Lords Sitting of 1 June 1981

Preamble
Reassembling after the Whitsun Recess the House met at half-past two of the clock: The LORD CHANCELLOR on the Woolsack.
Prayers-Read by the Lord Bishop of Salisbury.

East Timor: Indonesian Armed Forces
Lord Avebury: 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 information they have about military operations by Indonesia in East Timor since the middle of April; and whether they will seek assurances from Indonesia that Hawk aircraft sold to that country for training purposes will not be adapted for use in the ground attack role against the civilian population of occupied East Timor.
Lord Skelmersdale: My Lords, we have no information about military operations by Indonesia in East Timor since the middle of April. All relevant factors are taken into account in reaching decisions on defence sales, but it is not practical to seek assurances about the use to which military equipment may be put.
Lord Avebury: My Lords, would the noble Lord agree that it is very difficult to get information out of East Timor when the Indonesian authorities permit visits there by foreign journalists only at infrequent intervals? When they do go they are escorted to places where the Indonesian authorities permit them to see what is happening, but not necessarily to those areas where military operations are taking place.
Is the noble Lord further aware that the Australian Ministry of Foreign Affairs has admitted that extensive operations were conducted by the Indonesians at the end of March and it is possible that the troops who were then engaged in those operations have not been withdrawn? In the light of those facts, is it not essential that some assurances should be sought from the Indonesian authorities that they will not convert the Hawk aircraft which have been sold to Indonesia, and which are supposed to be for purely training purposes, into a ground attack role, which the manufacturers, British Aerospace, say is easily possible?
Lord Skelmersdale: My Lords, such reports as we have—I agree that they are difficult to come by—suggest that conditions in East Timor are now relatively peaceful, although incidents do occur from time to time. The last one that we know about was in the middle of April last. So far as the Hawk aircraft are concerned and their suitability as ground attack weapons, the training aircraft are in fact considerably under-stressed. In order to add military hardware on to them, I understand that they would have to be substantially different aircraft, and therefore there is absolutely no likelihood of their being used for this purpose in this case.
Baroness Vickers: My Lords, in view of the fact that I have been to East Timor and I do not think the noble Lord has been there, may I ask the noble Lord whether it would not be better if he did not listen to continual rumours and that he visits the embassy, should he really want full knowledge? I personally can supply him with some quite useful information if he wishes to have it.
Lord Skelmersdale: My Lords, I am very grateful to my noble friend and I am sure that the noble Lord, Lord Avebury, would like to talk to my noble friend on this particular subject.
Lord Avebury: My Lords, is the noble Lord aware that the Indonesian Ambassador is most helpful and that he provides me with extensive information, but that does not stop me from asking for information from Her Majesty's Government at the same time? Would not the noble Lord agree that if conditions are relatively peaceful it becomes all the more mysterious that the Indonesian authorities should have added to the order which they had already placed for eight Hawk aircraft and have now taken up their option on another four?
Lord Skelmersdale: My Lords, indeed they have taken up an option on another four. And why should they not?—because they want to use these as training aircraft.
Viscount St. Davids: My Lords, would not the noble Lord agree that there are very few trustworthy Governments in the world—in fact, the number might almost amount to zero—but, although there are some Governments to which we should not be providing arms, really the noble Lord and his friends have to take the world as they find it?
Lord Skelmersdale: My Lords, yes, of course we always take the world as we find it.

Nationalised Industries: Accounting Procedures
2.40 p.m.
Lord Boyd-Carpenter: 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 have any plans to improve the accounting procedures of the nationalised industries so as to show distinctly the difference between capital and revenue expenditures.
The Minister of State, Treasury (Lord Cockfield): My Lords, the audited accounts of the nationalised industries already distinguish between capital and revenue expenditure. If, however, my noble friend has in mind a particular aspect where he feels that an improvement could be made, perhaps he would let me know.
Lord Boyd-Carpenter: My Lords, while thanking my noble friend for that helpful reply may I ask him whether he can assure the House that it is not possible under the present accounting system for monies provided for the necessary investment of a nationalised industry to be employed for the purposes of propping up its deficit position?
Lord Cockfield: My Lords, a full analysis of the capital expenditure of the nationalised industries and of the way that that capital expenditure has been financed appears in tables 3.2 to 3.5 inclusive in the White Paper on public expenditure. Therefore, it is possible from these tables to deduce whether money which has been allocated for capital expenditure has been used for that purpose or has been used to make good a shortfall in profits or an increase in losses. I entirely agree with the point of substance made by my noble friend, namely, that it is quite wrong and in fact damaging to the economy generally if money which has been allocated for capital expenditure is in fact used for revenue purposes.
Lord Bruce of Donington: My Lords, will the noble Lord give the House an assurance that if he considers some improvements in the existing accounting arrangements, he will consult with the profession before he brings those improvements into operation? And does he not agree with the CBI—and indeed other bodies—that there is now an overwhelming case, for the purpose of determining the public sector borrowing requirement, for treating capital investment for productive purposes differently from ordinary current revenue expenditure?
Lord Cockfield: My Lords, so far as the first part of the noble Lord's supplementary question is concerned, the Government have always given their support and indeed encouragement to the adoption by the nationalised industries of the highest standards of accounting. Consultations on these matters proceed on a regular basis. The Government have in particular given great encouragement to the adoption of current cost accounting, and the publication of the new accounting standard SSAP 16 should result in an improvement in the level of current cost accounting for the nationalised industries, as elsewhere.
So far as the second part of the noble Lord's supplementary question is concerned, I do not agree with him at all. That money which is raised by the nationalised industries is in fact a charge on the public sector so long as those industries remain within the public sector. No change would be made in the reality of the situation simply by juggling with the figures. Of course, if the point the noble Lord is making is that an improvement in the efficiency of the nationalised industries would set money free for a higher level of capital expenditure, I would agree with him.
Lord Orr-Ewing: My Lords, may I ask my noble friend whether it is not a fact that in the current year the National Coal Board have been allocated, after depreciation, £363 million for capital expenditure? If this capital expenditure allocation is diverted to make good losses in the revenue area, surely this has serious repercussions for those companies which are
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making mining machinery and for the jobs that industry provides? Would my noble friend perhaps tell us if it is true that Government lending to the nationalised industries in the current year is £1,400 million; what it is likely to be reduced to in the current year; and whether that target will in fact be achieved?
Lord Cockfield: My Lords, I am grateful to my noble friend for his support and I agree with many of the comments that he makes. One of the points that is commonly overlooked in the present debate is that the capital expenditure on fixed assets planned by the nationalised industries in each of the next three years—that is, the current year plus the two following years—is expected to be £5·2 billion, compared with 4½ billion in each of the last three years. This is at constant prices, 1980 survey prices. We are therefore expecting a substantial increase in the level of expenditure by the nationalised industries on capital development compared with the position that existed in the past.
Lord Boyd-Carpenter: My Lords, will my noble friend add to his kindness by answering the question which was included in my earlier supplementary question, as to whether, with the aid of the tables in the national accounts of which he has reminded us, it is possible for him to assure the House that, at any rate during the lifetime of the present Government, money provided for one purpose has not been used for?
Lord Cockfield: My Lords, it is obviously highly desirable that such a result should be achieved and it is the Government's intention to use their best efforts and influence to ensure that it is achieved. But it would not be possible to give a guarantee of the sort for which my noble friend asks.

