 85.
I shall not pretend that the passage of this Bill would eliminate this horrific degree of overcrowding, which is far worse than the average for the men's prisons. But I suggest that it would make a contribution towards alleviating the pressure. On other occasions no doubt there will be plenty of suggestions of further categories of women who ought not to be in prison. If one talks to anyone in the women's prison service, one will find that they have no difficulty in producing many suggestions as to how the women who are now accommodated in those prisons could be better dealt with elsewhere. However, I think that this is one component—by no means negligible—of the overall solution.
What does Section 1 of the Street Offences do? It makes it an offence for a common prostitute to loiter or solicit in a

1503
street or public place for the purpose of prostitution. For the purposes of this section, a common prostitute is a woman who has been cautioned twice before by a police officer when seen loitering or soliciting, or who has a previous conviction under the section. This provision was considered by the Working Party on Vagrancy and Street Offences which was appointed by the then Home Secretary, Mr. Reginald Maudling, as long ago as 1971. In 1974 the working party issued a working paper, and in 1976 they finally made a report, saying that:
"the most effective way to maintain the status quo on the streets (if that is what is wanted) is to retain the present Section 1 offence and the cautioning system".
The purpose of the Wolfenden Committee's recommendations, which have been embodied in the Street Offences Act, was not, of course, to eliminate prostitution, which, as everybody recognised, would have been impossible, but to deal with the nuisance that was caused prior to that Act by large numbers of prostitutes persistently and tenaciously soliciting, particularly in certain areas of London where they annoyed the local residents and made it difficult for any woman to walk through those areas without being importuned.
Some people are afraid that without the sanction of imprisonment, the prostitutes would emerge from the brothels and bedsits where they have been lurking for the last 20 years to become again a plague on respectable citizens and tourists. Here I think that we are in the region of pure opinion, as no one can be absolutely certain what would happen. What can be said without fear of contradiction is that some prostitutes continue to solicit on the streets and are not deterred by the penalties, including the threat of imprisonment; while others, who turned to a variety of different methods of attracting clients, would be unlikely to go back to the relatively uncomfortable and inefficient business of street walking. What they have done is to arrange their affairs so that the clients come to them through massage parlours, saunas, escort agencies, postcards in the windows of newsagents and private parties, such as the one held recently by the unfortunate Mrs. Payne. It is worth noting that the ladies who offered their services at her establishment
1504
ran no risk of prosecution, and by all accounts they seem to have been able to rely on a higher class of customer than would be expected from casual encounters on the street.
One major social change in the last 20 years, which I think is frequently overlooked in these discussions, is the dramatic increase in offences of violence. The prostitute who relies on picking up men off the streets is, of course, taking a very considerable risk. That must be at least as great a disincentive to soliciting as a method of attracting clients as a threat of a prison sentence. My own conclusion would be that decriminalisation might have a small effect on the prevalence of soliciting, but that any nuisance caused thereby would be vastly outweighed by the beneficial effects of keeping some 300 to 400 women a year out of prison. It is worth pointing out, too, that there are on the statute book other methods of dealing with soliciting of an aggressive or violent nature. Section 64 of the Metropolitan Police Act 1839 has been mentioned to me; I do not know whether this is used any longer, but it allows any constable belonging to the Metropolitan Police
"… to take into custody, without a warrant, all loose, idle and disorderly persons whom he shall find disturbing the public peace, or whom he shall have good cause to suspect of having committed or being about to commit any felony, misdemeanour or breach of the peace, and all persons whom he shall find between sunset and the hour of eight in the morning lying or loitering in any highway, yard or other place and not giving a satisfactory account of themselves ".
Then there is Section 5 of the Public Order Act 1936, which provides:
"Any person who in any public place uses threatening, abusive or insulting words or behaviour with intent to provoke a breach of the peace, or whereby a breach of the peace is likely to be occasioned, shall be guilty of an offence ".
The police in certain parts of the country are perfectly ready to use Section 5 of the Public Order Act 1936 on a fairly extensive scale. I think that if prostitutes were to commit acts of aggression against ordinary passers-by and citizens, there is a whole armoury of weapons on the statute book which the police could use to deal with them.
I asked the Minister recently whether the review of the Public Order Act now being undertaken would include consideration of the use of Section 5 to deal with both

1505
soliciting by women and importuning by men, and the noble Lord replied on 14th March that the law on sexual offences was entirely a matter for the Criminal Law Revision Committee. Perhaps he could say this evening whether that committee would be able to examine the possible use of Section 5 and what, if any, is the extent of liaison between the Criminal Law Revision Committee and the body which is now examining the Public Order Act.
A questionnaire which the Criminal Law Revision Committee issued last June did not refer to the matter, and in the 18 questions on various aspects of the law on prostitution which they put to the recipients of that questionnaire the only one to which they attached a comment suggesting the answer they appeared to want was the one about soliciting. They asked:
"Should the existing provisions about soliciting by prostitutes in streets and public places be retained?"
And they went on:
"It should be borne in mind that past experience has shown that men solicited by prostitutes are usually unwilling to give evidence and accordingly the Working Party on Vagrancy and Street Offences (Report, para. 87) and the Wolfenden Committee (Report, paras. 251–256) did not favour any form of provision requiring proof of annoyance ".
It seemed to me that the committee had approached at any rate this part of its task with its mind partly made up. It would be helpful if the Minister, when he replies, could give some indication of when the Criminal Law Revision Committee is expected to report. I think the par for the course would be about two years; the questionnaire having gone out in June 1979, the replies would be received in June 1980, with publication towards the end of 1980, allowing adequate time for consultations on the report of the committee, it is unlikely that legislation would come before the House before the Session 1982–83. I suggest that some way has to be found to speed up this process if the criminal law is to be kept properly up to date, not only in this area but as a whole.
I turn to the negative side of the provisions which the Bill seeks to amend. The working party said in their report that the principal criticisms of Clause 1 were:
1506

"(a)that its use of the phrase ' common prostitute ' is at best derogatory and at worst prejudiced;

(b) that it is differently drafted from comparable legislation controlling male importuners (and at present there is no offence of a man importuning a woman) and thereby discriminates against women; and

(c) that without a requirement to prove annoyance or nuisance there is insufficient concern for the liberty of the individual".

To those should be added the statement of the Home Office Research Unit Bulletin on Women Offenders of July 1974, which said:
"It is quite widely acknowledged that prison is inappropriate to prostitutes. The women involved tend to regard it as a calculated risk of their profession. It can have slight rehabilitative value, even if it affords temporary respite from an exacting life".
If prison, then, has no effect on the prostitutes themselves, their presence there may presumably influence the other women whom they meet. Dr. Megan Bull, the Governor of Holloway Prison, said in evidence before the Select Committee on Expenditure in another place that young girls may be recruited into the profession as a result of the contacts they make with prostitutes in prison.
There are two other points I wish to emphasise. First, sending a prostitute to prison makes it even more necessary for her to continue soliciting and to intensify her activities if she has no other means of attracting clients. She comes out of prison often heavily in debt and, incidentally, if prison sentences are to be retained at all, it seems to be generally agreed that much shorter sentences can be just as unpleasant subjectively, if that is the idea, as the longer ones which are normally imposed; a couple of weeks does the same as a three months' sentence, which appears to be standard for most magistrates' courts. She needs to go back on the streets immediately to make up for lost time and to stave off the most pressing of her creditors. I thought that was well exemplified by the evidence given by Susan to the Expenditure Sub-Committee when she said, and I quote from Paper HC 61, xiv:
"After I got out (three months imprisonment for soliciting and loitering) I was two months behind with my bills. I had £80 of debts to come out to. That was money owing on my furniture, TV, insurance and clubs (hire purchase) besides the £8 to £10 a week I give to my mum for my keep. In the end I had to solicit to get the

1507
money. I was doing it again within two weeks of coming home. After a while I got an assembly job but I only cleared £30 a week after stoppages. It just wasn't enough for my commitments so I went back on ' the game ' again ".
This of course is not a problem peculiar to prostitutes, but I suggest it affects them disproportionately because they are less likely than most other women who go to prison to have the support of their families, and it is getting worse because women may be given one or more three-month suspended sentences and then, on the second or third occasion, they may come up against a tough bench who will put another three months on top of the previous one or two, so that the woman will spend six or nine months in prison at a stretch.
I spoke to a woman, Jean, this morning in Birmingham, who was sentenced on 2nd May 1979 to three months plus a three months' suspended sentence, so she did six months altogether in Risley Prison, Birmingham. She has two children aged seven and eight, but she was lucky enough that they were able to live with her sister while she was in prison, but of course many women are not fortunate enough to have relatives who will do that. She said to me that in the area of Birmingham where she operates the police know who to pick on and that very frequently they arrest women who are passing through a red light area and who they know, from their recognition of them, have previously been prostitutes, and so they may get three or six months for doing nothing whatever.
The second point I wish to make before concluding is that several of the witnesses who appeared before the Select Committee mentioned the fact that prostitutes tend to have dependent children, so that imprisonment frequently means the children having to be received into care. That, of course, is an extra punishment not only for the prostitute but for the innocent child as well, and the long-term psychological damage it does to the child may be quite severe, apart from the cost to the taxpayer.
Apparently—and I should like the views of the noble Lord on this—no records are kept of the number of children received into care as a result of their mothers receiving custodial sentences, nor has any research been done on the effects of prison
1508
life on pre-school children who spend time in mother-and-baby units. I wonder whether the Home Office might not start to keep statistics on children received into care from now onwards. Perhaps the noble Lord will consider that point. I also wonder whether he can tell the House what has been the result of the Home Office consideration of the usefulness of commissioning research into the effects of pre-school children being taken into prison with their mothers, which was mentioned in the former Home Secretary's Answer of 17th April 1978.
Lord DAVIES of LEEK: My Lords, what age group was the noble Lord thinking of?
Lord AVEBURY: My Lords, the Answer that was given by the former Home Secretary related to the pre-school children, but in answer to the noble Lord, Lord Davies of Leek, I am informed that although in theory any child of pre-school age may be received into, for example, Holloway Prison with his mother, in practice the accommodation is very limited and the prison takes only children up to the age of three. Other provisions have to be made where a child is aged over three, and these are the occasions on which the child has to be received into care.
Lord DAVIES of LEEK: I thank the noble Lord.
Lord AVEBURY: My Lords, on this point I obtained some figures from an inner city probation department in Sheffield today. The department told me that in the 18-month period between January 1979 and May 1980 17 women were given sentences for soliciting by the magistrates' courts in Sheffield, and among those 17 women, six had either a child or groups of children who were received into care as a consequence of their mother's sentence. I do not know whether those figures are typical; perhaps the noble Lord can enlighten us on this. If that experience was paralleled throughout the country, then it would seem that we are taking a very large number of children into care purely as a result of the convictions for soliciting.
The other fact I was given—and it is very interesting—relating to the experience

1509
of the inner city probation office in Sheffield is that of 21 statutory clients referred to them by the court, no fewer than 17 were single parents and this tallies with the estimate that was given to me by PROS, the Programme for Reform of the Law on Soliciting, who said that in their judgment as many as 75 per cent. of prostitutes may be single parents.
The next question that I should like to ask the noble Lord about is that of community service orders as an alternative to prison. The board of visitors of Hollo-way Prison said in their evidence to the Select Committee that community service orders may not be appropriate for single parent families—and I have just mentioned the high proportion of single parents who are found among soliciting prostitutes—and they suggested that some form of service which single mothers could carry out in their own homes while looking after their children be devised. I wonder whether the noble Lord can tell us whether the Home Office has looked at that suggestion and, if so, with what result. To what extent are community service orders already being used by the courts for women convicted of soliciting?
I spoke today to another girl, Sandra, who is carrying out a community service order at the moment, and she said to me:
"As an alternative to prison it's better, but why should we go to court at all? I'm doing meals-on-wheels. It's very awkward because I've got a little boy aged seven and you have got to go when they say they want you.
"When I was in prison about five years ago he had to go into care. I was lucky—the lady he went to was very good".
But if we must have a penalty at all, then clearly these community service orders are very much better than sending women to prison.
I mentioned earlier that many other categories of person other than prostitutes find themselves in prison because of the bankruptcy of ideas in our society about how to deal with the whole spectrum of what we would call deviant behaviour. But these categories tend to overlap. Evidence also given to the Select Committee showed that a quarter of the prostitutes imprisoned are alcoholics, a quarter are drug addicts, a quarter have attempted suicide at some time or another, a quarter have a variety of physical disorders, and one in six has a history of mental illness. The Police Federation describes them as
1510
"inadequate by virtue of a variety of health, mental or other reasons … and are in need of medical help, which the prison sentences do not give".
The behaviour of, tragically, large numbers of persons who are social casualties may be strange and frightening to the normal person, and even normal people may become a nuisance to others when, for instance, they swarm into a city for a football match, drive noisy motorcycles, or park in front of somebody else's house. But we do not imprison people for their behaviour when their actions in other respects are perfectly lawful.
Prostitution itself is not an offence, and while it is certainly not to be encouraged, neither is it right in my view for an act preparatory to prostitution to be treated with such great severity under the law. The offence of soliciting is itself unique in that the accused is treated as guilty before any decision has been reached by the court, by reason of the two cautions which are read out by a police officer, labelling the accused as a "common prostitute". The offence is also exceptional in requiring police evidence only, and not that of the person who in theory has been annoyed.
It is hard to believe that this provision was not the work of Victorian hypocrites, but that it was promoted and supported by many who are still here today. The remedy was indeed far worse than the disease, and now with the enlightened policy announced by the Home Secretary, there is reason to hope that the Government will be sympathetic to this Bill. My Lords, I beg to move.
Moved, That the Bill be now read 2".—(Lord Avebury.)
7.36 p.m.
Lord HARRIS of GREENWICH: My Lords, I hope to speak fairly briefly this evening. However, before doing so, perhaps I should say that I have not hitherto regarded it as proper to intervene in debates on penal policy in the last 15 months, given the fact that as chairman of the Parole Board I should have regarded that as inappropriate. However, I speak tonight for two reasons. The first is that I was involved in a debate in this House, with the noble Lord, Lord Avebury, into the possibility of abolishing penalties of imprisonment for certain offences; that

1511
was when I was a Minister in the Home Office. The second reason is that in any event the cases of women sentenced to imprisonment for soliciting do not come before the Parole Board, nor indeed local review committees. The sentences are in fact too short to come before those bodies.
As the House will be aware, and as indeed the noble Lord, Lord Avebury, has already reminded us, at the moment the entire prison system is suffering the most grievous overcrowding. The position in local prisons where people are serving shorter sentences of imprisonment is particularly serious, and this being so, it is appropriate for us to discuss any proposal which would lessen the pressures on the system.
A few weeks ago the right honourable gentleman the Home Secretary announced his plans for dealing with this problem. I very much agreed with the approach which he indicated in that statement. He certainly pointed out—and I think it was right that he should do so—that there are no simple solutions to this problem. Sometimes it is argued that there is some magical way in which the pressures on the prison population can be relieved. I am bound to say that I do not believe that such options exist. But certainly we must look at any proposal which has the effect of reducing the numbers.
Some of the critics of the Home Secretary's statement have advanced proposals which I believe would paradoxically have the effect not of reducing the prison population, but arguably in some cases even increasing it, though of course that is not the intention of those who put forward these proposals. Having said that, there is one particular area in which Parliament itself has a responsibility; and it is a very important one indeed. That is when it considers, as it has to when considering proposals for legislative change, the scale of sentences; and, as a result of this Bill, introduced by the noble Lord, Lord Avebury, we are given the opportunity to examine the penalties this evening.
I would say this at the outset. I have come to the conclusion—and tonight, of course, I speak entirely for myself—that in some respects the present law is unsatisfactory. First, I am impressed by the doubts
1512
which have been expressed by a wide variety of organisations about sentencing prostitutes to terms of imprisonment. The Home Office Working Party on Vagrancy, to which the noble Lord, Lord Avebury, has already referred, has reported that the Prison Service did not see itself as having any useful rehabilitative role in the case of prostitutes, and I think it is self-evident why that is so. And, as the very helpful document which has been provided by NACRO reminded us, this view has been more than confirmed by policy statements made by organisations ranging from the Prison Officers' Association to the prison and borstal governors' branch of the Society of Civil and Public Servants.
Secondly, I am struck, too, by the dismissive attitude of a great deal of informed public opinion about the whole concept of imprisoning these women. They just do not think it is necessary. More than that, many people are I believe increasingly uneasy about a law which can imprison women for the offence of soliciting but which leaves untouched the men who drive slowly through some of our streets trying to pick up these girls. I am well aware that the men who do this, either in cars or on foot, can in certain circumstances themselves be guilty of an offence, but that offence is exceptionally difficult to prove; and, in any event, I think the House must accept that chief officers of police have heavy demands on their resources, and there has to be some limit to the number of men they can make available for this purpose.
I recognise at once that there is a dilemma facing those who take the view which I am expressing this evening. Do we argue that the present law is so unsatisfactory that it should be scrapped altogether, or do we say that what concerns us primarily is the question of imprisonment? I concede at once that there is a need for a law which deals with the nuisance that can be caused by soliciting, by men or by women. I think we would be quite wrong to suggest that soliciting is not a matter which can create an exceptionally disagreeable situation for many of our fellow citizens. It is folly, I think, to pretend that there are not some areas of our great cities in which a man's wife, girlfriend or daughter cannot approach her own front door without being

1513
approached by men. Furthermore, I think that in a situation of that kind people are perfectly entitled to be quite indignant that that should be so, and, indeed, to demand some protection from the law.
NACRO have argued, in the evidence which they have put forward to the Criminal Law Revision Committee—and, indeed, the noble Lord, Lord Avebury, touched on this particular point a few moments ago—that one way of dealing with this problem is by simply relying on Section 5 of the Public Order Act. It is argued that this in itself would be an adequate answer to the problem. Under that section of the Public Order Act it is an offence to use threatening, abusive or insulting words or behaviour whereby a breach of the peace is likely to be occasioned. I suspect that if I were to ask the Parliamentary Under-Secretary what were his views on that, he would perfectly reasonably, if I may say so, say that this matter has been put to the Criminal Law Revision Committee and, that being so, we should wait to hear their views. That would be the answer which I would give if I were in his position, so I will not ask the question. But, having said that, I should like to echo the question put by the noble Lord, Lord Avebury: When are we likely to get a report from the Criminal Law Revision Committee on this matter?
I now turn, if I may, to the question which is before us this evening; namely, whether the courts, having convicted a woman of the offence of soliciting, should any longer be empowered to sentence her to a period of imprisonment. I concede that if the offence remains—and it will clearly do so in any event until the Criminal Law Revision Committee reports; I think that is inescapable—some women who have merely been fined will in fact end up in prison anyway. We have all spent a great deal of time discussing whether there is an alternative to the imprisonment of people who do not pay fines, but it is an exceptionally difficult problem to find a satisfactory answer to this. Therefore, I would accept, on the basis of the argument which I am deploying this evening, that even if the offence itself was no longer imprisonable some people would still go to prison.
1514
But, having said that, I very much hope that the noble Lord the Parliamentary Under-Secretary will be able to indicate that the Government are at least prepared to consider abolishing the right of courts to order a term of imprisonment. The overcrowding situation in women's prisons is certainly just as serious, if not in some respects more serious, than the situation in male establishments. Holloway is still only partially rebuilt, and it will be some years before it is wholly in operation. While I was a Minister I had the extremely painful duty of deciding that a new remand centre which was going to be opened at Cookham Wood in Kent, designed to take young men from the extremely overcrowded conditions in the local prison at Canterbury, would in fact have to become a women's prison. It had just been built, and the staff had pretty well been engaged. Then, at the last moment, we had to switch it round and make it a women's prison. In doing so, I incurred severe criticism from the right reverend Prelate the Bishop of Rochester and Chatham, because he said—and I believe he was absolutely right in saying so—that what I was doing was preserving wholly unacceptable conditions at the local prison in Canterbury. Indeed I was, but, unfortunately, I had no choice because the pressure on the women's prisons was so serious that in fact we simply had to make more accommodation available.
It therefore seems to me in the situation I have described that it would be right to treat soliciting in exactly the same way as the Criminal Law Act 1977 dealt with the offence of being drunk and disorderly; namely, by preserving a substantial financial penalty but abolishing the right of the courts to order a term of imprisonment. I do not believe—I must say this in conclusion—that such a change in the law would in any way run counter to the views of many informed members of the public, and I think that it would make a useful contribution to lessening the very heavy burdens which, as I have indicated, are now facing our entire prison system.
7.48 p.m.
Baroness VICKERS: My Lords, I should like to thank the noble Lord, Lord Avebury, for proposing this small amendment to the Street Offences Act,

1515
and for his speech today, which was most informative. I was very interested in what the noble Lord, Lord Harris, said, because I remember what he said in a previous debate when I spoke and he was in the ministerial position. But I am also rather astonished that he should, apparently, if I have not misunderstood him, think that overcrowding of prisons is one of the main reasons for not sending prostitutes to prison. They are not doing anything illegal; they are not criminals; and I should have thought that this was a very poor reason for suggesting why they should not go to prison. There are plenty of other reasons.
I am sorry that this debate has taken place rather late at night, and I hope that noble Lords not here will read in Hansard tomorrow what is said; because we had hoped, I think, to get the views of this House on what has happened since the passing of the Street Offences Act 1959, and I think it is extremely important. But, as I said in 1977, I still hold the view that consideration should be given to the total abolition of all laws concerning prostitution—and, I should like to add, especially the Street Offences Act 1959.
Since the date in 1977, I have consulted (as has the noble Lord) a number of organisations. I have given talks to interested societies, attended press organisations, met the press from the Continent and attended the weekend conference of the Cropwood Round Table in Cambridge in December of last year. I have received the report from NACRO, also that of the Women's National Commission and that of a number of solicitors and lawyers. Many people agree, it seems, that the 1959 Act is not compatible—and I do not think that this has been mentioned—with the Sex Discrimination Act. In fact, it is totally contrary to what that Act has laid down. The basic fact in dealing with prostitution is that it has always existed, continues to exist and will continue to exist in some form because there has always been and always will be a demand for the prostitutes' services. We all know that prostitutes go on the streets not for other prostitutes but for getting their clients, who are men. However many Acts of Parliament are passed, I suggest that this will continue.
May I suggest that prostitution has
1516
little to do with what is known as the permissive society. It seems logical that in a permissive society there should be less need for prostitution than there was, for example, in the Victorian era. But the Home Office working party in their Green Paper said:
"The way of life of the prostitute is so remarkable a rejection of the normal ways of society as to bear comparison with the drug addict ".
That, to my mind, is one of the most unthinking and undesirable remarks in this Green Paper. It is a fascinating statement to be made (and put into a document) by people who are supposed to be responsible. Therefore, I have little faith in that working party.
The National Women's Commission considered a lot of these points and said in regard to imprisonment that it may have a certain deterrent value but that they do not see it as a particularly effective form of punishment. Although I do not agree with all the suggestions in their paper, I do agree with what they went on to say:
"The law should be changed to apply equally to men and women. In deciding whether to prosecute, allowance should be made for the fact that in some cases a prostitute's husband or cohabitee, who may be technically ' living on the earnings of prostitution ' is in fact playing a supportive and protective role in accordance with women's own wishes".
This does not happen only in Britain but in several countries in Europe. As the noble Lord has said, the number of prostitutes sent to prison does not reveal a satisfactory state of affairs. In 1978, there were 308 prostitutes in prison and, in 1972, 265. Nothing has happened since the Street Offences Act was promulgated to keep women out of prison. The National Women's Commission went on to talk of other unpleasant things: the poncing by landlords for higher rents, hotel staff who have to be tipped or the prostitutes may be evicted.
At the time of the Wolfenden Report, on which the Street Offences Act was based, I understand that no women would give evidence. I am pleased to say that I was able to arrange in Central Hall, Westminster, to have a meeting at which over 200 women turned up. Also attending were members of voluntary organisations, probation officers and clergy. One of my difficulties was to see that the police did not arrest anybody they knew when they came out of the building. But

1517
they understood what was happening.
Also, I gave evidence to the Education, Arts and Home Office Sub-committee of the House of Commons Select Committee on Expenditure and I was allowed to take there a deputation of all types of prostitutes who were very eloquent in the views they gave. The noble Lord said that he had read some of this evidence. This is one of the best ways of getting to understand the problem. In order that women should not be sent to prison after being arrested for persistently accosting persons, it should be necessary that the person being accosted should either say that he or she was not worried or should go to the court to give evidence if the prostitute pleaded not guilty. I am sure that it is against British law that a person should go to court and have only, say, the police officer's word against hers. It is essential that evidence should be given.
I should like to do away with the phrase "common prostitute". No person should be so labelled for life. I think it is most unfair. Supposing that a woman, no longer a prostitute, commits a trivial offence and goes to court. The magistrate asks for her past record and is told, "She is a common prostitute". She may by then be happily married. Perhaps she had been apprehended for accosting only twice before being labelled a common prostitute. That should be abolished.
One of the difficulties at the present time is the number of foreigners in this country. I know, and others may know, that foreigners expect to obtain the services of prostitutes. I was told only this morning that the foreign guests of a certain hotel had asked for some women to be supplied to them. This is a great temptation for the people who are asked to provide women, and sometimes names are given by officials at the hotels concerned.
I should like to ask the noble Lord who is to wind up a specific question about the shortage of staff in Holloway. I was told only yesterday that women are often locked up from 2 p.m. until 8 p.m. Can the noble Lord say whether this is correct?
I should like to suggest that Section 54(1) of the Metropolitan Police Act 1939, under which annoyance has to be proved, is quite enough—and in those days the fine was £2. Things have changed. Surely that is enough. We do not need the Street
1518
Offences Act. I should like to see the Street Offences Act repealed and then, if necessary, to use the other Act. Other action can be dealt with by the Public Order Act 1936 or by the by-laws which most local authorities have.
May I conclude by reading what was said in 1957 by the organisation known at one time as the Josephine Butler Society:
"It is a matter for profound regret that the Wolfenden Committee has, in contrast to its work on the problem of homosexuality,"—
and the Wolfenden Report started what are now called the "gay men"—
"placed so narrow an interpretation on its terms of reference in regard to prostitution.
"The great fundamental, that good law educates, and unjust law prostitutes the moral standards of society has been ignored. Equitable and just law is the first requirement for fostering a sense of equal responsibility in both men and women. Concentration upon the prostitute in the streets as a nuisance, rather than part of a complex moral and social problem, leads to complacent disregard of the moral effect upon the public mind of the legislation proposed ".
My Lords, that still holds good.
7.59 p.m.
Baroness HORNSBY-SMITH: My Lords, when the 1959 Bill came in I was then, I think, the bê te noir of the noble Lord, Lord Avebury, when we both sat in another place. Indeed, I had to take the Bill through its Committee stage at that time. That Bill was not introduced without an enormous wealth of evidence from all sources and authorities who had to deal with the great metropolitan cities; and some of the strongest representations were made by the then Tourist Board because of the enormous number of complaints they had from highly reputable visitors who found the manner of behaviour, the soliciting, the threatening and sometimes the sheer blackmail, was a real menace on our streets. I have a very open mind about whether gaol is of any value, so it is not on that point that I am mainly disagreeing with the noble Lord and my noble friend Lady Vickers.
I should like to say to my noble friend the Minister that, as I understand it, prostitutes are not lightly sent to prison unless there is a long record of persistent soliciting—and sometimes in rather unpalatable circumstances. Secondly, a very substantial number of young girls come to

1519
the great City and do not have financial means. They do not find themselves in Soho, but probably get a lift on a lorry and finish up in the East End, round about Stepney, in some of the clubs there. By the "network" they may find themselves in a situation where someone says: "I know where you can find somewhere for the night". They perhaps start off being given a job in one of the cafes.
During my investigations at the time I toured some of the cafes in Soho. Some months later I was to recognise in the police courts some of the girls whose debts had suddenly run up from their benefactors and they were told how they could make more money. They were thereupon set up in the West End.
I agree with what I know is the view of my noble friend Lady Vickers, that many of the prostitutes who (shall we say?) straightforwardly offer their services are prepared to accept: "No, thank you. Not interested ". But they are not all archangels, and a minority can be extremely vicious and use blackmail. It is here that I would quarrel with the noble Lord's amendment, and that is on the limitation of £50. That is peanuts to the highly paid professional in London—absolute peanuts. If she goes to prison she is losing a week, a fortnight, or possibly—in a severe case—a month.
If the noble Lord inquires of some of the hotels, he will find that one of the problems of their security officers is to see that some of these astute ladies do not bribe a casual member of the staff to let them into some wealthy visitor's room. When he finds a prostitute in his room he feels his reputation is at stake. She tells him quite bluntly that she will swear that she was invited there and he can pay up or otherwise. Anybody who believes that this type of situation does not happen is living in Cloud Cuckoo-land. While I would not go all out in maintaining that there should be a prison sentence, I think that there should be a latitude for the court to decide whether a higher amount should be imposed where there is evidence of someone trying to blackmail.
Lord DONALDSON of KINGS-BRIDGE: My Lords, I am puzzled by what the noble Baroness is saying. This can only be based on the belief that
1520
prostitution is an offence. The noble Baroness knows as well as I do that in this country prostitution is not an offence. Blackmail of course is. What we are discussing is not whether prostitution is an offence or whether some prostitutes make a great deal of money and may be very disreputable people. This is part of our background, and there is no offence of prostitution in this country. What we are discussing today—and I do not think the remarks of the noble Baroness are relevant to it—is whether soliciting by a prostitute in public is an offence.
Baroness HORNSBY-SMITH: My Lords, I accept what the noble Lord says. I hope he will forgive me if I feel that the background on which the present Bill was passed—then, many of the offences occurred in the streets, and the legislation was passed to stop the nuisance and soliciting in the street—has been transferred to what I would call public places; I refer to where somebody trespasses into somebody else's room in a hotel. That is the basis of my reservation.
There may be times when a £20 fine is enough, but I think that the £50 limitation and maximum is too small. I should like to ask my noble friend the Minister whether, when young girls are involved, it will still be possible, if they are under age, to take them into care, even if this amendment were passed? Girls—and we have had examples of girls aged 13, 14 and 15—who are under age should not be covered by this amendment. That is all I want to say, my Lords. I did not think I would be here in time to speak. I feel that we cannot treat too lightly something which can be a great embarrassment and quite a menace in our capital cities.
8.7 p.m.
Baroness BIRK: My Lords, the noble Baroness who has just spoken at least broke the chain of attitude as far as Lord Avebury's Bill is concerned, because there seemed to be almost complete agreement—certainly up to a certain point—about it. She asked the Minister how often people should be sent to prison for prostitution. My noble friend Lord Donaldson explained that prostitution is not an offence. I can tell the noble Baroness (and save the noble Lord, Lord Belstead, from doing so) that loitering and soliciting are the offences and there is a maximum penalty of £50