Police Protective Clothing and Equipment
2.47 p.m.
Baroness Sharples: 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 when they propose to equip the police with adequate protective gear for dealing with mob violence.
The Parliamentary Under-Secretary, Home Office (Lord Belstead): My Lords, in recent years a good deal of attention has been given to protective clothing and equipment for the police. In the light of recent serious disorders my right honourable friend the Home Secretary thought it right that there should be a further thorough examination of these matters. Accordingly, on 1st May he appointed a working group to review the work that had been undertaken previously and to consider whether any changes are necessary. The review is to be undertaken as quickly as possible, and we shall report the outcome to Parliament.
Baroness Sharples: My Lords, I thank my noble friend for that reply. I should be very grateful if my noble friend could ask his right honourable friend whether he might consider issuing the police with fireproofed navy blue overalls, whereby their image in the public's eyes would not be reduced. Would he also consider that fibreglass helmets are of great use?
Lord Belstead: My Lords, I entirely agree with my noble friend that the use of fire during disturbances is a particularly worrying feature and a dangerous development which we have recently seen. The protective shield which the police can carry, if the chief constable thinks it right, resists attack from burning petrol, and work is in hand on the possible use of fire-resistant materials for uniforms.
With regard to my noble friend's question about helmets, I should like to make the point that there is available a strengthened version of the police helmet with a polycarbonate visor, and various body protectors also, in addition to police shields. But of course these are all matters which are within the operational discretion of a chief constable in a given situation.
Baroness Gaitskell: My Lords, may I ask the noble Lord, have we no protective material against the fire bomb? Anyone who saw the policeman in Northern Ireland covered in flames—Clive James in the Observer pointed out how horrific this was—must have wondered whether the police have protective clothing, as well as the shields and the other things, to save them from these terrible flames.
Lord Belstead: My Lords, the working group referred to in my original Answer which my right honourable friend the Home Secretary set up on 1st May and which consists of representatives of the Home Office, Her Majesty's Inspectorate of Constabulary, the police organisations and the local authorities, will, among other things, be looking most seriously into the point raised by the noble Baroness, Lady Gaitskell—namely, the possibilities of further developing the use of fire-resistant materials.
Lord Reigate: My Lords, will this review cover the conditions and the equipment used by other countries?
Lord Belstead: Yes, my Lords.
Lord Hankey: My Lords, might it occur to the Government that a fire bomb such as we have seen on the television being used in Northern Ireland possibly merits a real bullet instead of a plastic one? Should not those conditions really be met with greater severity than we are at present using?
Lord Belstead: My Lords, I entirely understand the concern which prompts the question put by the noble Lord, but I think that it is worth noticing that when my right honourable friend the Home Secretary met police representatives before announcing the establishment of the working group on 1st May, they all agreed without any dissenting voice that any departure from traditional policing methods is undesirable.
Lord De Freyne: My Lords, would my noble friend not consider possibly bringing back into this country
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what was and is used in Northern Ireland—that is, the water cannon?
Lord Belstead: My Lords, the use of equipment such as water cannon, can, of course, be effective in certain circumstances, but it could in the long term alienate the public from the police. As I have said, my right honourable friend has set up this working group, which includes representatives of all the police organisations and the local authorities, as well as the Government. I think that this is the right way to proceed and that we now ought to wait until those deliberations are over, when, as I have promised, my right honourable friend will be making a statement.
Lord Hale: My Lords, can the Minister say whether he could add representatives of the London Fire Brigade to the committee, since I understand that they did take special advice on the use of protective metal shields at the time when they decided to abolish the use of asbestos because it was dangerous to firemen?
Lord Belstead: My Lords, I believe that the noble Lord is absolutely right in what he says as regards the knowledge which is in the possession of fire brigades generally, and I think that that relates, incidentally, to the use of non-inflammable materials for clothing as well. I assure the noble Lord that the working group to which I have referred will take most seriously any information which the fire service can give.
Baroness Macleod of Borve: My Lords, can my noble friend assure the House that if, when the deliberations of the working party are completed, the Government are asked to spend money on anything at all to do with helping the police, they will make that money available?
Lord Belstead: My Lords, I think that we have shown in Government that we will do everything that we can to support the work of the police. Now I think that we must wait to see the results of the deliberations to which I have referred.

Racially Segregated Sports: UN Report
2.54 p.m.
The Earl of Kinnoull: 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 how they view the recent report by the United Nations Committee on Racially Segregated Sports and the naming in that report of individual athletes.
The Earl of Avon: My Lords, we view the report without enthusiasm. Her Majesty's Government cannot support any proposal which would oblige us to place limitations in the movement of our sportsmen and women, or to interfere with individual liberties. We do not believe that the naming of individuals in this report will contribute towards the solution of a difficult and sensitive international problem.
The Earl of Kinnoull: My Lords, I thank my noble friend for that helpful reply. First, can he say what action Her Majesty's Government have taken within the United Nations to express their attitude to this report? Secondly, can he confirm that Her Majesty's Government will offer support and advice to individual athletes who may be affected by the report? Finally, can he confirm rumours of recent initiatives by the South African Government to relax their apartheid policy in sport?
The Earl of Avon: My Lords, in answer to my noble friend's three supplementaries, first, my right honourable friend the Minister of State at the Foreign and Commonwealth Office made clear in another place on 20th May the Government's attitude, and the United Nations special committee against apartheid can be in no doubt about our views. With regard to advice to specific athletes, that the Government do not do, but they are, of course, in contact constantly with the Sports Council, As regards the noble Lord's final supplementary, Her Majesty's Government are encouraged by the reports that they have heard but no details are yet to hand. However, if they are true, those reports of initiatives would certainly represent a step in the right direction.
Lord Avebury: My Lords, are we not committed by the Gleneagles Agreement to discouraging sporting contacts with South Africa? How can we do that unless we know which sportsmen collaborate with the racists? Can the Minister say what steps the Government have taken or are intending to take co comply with our obligations under the Gleneagles Agreement?
The Earl of Avon: My Lords, this subject was raised in your Lordships' House only two weeks ago, at Question Time on 18th May, and my noble friend Lord Bellwin replying at that time did say at col. 721:
"so far as the blacklist is concerned, every country has the right to refuse entry to non-nationals whose presence it would regard as undesirable. That right cannot be denied. However, Her Majesty's Government are unable to accept any proposals which would oblige them to place limitations on the freedom of movement of its citizens or interfere with individual liberties".
Perhaps I may remind the noble Lord, Lord Avebury, that the Commonwealth statement called the Gleneagles Agreement says that the countries fully acknowledge that it is for each Government to determine in accordance with its laws methods by which it may best discharge its commitment.
Lord Goronwy-Roberts: My Lords, I should like to reinforce what the Minister has just said—while very fully sympathising with what the noble Lord, Lord Avebury, has said—that the Gleneagles agreements, like other agreements that led up to them, were very difficult to attain, were between Governments, and implicity and explicitly placed upon Governments the onus and the opportunity of exerting the best and most efficient possible pressure on their nationals in this direction. Any suggestion of pillorying individuals for any decision of their own, for which Governments are not responsible, would be greatly resented by very many of us.
The Earl of Avon: My Lords, I am grateful to the noble Lord, and I fully agree with all that he has said.
Lord Barnby: My Lords, although the Minister's first reply to the Question was quite clear, can he say whether definite instructions have been given to our representative at the United Nations that there should be vehement denunciation of this attempt to stop champions in various kinds of recreation moving from one country to another to their own disappointment and to the disappointment of an enormous number of people in other countries who want to admire their achievements?
The Earl of Avon: My Lords, in answer to my noble friend's intervention, I can only reiterate what I have said, which is that we know that the United Nations are fully aware of the Government's position, and that is as far as we think that it is necessary to go at the moment.

Betting and Gaming Duties Bill [H.L.]
The Lord Chancellor (Lord Hailsham of Saint Marylebone): My Lords, I beg to introduce a Bill to consolidate certain enactments concerning the duties of excise relating to betting and gaming. I beg to move that this Bill be now read a first time.
Moved, That the Bill be now read 1a—(The Lord Chancellor.)
On Question, Bill read la, and to be printed.

British Railways (Pension Schemes) Bill
Baroness Wootton of Abinger: My Lords, on behalf of my noble friend the Chairman of Committees, I beg to move that this Bill be now read a second time.
Moved, That the Bill be now read 2a.—(Baroness Wootton of Abinger.)
On Question, Bill read 2a, and committed to an Unopposed Bill Committee.

British Transport Docks Bill
Baroness Wootton of Abinger: My Lords, on behalf of my noble friend the Chairman of Committees, I beg to move that this Bill be now read a second time.
Moved, That the Bill be now read 2a.—(Baroness Wootton of Abinger.)
On Question, Bill read 2a, and committed to an Unopposed Bill Committee.

Atomic Energy (Miscellaneous Provisions) Bill
Brought from the Commons on Thursday the 21st of May last and printed pursuant to Standing Order No. 47; read 1a.
Countryside (Scotland) Bill
Brought from the Commons on Thursday the 21st of May last and printed pursuant to Standing Order No. 47; read 1a.
Ports (Financial Assistance) Bill
Read 3a,and passed.
Licensing (Amendment) Bill [H.L.]
Report received.