1521
fine for the first offence, £200 for the second and £200 and/or three months' imprisonment for the third or a subsequent offence. It depends entirely upon the court. I am a justice of the peace. We have cases which come before us and, on the whole, we try to avoid sending women to prison. But the way is open for other courts to operate the law as it is.
The first time I spoke in this House in connection with this subject was in making the second speech I ever made in the House, in 1968 when the late Lord Chorley brought forward the Street Offences Bill. The purpose of that was to remove discrimination from the law on prostitution and soliciting and to redefine it to include loitering for immoral purposes. It is very interesting that at the time the late Lord Stonham, who was the Minister of State on the Government Benches, said, when I put very much the case that my noble friends have been putting tonight, that the Criminal Law Revision Committee was looking at it and would be reporting very shortly. I said (at column 1330 of Hansard for 8th February 1968):
"The question of referring the whole thing to the Criminal Law Revision Committee and waiting for their report seems to me to be wrong for two reasons. I mean no disrespect or disbelief of what my noble friend Lord Stonham has said, that they are ' very ' shortly going to examine this area, but that means rather longer for those of us who have been impatient for many years".
My Lords, they still have not reported. I then went on to say:
"I still disagree with my noble friend, because I think the advice we should be giving is not technical advice "—
from the Criminal Law Revision Committee—
"but advice on policy, advice on the relationship between men and women, equity of punishment, sex discrimination. This is not a job for the Criminal Law Revision Committee but a job for Parliament. That is my view about this. "
I still take the same view.
The problem with the original Bill—and we are now going back over 12 years—was that the law on loitering for immoral purposes was going to be a rather wide and a rather insubstantial thing to establish. Therefore, it rather fell down on that, together with the fact that there was then—I am not sure about this—a stronger degree of male chauvinism in your Lordships' House than there is now, and certainly there was a packing of the men together to support each other so that they
1522
did not come within the purview of any Act. Then, in the following year, in 1969, Lord Chorley brought forward another Street Offences Bill. In connexion with that, he said it was based on it being an offence for any person in a street or public place
"… persistently to accost any person or persons with a view to offering or obtaining sexual services for payment or reward ".
That Bill got its Second Reading although the first Bill did not, but it was lost because of wrecking amendments. There the matter stood. There have been various attempts by noble Lords, including the noble Lord, Lord Avebury, who has brought forward this Bill tonight, to try to get the law altered.
I think the question of whether or not the fine is £50 is quite irrelevant. The noble Lord is trying to do what I think is absolutely right. He is putting down a marker and from then on, as the noble Lord, Lord Harris, said—I will not repeat it all—suggests dealing with this particular offence in the context of not sending women to prison. It is really what we are talking about and moving towards, I hope; in other words, that the offence itself should go as other speakers have said, and that it should be dealt with by the law as it stands on the basis of nuisance.
If two people want to get together through being solicited or accosted and it does not displease either of them, there is no nuisance created. They are both adults, and therefore the law has nothing to do with it. I think the trouble is that unfortunately there has always been an incestuous relationship between law and morality in this area. There has also been, and is still, a great deal of hypocrisy about this, and I should not be surprised if the all-party penal reform group which is to report fairly soon on a vast number of offences which they feel should not result in imprisonment does not follow the line which I am following tonight.
The only point at which I would part company with the noble Lord, Lord Avebury, is that he was asking how much was being done in the way of research and monitoring the effect on children when their mothers go to prison. I really do not think one needs to spend a great deal of money and research on

1523
that. We know it must have a very bad effect on the children when their mothers go to prison. I would much rather not send the mothers to prison and spend the money on the research on the children. If you do this by "nuisance", the Minister is probably going to say, first, that we should perhaps go back to the situation as it was before the 1969 Act. The noble Lord, Lord Avebury, dealt with that, but I think the whole sexual climate has changed considerably in this country—that is a "guesstimate" just as much as any other, if the noble Lord does say that this is going to happen again. What we have to do is to behave in a civilised and humane way, do away with the offence and then see what happens.
The other point then probably arises: What then do you do if you have people who are found guilty of creating a nuisance—let us get away from the words "loitering" and "soliciting"—and then they do not pay their fines? I would say that one should work along the lines of proposals for other fines, for example, as regards the non-payment of maintenance and debt. If it is proved that there has been a deliberate or wilful refusal to pay, then in those cases one considers that as the offence in itself, for which the ultimate sanction would be prison.
I think the noble Lord, when replying is also going to refer to the fact that the Home Office working party finally came out in favour of leaving the law as it is at the moment. That is not surprising when one looks at the composition of that working party; seven Home Office officials; four senior police officers, one DHSS official and one official from the DPP. None of the voluntary organisation dealing with prostitution was represented on the working party—or, for that matter, vagrants—so I would not put my faith in that particular report.
Lord AVEBURY: My Lords, if I may intervene, the noble Baroness might also have reminded the House that out of all those people she has mentioned on that committee there was only one woman.
Baroness BIRK: My Lords, the noble Lord has made the point for me. It is a fair point, but I do not like the idea of the "statutory woman". Let me say there
1524
were not even two women on the committee. There is also the point that if you set up a committee like that you probably ought to have somebody who is in the trade on it, and thus have a prostitute on that committee. Be that as it may, I would support my noble friend Lord Harris in that something really needs to be done in the interim, not only on the basis of keeping more people out of prison—which is absolutely essential, as I think we would all agree; at least I hope we would—but in order to deal in an interim manner with this proposition. However, I think that the noble Lord, Lord Avebury, knows very well there is not very much chance of this Bill emerging as an Act of Parliament as it stands. I should have thought that very strong guidance could have been given to magistrates and courts along the lines that imprisonments should not be one of the penalties used in cases like this until the law is changed, unless there are very special circumstances. In other words, the emphasis should be so strongly against imprisonment that it really becomes almost disused.
Finally, I would say that it is perfectly true, as the noble Baroness said, that prostitution will go on as long as there is a demand. If there is a demand there will be a supply to meet it. I was at one time a prison visitor at Holloway Prison and I remember, many years ago, there was a young girl there, who was only 20. The chaplain asked me whether I would take her on because all the other visitors had "had a go" and had not got very far with her. I must say I did not either, except that I think I learned much more from her than she learned from me—I mean about her attitudes. When I asked her why she did it, she said: "Tell me of any other job where you can get up late in the morning and earn the sort of money that I am earning".
The effect of rehabilitation or doing anything for her meant nothing at all, and the fact that she had been to prison once then took away that deterrent. I know the difficulty the noble Lord will find himself in when he replies, but I would hope he will be able to say that the Government are thinking along these lines and that the whole attitude to this offence has got to be changed. We really have to grow up as a society when we are dealing with adults. In the meantime, any

1525
interim measure that can be taken will be taken, and either the Criminal Law Revision Committee will be reporting almost immediately or he will say: "The whole thing has got moribund and we will just forget about it all together and get on and take action ".
8.19 p.m.
The PARLIAMENTARY UNDERSECRETARY of STATE, HOME OFFICE (Lord Belstead): My Lords, I think it is fair to say that the principal issue which is before us this evening—and I am grateful to the noble Lord, Lord Avebury, for raising this matter in the form of his Private Member's Bill—is whether or not a prostitute who solicits in the street or in a public place should be liable to be imprisoned. That is really what we are talking about. It is an issue which, as your Lordships are aware, has been considered by two substantial bodies in the last 20 years or so, the Wolfenden Committee in 1957; and then the Working Party on Vagrancy and Street Offences in 1976.
The first thing thing I should like to say is that neither the Wolfenden Committee nor the Working Party which reported 19 years later can exactly be accused of advocating a system of criminal sanctions leading to a large-scale imprisonment of prostitutes; rather the reverse. I listened with great interest to the speech which the noble Lord, Lord Avebury, made, and I think that the debate which his Bill has given rise to has been of importance this evening. But, if I may say so to him, the point which he did not address his speech to was the broad effect which the 1959 Act has had. That Act reduced substantially the number of women found guilty of soliciting, and this may be said to have justified in some considerable measure the recommendations of the first body and the endorsement of those recommendations by the second.
However, the Government's attitude to the noble Lord's Bill this evening will be based on a rehearsal of the arguments put forward by either of those two bodies; not indeed on those raised during the passage of the Criminal Law Bill of 1977 when the noble Lord sought the same objective as he is seeking now. On that occasion, of course, it was the noble Lord, Lord Harris, who spoke for the Government of that time. But the Government
1526
today cannot support this Bill as it stands, and the most compelling reason is that the law on prostitution is being reviewed as part of a comprehensive exercise on the law on sexual offences by the Criminal Law Revision Committee, which is being assisted by the Policy Advisory Committee on Sexual Offences. It would be inappropriate, in the Government's submission, to consider making this one aspect of the law on prostitution revert to the position that obtained before the 1959 Act in advance of the findings of those committees, which will enable this aspect to be viewed in a more general perspective.
Because the noble Baroness, Lady Birk, did so, I shall not rehearse the structure of the penalties of the 1959 Act. The simple fact is that the Act provided for enhanced financial penalties, with finally—on being convicted for a third time—a prostitute who solicits being liable to a maximum term of imprisonment of three months imposable instead of or in addition to a fine.
Lord AVEBURY: My Lords, will the noble Lord remind us whether, in 1959, the courts had power to award suspended sentences, or has that been introduced since then? Is not the effect of that that many prostitutes serve as much as six or nine months in prison instead of the three months originally contemplated by Parliament?
Lord BELSTEAD: My Lords, that is rather a fast ball. As far as I remember, the suspended sentence most certainly came after that particular date. On the other hand, I do not draw the same conclusion that the noble Lord draws from the question he has asked.
If I may go on for a moment on the tack that I am on, the committee recommended that a short term of imprisonment—and I am referring to the Wolfenden Committee—would be available on third or subsequent conviction because it considered that there was some danger that persistent offenders would simply pass on the fines to their customers, or that they would seek more customers. Within the committee's reasoning was also the hope that the threat of possible imprisonment might make prostitutes more willing to accept the imposition of a probation order.

1527
The noble Lord in his speech spoke of children being received into care because their mothers are in custody. I agree with the noble Lord that each situation of that kind is potentially tragic. But I would remind the noble Lord that without a sentence of imprisonment as a possibility there undoubtedly are people—among them prostitutes who solicit—who will not agree to a probation order. The Wolfenden Committee had some very firm remarks to make on this particular subject, and when the noble Lord also spoke, as he did, of the merits of community service for these offences I would just say that the 2 per cent. of women found guilty in 1978 of soliciting who were made subject to community service orders were of course given those orders as an alternative to imprisonment.
If I may just turn to the question of imprisonment, because this is what is uppermost in our minds, I remind the House for a moment that the Working Party on Vagrancy and Street Offences endorsed both the graduated penalty system and the availability of imprisonment as a final sanction. But, if one looks at that report, what is absolutely clear is that the 1976 working party took the view that prison was a deterrent against soliciting. Indeed, they went so far as to say, if I remember rightly, that they thought it would not greatly increase the prison population. I would put it to the House that the evidence would appear to justify that view. It would also justify the view which I sought to put forward at the beginning of my speech, that the effect of the 1959 Act had been to reduce the prevalence of soliciting in the streets. In 1959 over 12,000 women were found guilty of soliciting. A year later, by which time the Act had begun to have effect, that number had dropped to less than 3,000.
I was not sure from the speech which the noble Baroness, Lady Birk, made, but it seemed to me from her remarks that she felt that soliciting was not really a public nuisance. Let me just finish, because I am going to say something nice. It may be that the noble Baroness is too young to remember the days before the 1959 Act, but at my age I can certainly remember when, before the 1959 Act, in all seriousness parts of the streets of the
1528
capital were a public nuisance. I do put it to your Lordships that in this respect the 1959 Act has had an effect.
Baroness BIRK: My Lords, I thank the noble Lord very much for what he has said. I had heard about it; somebody did tell me what went on! I must put it to him that this again is going backwards and just making a guess at what is going to happen. Once you have done that and emptied the streets, it is very unlikely that the same thing will happen again. It is proved by what the noble Lord has said, and the figures we have from the Home Office, that the numbers of people who have been in prison are really very, very small, otherwise there would be more people being imprisoned. The courts are not imprisoning people, but prostitution is still going on, though it is going on in a different way. It is going on, if you like, in a more comfortable way, off the streets through call girls and in all sorts of ways. That is the pattern today.
Lord BELSTEAD: My Lords, I am interested that the noble Baroness thinks that if the final sanction of imprisonment were to be done away with one would not revert to the sort of figures for soliciting that were found before the 1959 Act. I am not saying that in any way to cross swords with the noble Baroness. I am genuinely trying to listen to what has been said in this debate, because it is an important debate this evening. In this connection may I say that I discerned a difference between the speeches and the objectives of the noble Lord, Lord Avebury, and the noble Lord, Lord Harris. The Bill of the noble Lord, Lord Avebury, and the speech which he made on it, would not only remove custody as a final sanction for soliciting but also reduces the maximum financial penalties which there would be for someone who is soliciting. As I understood the speech of the noble Lord, Lord Harris, he spoke of the desirability of removing the final sanction of imprisonment, but also spoke of the necessity of substantial financial penalties. This evening, all I can say is that we shall have to see what the Criminal Law Revision Committee has to say about this aspect of the matter. But certainly there is an important distinction here between those attitudes of the two noble Lords who spoke.

1529
Before I finish, I just want to make one or two quick points. First it is important that I should just give the statistics of the prison numbers. On 30th June 1978, which, I am afraid, is the latest date for which I have figures, there were just 37 women convicted of offences relating to prostitution who were in prison. That figure represented about 0–1 per cent. of the sentenced prison population. None the less, the noble Lord, Lord Avebury, was quite right to quote my right honourable friend the Home Secretary. He had every justification for doing so.
Any contribution, however minimal, to a reduction of the pressures on our prisons is generally to be welcomed. Let us make that absolutely clear. But I do not think it can be properly brought about by simply abolishing imprisonment for certain offences, without full consideration of the implications for other related areas of the criminal law and, more important, without a careful assessment of the social consequences. Indeed, in his speech the noble Lord, Lord Harris, gave a word of warning about measures which are very often, with the best will in the world, designed to reduce the prison population, and may be found, in the final event, to be counter-productive.
Incidentally, the noble Lord, Lord Avebury, asked me whether the Criminal Law Revision Committee would be dealing with Section 5 of the Public Order Act in its deliberations. My answer to that question is that the CLRC will deal with all aspects of the law on prostitution, including the possibility of using provisions in other legislation, such as Section 5 of the Public Order Act.
Both the noble Lord, Lord Avebury, and the noble Lord, Lord Harris, asked me when the Criminal Law Revision Committee would report. We may have to wait until next year for their working paper, and perhaps a year or two after that for their final report, covering the whole range of sexual offences, to be published. But I suggest that it is worth waiting until the full examination, which the previous Government asked these committees to undertake, is completed.
Finally, there were two questions which my noble friends Lady Vickers and Lady Hornsby-Smith asked me, and I am sorry that I cannot give fuller replies. My
1530
noble friend Lady Vickers asked me about the present conditions at Holloway. I have not visited Holloway for exactly a year and I am therefore speaking on advice, which is that at the moment the real problem in the prison is with remand prisoners. On rare occasions it has been found necessary to keep sentenced prisoners locked up for prolonged periods during the day, but they are almost always allowed association on most days, and would it were even better than that.
But it is the case that the particular difficulty arises with remand prisoners. Those who elect to work are naturally out of their cells while working, but for those who elect not to work it is sometimes difficult to allow association periods, because of staff shortages. May I just add that we are pressing ahead as fast as possible with the building project at Holloway, about which the noble Lord, Lord Harris, spoke. One of the things that I am glad to be able to say to your Lordships this evening is that at least during the last year one of the silver linings to the many clouds in the prison service is that recruitment to the prison service has enormously improved. I hope that this, in its turn, will have its effect not only on men's, but also on women's prisons.
I am afraid that I am answering my noble friend Lady Hornsby-Smith off the cuff, when I say that, as I understand it, the noble Lord's Bill would not have any effect on the provisions of the Children and Young Persons Act, with regard to taking young people into care. I must finish, and I merely express a hope, which is that the noble Lord, Lord Avebury, may feel it right, in the light of this debate, not to proceed with this Bill, in the knowledge that he will none the less be able to return to it in due course, because of the reports to which I have referred this evening.
8.35 p.m.
Lord AVEBURY: My Lords, I should have been very satisfied with the debate which has just taken place, if I had listened only to the weighty and significant speech of the noble Lord, Lord Harris, since he was the Minister who was sitting on the other side of the House on the Criminal Law Bill of 1977. His views have shifted significantly since then, in that he now does

1531
not see prison as an appropriate penalty for this offence.
If I may say so to the Minister, it is no good him trying to drive a wedge between the noble Lord, Lord Harris, and myself on this issue, because in drafting this Bill I was not particularly concerned with the amount of the fine, but was simply enabling the House to discuss the general principle of whether or not imprisonment is an appropriate penalty for this offence. If we could get that out of the way, the noble Lord, Lord Harris, and I would have no difficulty whatsoever in agreeing on what kind of levels the fines should be.
I was also very grateful to the noble Baroness, Lady Vickers, with her immense knowledge and experience, for having taking part in this debate and for having emphasised, as she did, that the provisions of Section 1 of the Street Offences Act arc incompatible with, at any rate, the spirit of the Sex Discrimination Act and should be looked at in that light.
I am grateful, too, to the noble Baroness, Lady Hornsby-Smith, although I did not entirely agree with her. I thought that she enabled some points, which could have got in the way of the consideration of this Bill as red herrings, to be clearly dealt with by the Minister. The noble Baroness, Lady Birk, rightly pointed out to your Lordships that this is a job for Parliament and not for any number of committees, however weighty and important they may be.
I really think, in view of the timescale that the noble Lord, Lord Belstead, has given to us, that the Criminal Law Revision Committee will not report before next summer and then it will be in the form of a working paper which will lead to a final report, perhaps two years later, that I was far too optimistic in the timescale that I mentioned at the beginning of this debate, when I said that it might be possible to have legislation on the Street Offences Act, in general, in the Session 1982–83. What the noble Lord, Lord Belstead, has just said means that we could not expect anything to happen before 1984–85, at the earliest.
While, as the noble Lord indicated, it is not appropriate for us to proceed with this Bill at such a late stage in the Session, when it would be impossible, even with
1532
the full backing of the Government, to get it on to the statute book, I am quite certain that, in the light of the timetable which the noble Lord has mentioned, we shall not have heard the end of it, but that others, apart from myself, will wish to introduce legislation with a better chance of success, at the beginning of the next Session.
We have, as the noble Baroness, Lady Birk, said, to deal with this matter in an interim manner. Even if we cannot change the law, there is the valuable suggestion which she made that guidance should be given to the courts, so that they would use this penalty only as a last resort. The noble Lord, Lord Belstead, did not touch on this point and perhaps it needs a little more consideration.
There were two questions which I also put to him, concerning the number of children taken into care after sentencing where a woman had previously been given a suspended sentence of three months, which was added on to a further sentence imposed by the magistrates, so that she did six or nine months in total. There was a further question which I asked, and which the noble Lord may be able to answer in writing. But as I have said, I think it would be inappropriate for us to deal with the Bill at this late stage in the Session. However, I take this opportunity of giving the noble Lord, Lord Belstead, and the Government notice that, if nobody else brings in a more comprehensive Bill this autumn, early in the Session when it has a chance of success, I shall be doing so myself. With that, I beg leave to withdraw the Bill.
Motion, by leave, withdrawn.
Bill, by leave, withdrawn.

LICENSED PREMISES (EXCLUSION OF CERTAIN PERSONS) BILL
Lord INGLEWOOD: My Lords, I understand that no amendments have been set down to this Bill and that no noble Lord has indicated a wish to move a manuscript amendment or to speak in Committee. Therefore, unless any noble Lord objects, I beg to move that the Order of Commitment be discharged.
Moved, That the Order of Commitment be discharged.—(Lord Inglewood.)
On Question, Motion agreed to.

THE ARTS: CAREER TRAINING
8.41 p.m.
Lord VAIZEY Lord VAIZEY rose to ask Her Majesty's Government whether they are aware of the difficulties facing young people who are training for careers in the arts. The noble Lord said: My Lords, I beg leave to ask the Question standing in my name on the Order Paper. First, may I thank all noble Lords in the Chamber who are going to take part in the debate for their great concern about this important issue. A number of other Peers wanted to take part, but they cannot, unfortunately, be present, notably the noble Lord, Lord Balfour of Burleigh, the noble Lord, Lord Miles, and the noble Lord, Lord Vernon, who is unfortunately ill. I hope very much that he will soon be better. I am sure, though, that despite their absence it will be an interesting and valuable debate. Not least, may I in anticipation thank my noble friend for his reply and say how much we are looking forward to the maiden speech of the noble Viscount, Lord Chandos, who has come here tonight specially for this important debate.
I had the privilege of being the chairman of two committees of inquiry into training for the arts which were established by the Gulbenkian Foundation. One was into drama and the other was into music. There were two further reports: one on dance, chaired by Mr. Peter Brinson; and another on the visual arts, chaired by Dr. Richard Hoggart, will soon follow. The three reports on the performing arts—I know that my noble friend Lord Gosford will be speaking particularly about the visual arts—make many similar points, and I wish to draw your Lordships' attention to them tonight.
Achievement in the arts is of course a matter of talent and genius, but the high levels of achievement are dependent upon high levels of training. You get good dancers, good orchestras, good actors, out of a well tilled and well fertilised seedbed in which individual plants of genius and talent are nurtured. The rise in the standards of British dance, drama and music in this century, and especially in the past 30 years, is principally due to the excellence of the training which is provided here in Britain. All the reports provide chapter and verse for that. There is no
1534
doubt at all that training leads to excellence, and we have excellence in this country probably without parallel in the Western World.
The next point I want to make is that we are dealing with very small numbers of people. All children of course have artistic gifts of one kind or another but the number who are gifted, in the sense that they have the potential to go on to become professional performers or to play in one of the great symphony orchestras, is exceptionally small. In the report on music, we estimated that out of the 10 million children in our schools, something like 30,000 children were probably gifted in that sense. The figures for dance and for drama may well be smaller. Not all of those people with these very rare gifts will want to make use of them in their professional lives. Many gifted people, like my noble friend Lord Annan, whose brilliant lecture on Shakespeare the other night showed that he would make a brilliant actor, has chosen to use his gifts in academic life. Not all of these gifted people want to be professional performers, and many of these very gifted children are dealt with perfectly adequately in normal local authority schools or in independent schools, like St. Paul's Girls' School. So the numbers involved that we are talking about are very small, but of course they are terribly important.
If I may come to the first problem to which I wish to draw your Lordships' attention, if you want to exercise a musical or a dancing gift—and there can be few greater gifts that can be bestowed upon anybody than to have the gift to be a musician of genius or a dancer of genius—you have to begin very early. Local authorities are more and more setting up schemes to identify talent and to develop it through music centres and the use of peripatetic teachers in ordinary schools. But there is no doubt at all that some children need a special environment. Noble Lords will know that Mrs. Shirley Williams in the 1976 Education Act exempted schools for music and dance from the general provisions about secondary educational reorganisation which were incorporated in that Act.
Lord DONALDSON of KINGSBRIDGE: My Lords, the noble Lord will remember that noble Lords on his side

1535
of the House were bitterly opposed to this exemption.
Lord VAIZEY: My Lords, that is perfectly true, although no doubt the noble Lord will also remember that I helped to move various amendments along those lines at that time.
Lord DONALDSON of KINGS-BRIDGE: Yes, my Lords, that is right.
Lord VAIZEY: If we take some of these schools, like Chetham's School, Manchester, which is a very great school, or Wells Cathedral School or the Royal Ballet School, the difficulty is that these schools are charitable foundations. Although they in some respects get a direct grant from the Department of Education and Science, I hope that ways and means can be found for local authorities to give direct support to these schools—as, indeed, is being tried very imaginatively by the London Borough of Brent for the Purcell School—and that other local authorities will not be unduly restrictive when they are called upon to pay the hefty fees for those very few children who need to go to these schools—perhaps in the whole country at most a few hundred in every year.
May I now turn to the second set of questions relating to the colleges—sometimes misleadingly called schools—which take people from 17 or 18 onwards. Some, like most of the arts schools, the Royal Northern College of Music, the Central School of Drama and the Guildhall School, are in the public sector and are adequately financed. Others, including some of the most prestigious, like the Royal Academy of Music, the Royal College of Music, the Upper School of the Royal Ballet, the London Contemporary Dance School and RADA, are in the private sector, and they are finding it increasingly difficult to raise funds. I have for very long thought that for many of them a carefully negotiated entry into the public sector would be for the best. But one problem stands out, and it is the vexed question of mandatory and discretionary grants to students. Roughly speaking, if a British student goes to a university or to a polytechnic to read for a degree, he is in most circumstances qualified for a grant to cover the fees, and
1536
a maintenance grant, which is of course means tested, to cover his living expenses. But for other students attending private colleges or non-degree courses—this applies especially to dancers and to actors, for the course at the Upper School of the Royal Ballet is a non-degree course, and this also applies to a good number of musicians—the grants for fees and maintenance are at the discretion of the local authority.
Now the fees in the private sector are necessarily large since they have to contribute to all the costs of the institution which in the case of the universities and the polytechnics are covered by the state. These fees are naturally quite beyond most students. In these hard times, this is where most local authorities, or many local authorities, are cutting.
The consequences are that many really brilliant candidates are not able to train and that some outstanding institutions, like the London Contemporary Dance School, are threatened by closure. That is particularly sad because, as many noble Lords will know, Mr. Robin Howard, having overcome enormous personal difficulties, has created this school which is one of the most distinguished in the world, and it is now threatened by closure. It would be a terrible tragedy if this outstanding contribution to the artistic life not only of this country but of Western Europe and North America were to close.
I tried to get the law on this matter amended during the passage of the Education (No. 2) Bill, but my amendment was defeated. I cannot for the life of me see the reason why the dimmest polytechnic student in business studies or the stupidest chemist at a university should get a mandatory grant while a brilliant dancer or musician is left to the vagaries of discretion. Now that the Prime Minister has reaffirmed in the strongest terms at the Royal Academy Dinner the Government's commitment to the Arts and has announced today an extra £1 million to the Royal Opera House fund, perhaps we can look at this matter again.
It is surely illogical, as the noble Viscount, Lord Eccles, has often said, to protect the specialist secondary schools in the Arts and then, the moment the

1537
children leave the junior school in the Royal Ballet at the age of 16, to leave them to the vagaries of local authority discretion when they get to the upper school. It is a bizarre arrangement. Of course the argument is used that it is difficult to discriminate between one kind of student and another. I think that is the wettest kind of argument I have ever heard. After all it is an old adage that "To govern is to choose" and if civil servants cannot devise a scheme I cannot see why they should have such enormous salaries. I am sure it could be done if there was the political will.
I turn now to what is fundamentally the most important issue of all, namely, employment. The over-supply of people trained for the arts seems to me to be endemic in a free society. If you never dare to sell your talent then you never win the prize for expressing it. It is in the nature of being a free country that more people will try to get into the professional arts than are likely to succeed. In my opinion therefore there will always be unemployed actors, artists and musicians. It is a very difficult thing to measure because people are reluctant to give up this ambition in the face of repeated failures. All our attempts to measure it statistically ran into the sand. It does not make it any less unhappy or miserable for the people concerned because it is something which is in the nature of things, but, if we could limit the supply of training places and help to regulate entry to some extent by setting up proper career patterns, I think we could mitigate the misery and ensure that the really able boys and girls progress in their careers.
Two very promising things point the way. We now have a training council in drama under the chairmanship of Mr. Van Straubenzee, the Member of Wokingham, a training board for music under the chairmanship of Mr. John Hosier of the Guildhall School of Music, and one for dance under the chairmanship of Mr. Michael Wood, formerly of the Royal Ballet School. These boards represent the employers, the unions and the training bodies and their job is try to match demand and supply and to raise standards at the training institutions. I hope that one day we shall see a training board for the arts of which these important existing boards would be constituent elements.
1538
That would be an enormous breakthrough because it would link one in to the whole power base of the Manpower Services Commission and all the agencies attached to it. It is important because one of the reasons why the arts have been so badly treated has been because they have not been organised as the rest of the economy is organised. That could be a misleading and philistine statement to make, because I share the view that we do not want an enormous bureaucracy dealing with the arts; that would be death, as it has been in Eastern Europe. "The spirit bloweth where it listeth". On the other hand, there is a great body of legislation and rules, like social security, the tax system, and so on, which affect the arts as much as they affect everything else in our lives.
There is little doubt in my mind that those of us in the arts have to organise if we are to win the legitimate rewards which are available to other people in our society who are organised. It is indicative that we have virtually no lobby in the other place or here, whereas the heritage lobby—which, after all, is ultimately dealing with dead art—is immensely strong. The unions, like Equity and the Musicians' Union (for which I feel very warmly because I have worked with them for a long time) are fully seized of this and I think they are growing more and more influential and we shall see more of their impact on Parliament in the next few years.
I come now to my last point. After graduation, there has to be a path to a full career. The most promising development is the National Centre for Orchestral Studies which was set up by Mr. Nick Tschaikov, a former member of the Philharmonic. My report endorsed and developed his idea and it has the support of the Musicians' Union, the BBC and the Association of British Orchestras. It is located at Goldsmiths' College—that is Dr. Richard Hoggart's college—and it gives graduates in music a full-time professional training in orchestral playing, which is something we have never had before in this country. It prepares them for excellence, but the trouble once more is grants. It picks the candidates to play a particular instrument but the candidates might live in the wrong place to get the money to get them through the course.