Social Security Bill
3.3 p.m.
The Minister of State, Department of Education and Science (Baroness Young): My Lords, I beg to move that this Bill be now read a second time. I do not doubt that we can and will find points to discuss on other clauses, but the weight of public comment and the balance of debate in another place make it clear that this is essentially a one-clause Bill. The key clause is Clause 1, and I fear that there will be no escaping, on either side of your Lordships' House, and indeed on the Cross-Benches, repetition of many of the arguments about social security expenditure with which we have become familiar.
Clause 1 does not, in fact, make any radical innovations. The first part of the clause enshrines in law what has become the up-rating practice in recent years; namely, an announcement (by convention, at Budget time) of the up-rating date, the up-rating figure, and the relationship between the increases proposed and movement in the retail price index; followed in due course by the laying of up-rating instruments which enable the announcements to be carried through into the actual benefit changes.
There has not been an occasion when the up-rating has been changed between announcement and implementation, but the possibility has been there, especially when legislation has been required before the up-rating instruments can be made and this stage has therefore been pushed towards the end of the Session. Such a change would mean that the global picture of expenditure commitments sought at Budget time and immediately after would not be available, and that the up-rating process, which usually begins in May, would have to be unscrambled and started again. The essential fact is that, as matters stand at present, the focal point is the laying of the up-rating order (and its associated statutory instruments), and the Secretary of State has to satisfy himself then as to the likely level of inflation between up-ratings. If the rate of inflation has slowed down or speeded up between the Budget announcement and the laying of the order, all the sums might have to be done again. That is not, I think, a prospect that any Government could face with equanimity.
If I may anticipate the argument in favour of the status quo, and it is perhaps the only argument: is there not some advantage in settling the benefit rates as near as possible to the date on which they will take effect, for example, July instead of March? The answer must be, "No" when the operational timetable means that July is far too late to start work on the up-rating process, and when the power to make good any shortfall due to an underestimate of inflation is there for the next up-rating. I should add that the
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guarantee of price protection that the Government have given for pensions and other long-term benefits carries with it the guarantee that any shortfall in the up-rating of these benefits will be made good.
This leads me directly to the second and much more controversial part of Clause 1. As I have said, the Government are committed to price protection for long-term benefits. That includes price protection for the invalidity benefit at its present level until it is brought into tax, and price protection thereafter at its unabated level. As regards short-term benefits, there is the legislative power in last year's Social Security (No. 2) Act to give up to 5 per cent. below price protection in 1981 and 1982, as was done for 1980. That power is not to be used in 1981, and we would hope not to have to use it in 1982. Beyond that the unmodified price protection statutory requirement applies. This is the background to the second main provision of Clause 1.
That second part enables the Government at the 1981 up-rating, and only at the 1981 up-rating, to take account of the fact that the previous up-rating was higher than intended—higher because inflation was reckoned, over the relevant period, as 16·5 per cent. and in fact emerged as only 15·5 per cent. Thus, what had been intended as a prices-only up-rating for long-term benefits became prices plus 1 per cent., that is, a real improvement; while what had been intended for invalidity benefit and short-term benefits as an increase of 5 per cent. less than the inflation level was therefore 4 per cent. below that level. There has been a certain amount of entirely understandable misunderstanding about all this.
Put simply, beneficiaries will get between November 1980 and November 1981 a benefit worth 1 per cent. more than was intended. They enjoy that advantage for a year, and no one can or wants to take it away from them. At the 1981 up-rating—effective from 23rd November, precisely a year after the previous up-rating—the 10 per cent. increase to allow for the expected rate of inflation between up-ratings will be based not on the actual 1980 rates but on the rates that would have been paid had the rate of inflation for 1979–1980 been accurately predicted. In short, Clause 1 carries forward to future years what had been intended, debated and announced for November 1980, but not what actually happened.
For the single pensioner the effect is to pay from November 1981 25p less than would otherwise have been paid; for the pensioner couple the difference is 40p. The 1 per cent. is an across-the-board adjustment for all the main line annually up-ratable benefits, the Section 125 benefits. It bites also on those benefits which are up-rated in line with these benefits—that is, supplementary benefit, war pensions, and—under a separate heading—public service pensions. The new pensions scheme earnings-related additional components are dealt with in the same way, though for technical reasons the actual methodology is a little different from that which is used for the basic flat-rate benefits. The effect for the individual beneficiary is fairly small, though of course it is real and even a small change in a modest income is noticed; the public expenditure saving, overall, is about £225 million in a full year.

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It may be that some of the anger directed at this provision had been built up in readiness for the rather draconian measures which have been rumoured in some quarters of the press. It is quite clear that a lot of the anger is, in fact, a carry-over of opposition to last year's intended 5 per cent. abatement. This is understandable, because Clause 1 does not represent new policy or even extension of existing policy, but carries forward last year's plans to the extent that these have been overtaken by a rather more successful control of inflation than had been predicted. Seen against the background of our economic situation, which means that we are rather far down the economic league of industrialised nations all of which are suffering from a world recession; and seen against the background of a social security budget which has grown in relation to public expenditure generally and is still growing—and by no means only because of the high level of unemployment—Clause 1 should create no surprises.
Restraint in social service expenditure is never and at no point easy, and we have never pretended that it would be. But while expansion of social service provision based not on real resources but on borrowed money may be easy, the problem is that it is also unwise, and in the long term the bill has to be met, and that bill is a burden on public expenditure and helps to create an unhealthy economy, for which we shall all have to pay the price, not least those who are heavily dependent on public expenditure.
Your Lordships will be pleased to know that I can deal with the remaining clauses of the Bill rather more briefly. Clause 2 enlarges the powers of my right honourable friend the Secretary of State for Employment, and enables him to increase employers' maternity pay, paid for six weeks of absence from work due to pregnancy, to compensate for the loss during that period of the earnings-related supplement to maternity allowance. This clause has been modified since it was originally presented to Parliament, in order to make it quite clear that the intention is to increase the rate of maternity pay and not to open the way for decreasing it. The timing of the improvement is a matter for my right honourable friend, as it is whether it will be necessary to phase the improvement. I understand that his intention is to make the change as soon as resources allow, and not to phase it unless this proves essential.
Clause 3 is very different from the original version in the Bill as first presented. The clause then contained provision for increasing both custodial sentences for social security offences and the financial penalties. As the Minister for Social Security pointed out in another place, the logic of this double approach could reasonably be criticised. It must be necessary from time to time to increase financial penalties simply in order to maintain their real value. The length of the custodial sentence is not, however, affected by inflation: a three-month prison sentence remains a three-month prison sentence even in the most inflationary of times. Moreover, it is the general tendency and I think the general wish that custodial sentences should be imposed only where necessary, and should be as short as is consistent with the seriousness of the offence. The Government have therefore dropped entirely that part of the clause which lengthened custodial sentences,
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and what remains is the rationalisation of financial penalties for social security offences and aligns them for the most part with the normal scale of financial penalties.
The general policy of penalties for criminal offences is of course a matter for the Home Office, and that department's objective is to have all comparable offences dealt with by means of comparable financial penalties, and for the penalties so aligned to be inflation proof so that they maintain their real value over time. There have been suggestions that the increases in penalties in Clause 3 are part of the Government's attempts to deal with social security fraud and abuse, and that enhanced penalties might be used as a threat to hang over the heads of those against whom there is not adequate evidence of an offence but who might be persuaded by the threat of worse things to befall them to give up their benefit claims.
I am glad to take this opportunity to say that this fear or suspicion is totally unfounded. The instructions to officials engaged in investigating these matters make it quite clear that the possibility of prosecution and of consequential penalties is not to be used as a threat in order to obtain withdrawal of a claim. It is entirely right that fraud and abuse should be controlled because it brings no credit on the scheme as a whole, and indeed worries genuine beneficiaries who feel that their own reputation is at risk because they share benefits with people who are clearly not entitled to them. It is also right that serious offences which come before the courts should be dealt with consistently with their seriousness and consistently with comparable offences in other areas. However, these two things are not directly related.
Looking wider than Clause 3, and therefore taking in those social security offences at the upper end of the spectrum of seriousness which are dealt with under the Theft Act, I think it worth reminding your Lordships that deliberate fraud against the social security system; and therefore against the public purse, is certainly no less serious than an offence against the individual which is dealt with under the criminal law. I detect at times in earlier discussions the feeling that somehow anyone who is claiming a social security benefit must be a person in need of financial help and therefore deserving of sympathy. The point of course is that the minority of people who deliberately try to defraud the system are by definition people who are not in need, and are certainly not deserving of sympathy. The in-between group, as I might describe them, consisting of people who have sought and obtained that to which they are not entitled but have done it through misunderstanding and confusion, and who are perhaps less able to cope with life in general than the majority of the population, are not likely to be prosecuted.
Clause 4 is another clause which has been criticised, not because of what it provides but because of association with what is believed to be the Government's attitude to strikers and their dependants. Clause 4 simply underpins the existing practice, by which supplementary benefit paid to a striker after his return to work is recoverable. A technical flaw has been discovered in the existing provisions which means that while supplementary benefit awarded during and paid for the first fifteen days after return to work can be properly recovered, supplementary benefit paid for that period