1539
I have only a couple of points to make in closing my speech. The major question is, what help do we need from public authorities? First, quite clearly we want mandatory grants for people taking courses in the arts. That really is essential. The second requirement is an open mind about the entry of some private bodies of great distinction into the public sector. That may be unacceptable in the present atmosphere of cutbacks and economic hard times, but it ought not to be. The equation is simple. We want more money for the gifted who form, certainly, a much smaller number than the talented. If the country does not look after the gifted, then, in my judgment, we might just as well give up talking about the outstanding achievements of this country in the arts.
But even on a strict economic calculus the reports that the Gulbenkian Foundation has supported suggests less rather than more public expenditure, for a very simple reason. Perhaps I may explain, since the Minister on the Front Bench at the time could not take it in, although I am sure this Minister will. The present position offers no firm guidance to local authorities as to which are strong and which are weak colleges and schools. Discretion is used to support a large number of private institutions indiscriminately. In our view—and I speak now for the members of the committees which I chaired—too many students are now trained, with a consequent overcrowding of the labour market. We want fewer students to be trained, but trained to an even higher standard. The way to do that is to make the good schools and colleges financially secure enough to enable them to turn away mediocre applicants. At the moment they are having to take in anyone who can pay the fees. So that is why mandatory grants for institutions approved by the training boards are essential for excellence and economy.
My Lords, I have ranged over a wide area of the topic and inevitably I have spoken briefly and superficially about a subject to which I have devoted much study and which I believe to be fundamental to the arts in this country. What used to be lacking was knowledge. The Gulbenkian Foundation has now made knowledge available and the time has
1540
come for action. The foundation, the unions and the employers have taken some of the action; the training boards are in existence and so is the National Centre for Orchestral Studies. It is now time for the Government to accept their responsibilities.
8.59 p.m.
Lord BEAUMONT of WHITLEY: My Lords, I am delighted to be able to be the first to thank the noble Lord, Lord Vaizey, for having raised this matter with us tonight. We know of his work with the committees of the Gulbenkian Foundation and also some of us know of other work that he does in the arts world, helping the proliferation of the arts and helping others, and we are grateful to him. I think we ought also to express our thanks for the immense help which the Gulbenkian Foundation has given to the arts in this country and to this subject in particular. I think it is right to say that our discussion tonight would not be half as informed as I hope it will be if it had not been for them. Although unfortunately some noble Lords have had to remove their names from the list, we have a distinguished list of speakers and we are delighted to see the name of the noble Viscount, Lord Chandos, who is about to make his maiden speech.
I am going to trespass on your Lordships' time—though not very much of it—to go a little wider than the area covered by the noble Lord, Lord Vaizey. That is because he has covered it so well and there is very little with which I disagree. There will be a certain amount, I think, that will emerge in the course of what I am about to say.
I am speaking tonight on behalf of the general feeling of those of us in the Liberal Party who have paid particular attention to the problems of the arts in modern life and what Government should do and should not do about it. I think it is important to put what is being said tonight against a rather broader background. If one had to make a choice, if the money was so short, as to whether you were going to cultivate excellence or you were going to cultivate as much as possible of the bubbling art which can be encouraged at the grass roots among the people of this country, it is the latter that I would choose. It is, of course, a

1541
false dichotomy. On the whole it is difficult to have one without the other, in either way.
But why I think the grass-roots effort is the more important is because if you have the grass roots then I think it is impossible that the real geniuses and the really talented people, or at least a very large proportion of them, will not burst their way through and find help, indeed find the help that they are finding from the Gulbenkian Foundation and from your Lordships' debate tonight. But I think it is possible to have a sterile situation in which the few geniuses that there are in every generation are sedulously cultivated and the rest of the art world of the country goes cold and stale. I think that is something which we ought never to allow to happen. I am quite certain that the noble Lord, Lord Vaizey, and I are at one in thinking that both are desperately important, but I thought it important that we should not lose track, even in discussing this rather narrow subject tonight, of the basic importance of the arts in society.
To that main point I would add just three shorter ones, almost plucked at random from among the advice I have received from numerous Liberals who work in these fields. The first is the only point on which I think perhaps I disagree with the noble Lord, Lord Vaizey. I do not think I want to see fewer schools dealing with the arts, although I entirely take the point that there must be discrimination in the way that state money is used in supporting pupils in the arts. I think we must get away from the idea, which we sometimes have, that if you cannot get a job in the profession of the arts then in some way your education in the arts has been wasted. It has not. Education in the arts is a wonderful education and can be used by people in themselves in the whole of their lives. Of course it is a pity and of course it is a tragedy, and I would not deny it for a moment, if people with real talent are not allowed to use that. But what I am saying is that that kind of education is never wasted, and I am not entirely certain whether it is right to say that if you concentrate on fewer schools for better education you must necessarily get rid of the slightly less good schools and the less good education. We must
1542
remember, going back to what I was talking about earlier, that we have the need for the teachers and the animateurs who will in fact keep alive this feeling for the arts in the great mass of the people. We are at last no longer really a philistine country; that artistic feeling does exist in many places and in many ways.
The second minor point I wanted to make was that we must be very careful that we do not concentrate on the special schools to the exclusion of postgraduate entry. I know the Gulbenkian Trust took this fully into consideration when they made a report under the chairmanship of the noble Lord, Lord Vaizey. I do not think it has been mentioned and I think it is important that it is.
The third point I want to raise is the importance of the ethnic arts or ethnic artists. It is very difficult to speak on this matter without appearing to be condescending in some way, without producing half-baked theories as to whether what we need is pure ethnic art from our ethnic minorities or for them to be merging into us. AH I do say is that there is a danger of losing the art that can be produced sometimes in wonderful ways by the ethnic minorities who are with us to stay, and to lose it would be very sad indeed. T. S. Eliot pointed out in his Notes Towards the Definition of Culture that a culture always benefited from the diversity of the sources on which it could count and it always suffered from uniformity. This country is very lucky to have so many ethnic minorities, and one of the things we can actually take from them and use is their arts. Do let us never forget that when we are discussing the main subject of what we are doing about art education.
Before concluding, my Lords, I should like to repeat, or at least re-emphasise, what the noble Lord, Lord Vaizey, said about mandatory grants. It is, as he said, absolutely absurd that somehow in this country, which has produced and is producing great musicians, great artists, great sculptors, where our arts are in some ways in many fields at the top of what the world is producing, it should still be thought of as an optional extra which is of no importance. That is something which the Government should do and can do straight away, and I hope they will do

1543
something about it, as indeed I hope they will do everything they can to meet the points the noble Lord, Lord Vaizey, has put.
Lord TAYLOR of BLACKBURN: My Lords, I rise on this occasion to support completely the noble Lord, Lord Vaizey, because I totally agree with the propositions that he has put forward.
Lord MOWBRAY and STOURTON: My Lords, order. Is the noble Lord in order? We have a list of speakers and a maiden speaker should be speaking next.
Lord TAYLOR of BLACKBURN: I beg your Lordships' pardon.
9.9 p.m.
Viscount CHANDOS: My Lords, I, too, must thank the noble Lord, Lord Vaizey, for the opportunity to discuss this important and, even more, urgent question. I must say first of all that I can lay no claim to the depth of study and the qualifications which the noble Lord, Lord Vaizey, possesses, and that is particularly so in the area of dance and the theatre. I, too, can claim Robin Howard as an old friend of some 35 years. I have always been interested and aware of what he has been doing at the Institute of Contemporary Dance, but the dance has never played as much a part in my life as music.
At this stage, I should like to pick up a point which the noble Lord, Lord Beaumont of Whitley, made about ethnic contributions. At the Institute of Contemporary Dance, I saw a performance which seemed to me to achieve what I did not believe was possible in dance—namely, a performance that contained such complicated intellectual and, indeed, cerebral ideas that I would not have believed it possible. It was a dance performed by a solo dancer who was black and whether it was due to a genius which was in him irrespective of his colour, or whether it was a particular contribution which came from his ethnic origins, I do not know, but I merely put it forward as a point.
I have in the past had some connections with the theatre. I was in a theatrical management company of charitable status which did not try to make money, and I was a director of a commercial manage-
1544
ment company which did try to make money. The latter put on some plays of which I was proud and which lost money; and also some plays of which I was ashamed and which made money. Therefore, on a general basis all that I can really say is that I fully support the recommendations that the noble Lord, Lord Vaizey, has advanced tonight; namely, that mandatory grants should be available for the arts as they are for other subjects of higher education, and there should be—but obviously on a longer-term—some reorganisation of education, especially in music, in the colleges.
Having said that, I shall confine any further remarks to the field of music. For, although I have no professional qualifications I have continuously for the past 25 years been involved with various types of musical organisations and two in particular were concerned with young artists. For about 15 years I have been chairman of the National Trust Concert Society which, until two or three years ago, was responsible for putting on concerts in National Trust houses. That active function has now reverted to the National Trust which has grown, which has an organisation and which is happy to take it on. Partly by design and partly because of economic necessity those concerts employed a very high proportion of young artists. If one has a house which can accommodate an audience of perhaps 150, the economics mean that one must look for promising young artists at the beginning of their career. For that we depended upon the most expert professional advice and also on the wide knowledge of a number of my colleagues who had irons in the fire in a similar way in other organisations.
One of the problems that were brought home to us was, for example, that a promising young pianist in this country who, say, enters the Leeds Festival Piano Competition is at a great disadvantage as regards his competitors from, say, Eastern Europe simply because he does not have the exposure to the public, he does not have the opportunities to perform. That is one of the very grave handicaps which, in my view, are faced by young artists in this area.
I would agree, too, with the views expressed both in Gulbenkian and tonight by the noble Lord, Lord Vaizey, that there

1545
is a strong argument for raising the standards of entry to the musical colleges; reducing the number of students in the musical colleges; improving the ratio of teachers to students; and raising the standards on leaving, often after, I think, a fourth year, especially for string players.
A musician friend of mine, who already has an international reputation, I think expressed it fairly succinctly when he said that what we wanted was rather less of a finishing school and rather more of the conservatoire. At this time I do not propose to go further along the lines that the noble Lord, Lord Beaumont of Whitley, has followed about the general virtues of music for education. I agree with the noble Lord, but I do not think that this is the occasion on which to expand on this.
For a moment I should like to draw on my personal experience. I can claim no formal musical education whatever other than that I made an unsuccessful attempt to play the piano up to the age of nine. The lady who taught me, no doubt an inept pupil, could not resist pulling my then copious hair, and I abandoned this in an attempt to avoid baldness. Nevertheless, I cannot imagine what my life would have been like without music. It may not be a very scientific way—I might have learned much more quickly if I had understood more about it—but, simply by using my ears, it has come to play an almost major part in my life and there are very few days when I do not listen to music.
Therefore, I think that when we talk about the balance between concentrating on the excellence at the top—that is, producing performers of the highest quality—we are talking about education as well. When the noble Lord, Lord Beaumont, talks about a few musicians of genius, I do not think that he has quite understood what the noble Lord, Lord Vaizey, has said, which is that when we talk about excellence we are talking about a quality of a first-rate orchestral player, not of a world-famous star.
How much does musical life in this country owe to the efforts of, for instance, Sir Robert Mayer?—who has exposed children to something that they did not imagine. I think that we owe an equal debt to Sir William Glock, whose work
1546
on the original Third Programme has continued so that musical horizons which never dawned even on our parents have been available to everybody in this country who, of course, went to the trouble to listen.
There is something formidable about what is regarded as serious music. I suggest with some diffidence that perhaps it is just as important to achieve first-rate performances of second-rate works as well as not particularly distinguished performances of great masterpieces. In Vienna the New Year concert of what seems to me to be very second-rate music, and what Sir Thomas Beecham charmingly described as his "lollypops", brings into the musical field people who would not otherwise listen.
There is one point for which perhaps I could make a special pleading. It is something about which I know a certain amount. Since its formation I have been the chairman of a body with a charitable status which administers a baroque orchestra in this country which I think I can describe as second to none, though some critics have said that it is the finest in London. This is a development over not more than the last 10 years in this country, perhaps even shorter. It raises particular problems about training. The performance from original scores on original instruments, or copies of them, and in a style which, after a certain amount of research, is as close as we can get to what the composer intended, is very exacting. No doubt the position in the colleges is improving rapidly as there is a feedback through the professors and teachers who are themselves experts in this particular kind of performance, an expertise which they have probably had to achieve the hard way in their working life. I think that it is peripheral to the general argument, but it reinforces the importance of the high standards in the music colleges and, above all, of the necessity for a fourth year when required.
The economic prospect at the moment is, I think all your Lordships will agree, fairly bleak for the immediate future, but we must look beyond this, and whatever solution is arrived at, it is certain that the next 10 years or so will bring a totally different world for us to live in and that it will be hastened on us by new technologies. In some form or another, we

1547
must deal with increased leisure, whether it is due to working a shorter week, to earlier retirement or, alas, to continuing unemployment. In that world the arts—I have spoken with feeling about music but I am sure this applies equally to the other two—have an important role to play. If we do not build on that now, let alone allow to perish the valuable institutions we have, it will be much too late to do anything about it when the new world to which we look forward comes.
9.21 p.m.
Lord BIRKETT: My Lords, what a pleasure and privilege to be allowed to be the first to congratulate the noble Viscount, Lord Chandos, on such a confident, civilised and, above all, enormously knowledgeable maiden speech. How appropriate also that it should be on the arts that he spoke, considering the enormous gifts to the arts, the dedication to them, that lie within his family, a family whose name, I am happy to say, is embodied in what is now one of the most famous and distinguished theatres in Europe. But I am sure your Lordships will not thank me for expatiating upon the noble Viscount's forbears but will want me to say how enormously we enjoyed him himself and his maiden speech. It is not often that one can say, hand on heart, that one agreed with every single word of a maiden speech, but that indeed I can say, and I know I echo all your Lordships when I say how very much we hope to hear him often in this House.
I wish also to add my voice to those who have congratulated the noble Lord, Lord Vaizey, on introducing this debate, on such an important topic. It has been covered by Lord Vaizey and those who have spoken subsequently so widey that I do not intend to detain your Lordships for long. I intend in fact to take up only one aspect of Lord Vaizey's opening remarks but to echo them perhaps even more fervently than he did. He said that employment was a major factor and I believe, to take him up on the wording of his Question—which is the difficulties facing young people in the arts—that the biggest difficulty facing young people in the arts is the profession which they hope to enter. In many cases, the profession they hope they are entering is either in
1548
decline or on the point of going out of existence altogether. If not, they face other difficulties of employment that their training can scarcely have equipped them to face.
I wish to talk about two areas with which I have had some slight acquaintance in my working life. One of course is the theatre, and here there is a particular problem. Everybody knows—it has almost become a cliche of our own, by now limited, self-advertisement—that our acting and theatres are the greatest in the world, are a world attraction and are one of the few remaining aspects on which we can confidently congratulate ourselves. I think that our acting schools might share in that; certainly the distinction of their direction and the enthusiasm of their pupils would lead one to believe so. It is, therefore, for the theatrical profession in general, and certainly for the casting directors of those great theatres who have some potential to offer work to young people, a desperately dispiriting thing to find that they cannot do it. They are not empowered to offer work to brilliant young talent emerging from acting schools.
I do not want to involve myself in a debate about union procedures and union attitudes about which I am not totally informed. But to prevent young people entering a profession because of the dire and catastrophic under-employment of the older members of it may be sympathetic in a way but cannot in the long run be anything except suicidal. A policy which allows no young blood in until better times—those better times which by now are becoming legendary, certainly in financial terms, and which I doubt we shall ever see—will eventually wind up supporting a profession which can offer only King Lear and Gloucester, and in which Edgar and Edmund are no longer castable. I beg the unions in their attitude to consider that the normal cycle of human life must be preserved in acting, as it must in any other field.
So far as the films are concerned, the problem is different. There is a flourishing film school in the National Film School, but there are 'indeed other film schools, and they, too, are flourishing. They face a different problem—this time not from the unions, who have made an understanding approach to this matter and have in fact undertaken to see that the

1549
path into employment is not strewn with too many obstacles for the graduates of these schools. No, the problem for them is quite different. The problem is that the profession which they are entering has long been regarded as self-sufficient, so commercial, so rich, and indeed in some cases so disgraceful, that it needs no help whatever from private funds, or Government either; that the moguls of the world happily support it and grow rich upon it, and that no further action is necessary.
A small corner remains in this attitude which says that of course there is film art. It can confidently be left to the British Film Institute, because film art consists of either old films or foreign films—not exactly our own industry. Your Lordships will be relieved to know that I do not intend to weary you at this hour of the night with a lecture upon the dire economic circumstances of the British film industry. Your Lordships have been wearied with it before, and not only from me. Nevertheless, I believe that the point I am making, though I make it in slightly joking terms, is real. There must be an understanding that to enter a film industry which makes films—and like any other art they have their high points and their low points—requires some kind of opportunity to be offered in a national film industry. You cannot work exclusively in an archive, and you cannot be expected to go abroad immediately.
So the problems of the film industry are concerned with an understanding that some chance is needed later, and that films do not always involve millions. In fact there is a growing caucus of films in this country which shows that you do not need an excessive and almost plutocratic amount of money to be able to make a film. From the amateur world of the 8 millimetre film maker up to the minor film maker, and the off-shoot film maker in full 35 millimetre professional circumstances, films are possible on a limited but nevertheless exciting scale. That fact needs to be realised by the public, by the Government, and by institutions of all kinds when considering the output of our film schools.
Lastly, I wish to take up one further point of the noble Lord, Lord Vaizey. He drew a very nice contrast between the gifted and the very gifted, as I understand
1550
it. It was a contrast, if I jotted down his figures fast enough, which involved 10 million children going in and 30,000 coming out. That represents a tapering effect, and as I understand it, it is the funnel of interest tapering to the group of real talent. If we are to accept those figures, and certainly the principle behind them—and it is difficult not to—I think we must realise that it is very early that we have to start looking at our children to see how they are going through that long, exciting but in the long run probably not encouraging tunnel.
We do a great deal for our teenagers, for our 14, our 15 and our 16-year olds; we have competitions at the end of the road for our graduates; we have competitions for our university students; and we have grants—I appreciate all the points which have been made about the mandatory grant, but I am no expert on it and cannot speak to it—but as yet we do not do much among children before their teens, up to the age of 11 or 12, to encourage them to perform or exhibit, even on the most amateur terms, on school terms, their excitement and their talent in art. I believe (I have spoken briefly before on this subject, and I shall be even briefer now) that an international, or at least a national, children's art centre, where the children of the world, as opposed to the up-and-coming already-forming graduate talents of the world, can meet each other to perform and to excite each other about the artistic possibilities of the world, is something which, somehow, we must design, and fight for; because it is at that age that we shall start that long process to which the noble Lord, Lord Vaizey, has so eloquently referred, which leads them to become the practitioners of the arts whom we all admire.
9.37 p.m.
The Earl of GOSFORD: My Lords, first of all I should like to congratulate the noble Viscount, Lord Chandos. I, too, made my maiden speech in an arts debate, two or three years ago; and I was very interested to hear of his involvement in these thorny matters. Interestingly enough, more or less all the protagonists in that debate are here this evening. I should also like to thank Lord Vaizey for asking this Question, and for extending it from his original Question, which was going to be restricted to the performing arts.

1551
However, this bestows a great responsibility on me, as I must declare my interest as a visual artist and as honourary chairman of the Artists' Union.
I say right away that I agree with Lord Vaizey on the matter of the mandatory grants, and I supported his amendment to the Education (No. 2) Bill. I also agree with several sentiments which he expressed in his speech. Not least, I share his burning enthusiasm for the arts in this country. However, as he will well know, I do not agree with him that the answer lies in limiting the supply of training places. There are dangers here which I shall endeavour to explain. In effect, I believe the answer is very much broader. First, the problems as regards art and design courses are similar to those outlined by the noble Lord. The foundation course gets a discretionary grant, the degree course a mandatory grant by the local education authority. To enter a degree course you must have qualifications ranging from three A-levels to five O-levels. The preferred route through the various foundation courses caters for 96 per cent. of the students; 3 per cent. get straight into the degree courses but must also be academically qualified as above. That leaves roughly 1 per cent. who can still get into degree courses with no qualification, but the college must get permission from the validating body.
Here arise some of the dangers. One of the dangers which is recognised is that mostly middle-class children are in higher education—which is also recognised as not a good mix. The other danger is that academic qualifications may become the norm, thus cutting off the chances of those who are inarticulate through any other means. May I read from the page of questions which I sent to the Minister earlier today? Is a subject like mathematics when used as a generalisable skill, say, as an A-level qualification, regarded as being of greater value than an art A-level? If so, what is the reason behind this?
I differ from the noble Lord, Lord Vaizey, and I agree with the noble Lord, Lord Beaumont of Whitley, in that I do not believe that there should be more money for the gifted. There ought to be more provision for all to have a chance of further education; and if their talents
1552
lie in the arts they should not be denied the discipline of training, even though this might eventually lead to a different career, especially as talent may not be immediately obvious but may come through after several years' training. I am indebted to a friend for giving me a list of people who have benefited from visual arts education but have taken up different careers. They span from Makepeace Thackeray to David Storey, the playwright, Gerald Hoffnung, the composer and musician, Gerald Mansell, of the BBC; the noted art critic, John Berger, Roseburg, the poet; and we all know the Beatles, to name but a few.
I am also indebted to a head teacher who sent me the following information:
"The most important single fact about the education of artists and designers is that there is not enough of it. Speaking now of degree level education, the present proportion of the post-school age group who enjoy the benefits of advanced further education (i.e. higher education) is approximately 13 per cent.—and this is the figure for all subjects. Virtually no other developed country educates so few of its post-school population, and the figure is now stabilising, or dropping, after a fairly rapid rise from around 6 per cent. in the early 1960's. New courses in higher education are almost non-existent; … The number of students taking degree courses in art and design is of course an extremely small proportion of that 13 per cent.; I think the figure is now around 4,500 graduates per year in all art and design subjects … The number of people graduating in Fine Art each year, I think, is around 1200. This is also the number who enter the system, more or less".
I should like now to quote from Lord Redcliffe-Maud's document, Support for the Arts in England and Wales, (founded again by Gulbenkian) and dated 1976: I read from the paragraph headed "Education and training"
"The excellence of our artists, professional and amateur, and our increasing enjoyment of old and contemporary art depend in each case more on education than on anything deliberate arts patronage can do. A revolution, therefore, in educational policy over the next ten years which brought the arts nearer the heart of the curriculum in British schools (and teacher-training institutions) is what I would most dearly like to see ".
He goes on:
"… what we need is another revolutionary change, this time in the scale of national expenditure. Within the next five years or so, the adult education movement must receive priority such as it has had at no time in our history, and when it does the arts must at last have their chance ".
This is underlined by the progressive approach of the National Union of Students. They make several points: that

1553
reducing teachers and courses reduces choice; that school-leavers should be able to choose a worthwhile course, not necessarily with a job in view but a good all-round education. They point out that we are moving into times of less employment and therefore more opportunity and growth in the leisure area, where a cultural outlet is necessary to soak up creative energy. They believe that a good healthy stock of artists will be necessary for more opportunities not only to use art in the service of the community, but also linked courses such as fine art and practical printing techniques et cetera, to help gain export markets needed so desperately by Britain by good marketing through original design.
We should perhaps remember the importance of industrial design in the building of the great Wedgwood company by the coming together of the artist Flaxman and Wedgwood himself. The National Association of Teachers in Further and Higher Education—NATFHE—of course are worried about the cuts and the effects of the intention of streamlining through the new body, the Technicians Education Council.
I should like to ask the Minister my next question. As a result of the Further Education Circular 1/80, what steps are the Government taking to protect the vocational and degree level art and design courses which are necessarilly staff intensive? Special provision must be made to protect some of these courses which, while they do not attract a mass of people, arc none the less essential. The fear is that technical courses will stay and fine art courses will be scrapped first, thus ending up with colleges run only for certain studies.
I come to my next question. As a result of the local authority resources failing to keep abreast of the pay increases, will the Minister give an assurance that the staff/student ratios will not decline any further? One fear is that the Delaney system will have disastrous effects on the establishment of the art colleges, not least the practical element of overseeing in laboratories and expensive equipment. Here I agree with the noble Viscount, Lord Chandos, the teacher/student ratios must not worsen.
1554
Further education must strengthen links with industry. The London College of Printing is, I believe, very much affected as many processes are required and injection of the real world by part-time teachers brings in expertise from a wide range of disciplines. The fear is also therefore that cuts in staff will kill vitality, and the fear is a return to academicism. May I ask the Minister also what steps are the Government taking to protect part-time teachers, so necessary for the DA courses? I should like to quote from a speech made by Norman St. John-Stevas entitled "Arts in Education", on 21st March 1980. He said:
"In conclusion, I would like to say that education in the arts can no longer be regarded as the aquisition of specialist knowledge unrelated to everyday life. It is a vital ingredient in living a fuller life, in building a richer society ".
Finally, we move into the area of employment of artists and designers. The demand for designers is great. It is all a question of attitude. It is well known that artists and designers form part of managerial teams in the most successful firms abroad, notably in Japan. Design is an integral part of the whole industry. The Government have underlined their belief in the arts and I applaud the creation of a Minister with a seat in the Cabinet. But art is nothing without artists, who must feel as secure as the vest of society in order to carry out their work. As the Redcliffe-Maud Report said: "We underpay our artists".
I should like to quote from the TUC working party report on the arts which says this:
"There is no doubt in the working party's view that society does not benefit fully from the work of performing and creative artists. Much of the exploitation and under-employment of artists arises from the unsatisfactory terms and conditions of their employment, which are often of a casual nature. For every one of the stars and other brilliant successes in the arts there are many artists who make their contribution from a position of acute economic insecurity, which militates against them making a significant contribution to society ".
There is no category for an artist so far as the DHSS and the Department of Employment are concerned. They neither fit on to the professional register nor the worker register. Where are all the provisions that other countries are promoting, such as a percentage of building costs? Bulgaria, for instance, recognises that

1555
artists newly out of art schools will not yet have developed nor necessarily have found a market. They allow an artist to take a job which is most suited to him and to take half a day off to pursue his career in the arts. Also, I believe that Bulgaria has several thousand artists who are in fact living off their work as full-time arts artists.
May I ask the Minister whether he will approach the Arts Council to look into provisions that could be made to help young artists immediately on leaving art school?—as I believe these major grants and awards usually go to mature artists. I should like to quote now from a speech by the right honourable gentleman Mr. St. John-Stevas at a meeting of the representatives of the regional arts associations on 9th November last year. He said:
"I intend to do all that I can to enable those in the regions to enjoy our great national achievements in the arts but the regional arts associations have a special role to play."
In order to encourage devolution from the centre, as expounded in the Redcliffe-Maud Report, how much effect has the report had on the level of commitment to the arts by the local authorities? That report says:
"The new local authorities created by the 1972 Act are the chief arts patrons of the future. Local government is the democratic instrument whereby individual members of a community combine their efforts for common purposes within limits laid down by Parliament. Local communities in district and county have recently lost some of their traditional functions (sewage disposal, for example, water and health) but they now have the power (though no legal duty) to ensure that all members have the opportunities to practise and enjoy the arts.
"The future of the arts in England and Wales now chiefly depends on the extent to which, and the pace at which, these local councils come to regard the use of their arts patronage powers as part and parcel of the social fabric which they already help to sustain through their provision of education, housing, the social services, roads, land-use control, police, fire-protection, and the rest of local government. "
1556
So I differ with Lord Vaizey on the need for less rather than more public finance.
I am heartened by Norman St. John-Stevas's quote on 28th April this year:
"Nor are the benefits those of prestige and influence only. The arts can genuinely be said to pay their way. In every field from literature to painting they earn money for Britain. This is especially true of the performing arts: a high proportion of the tourists who flock to our country every year are drawn by the magnet of the British theatre. "
But I do not agree with him when he said the following, in June 1979:
"… private patronage frees art from the threat of censorship and establishmentarianism which constitute the unacceptable face of state support for the arts ".
The reason why I am a bit doubtful about that is that in the document put out by the Association of Business Sponsorship of the Arts it is said:
"It is very important firstly to distinguish between patronage and sponsorship. We are only dealing with the latter and it is also important to talk to businesses not in terms of the effect that they ought to be helping art (that is quite clearly not so) but more in terms that there are perfectly normal business reasons for being involved in art sponsorship. If ABSA can look after the interests of business when it is involved in the sponsorship of the arts, and can ensure that business will get a good return on its investment it will be the best possible way of ensuring the continuing increase in the total amount spent by industry on the arts in the UK".
I, like every Member of your Lordships' House, I am certain, dislike any kind of censorship whether it be by state or private hands.
Let me end by pointing out that the Richard Hoggart-chaired inquiry, again sponsored by Gulbenkian, that Lord Vaizey spoke about at the beginning, will tell us a lot more about the artists. Its terms of reference really are the inquiry into the economic situation of the living artist. I hope it will be only a short while now before that is prepared.
9.53 p.m.
Lord CRATHORNE: My Lords, may I, first of all, congratulate our maiden speaker, the noble Viscount, Lord Chandos. It was a truly marvellous maiden speech, without any question one of the finest I have heard in this Chamber. Seeing the noble Baroness, Lady Elliot of Harwood, still in the Chamber, it is a rather fascinating fact that her half-sister married the noble Viscount, Lord Chandos's grandfather, and I shall leave your Lordships to work that one out! At this late hour, I expect that the shorter my speech the better it will sound to your Lordships, so I shall indeed be brief.
As with everyone else who has taken part in this debate, I should like to thank my noble friend Lord Vaizey. He has certainly most persuasively argued that Government really does have an obligation to ensure that the high standards that exist in the performing arts in this country are maintained. Even if one looks at this question from a very simple economic viewpoint, high standards produce excellent returns for this country. There is no need to elaborate on the number of people who come to this country merely to see our theatre, concerts and ballet. I wonder whether maintaining these high standards need cost the Government any additional money, and perhaps the Minister will be talking about this aspect of the question tonight.
I wonder whether it is not just a question of a redeployment of the existing resources that are spent on training. There is no question that part of any redeployment must surely be in the giving of mandatory and discretionary grants to students, which have been much talked about this evening, and I very much hope that the Government will look at this point carefully again. It will clearly be a tragedy if the talented cannot train simply for lack of funds; and of course, if the talented cannot train, then the institutions to which they would be going simply have to pack up.
Along with other noble Lords, I know the work of the London School of Contemporary Dance very well, and they have made a truly remarkable contribution in the sphere of contemporary dance.
1558
They are genuinely threatened with closure and if that happens it will surely be a tragedy. I was interested in what my noble friend Lord Vaizey said about the all-important issue of employment and, indeed, this has been mentioned in other speeches. I should like to make two points about this, one which has been made already and one which has not been. The first was made by the noble Lord, Lord Birkett, and I agree with him that this is not the place to discuss in any detail the union problems that exist in theatre and in film. But we know that it is very difficult for a trained and talented actor to become a member of Equity, and I do not know whether there is any way in which the Government can help. I rather doubt it, but it is worth mentioning because it poses real problems for young performers.
The second point should be heartening to all of us, and it really extends a point made by the noble Viscount, Lord Chan-dos, which is that in the next 10 years we are going to see an incredible technological revolution. We are continually living through technological revolutions, but the things that are soon going to be with us will make an enormous difference to the performing artist. There will be an enormous growth in the demand for the services of those engaged in the performing arts. We shall see tremendous developments in the home video market, the video disc market and the pay television market, which is already a great success in America and will probably start in this country in the latter part of this year. Satellite TV will become a reality in about 1983, and will probably be bigger than all those markets put together. We have the fourth channel, we have breakfast television and we have an extension of the commercial radio network.
All these markets will require specially created material, and I have no doubt that the potential employment for performers will be greater in the next few years than at any time since the war. This is surely another reason, and a happy reason, why the Government must look very carefully into this most important question which my noble friend has most correctly allowed us to discuss tonight.
9.59 p.m.
Baroness TRUMPINGTON: My Lords, we owe a deep debt of gratitude to my noble friend Lord Vaizey, first because he initiated this very worthwhile debate, and, secondly, because he has provided us with the great joy of listening to the maiden speech of my noble friend Lord Chandos. May I add my congratulations to those which my noble friend has already received? When there is talk of abolishing this House, those who wish to do so might care to reflect that we should all be the poorer if we were deprived of hearing speeches such as the one delivered by my all too modest noble friend—a moving and brilliant specialist speech which could have been made only by someone who has devoted a lifetime to the service of the arts. It was a rare experience to listen to him.
Much that I should have liked to say has already been said, and I suppose that noble Lords will be thankful for that! However, while echoing the hopes of others, I feel that there is a certain difference between the needs of those who are gifted as actors, or who are concerned with drama, and the needs at an early age of those who dance or who are associated in any way with music. To put it baldly, actors have a way of making good, whatever their education, but the gifted child in the realms of dance and music needs specialist training from an early age.
Specialist training needs money, and there is no doubt that it is often very hard for music students to get discretionary grants. Private school fees are very high because they are not subsidised, but local authorities are often not prepared to meet these high fees. This is of particular application to opera students. Public bodies may jib at the fact that they do not get superb results from everyone they subsidise, but they must expect a percentage of non-high fliers in order to produce that pearl of great price. For example, within the last two years the London Opera House closed down. One of the reasons given for this was that it was not producing a high enough percentage of successful talent. It had, in fact, produced a number of stars, including Kiri te Kanawa, together with a very
1560
large number of talented and efficient performers who are still immensely active in the opera houses of Britain, Australia, Canada and America.
Lord DONALDSON of KINGSBRIDGE: My Lords, if I may interrupt the noble Baroness, she spoke of the London Opera House. I think she meant the London Opera School. The Opera House is still open.
Baroness TRUMPINGTON: I do apologise. I thought I said "London Opera Centre", and I am glad to be corrected. I should hate to be misunderstood, because this is a vital point. There were of course a number of people who did not make the grade at the London Opera Centre and, by the very nature of things, there had to be. I hope that this supports the point that I have already made.
The worrying aspect is that talented youngsters will be forced to look outside this country for their training. There are brilliant teachers. Many speakers have mentioned Robin Howard, who is an old friend of mine. He has employed one of the most brilliant teachers in his school of ballet. Brilliant teachers, however, without pupils or without a school will obviously look elsewhere for work. Do we really want there to be a talent drain from this country? Unless we support the young, that is surely what will happen. Indeed, it is already happening. I cannot believe that that is what this Government want.
10.4 p.m.
Lord AUCKLAND: My Lords, I should like to join in the tributes paid to my noble friend Lord Chandos on a most distinguished maiden speech—as we might have expected from a member of the very distinguished family from which he comes. The more we hear him speak in this House, the better the House will be. I intervene briefly in this debate for two reasons only. First, for some years I was a trustee of a repertory theatre in Surrey, near where I live. Secondly, for a few years I was a chorister at my school, and therefore have a particular love of music.