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but awarded afterwards (for example, on appeal) is not properly covered by existing provisions. This is purely tidying up, and makes no change in what has traditionally been understood to be the law and what has consistently been the practice.
Clause 5 has an entirely beneficial effect. It rescues from the effects of legislation last year, which changed the conditions for qualifying for sickness benefit for short periods of incapacity, haemo-dialysis patients whose treatment involves them in a regular pattern of short-term incapacity. This provision also in effect confirms existing practice, because extra statutory provision has been made since last September to ensure that haemo-dialysis patients did not suffer as a result of the change in the rules. Thus benefit will be payable for spells of two or three days of incapacity where the incapacity is due to haemo-dialysis; and the power could be used in respect of other categories where treatment produces a regular pattern of two or three days of incapacity each week if such cases are identified.
Clause 6 is yet another tidying up measure, though in this case the rules which have been underpinned are rules which go back to the beginning of the National Insurance Scheme. People's movements between one country and another in the course of their work have made it more than ever necessary for there to be reciprocal agreements between countries which enable contribution records and benefit entitlement to be built up in more than one country. Reciprocal agreements vary between country and country, according to the circumstances of local schemes and other factors, and tend in any case to be fairly substantial documents.
However, it has always been thought quite impossible to specify in each reciprocal agreement each and every effect on each and every individual case. The formula has therefore been adopted that the Social Security Act should be modified to such extent as may be required to give effect to the provisions of the reciprocal agreement. The Select Committee on Statutory Instruments has, however, just cast some doubt on the vires of this traditional provision; and Clause 6 establishes that the law is what it has hitherto been thought to be. There will be no change in the traditional practice, no increase in public expenditure, and no diminution of existing or prospective rights. The shortcoming pinpointed by the Select Committee is perhaps less an illustration of the complexities of social security than an example of what can sometimes happen where it has been thought necessary to simplify the provisions by adopting a broad formula.
Clause 7 puts into statutory form existing practice. British officers serving with the former Indian and Burmese armed forces, whose pensions are handled by the Overseas Development Administration, have had informal appeal rights hitherto. That is to say, their cases have been passed to this department where an objection has been lodged and considered by the Pensions Appeal Tribunals on a non-statutory basis. Clause 7 gives them the same statutory appeal rights that are available to those dealt with under the United Kindgom war pensions instruments. Clause 8 is largely formal.
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Finally, there are two schedules to the Bill. The first of these is associated with Clause 3 and sets out the old and proposed new financial penalties for social security offences. Schedule 2 is properly headed "Minor and consequential amendments". The first item in the schedule removes the requirement for automatic annual report from the Occupational Pensions Board, but leaves the Secretary of State free to ask the board for reports as and when necessary, and requires him to lay such reports before Parliament. This change has, I understand, the support of the Occupational Pensions Board. The second provision simply brings the Industrial Injuries Advisory Council divisions more into line with those of the Social Security Advisory Committee. In particular it gives the council the discretion that the committee has to decide that a particular set of regulations, for example because it does no more than tidy up provisions or confirm what has been supposed to be the law, need not be formally submitted to it. The third and last provision in the second schedule is entirely a matter of tidying up references in existing legislation. I think I have now covered all the clauses in and schedules to the Bill, and I beg to move that the Bill be now read a second time.
Moved, That the Bill be now read 2a.—(Baroness Young.)
3.20 p.m.
Baroness Jeger: My Lords, I am sure noble Lords will wish to thank the noble Baroness, Lady Young, for the usual swift efficiency with which she moved the Second Reading of what purports to be quite a short Bill. The difficulty with the Bill however is that it cannot be considered in isolation; it is but another piece in the tapestry of the Government's social policies which in the view of some of us deliberately make life hardest for the poorest people in this country.
This is the third Social Security Bill we have been asked to consider in two years. The first destroyed the right for pensions to be assessed in relation either to earnings or prices, whichever was the most advantageous to the pensioner, and which otherwise ensured that pensioners shared in any rise in the standard of living of the country to which most of them had contributed during their working lives. I believe it is essential to link benefits to average earnings, rather than to prices as the present Bill does.
It is no use lecturing an unemployed man or invalid on keeping benefits in line with prices. That way, his standards never improve because if benefits are to keep pace only with prices, he is, or feels he is, standing still. It is no use telling him how well off he is compared with the cruel poverty of the 'thirties or before; a man is as poor as he feels. He has a sense of poverty if the neighbours' wages go up and he, being out of work, cannot provide for his children as other families do. That sense of discrimination, of unfair struggle, is being increased by the present Government and measures such as this. Then we had the Social Security (No. 2) Bill, which legislated for a 5 per cent. cutback on short-term benefit. Those two measures taken together set a pattern which to many of us is totally unacceptable.

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I do not want to weary the House with too many figures, but I find that had we kept to the previous system of relating pensions to possible earnings, instead of £27·50 a single pensioner would have been getting £28·5, and a married couple instead of getting £43·5 would have been getting £45·85, a difference of over £70 a year for a married couple. This all has to be seen against a background of a reduction in local authority services for people who need them most. Because it is relevant to the Bill, I would remind your Lordships of a recent report by the Directors of Social Services in which they stated:
"The policies now being promulgated hit many of the services specially aimed at alleviating the plight of the old, sick and handicapped, and those who cannot tolerate the stresses which our society generates".
I submit that we cannot just look in isolation at these changes, particularly the changes proposed in Clause 1, without taking into account the whole picture of what is happening in the provision for those most in need of help.
The trouble is that I believe there is more to come. I must not get out of order, but I understand that the proposal to make employers pay the first eight weeks of sickness is still under consideration, although opposed by the CBI and the Engineering Employers' Federation. I am very apprehensive about that proposal because it seems to me that it will disadvantage the disabled in trying to get work which they desperately need because it is bound to encourage employers and potential employers to look very carefully at the health records of those whom they are about to employ. Then we must face the abolition of earnings-related supplements, which we are told will save the Government £360 million a year; which means it will cost those who were entitled to those benefits £360 million a year. Against that background, this mean little Bill is totally unacceptable because of the context in which it is set.
The noble Lord, Lord Cullen of Ashbourne, said on 8th April—his words appear in col. 538 of Hansard—that pensions had been and would be price protected. Let us consider what this Bill does to that assertion. The main provision in Clause 1 is to adjust the 1981 up-rating to take into account the fact that the 1980 up-rating was based on a 1 per cent. over-estimate of the increase in prices. The Explanatory and Financial Memorandum states clearly that it is the general level of prices that is being considered. It seems to me that while this is the way in which the social accountants ply their dismal trade, it is a sphere in which the Government show a total lack of warmth and imagination.
They are telling our old people and other pensioners that last year they were overpaid in relation to the general level of prices. In relation to what and compared with whom were they overpaid? Were they overpaid in relation to those who received £4,500 million in tax reductions in the first Conservative Budget, most of which went to people earning over £10,000 a year? That Budget lost millions of pounds to the Revenue. Or were they overpaid in relation to the rise in prices, as the Government are maintaining? If so, then the rise in what prices? It is usually accepted that the retail price index is not applicable to pensioner households, which is why we have other indices to follow. The last family expenditure survey showed that a single pensioner spent 69·6 per cent. of his income
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on food, fuel and housing compared with 43·5 per cent. for a working single person.
The retail price index includes a whole range of goods which most pensioners would never dream of buying. I submit that it is, therefore, totally irrelevant to the people about whom we are most concerned. If we consider fuel and heating alone, the family expenditure survey indicated that a single pensioner spent 13·8 per cent. of his income on fuel and heating compared with 5·6 per cent. for a single worker. And we know there are some formidable rises still to come and which completely distort any relevance of the RPI to the living costs of pensioners. We are considering commodities which are desperately needed. Heating in particular is of fundamental importance, and it is no good suggesting that we can overcome these problems by all sorts of rebates when we know, first, that means-tested rebates have a very small take-up and, secondly, that many people come just above the rebate level but are having a very difficult time.
I therefore must press the Minister on the assumption about the general level of prices to which she is connecting the position of pensioners. I do not see how it can be maintained that pensions—even with the surcharge, so to speak—are adequate in any case when one considers that out of over a million pensioners, more than 2 million are on supplementary assistance with probably another half million being entitled to further help. I often think—this is not the time to say it, perhaps—that an increase in basic pensions might save on some of the concessionary payments we make and would restore more dignity of choice, without which no real personal freedom exists.
We submit that the Government have not established any justification for the clause; they seem to have plucked the figure of 1 per cent. out of the air in a way that is not relevant to the position of people on pensions. Anybody could work out a price index which included whisky, fur coats, petrol and motor cars and which would show an enormous increase in the cost of living, but it would be equally irrelevant to the general RPI basis which seems to be the basis being used today.
The Government have yet to prove that pensioners did in fact receive 1 per cent. more than the rise in the cost of living, if it refers to their cost of living. Figures can be tedious, but to bring some life into this clause I reckon, to take the Government's assumption, that a single pensioner would have received 25p a week—and the noble Baroness confirmed that today—above the base line. What is the pensioner supposed to have done with that money? No crystal ball told him that he was being overpaid and to put that 25p in the teapot on the mantelpiece against next year's deprivations. That money has been spent. On what has that money been spent? May I remind your Lordships that a pint of milk costs 18½p? Perhaps the pensioner bought a loaf of bread, or perhaps he sent a Christmas card to somebody.
Lord Peart: No—too expensive!
Baroness Jeger: Or perhaps he posted a couple of second class letters, allowing too something for the envelopes. While the Government are dedicated to