1561
The repertory theatre movement in this country is really the breeding ground (if I may use that expression) not only for young actors and actresses but for designers, directors and others. It is also true that, through the repertory theatre, some of our finest actors and actresses graduate. Certainly the theatre in which I have an interest, although not a financial one—the Thorndike Theatre, named after the great Dame Sybil Thorndike and her very distinguished late husband—produced a number of plays with very young actors and actresses, and particularly "The Match Girls", which had a tremendous success there, although not as great a success in the West End as it deserved. But if ever there was a real example of some talented young actors and actresses, that play certainly provided it.
The repertory theatre movement generally, both in England and in Scotland—and I instance here the splendid Pitlochry Theatre, which I have had the pleasure of visiting and which is such a great tourist attraction, as well as catering for the native population—is suffering financially. Certainly so far as the Thorndike Theatre is concerned, due to inflation there has been a cut-back of some 50 per cent. on young actors and actresses; and although occupation of the theatre by audiences is in the main well over 90 per cent., and for many performances 100 per cent., there are serious problems of cost. Last year there was a 25 per cent. escalation in costs and of course the increase in admission charges is something which every theatre wants to avoid. This is particularly serious for the young actors and actresses who really are subsidising these theatres. The wages which they are paid are very much below the national average, but they still continue to give splendid performances. Without our repertory theatres in this country the potential for young actors and actresses would be dire indeed.
Turning for a moment to music, those of your Lordships who work in the City of London will know that in a number of the churches there are some splendid lunchtime concerts where those who work under pressure can unwind for half an hour to an hour. These concerts are given by the young students from the Royal College of Music. Not infre-
1562
quently I go along and listen to these highly talented pianists, violinists and singers, who give immense pleasure to their audiences. But I wonder whether my noble friend has anything to say about the future of these young players, particularly the violinists and the woodwind players, in view of the cut-back of some of the BBC orchestras—and I do not want to get involved in that question at this late hour. There is no doubt that the musical life of this country will suffer if this cut-back is anything like permanent.
We as a country have for long led the world in music, since the 14th and 15th century, and it is the same with the stage. My noble friend Lord Vaizey has asked a Question of enormous importance this evening, and it is to be hoped that with the plethora of experienced speakers we have had this evening the Government can hold out some hope, even if it be medium long-term hope, for these young men and women on the stage and in the world of music who give such pleasure nationally and internationally.
10.12 p.m.
Lord TAYLOR of BLACKBURN: My Lords, may I apologise on three counts. May I first apologise to the noble Viscount, Lord Chandos, for butting in when I did earlier? I do apologise most sincerely to him for that. I also apologise to the acting Leader of the House because I did not give notice that I intended to speak in this debate. May I apologise too to my noble friend Lord Vaizey for not putting my name down on the list of speakers, and to my colleagues on this Bench that for the first time I have stepped down here to make a speech? So I have done the four apologies in one, and f your Lordships all accept my apologies, that is it.
I want to say very briefly that I have been chairman of a local education committee and have served on various education authorities up and down the country many times and in many ways. One of the things I have always been very worried about is the way in which we distribute grants to people who perhaps have not got academic talents but nevertheless are first-class in the world of the arts. I come from a place called Blackburn

1563
and we had Kathleen Ferrier in Blackburn. She was refused a grant from the local authority there because academically she could not qualify for that grant. Because she did not qualify, she did not get to any school or any organisation that would help to train her, and therefore she went on her parents' request.
What I want to do, like Lord Vaizey, is to make sure that these people are entitled to a grant in the same way that other people are entitled to a grant. I think that is vital. If we have got people in our communities who are good in the arts in any way at all, we ought to encourage them and we ought to give them the encouragement by providing financial resources. I do not want to go on any longer, but I completely support the noble Lord, Lord Vaizey, in the way that he has gone on this.
10.14 p.m.
Lord DONALDSON of KINGSBRIDGE: My Lords, I fear that the noble Lord's Question will get a fairly frosty answer from the noble Lord opposite. It is indeed refreshing to hear a new recruit on the other side make a plea for proper planning, for a carefully negotiated entry into the private sector (is not that something rather like nationalisation?), for more Quangos, and for more spending on the arts.
I agree with pretty well everything which he puts forward, but I must remind him which side he is on. His leader and her colleagues are highly sceptical of all planning and believe with doctrinaire passion in competition and the free market. The Government are contemptuously opposed to Quangos and yet the noble Lord proposes in his drama plans a new one without which the plans could not work. And in all his suggestions there must be more, not less, expenditure.
I repeat I am in favour of pretty well all that he suggests. But I doubt whether this evening's Question will get us much nearer to what he is asking for. Doctrinaire though the Tory devotion to the market may be, I am glad to note that even this somewhat philistine Government accept that the arts cannot flourish without subsidy. The Minister is now asking the business world to put up £500 million
1564
for the arts. I admire this optimism. The figures of who does what show how formidable his task is. At the moment the Government distribute £70 million through the Arts Council and another £93 million through the museums and libraries. The local authorities put up £69 million and the business sponsors £5 million. So the right honourable gentleman has £495 million to go for and good luck to him. But, however successful he may be the arts will for ever, in my opinion, depend upon Government as their main supporter. So the question of more money for training in the arts is not one the Government can shrug off.
The noble Lord has served a particularly useful function in differentiating clearly between art in education and vocational training. The two are quite different and need separate discussions. I wish for a moment to look at art in education which generally speaking has not been discussed much this evening. When going around schools, which for three years I did quite a lot of, I was enormously impressed with two arts which seemed to be well put forward to children. One of them was painting. In nearly every school—both the big and the small, and the forward and backward—one saw exhibitions of children's art with a great deal of dross but some real talent. And that seemed to me—I would not say all that one could ask for—very much in the right direction.
As regards music I wish to join with the noble Viscount in saying that it is also my passion. I should like to take the opportunity to congratulate him on his splendid speech. I was so pleased that he spoke of Sir Robert Mayer and William Glock who have, in fact, done a very great deal personally to transform things here. However, as regards music, I found, as I went around, that there was a good deal of good elementary education and presentation of music to children at a young age. It was nothing like as good as they are doing in Hungary and nothing like as good, I think, as the Suzuki system in Japan, both of which, by taking children very early, are producing more converts to the subject than we are able to do. However, I think that we are doing quite well here.
I have two grandchildren in a comprehensive, both of whom have music

1565
scholarships and I must say that I think that the education they are receiving is extremely good. That is not true of all schools—it could not be true—but I think that in their case it is very good. As regards drama, the most important aspect is the peripatetic companies to which the noble Lord's report refers, which go round to schools, and places like the Cockpit in London which have schools in, and who, roughly speaking, do theatre in education. What worries me about theatre in education is that largely the troupes who deal with it are attached to local theatres which are financed by local government, and I am afraid that they may be cut. I shall not ask the Minister to give me an answer tonight, but I think that I shall put down a Question for Written Answer to ask about the position of theatre in education over the last four or five years. I believe that it is bad, and if that is so, then it is very serious. It is one of the most hopeful movements in the whole of art in education. As to dance, I saw very little. I saw one or two dance activities going on, but there is a great deal to be done here and it is probably the least forward of them.
Looking back on one's own experience, I had an extremely expensive education, like some other noble Lords, and I was exposed to all these things. The exposure to painting did nothing for me until many years later when I became interested. As for the exposure to dancing, I danced the hornpipe in a sailor suit with somebody who is now a High Court judge and that went down very well, but it was a long time ago. As for drama, I acted in a couple of plays at school and I say with some pride that the noble and learned Lord who sits on the Woolsack had a very prominent and successful part in drag in one of them. As to music, it has become a basic part of my life, as the noble Viscount, Lord Chandos, said. I began to learn the violin at the age of seven and I have never looked back in my intense interest in music, which I think is the noble Viscount's position. So much for the schools.
On the whole, quite a lot is happening. But there was a nasty report in The Times last week suggesting that some of the art colleges are suffering from cuts and may have to close. I should like to know whether we can be given information,
1566
either today or by letter, about that. I do not necessarily want it tonight. However, it is very important that these colleges should not be closed down.
I want to turn to the vocation business, which is an entirely different matter. However, before doing so, let me say that over the intermediate stage—that is, not the elementary school child, but the boy or girl of 15 or 16 years of age who is quite interested in music—there are a number of very serious problems. The noble Lord, Lord Somers, who could not stay to speak tonight, gave me a few figures. Do noble Lords realise that it costs £1,400 to buy a bassoon; that it costs £500 to buy a trumpet, £800 to buy a French horn, £600 to buy a flute, and so on? This is an absolutely new situation. I bought my first clarinet for £11, although admittedly that was a long time ago and I cannot say I still have it, but I remember buying it very well.
I have received complaints, particularly from people in North Wales who regard themselves as being in a neglected area in this world, who say that to obtain intermediate teaching in musicianship is almost impossible there. I should like the noble Lord to look at this and possibly talk to me about it later on. The other point about Wales is that actors who act in the Welsh language need special help and find it very difficult to get.
Returning to the question of vocational training in the higher sense, here, in spite of the Tory reluctance to indulge in planning, it is quite crazy to leave matters to sort themselves out. The noble Lord, Lord Vaizey, has made a very powerful case. The problem is particularly urgent in music and dance for, as the noble Baroness, Lady Trumpington, said, both are almost wholly dependent on technical training as opposed to painting or drama, where natural genius can sometimes, but not always, flower with little or no training. But excellence in music or dance can be achieved only with, first, talent and then training. Therefore, it is extremely important.
Following the general lines of the noble Lord's excellent Gulbenkian report, Training Musicians, it seems that we should have mandatory and not discretionary grants to the five specialist music schools

1567
and, I would add, to the 30 or so choir schools. I think that the question of mandatory or discretionary grants is crucial. It is the matter about which I am perfectly certain we shall get a raspberry, and not a strawberry from the noble Lord, Lord Mowbray and Stourton. However, I agree with the noble Lord, Lord Vaizey, that if the Minister and his colleagues wanted to find a way of doing this, it could be done. It could be done at the cost of certain other people, but every now and then one must have priorities, and I think we ought to do it. The various speeches tonight have stressed the importance of this in a moving way from all sides of your Lordships' House, and I hope the noble Lord, Lord Mowbray and Stourton, can get his colleagues to look at this again. Of course it could be done, although it would create a lot of trouble with other people; but, then, that is what Ministers are for.
Planning comes in here because somebody has to look at the prospects for professional musicians and dancers and make sure that the number being so expensively trained with mandatory grants of which the taxpayer pays 60 per cent., should be kept in line with the vacancies available. The orchestral players, for example, have just been conspicuously reduced by the BBC, and in his drama training study called Going on the Stage the noble Lord suggests a new Quango to do this for drama. My view is that there should be a similar Quango—in a sense, he has already told us that the training boards might so act—in each of the four fundamental arts we are discussing.
I endorse the noble Lord's main recommendation that vocational training at a specialist level should command mandatory grants in a limited number of training institutions approved by a high-level committee drawn from the relevant profession and the same committee should be responsible for keeping the numbers roughly in line with professional opportunities for employment. This is all quite complicated and we cannot elaborate it now, but the basic idea is quite simple, perfectly practicable, will cost money and, in my opinion, I regret to say, will not be done, though it ought to be done.
10.27 p.m.
Lord MOWBRAY and STOURTON: My Lords, despite the lateness of the hour, I must thank my noble friend Lord Vaizey and express gratitude to him for the opportunity to debate this important and very interesting topic. We have had an extremely impressive list of speakers, and many interesting and useful contributions have been made by noble Lords whose experience and concern in training for the arts commands the respect of the House. I am very conscious of my own relative inexperience in this area, but I have listened with great care to all that has been said and I shall endeavour to clarify the Government's position on the matters raised.
I too pay tribute to my noble friend Lord Chandos for his most eloquent and delightful maiden speech. It is delightful to have among us such a man, remembering his splendid father and his equally splendid ancestor, Sir John Chandos, of Poitiers fame. To have had his descendant expounding so charmingly on music has been a great pleasure, and the words of praise of the noble Lord, Lord Birkett, were extremely apt. Lord Birkett mentioned that better times were hoped for. I am reminded that one of William the Conqueror's knights had inscribed in French on his sword le bon temps viendra. Hope springs eternal and hopefully one day somebody will find that the good times have arrived.
The commitment of the noble Lord, Lord Vaizey, to the development of the arts is well known and has been witnessed again tonight. He has mentioned his leadership of the two inquiries sponsored by the Gulbenkian Foundation into training for drama and dance. The first, Going On The Stage, was published in 1975, and the second, Training Musicians, in 1978. These have done much to promote useful discussion and debate, and the noble Lord, Lord Vaizey, has performed an invaluable service to the arts in this respect.
The noble Lord, Lord Beaumont, began by speaking of the importance of getting the brilliant pupil identified and trained. This subject is one which I remembered being the theme of many of the speeches of the noble Lord, Lord James of Rusholme, in so many of our