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correcting what appears to be over-provision to the poor they show no concern about the over-provision they make to the highest taxpayers and those with the highest disposable income. In fact, I reckon that the single pensioner will lose some £15·60 a year in real terms. The Secretary of State said in another place on 24th February:
"About £225 million will thus be saved by this measure—£225 million which we cannot afford to spend".—[Official Report, Commons; col. 762.]
It is money that the beneficiaries cannot afford to do without. Lower social security benefits in real terms may mean that the state may save in cash on the cost of unemployment, illness or age—but that cost is borne instead by the deprivation and erosion of human dignity of the individuals concerned. This is a mean and irrelevant clause. It has nothing to do with the economic problems which are at the heart of the difficulties facing this country and the rest of the world.
As the noble Baroness the Minister has said, Clause 1 is the most important clause in the Bill and I, too, shall speak more briefly about the other clauses. We welcome the maternity arrangements, which have been the subject of much discussion, and we shall of course be looking at them in greater detail at Committee stage. We note that, for a change, there will be an additional cost of £6 million. The sooner arrangements are made to start these payments, the better, and we hope that the fullest consultation will take place.
In respect of Clause 3, which deals with the question of increased penalties, I welcome the statement made by the Minister this afternoon that there is to be no lenghthening of custodial sentences—so that we shall not inflate time as well as money. Nobody wishes to excuse fraud against the community, neither by tax dodgers nor by dishonest claimants for social security. But we share the noble Baroness's concern and must be anxious that any intensified campaign in this direction should not reduce take-up of benefits by those who are entitled to them. The Supplementary Benefits Commission estimated in 1979 that £4,000 million were unclaimed and that about 25 per cent. of eligible people—about 1 million people if one includes their families—did not take up benefits to which they were entitled. I was glad to hear what the noble Baroness said with regard to instructions to officials which will try to ensure that any action under this clause will not further inhibit people from claiming their rights. I know it is not the noble Baroness's concern, but hope that the Government will be even-handed and, while the DHSS will be increasing the number of its fraud investigators, I wonder whether there has been an increase or a decrease in the number of Inland Revenue investigators.
The question of custodial sentences is one for the courts, but I believe it is right to say that all of us must hope there will be the greatest hesitation in using imprisonment in these cases. It is generally agreed that it is important to reduce the prison population and the length of time that people spend in prison. If we are to return to economic arguments, it costs at least £120 a week to keep one prisoner; in some prisons it costs £160 a week. One must add to that expense the cost of unavoidable social security benefits paid to the prisoner's family. I hope that the utmost preventive work will be done in this direction.
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Clause 4 of the Bill deals with benefits paid to a person after returning to work and I agree with the noble Baroness that this is a technical amendment about the cover of benefit which amends for clarification Section 9 of the 1976 Supplementary Benefits Act. That seems to me to be acceptable as it stands. We all welcome Clause 5. This is the clause which will especially help dialysis patients because it takes away the requirement that people must be off work for four consecutive days before they can claim benefits. For such patients it is often a case of having only two or three days off before returning to work. I hope that this clause will be applied as generously and as tolerantly as possible to other disabled people, because there are many people trying to hold down a job who do require regular treatment of various sorts. I hope that the widest publicity will be given to helping such people to feel they are included under this clause.
Clause 6 and Clause 7 are both largely technical. Clause 6 deals with reciprocity with other countries and, quite rightly, makes this aspect clear. We welcome Clause 7 although I am not sure it is relevant—but if this was one method of getting it on to the statute book then it was right to do it in this way and to settle fairly this point about officers who served in India and Burma. With those exceptions I still feel that this is a mean Bill. It seems to me that it carries further forward the Government's deliberate policy of eroding the sense of community and social responsibility which is essential in a complicated and civilised society. It is not a question of good housekeeping and of doing without things we cannot afford. In my view, the Government are guilty of by-passing because they are spending money on the wrong things. They are putting £14,000 million into the pockets of 5 per cent. of the people of this country. This Government cut taxes on the rich and cut benefits for the poor in real terms.
The question is: How should we spend what we have? We can all complain that we do not have enough money and say that when we have more we will put it to good use. But the question that faces society today is, how can we pool the social risks that confront millions of our fellow citizens and which confront an increasing number of unemployed—with the figure reaching up to 3 million which, including their families, will be a really unacceptably large part of the population? Although this may seem just a little Bill, to me it symbolises the difference in attitudes to public and private expenditure which is at the heart of our political and philosophical arguments. The Government, I repeat, are deliberately making economic arrangements which emphasise instead of healing the differences between one man and another. That is a long way from St. Francis of Assisi; and I regret this Bill, especially Clause 1.
3.40 p.m.
Lord Banks: My Lords, I should like to join in thanking the noble Baroness, Lady Young, for her very careful explanation of the contents of this Bill. As the noble Baroness said, this Bill would be a routine and relatively non-controversial Bill but for Clause 1—the clause which includes the proposal to claw back in the November 1981 uprating the 1 per cent. overestimate in inflation allowed for in the November

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1980 uprating. The problem arises in the first instance through having a period of reference half in the past and half in the future. Guesswork is inevitably involved if that is so, and on a number of previous occasions in this House I have drawn attention to the undesirability of that. Indeed, I criticised the last Government when they introduced this system, creating these problems, and, incidentally, at the same time depriving recipients of the benefits of an increase that they would otherwise have received if the previous historical reference period had been adhered to.
I agree with the noble Baroness, Lady Jeger, that we must consider the decision to claw back the 1 per cent., and its cumulative effect in later years, against the background of what the present Government have already done to social security benefits. In regard to long-term benefits the link with earnings has been broken. So far as the invalidity pension is concerned the link with earnings has been broken and the benefits subjected to a 5 per cent. abatement, though the Government have promised to make good the abatement when the benefit is brought into tax. So far as short-term benefits are concerned, they have been subjected to a 5 per cent. abatement, and as yet no promise has been forthcoming that that abatement will be made good when they are brought into tax; and of course not only is the abatement effective in the year in which it is first imposed, but it has a continuing cumulative effect.
I believe that the Secretary of State has claimed total savings on the welfare budget of £1,500 million. We must, too, consider the decision to claw back the 1 per cent. against the Government's attitude to shortfalls in the past. It is true that they had given an undertaking to make good the shortfall in the Labour Government's estimate with regard to long-term benefits at November 1978; and that they did make good. But they refused to make good the shortfall of November 1978 with regard to short-term benefits, and they refused to make good the shortfall at November 1979 with regard to long-term benefits. The present Bill deals only with November 1981, but if future over-estimates are to be dealt with in the same way, then we require cast iron assurances that under-estimates will be made good. Now the Prime Minister has given a pledge that so far as pensions are concerned, that will be the case. It is not clear to me whether the pledge applies also to other long-term benefits, and it would appear that it does not apply to short-term benefits. I should be grateful if the noble Baroness, Lady Young, will clarify that point when she replies.
As the noble Baroness, Lady Jeger, has said, it is not as if social security benefits are too high. If we look, for example, at unemployment and sickness benefits, we find that a man with a wife and two children in 1970 received benefit which represented 66·5 per cent. of net average earnings. In 1979 the percentage had fallen to 59·5 of net average earnings. So far as pensions are concerned, 18 years ago my party accepted the target of 33 per cent. of national average earnings for the single person's pension and 50 per cent. of national average earnings for the married couple's pension.
What is the position today? At last November, the maximum point—the point when the percentage
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is at its highest because the increase has just taken place—the pension for the single person represented 23·73 per cent. of national average earnings, which was nearly 10 per cent. short of the target, and for the married couple the percentage was 37·98, some 12 per cent. short of the target. Of course, the figure would gradually fall away during the year, as inflation bit into it.
In those circumstances, we on these Benches welcome the over-estimate of 1 per cent. In view of all these factors the Government might well have regarded the 1 per cent. over-estimate as a small and fortuitous modification of the cuts already made. However, the Government say that they cannot afford that, that the economy will not permit them to allow that over-estimate to stand. But I wonder whether that is anything more than a dogmatic assertion. The Government are spending as a percentage of gross domestic product less than are many other industrialised countries, and figures published again during the last two or three weeks have indicated how far down the league table we come.
Government spending as a percentage of gross domestic product is not higher than it was five years ago. Under the present Government it has increased as a percentage, but it fell in the latter part of the last Government's term of office. But we are told—the noble Baroness repeated this this afternoon—that in 10 years the social security bill has gone up from 17 per cent. of total public expenditure to 27 per cent., and must be checked. We know the main reasons for this—for example, the rising number of retirement pensioners, which came as no surprise. That was allowed for in the retirement pension provided under the 1975 Act and introduced in 1978. The contributions introduced at that time have not shown themselves incapable of providing that benefit. Any increase that there has been in the national insurance contribution has been largely as a result of the increase in unemployment.
Then there has been the introduction of child benefit, which meant the substitution of cash payments, which count as public expenditure, for allowances against tax, which do not. There has been an increase in the real value of benefits. This, too, was provided for in the 1975 Act so far as national insurance is concerned, and there have been some new benefits, such as mobility allowance.
So Parliament decided to tip the balance towards social security. Was that wrong? I believe that we need a thorough examination of the relationship of the social security budget to the national budget and to the national economy. What is the right proportion of expenditure on social security, bearing in mind that social security payments and social security contributions, though they of course have an impact on the economy, are nevertheless a transfer of income and not a claim on physical resources; and bearing in mind, too, the needs of the population. Should benefits financed by national insurance contributions be counted at all as public expenditure, except as regards the Treasury supplement? Compulsory insurance payments for motor insurance, for example, are not so regarded. I believe that we need to have the answers to questions such as those before we can say that the Government, having already made considerable