1569
debates on the brilliant child, and of course we are now discussing the brilliant child in relation to the arts.
While the Government recognise the value of the Gulbenkian Reports, and not least those which centre on individual aspects of the performing arts, and the contribution which they make to the development of both education and training in these fields, it must be stated that these are independent inquiries which have been, and will be, carefully studied by the Department of Education and Science, and I trust, by the many other bodies closely affected by their recommendations. In the final analysis, however,—and I know that the noble Lord, Lord Vaizey, will understand this—the Government have no commitment to adopt any recommendations made, and could do so only after the fullest consideration of the effect which they would have on public expenditure.
Both the noble Lords, Lord Vaizey and Lord Donaldson, rightly referred to the marked improvement in standards in dance, drama and music, and attributed this, in the main, to the high level of training available in this country. We must certainly remember that there is much in the present system from which we can take satisfaction; and I was glad to hear the point made that many children of school age with an artistic talent can be catered for in their own schools, or by means of special arrangements made by local education authorities.
I feel very strongly that industry has a role to play in sponsoring the training of exceptionally bright children in the performing arts. In the past, especially in central Europe, the Churches used to support musicians and artists in their work. Could not commerce and industry take over some of this good work? The noble Lord, Lord Donaldson, mentioned that my right honourable friend had been suggesting this; and I do not see why they should not help these children with their special training, in the same way as companies finance concerts, opera and ballet performances, and the theatre.
The noble Lord, Lord Donaldson, mentioned the cut-back in orchestras. There is a very hopeful sign. Discussions are going on at this moment between four parties: the Arts Council of Northern
1570
Ireland, the Ulster Orchestra Society, the BBC in Northern Ireland, and Gallaher Ltd. It is proposed to form a Northern Ireland orchestra of up to 70 players, and it is hoped that at least 33 of the new posts in the symphony orchestra might go to players from the BBC Northern Ireland Orchestra. This is an example which, if it does come off—and it is only at the discussion stage—will be one occasion where industry is entering into discussion in order to help.
The report Training Musicians to which I have referred rightly stressed the central position of local education authorities in this area. The report made a number of interesting and positive recommendations, which I am sure will have been studied with care by local education authority music advisers. These dealt with the identification of musical ability in primary and secondary schools, the encouragement of non-specialist teachers to become more involved in musical activities in schools, the supporting of weekend and evening music centres, and a number of other detailed points. Perhaps the key recommendation, linking the others, was that local education authorities should be prepared to provide musical training in whichever of a number of possible ways is most appropriate to the particular circumstances of an individual area and the particular needs of each individual pupil. This is a useful reminder that individual needs and circumstances differ, and that local education authorities are particularly well placed to assess these, and, if they consider it necessary, to make or support special arrangements.
Interest in music, and in particular in learning an instrument, has of course very greatly increased among school children, and examination entries, for example, are rising steadily, though many of course have no intention of seeking a career in music. There has certainly been a marked and welcome improvement in the standard of music education in the maintained (or state) sector over the last 15 years or so—many schools now have school orchestras of a very worthy standard, for example—though there is a national shortage of qualified music teachers. The music centres which a number of local education authorities sponsor, usually at weekends, provide very

1571
good opportunities to carry study forward to the very highest standard of excellence—
Lord TAYLOR of BLACKBURN: I am sorry, my Lords, but the Minister is not aware of what is going on among local authorities in regard to cut-backs, and the cut-backs are on this side.
Lord MOWBRAY and STOURTON: My Lords, perhaps the noble Lord will allow me to finish my speech, and then he will hear what I have to say. It is too early to interrupt me to tell me what I am not going to say.
Lord TAYLOR of BLACKBURN: I apologise to the noble Lord.
Lord MOWBRAY and STOURTON: My Lords, talented musicians at maintained schools are also able to apply for junior exhibitions at the main music colleges, which are sponsored by education authorities. Some of these arrangements may be under pressure as a result of the public spending economies which are having to be insisted upon, but in general, it seems to me, there is a background of increasing musical education and training, which is encouraging.
My Lords, few would dispute that special arrangements may be needed for school-age children with outstanding talent or promise in instrumental playing. Your Lordships will be aware that in 1973 the previous Conservative Government introduced a direct grant scheme to provide precisely this for pupils at the Yehudi Menuhin and Royal Ballet Lower Schools. This, in part, replaced assistance formerly channelled through the Arts Council. The principles accepted by the Prime Minister when she was Secretary of State for Education and Science were that there was a limited need for specialised training of a high order; that these excellent schools should not have to compromise their very high standards for financial reasons; and that pupils of the necessary talent should not be denied access to a place for lack of parental means. About 150 pupils are at present supported by fee remission grant, which totalled some £440,000 in the 1979–80 financial year. This is a high per capita outlay, but few would dispute that this has been a successful and desirable arrangement. As a
1572
Government, we are fully committed to the continuation of these arrangements.
My Lords, the noble Lord, Lord Beaumont, and my noble friend Lord Chandos asked about ethnic art. We know there is public support for the performing arts, and it is of course a matter for the Arts Council, whose patronage is very extensive. I am sure they will study with interest the points which the two noble Lords have made on this particular topic. My Lords, other schools considered tonight, such as Chetham's School of Music, the Wells Cathedral School and Purcell School, have much to offer as well. Many local education authorities have been willing to sponsor children at these schools, particularly Chetham's School, and I understand that the scale of this particular form of support was steadily increasing until 1979, when some intending pupils were unable to persuade their authorities to give support. In some cases, too, the support given may have been at a fixed level, leaving the parents to find a large balance of the fees, which I know are somewhat hefty.
The schools are worried that last year's check in local education authority support may be repeated, and that more pupils who would otherwise have been admitted will not be able to take up places. This must, of course, be a matter for the authorities concerned, who may wish to have regard, not only to their policy on discretionary awards but to the alternative provision which may be possible. Thus, concern by the music schools about support by local education authorities has led them to propose to my noble friend the Minister of State at the Department of Education and Science that they should be supported by direct grant from the Government on the lines of the Yehudi Menuhin School and the Royal Ballet Lower School.
My noble friend (that is Lady Young, of course) has told the schools that their bid for financial support will have to be considered in the context of the assisted places scheme, which your Lordships will recall discussing at length when the Education (No. 2) Bill was before us earlier this year, and this the Minister is doing. Any extension of existing arrangements for Government support for specialised schools would have to come

1573
from the resources available for that scheme, and would also be subject to the same timing. This means that the earliest any assistance could be available might be for the September 1981 intake, as that is when the assisted places scheme is to start. At the moment, our position on this is completely open, but we shall let the three schools have our answer as quickly as possible.
I have taken a little of your Lordships' time to explain the Government's position on this particular point, and I hope it will be of interest to noble Lords.
Lord VAIZEY: My Lords, perhaps I may say how grateful I am for that particular point.
Lord MOWBRAY and STOURTON: I thank my noble friend. My noble friend Lord Drogheda, who, unfortunately, owing to the lateness of the hour at which this debate was to come on, had to go to another engagement, gave me notice of the two chief points that he would have liked to talk about. They were ballet schools and the London School of Contemporary Dance. Like my noble friend Lady Trumpington, I, too, must be in on the act. I, too, know Mr. Robin Howard. I have known him for 35 years, in fact. For good measure, I know his mother Lady Lorna and his sister, Kiloran, as well. The noble Viscount, Lord Chandos, and the noble Lord, Lord Crathorne, expressed anxiety on this point and the noble Lords can be assured that we are looking at this point sincerely and sympathetically.
Turning to the further education sector, the noble Lord, Lord Vaizey, would, I know, be the first to acknowledge that the mixed bag of provision in the performing arts, which stretches across age levels and across both the independent and public sectors, is an inheritance largely due to historical accident. The noble Lord, Lord Donaldson, I remember, told us he had danced the hornpipe when he was young. My only dancing achievement when I was young, in 1929, was that I was Madame Vacani's star pupil with the sister of the Chairman of Committees.
Lord DONALDSON of KINGSBRIDGE: My Lords, I went to Miss Vacani's when I was young.
Lord BEAUMONT of WHITLEY: As I did, my Lords.
Baroness TRUMPINGTON: My Lords, so did I.
Lord TAYLOR of BLACKBURN: My Lords, as somebody who was born in 1929,I hope we are not going to dance the hornpipe in here tonight.
Lord MOWBRAY and STOURTON: My Lords, we hope not. However, it is a fact that most of the art schools or colleges and several of the music and drama schools are in the public sector and are therefore maintained by local education authorities, while others remain independent, having been established on that basis. Any attempt to rationalise this diverse provision must take into account the competing claims on public resources of other, quite unrelated, disciplines and the consequential effect on educational resources.
The question of mandatory and discretionary grants to students has been described as a "vexed" question. We have no doubt that it is, have we? The noble Lord, Lord Donaldson, spoke about the theatre and education and the noble Lord, Lord Auckland, referred to the same point.
The present awards system is based on the principle that awards should be mandatory for students taking full-time courses of first degree or equivalent level or teacher-training courses, irrespective of the subject of study. Courses comparable to first-degree courses can also, on application, be designated individually for mandatory awards; this applies to courses in drama, dance and music as well as in more academic disciplines. Noble Lords will realise that, except in music, most such courses are designed for performers and in consequence do not require academic study of a level which can be regarded as comparable to that of a first degree. This is particularly so for courses in dance which for professional reasons are designed for 17-year-olds. Nevertheless, local education authorities do have the power to make awards at their discretion for courses which are not designated for mandatory awards.
I am most grateful to the noble Earl, Lord Gosford, for giving me notice of the questions to which he wanted an

1575
answer. I will point out to him now one of his answers, but I must ask him when he addresses your Lordships' House in future to comply, please, with the conventions and not just to refer to "Norman St. John-Stevas"—he is the right honourable the Minister, or your Lordships' right honourable friend. We do not refer to him in that way.
The Earl of GOSFORD: My Lords, may I say that I am sorry.
Lord MOWBRAY and STOURTON: My Lords, I thank the noble Earl. The noble Earl raised the question of the effect of cuts in local government expenditure on awards for foundation and diploma courses. I take it that the noble Earl has in mind non-advanced courses which do not attract mandatory awards. Undoubtedly, there will be some effect but it is difficult to say at present how reductions in expenditure on local authority discretionary awards will affect particular areas. So far as foundation courses are concerned, those which form an integral part of a degree course do attract mandatory grants. Courses intended to bring a student up to the standard at which they can embark on a degree course, however, do not.
The Government's expenditure plans assume that local education authorities' expenditure on discretionary awards will remain broadly at the present overall level of about £80 million a year. This does not, of course, imply that every local authority will be maintaining its expenditure at the present level, and indeed there is evidence that some local authorities are having to reduce severely the number of discretionary awards they are making in 1980–81. It is difficult to estimate the extent of local education authority economies on discretionary awards and their effect on particular fields of further education, and it may be that their effect is being felt disproportionately by students wishing to undertake courses in the performing arts. While we are of course aware of the consequences of this, both for individuals and for institutions, it remains the responsibility of each local education authority to decide upon the priority to be given to discretionary awards compared with other pressing claims on
1576
resources, and upon the priorities they are prepared to give to courses of various kinds.
The Government have no intention of interfering with or advising authorities on the use of their discretion: it is up to them to formulate their own policies and to make awards in accordance with their own judgments of local circumstances and the merits of each case. It is my impression that authorities take their responsibility for discretionary awards very seriously. This is no easy task and particular difficulties arise in the field of the performing arts in identifying the standard of the courses concerned.
Moreover, I should like to point out that, if some of the more profligate local authorities reduced their unnecessary spending, they would have more money to provide grants for children with great artistic talents. Still, I am sure that those who have spoken tonight applaud the efforts of all those authorities which have found it possible in these difficult times to give discretionary grants in deserving cases.
I do not think that we should take too gloomy a view of the future prospects for local authority discretionary awards, either. Though some have found it necessary to make economies in this area in the short term, these may become less necessary as longer-term expenditure plans are formulated and applied.
Noble Lords will know, from the debate we had at Report stage on the Education Act 1980 on Lord Vaizey's amendment, that the Government have no plans to change the present legislative position on mandatory awards. We recognise that difficult problems may arise for would-be students of the performing arts where authorities reduce their expenditure on discretionary awards. But they are not alone in this predicament, and it would be quite inequitable to extend the scope of mandatory awards to courses in the performing arts while ignoring the claims, for instance, of lawyers, social workers and many others who depend on local authority discretionary awards as well.
Lord VAIZEY: If that is the case, my Lords, why are they prepared to give mandatory grants to business studies in chemistry but not for dance and drama? If you are going to make that kind of

1577
argument, it is a very "wet" answer, if I may say so.
Lord MOWBRAY and STOURTON: My Lords, I will write to my noble friend on that point. If anybody else is interested, they can have a copy of the letter.
We have concluded that such a call on public resources could not be justified when we are asking for restraint in other areas. Even if we were able to, however, the problem for performers would not be wholly solved since, as I have already explained, a number of courses for performers are not advanced courses. To make awards mandatory for all non-advanced courses of further education would of course be prohibitively expensive. It would be virtually impossible to find an equitable basis for extending mandatory awards only to selected non-advanced courses of further education, and it is not self-evident that courses in the performing arts could be regarded as having priority.
This brings me to the question on which the noble Lord, Lord Vaizey, touched. At present, the education and training systems of this country produce more qualified aspirants to careers in the performing arts (with the possible exception of string players) than can be accommodated in the volume of professional activity as we know it at present. Against this background, it is probably not in the long-term interest of any but the most talented young people to encourage them to think in terms of a professional career in any of these fields: and it is difficult to justify spending public money to give awards for such training as an automatic right. I appreciate that Lord Vaizey's proposal, that courses should be designated for mandatory awards only at accredited institutions, is designed to reduce the number in training; but there can be no guarantee that it would do so. With mandatory awards assured, the selected institutions might well increase their intakes.
Special mention has been made of the National Centre for Orchestral Studies, and I should like to add my own appreciation of the work of the centre. Nevertheless, it is a performers' course and students must look to their local education authority for discretionary awards. The noble Lord said that it is time for the
1578
Government to face up to their responsibilities. This has been echoed by other noble Lords. Let me say a word first about the visual arts, on which the noble Earl, Lord Gosford, also spoke.
We shall, of course, study with interest the impending report from the Gulbenkian Foundation, but I think I should make the point that there are currently 41 colleges offering degree courses in the fine arts catering for a wide range of interest, and it is unlikely that there can be any aspirant frustrated by the absence of the right kind of course. At the lower level, vocational courses are about to become subject to national validating arrangements under the Technician Education Council's Committee for Art and Design.
I was going to answer some more of the questions of the noble Earl, Lord Gosford, but, if he will allow me, I will write to him, and, again, if any other noble Lord would like to have copies, I will arrange for that.
The Earl of GOSFORD: My Lords, may I thank the noble Lord the Minister for that kind offer of writing to me, and may I take up his offer of receiving a copy of the letter he sends to the noble Lord, Lord Vaizey?
Lord MOWBRAY and STOURTON: My Lords, as for our responsibilities in the area of school age provision for training in the performing arts—and most of us would accept, I am sure, that we are talking here about providing for high talent in music and dancing—we have to recognise, on the one hand, the special role of local education authorities in identifying and assessing need; and, of course, the quite special funding by means of direct grant at the Yehudi Menuhin and Royal Ballet Lower School to which I have already referred. My noble friend Lady Young is currently considering with great care the case made to her for similar funding for pupils at three other music schools and they can expect an answer from her before very long.
Discretionary support by education authorities is not, of course, a responsibility of government. It has been made abundantly clear by the local authority associations that local authorities should

1579
be entirely free to make their own decisions in those areas, including awards, where they are charged with a discretionary responsibility. The Government have no wish to intervene in matters which are properly the concern of local authorities, who must determine their own priorities in the light of their particular needs and resources, as I have said. Moreover, if the Government started to sponsor arts training directly, it could become a never-ending drain on the Exchequer from all the folk whose hopes of financial support had suddenly been raised.
There may, as noble Lords have suggested, be a case for looking again at the scope of mandatory awards, though I can see little prospect of any extension in present economic circumstances. However, I assure your Lordships that the Government will be keeping the question under review in the light of local education authorities' future plans for discretionary awards. I can assure the noble Lord, Lord Donaldson, that we are not trying to shrug anything off and we are not trying to issue raspberries or strawberries!
I am afraid that I have not offered very much by way of further finance for training gifted children in the performing arts, although we all agree on the desirability of this. Still, I think we have tonight given the various aspects of this topic a most useful airing, and who knows but that some businessman or commercial organisation may read about this debate and be spurred on to sponsor the training of a bright child—for example, a future musician, actor or dancer. Also, I hope very much that local education authorities will feel encouraged to continue with their crucially important and very worthwhile work in this field.
My Lords, if I find I have left out certain things—and I am sure I have—apart from what I have said to the noble Earl, Lord Gosford, I will promise to write. I will also write to the noble Lord, Lord Donaldson, about art in the art colleges. I would like to thank all your Lordships who have contributed to this very interesting debate and to apologise for my inadequacy if I have not answered sufficiently well.

MAGISTRATES' COURTS BILL [H.L.]
Reported from the Joint Committee with amendments, and recommitted to a Committee of the Whole House; Bill to be printed as amended.