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cuts in social security benefits, must for the sake of the economy go on to claw back the small, fortuitous mitigation of the cuts which social security recipients have received.
3.49 p.m.
Lord Kilmarnock: My Lords, I am glad to be able to begin by welcoming the noble Baroness's announcement that the Government have dropped their original intention to increase the custodial sentences associated with frauds of supplementary benefits, of benefits of all kinds. It seemed to me to emerge very clearly from the debate that we had during the Committee stage of the Criminal Attempts Bill, in particular from the speeches made from this Bench by the noble Lords, Lord Donaldson of Kingsbridge, and the noble Lord, Lord Hunt, that that maximum deterrent effect lies in the very prospect of going to prison at all, and the maximum punitive effect is achieved during the first few days or weeks. What is more, such an increase would have gone directly against the Government's declared strategy to reduce the prison population. Therefore, we on this Bench are able to welcome the announcement.
Now I turn to the main clause and principal raison d'être of the Bill, Clause 1. This has been very fully covered from the Opposition Front Bench by the noble Baroness, Lady Jeger, and by the noble Lord, Lord Banks, with his usual thoroughness. But the matter of the claw-back is not as simple a one as it appears at first sight, and in the interests of clearing my own mind and those of my noble friends, perhaps, I am afraid I must ask the noble Baroness to answer, when she comes to reply, one or two questions. In the first place, can we have an undertaking from the Government that if there is an under-estimate this year or in any future year it will be made good—that is, that the reverse procedure will apply—and that any under-estimate will be made good to pensioners and any other long-term beneficiaries with the same speed as this supposed over-estimate is being clawed back from them?
Next, what is the position to be if an intentional rise is awarded over and above what would be justified by the price index, owing, perhaps, to an improvement in the country's economic position? On the principle now being established, could this be clawed back in a subsequent year because the economy had turned down again? It really would be intolerable if pensioners in particular were to be placed on this type of see-saw. Furthermore, these abstruse Treasury calculations cut little ice with the beneficiaries, who find them extremely hard to understand.
There is, incidentally, a further serious defect in this legislation, which is that new entrants to the pensioner category this year are being docked on account of a notional excess payment which they did not even receive. It was hardly a "big deal" for those who did, and will be of little comfort to those who did not.
I anticipate that the noble Baroness may say that this is a once-and-for-all operation; in other words, that pensioners and others are being asked to repay a 1 per cent. over-payment last year, this will put the record straight and that is that. But, my Lords, it is a precedent, and we all know how insidious they can be.
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Furthermore, is it really correct to say that this is a once-and-for-all operation? Is there not, in fact, as I think the noble Lord, Lord Banks, suggested, a cumulative effect here? The supposed over-payment took place on last year's lower base, surely, while the 1 per cent. claw-back is to be applied on this year's higher base. The effect, I agree, is relatively small when a single percentage point is involved, though this does not mean that it will not be bitterly resented by 9·6 million pensioners up and down the country.
But what if the Government are wrong in the future by, say, three percentage points? The cumulative effect in this case would be considerable. That is why I believe that this is a thoroughly undesirable precedent to introduce into the social security legislation of this country. I really cannnot believe that it would be right that old people in particular, whose tight budgets are particularly sensitive to marginal changes in their real income, should be subjected to this see-saw approach to their pensions. I make no apology for repeating the see-saw metaphor because I believe it is apt.
Finally, there is the whole question of which index is to be used as the basis for calculating statutory pension increases—and this was in fact touched on also by the noble Baroness, Lady Jeger. The 1975 Act said prices or earnings, whichever was the highest. Now the base is just prices, and the yardstick used is the retail price index. But, as the noble Baroness indicated, there are other indices. The TPI, the tax and price index, for example, is several percentage points above the RPI. There are very strong grounds for believing that the RPI does not truly reflect pensioners' living costs. All the available evidence shows that the rise of the cost of living, both for low-income families and for retirement pensioners, is greater than the RPI. The noble Baroness, Lady Jeger, gave some of these figures, but I think it is worth repeating them. The last family expenditure survey showed that a single pensioner living alone spends 13·8 per cent. of income on fuel, whereas a single person below retirement age spends only 5·6 per cent. If fuel, food and housing are taken together, the single pensioner spends 69·6 per cent. of his income on these three items alone while the corresponding percentage for a single householder below retirement age is only 43·5 per cent.
Another important consideration is that old people frequently lack transport to take them to supermarkets and shopping centres, and are therefore forced to do their shopping at the corner shop. I have nothing against corner shops, and long may they survive, but their prices are inevitably higher than those of the big chains and this must affect the costs of old people using them. All in all, my Lords, there would seem to be a strong case for using the family expenditure survey or some other adequately weighted measurement to assess pensioners' living costs rather than the retail price index. I understand that it was the Government's pledge at the last election to keep pensions in line with the cost of living. If this is to have any real meaning, it must surely apply to real costs. I should therefore like to ask the noble Baroness to tell us when she comes to reply whether the Government will consider revising their procedures for assessing pensioners' statutory increases. The present basis seems to be less than satisfactory.
3.56 p.m.
Lord Boyd-Carpenter: My Lords, as social security Bills go, this is not a major measure, although it shows a sad consistency with a good deal of other recent legislation, in that it arrives in this House with two corrigenda slips attached. I should once again like to ask my noble friends on the Government Bench whether someone cannot take a grip on the supply of legislative material effected to this House, and make sure that Parliamentary Bills in particular arrive here word prefect, and not with two corrigenda slips attached, involving one in the effort, particularly if one is consulting people outside, of fitting the alterations into the text as originally issued. This used not to happen some years ago; it is not necessary that it should happen; and it indicates carelessness somewhere. Naturally I do not attribute that to my noble friend Lady Young, but I do attribute it perhaps to some of those who serve her.
As I ventured to say to your Lordships, this is not a major measure, although the noble Baroness, Lady Jeger, did her splendid best to try to make it seem so. But your Lordships will have observed that she did so only by reminding us of a good deal of the material in at least two preceding measures which have been through the parliamentary process and which are now the law of the land. As my noble friend on the Government Front Bench said, in point of substance or controversy, Clause 1 is of course the only point of any real substance.
However, I should like to address myself, if I may, to the general approach of the noble Baroness, Lady Jeger. She did not appear to appreciate, not only in her strictures on this measure but in her somewhat retrospective comments on preceding measures, that no activity of government, not even social security, can be immune from the effects of the general state of the national economy. I have on occasion reminded your Lordships of the fact that I was at one time responsible for social security. Indeed, I believe I was so responsible for a longer period than any other Minister since the National Insurance Act 1948. But I did have the good fortune, for which I thank providence, that I was in that office at a time when the national economy was expanding. This was an era when even lower levels of taxation produced ever higher levels of revenue because the national income, under the wise administration of that era, was steadily growing. I therefore have a good deal of sympathy with those who, like my noble friends on this Bench, have to look after our social security system at a time of manifest economic difficulty. The problem is a different one; and with all respect I suggest to your Lordships that this is a matter which we ought to have very much in mind in considering the various proposals brought forward.
I thought, if the noble Baroness, Lady Jeger, will allow me to say so, that, for her, her approach was a little simpliste when she compared the modest restraints involved in Clause 1 with certain reductions in direct taxation made two years ago. The approach seemed to suggest—and I hope that she will not mind my putting it in this way—that the function of Government was to take a grip of the whole wealth of the country and then hand it out, parcel it out, in a way they regarded as morally meritorious. That kind of
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thing has been tried and has been a disastrous failure because it ignores the basic element in the whole equation, the incentive to create wealth. If you adopt this maternalistic attitude—and I was about to say "paternalistic"—towards the whole of the national income, then, inescapably under what is still basically a free enterprise system, you discourage enterprise, damage incentive, drive the wealth producers overseas and, at the end of the day, have less wealth to distribute. So I think that we should look at this very much with the lesson of the late 1950s in mind; that the possibility of making the improvements in our social security system, which on all sides of this House and outside we want to see, depends on securing a growth in national wealth. An attitude of taking the whole wealth of the nation and bundling it out as some Government department thinks fit is really fatal to that objective of strengthening the national creation of wealth.
Baroness Jeger: My Lords, I am very confused as to what result the present Government policies are having in increasing the wealth of the country in view of what we have seen over the weekend and the increase in the numbers of the unemployed. Is the noble Lord saying that, however much the wealth of the country increases, redistribution has no part for a Government with any social conscience?
Lord Boyd-Carpenter: My Lords, in the first place, if the noble Baroness will exercise the divine quality of patience and allow for the fact that the present Administration inherited the results of disastrous mismanagement of our economy over a number of years and requires time (particularly during a world recession, which obviously has not facilitated their task) to produce results, she will find that the harsh and difficult measures which have had to be taken for this very purpose will in due course have their effect and we shall get back to the happy state of affairs in which the national income is increasing again and in which, among other things, the task of a Minister of Social Security again becomes a pleasant and agreeable one.
As to redistribution, it is foolish to be dogmatic. There comes a point—and it is a matter of enormous argument, I agree, where that point is—where compulsory redistribution discourages the creation of wealth. Undoubtedly, to judge from the results, there have been times in our recent past when we have gone beyond that point but, of course, again, once you have a strong and expanding economy, you can take (as the Macmillan Government took) a considerable amount in taxation and use it to improve the lot of the less fortunate.
That leads me on to the noble Lord, Lord Banks, who in previous debates has perpetrated, if he will allow me to say so, what is the same heresy. He expressed a doubt as to whether expenditure from the national insurance fund was public expenditure at all. I think that if the noble Lord thinks about that, he will realise that it must be so. Expenditure in the national insurance fund comes from two sources: the contributions of the contributors taken from them by law (in something like the way in which income tax is taken by law and, indeed, diminishes the amount of income that they have available to have income tax

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levied upon it) and also directly from the Exchequer by way of the Exchequer contribution. It is, in the true sense, money taken by the state to be spent for particular purposes which the state thinks right. The fact that the noble Lord and I think that on the whole these purposes are right does not, I suggest, make it the fact that this is other than public expenditure, however admirable. Therefore, I suggest to him that it must be taken into account by a Government which have (as noble Lords on both sides of the House well know) an extremely difficult economic situation to handle.
The trouble, as my noble friend Lady Young so well said, is that restraint in these matters is always painful. If you are to administer a great social security system on which a large number of our fellow countrymen are and will be for many years in large measure dependent, you cannot proceed in the handling of it just on the basis that the sky is the limit regardless of the general economic situation. Every item of it must be improved as the year passes. There come times—and this, I think, is one of them; and I say that I am happy to think that I was not myself personally involved at such a difficult time—where restraint is necessary and where things like special priority for child allowance, for example, has to take precedence; and taking precedence means that other things do not go forward as fast as one would like.
This is surely the proof about the social security administration and it is surely, therefore, right for a Government to show kindness and sensitivity, but also to have the courage and the determination to exercise that painful restraint which they have to do. It would have been easier for the Government not to have worried about the 1 per cent. last year. It has always seemed to me that the system under which the increase in pension to take effect in November is announced in April (or, as this year when the Budget was in March, in March) is an odd system, because in times of inflation it is impossible accurately to assess what the retail prices index will have done over as long a period as that. That was not a problem in the late 1950s since the index was stable and, indeed, an increase of 1 per cent. in the course of a year was apt to cause alarm. It is a problem now.
I think the Government ought to give consideration as to whether, notwithstanding the natural convenience from the Chancellor of the Exchequer's point of view, it really makes sense to announce benefit rates for November in a speech in March or early April. Until inflation has further reduced than at present, it seems to cause the Government a quite unnecessary difficulty and to involve them, as this Bill does, in having to do something which is very easy to attack. I commend the Government's courage in this. The House will remember that the pensioner, of all people, is the most vulnerable to the ravages of inflation, not so much because of his pension, which is related to prices, but because many pensioners have savings which inflation erodes. Looking at it from the point of view of the general benefit of the pensioner as of everybody else, it seems to me that the line the Government are taking is courageous and right and I hope that the House will support them in it.
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My Lords, I would add one point on a small matter which I was delighted to see in Clause 7 of the Bill. It is absolutely right that India and Burma officers at last should have the right to go to a pension appeals tribunal as of right. To go by arrangement, to go by concession, is not the same thing. The matters involved are generally very important for them. Although it is late in the day—some 30 years—since we left India and Burma, it is quite good of somebody in the Government to have thought of this at this stage and to have it included in the measure. I should like to thank my noble friend for doing that.
So I personally fully support the Government in this measure. I sympathise with them. All noble Lords will realise how much pleasanter it is to be able, as one day my noble friends will be able to do again, in the words of the poet: "To scatter plenty o'er a smiling land".
"And read their story in a nation's eyes".
4.11 p.m.
Baroness Phillips: My Lords, I intervene in what the Minister might consider is a cheating action because I wish to refer to something which is not actually in the Bill. I call in aid the fact that all social security Bills, having had the experience of dealing with them from the Front Bench, when in Government, tend to be rag bags. In other words, various things are put in which are not in total juxtaposition, as indeed is the clause to which reference has just been made. I do not intend to follow what the noble Lord, Lord Boyd-Carpenter, said other than tell him that people do not feel that the Government give them any pensions at all. Most people feel—and rightly—that during their working life they make a contribution which were they to put it in a private insurance scheme would certainly not be subjected to every wind of change. Governments take advantage as no private scheme would attempt to do.
They would probably have put the money in a much more protected source so that it would be there to pay out. One of the points that comes out clearly about the paying in and the drawing out is in the clause which refers to the maternity pay. One should be delighted that the Government are putting it in in order to pay more; but when Governments purport to increase something I am always very nervous that at some later stage they use the same clause in order to decrease it. They have not put in the word "decrease"; I think they have put in the word "increase". I only hope that this augurs well for the maternity payments.
As your Lordships will know, under the maternity payments you can receive—though it is unlikely that many people do—three things. You can receive the maternity grant, which is the magnificent sum of £25. At the price of most children's clothing and cots, prams, et cetera, I do not think that that would purchase very much. You can receive the maternity allowance which is payable for 18 weeks, and you can receive the maternity pay provided you fit in with all the necessary qualifications.
The maternity allowance has not been mentioned in this Bill. This is the one to which I wish to refer. The allowance we are told is payable for 18 weeks. These are 18 weeks which the Government specify.

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In other words, 11 weeks must be taken before confinement and the rest afterwards. I said when I put down a Question about this that surely if you are allowing payment out of any fund you must have allocated on the assumption that everybody drawing would draw the 18 weeks. You cannot have assumed that a certain number would only draw the odd seven. I appeal to the Government to make this a flexible payment.
I have come up against this largely because my own secretary—who is continuing to work largely because she is needed by the employer and is really doing a favour to the employer—will ultimately lose the money for which she has paid in. As she points out, she has paid a full stamp. She says: "Since I am not going to be able to draw it, I shall make sure that I point out to other people that there is no particular advantage in paying the full stamp."
That is the disastrous effect that you can have if people feel that they are not getting the benefits that they have been told that they will receive. The noble Lord, Lord Cullen of Ashbourne, when he replied to my Question, pointed out that a review was in progress. He heartened me by saying that perhaps it might be simplified and perhaps there would be a better way which everybody could receive a higher sum of money thus cutting across the rather complicated rules which at the moment mean payment. I wonder whether we can dare ask whether, if we move an amendment to this Bill in the later stages, the Minister would receive the idea? This is on one simple matter: the 18 weeks' payment should be a flexible payment. The noble Lord, Lord Boyd-Carpenter, referred to prosperity. Prosperity is obviously earned by people who are still working. If they are going to be penalised, as indeed pensioners are if they work—we all know the iniquitous earnings rule, it is taking money away from them—there is precious little encouragement to add to the national wealth.
This is a simple example but it affects a large number of young working wives. It is much better for them if they work. The money is surely intended for the use of the child, not merely to keep the mother away from work. Obviously, if women were going down coalmines it would be absolutely essential that they did not work; but so many women are working in places where they are needed and wanted. I feel that it is unfortunate that this system works in this curious way. I am hopeful—casting my bread upon the waters—that perhaps if I could introduce a small amendment at the next stage of the Bill the Government will look kindly upon this. I do not think that it will involve a great deal of increase in money being paid out but it will enable the people who continue working to receive what they feel to be rightly theirs.
4.17 p.m.
Lord Wallace of Coslany: My Lords, we have had a somewhat short debate which to me to some extent is disappointing because this is a very important and vital subject. I should like to thank—as indeed my colleagues have done—the noble Baroness for her outline of the Bill, which was made with great speed and with her usual smooth and reassuring performance, although unfortunately I am not reassured.
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The Bill that we are discussing has been described in another place by a Conservative MP as "unfair and mean". That in my view is an understatement. This MP with another actually voted against their Government on the Second Reading. As the House is aware, this Bill is the third in a series of Bills on social security. The purpose of the Government with this Bill, as with the others, is to reduce public expenditure, and the effect is to reduce the amount and purchasing power of benefits. That in a nutshell is what this Bill is about.
We are told time and time again that the economic position of the country is critical—and I do not dispute that—and that all sections of the community must make some sacrifice. Bear in mind the lavish tax handouts given in the first Tory Budget where, by the end of 1980–81, the loss of revenue through the change in the standard rate of income tax alone will amount to approximately £6,400 million. The loss each year by the adjustment in the higher rate band is about £300 million.
Taking this into account, how can the Government talk about sharing the burden to the increasing millions of unemployed, the disabled and the sick? Are not these members of our society sacrificing enough already? It is stated that the cuts are small. The fact is that the living standards of the worse-off sections of the community are being reduced by this Bill and preceding legislation.
The Secretary of State said to the Conservative Party Conference in 1980:
"We believe that it is the duty of the strong to help the weak. That is why we seek to help the most vulnerable in our society. Those words are not just pious platitudes: look at the record".
Look at the record indeed! Without taking into account the 1 per cent. issue in this Bill due to the breaking of the link of pensions with earnings, single old-age pensioners are 90p per week worse off and married couples are £1.40 worse off. Take the long-term disabled, and bear in mind that this is the International Year of the Disabled; every single invalidity pensioner is suffering a cut of £2 per week that he would have received, and a married couple a cut of £3 per week. Look at the record indeed! All this is without taking into account Clause 1 of this Bill.
Quite honestly, I do not think the majority of those on the Benches opposite know or appreciate what life on a low income, be it wages or social security benefits, really means. Charles Dickens' character, Micawber, is not exactly typical of the people we are discussing and who are affected by this Bill, but Dickens had an appreciation of poverty:
"Income £1, expenditure 19s 11d: result happiness. Income £1, expenditure £1. Os 1d: result misery".
When the income is low, a few pence one way or the other, be it price rise or social security benefit, makes all the difference in the world. Some of us know what it means from our own personal experience in the past.
We often hear references being made to some women being bad managers. This sort of talk usually arises when we discuss social security. It arose in a question very recently which was discussed in this very Chamber. A woman has to be a mathematical genius to cope with the financial situation of a family on low income, be it a single-parent family or a family with the breadwinner physically disabled or unemployed. It is a

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constant battle, often lost, to make ends meet. These are the people from whom the Government expect to effect financial savings in the present economic situation and to defeat inflation—the Clause 1 victims, in fact.
I will now make a few comments on Clause 3, with its increased financial penalties on those seeking benefits from the state to which they are not entitled. I am glad to see that the imprisonment side of that has been cut out. Those "scroungers", as sonic call them, are comparatively few in number but any case established is headlines in some sections of the press and creates an impression of widespread abuse which in fact is not the case. Some 1,000 staff are, I understand, now being employed to sniff out fraudulent claims, which operation is expected to save £50 million. What is the cost annually of this exercise? Why this concentration on social security benefits and not on tax evasion which is estimated to cost about £2 billion per annum?
What I am afraid of is that the increased severe financial penalties will scare off people who are entitled to claim supplementary benefits but do not do so. I understand it is at least 500,000, and probably more. When I was Member of Parliament for Norwich North I frequently had to try to persuade elderly or handicapped people to claim supplementary benefit. Many had not done so mainly because of lack of awareness of such benefits and very often, with the elderly, just pride. If I failed to convince such people I used to write or phone the manager of the local social security office and ask him to send round to the person concerned a tactful and experienced member of his staff—and I pay tribute to the many members of the social security offices I have met in the course of my career. As a result, many people received additional help to which they were fully entitled.
Now I put this point to the Government: You are engaging in an intensive and expensive campaign against fraudulent claims. What action are you taking to persuade the entitled to claim? I am persuaded to make this point arising from an article in the Guardian dated 28th May 1981; and I quote:
"Radio commercials urging the elderly and the unemployed to claim more social security benefits are about to be launched by Labour-controlled councils in Sheffield and Newcastle upon Tyne.
"Their decisions follow a successful publicity campaign by Strathclyde Council which resulted in extra social security payments last year of nearly £1 million.
"Both councils are voting ratepayers' money totalling £32,000 to launch the campaign, which will include the employment of a welfare rights worker and an education and information campaign on welfare rights. Newcastle upon Tyne is also to launch an 'advice line' for people seeking help on benefits. Sheffield is to concentrate on helping those on short time, the newly unemployed and the elderly.
"The authorities' move follows a letter to three Sheffield MPs from Mrs. Lynda Chalker, a junior Social Security Minister. In it Mrs. Chalker said that the Government's main purpose in its Social Security Act was to save money—about £270 million this year and up to £480 million next year. She also condemned the idea of 'an increase in general publicity' to encourage more claims".
Will the Government support and encourage such councils to do their work for them or will they indulge in a similar campaign? Or will they take action to stifle such activity, on the grounds that their main purpose in their social security legislation is to save money—
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"about £270 million this year and up to £480 million next year"?
This is a ruthless, tawdry and mean little Bill. By tradition we do not oppose Government legislation passed from another place on Second Reading in this House. I, for one, respect tradition but I am very strongly tempted indeed to advise my noble friends to divide the House. We shall not do so, but will closely examine the Bill in Committee and on Report. The Government Chief Whip, as is his habit these days, will no doubt put his faithful watchdogs on the doors. Even so, we look forward to receiving support from many quarters in our effort to bring a degree of humanity into what constitutes a harsh and unjust piece of projected legislation.
4.28 p.m.
Baroness Young: My Lords, we have come to the end of a short debate on this Bill. I should like to begin by thanking my noble friend Lord Boyd-Carpenter very much for speaking in support of the Government. I am grateful to him for understanding some of the problems that we on the Front Bench face. One of the difficulties that the Government encounter is the fact that a lot of people are disinclined to recognise the reality of our situation and to face the very hard and difficult policies that we are asked to carry out. I have listened on a number of occasions to the strictures from the Opposition Front Benches, particularly in debates like this, and have been accused of a great many things. I should like to assure the Front Bench opposite that I understand what it is not to have a lot of money. I only wish that I had never had the experience of having a little money, but, alas!, that is not the case. I have also known a lot of people who have had to struggle on very little money, and I am perfectly well aware of the difficulties that people face in these circumstances.
I should also like to assure noble Lords opposite that I should much prefer, as my noble friend Lord Boyd-Carpenter has said, to be able to come to the Dispatch Box and say that all the benefits were going up. Who, in political life, does not like to be able to say what people want to hear, and to say it because it would give so much pleasure and help to a lot of people who deserve it? There is surely no difference of opinion about that. But I do not think it helps, in these circumstances—certainly, it does not help the elderly or those on both short- and long-term benefits—to give exaggerated pictures of what is happening. Therefore, I am very grateful to my noble friend for setting out the economic background to this Bill—I shall not repeat the arguments, because he has made them very carefully and clearly—and, also, for his explanation and understanding of what Clause 1 is attempting to do.
Having thanked my noble friend for his remarks, and particularly for his welcome to Clause 7, I should like to say to the noble Baroness, Lady Jeger, and, indeed, to others who have spoken, that I am glad that they at least support Clause 3 and some of the other measures in the Bill. I shall concentrate my remarks very largely on Clause 1, in order to get away from some of the exaggerations which play on the fears of the elderly, and in order to set the record straight—which is very important—in relation to this

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Government's and other Governments', policies on pensions.
There is one matter which I should like to clear up which is not directly concerned with the Bill, though it was referred to by the noble Baroness, Lady Jeger. It relates to the employers' sick pay arrangements and the effect that they might have on disabled people. It is very important to make it clear that this is not, as the noble Baroness suggested, directly relevant to this Bill, but it is worth saying, and saying as often as we can, that the attendance record of disabled people is, in general, very good indeed. The recent figures on employing disabled people, which have been produced by the Manpower Services Commission, emphasise the point that disabled people are good employees with good records. I should not want the suggestion to get about, in any way, that the sickness absence of disabled people is generally above average, because there is no evidence of this. It is very important to make that point quite clear.
To turn to Clause 1 of the Bill, the really contentious part of it is subsection (3). This enables us to take into account at this year's up-rating the fact that last year we increased benefits by more than was our intention. The intention last year was to increase pensions and other long-term benefits, apart from invalidity benefit, in line with prices, and to increase short-term benefit and invalidity benefit by five percentage points less than the increase in prices, under the provisions of the Social Security (No. 2) Act 1980. In the end, the estimate of price increases was 1 per cent. too high, at 16½ per cent. instead of 15½ per cent., and subsection (3) enables us to calculate this year's rates by recalculating the 1980 rates as if the prices forecast had been correct, and to increase those recalculated rates by 10 per cent., which is the expected increase in prices between November 1980 and November 1981. I have been asked—
Baroness Jeger: My Lords, before the noble Baroness leaves the point of prices, can she answer the point raised by more than one speaker? Of what was it 1 per cent.? Was it 1 per cent. of the general level of prices, 1 per cent. of the RPI or 1 per cent. of the pensioners' estimated budget?
Baroness Young: Yes, my Lords. I was just coining to that point, because it is an important one which the noble Baroness and other people raised. The basis is the retail price index. I should like to say on this point, because it has been raised by a lot of noble Lords, that the general retail price index is widely accepted as a reliable measure of price increases faced by different types of households to which the index refers. It was, of course, used by the noble Baroness's own Government when they were in office. It includes low income families and the majority of social security beneficiaries, including about half of all pensioner households; and, of course, the up-ratings affect many more people than pensioners alone.
As to the suitability of pensioner indices, which point was raised by the noble Lord, Lord Kilmarnock, I understand that these are limited in scope. In particular, they exclude housing costs and are published only quarterly. They cannot, therefore, be compared directly with the general index, and it would not be
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appropriate to up-rate benefits in line with an index which does not cover housing costs. It is very important that I should make that clear.
It may be helpful, if I go on to say that, in 1977, 1978 and 1979, pensioners' indices rose by less than the general index, excluding housing. It is true that over the 12 months from the fourth quarter of 1979 to the fourth quarter of 1980—this is the nearest we can get to the 54-week period between the 1979 and 1980 upratings—the general index, excluding housing, rose by 13·3 per cent. compared with 14·7 per cent. for the one-pensioner index and 14 per cent. for the two-pensioners index. It would not be easy to calculate for a 54-week period, but the difference would probably not be significantly altered. So the 1 per cent. relates to the retail price index, which is the index now used in all cases, and I think it is right that we should stand by that same index.
I should like to reaffirm—again, this is a point which was raised by the noble Baroness, Lady Jeger, and the noble Lord, Lord Kilmarnock—that the shortfall will be made good for pensioners, as for other long-term beneficiaries. The shortfall will hold for all of them. It is the intention that the provision will cover only this year's 1 per cent. overpayment and will not extend any further than that. So there is no question of this arising under this Bill at another time.
On the question of the overpayment, I think that the noble Lord, Lord Kilmarnock, has misunderstood the position. The 1 per cent. was 1 per cent. extra on the 1979 benefit rates. By recalculating the increase on the 1979 rates to give a notional rate for November 1980, the 1 per cent. is precisely recovered. It is not a direct 1 per cent. subtraction from the 16·5 per cent. The effect is to increase the 1980 rates by 9·06 per cent.—not a full 1 per cent. reduction.
The noble Baroness, Lady Phillips, raised a quite separate point about maternity pay. She has raised the question of maternity allowance before in this House, and I know that she feels very strongly about it. The estimates of maternity allowance expenditure are based on actual experience and on birthrate projections. To extend the entitlement period would mean an increase in costs, however marginal that might be. I understand that the noble Baroness hopes to put down an amendment to give flexibility of entitlement, which would undoubtedly increase the cost. She will not expect me to say that this is something which I welcome, but of course I shall look to see what the amendment is when she puts it down before giving a definitive answer on the point.
The noble Lord, Lord Wallace of Coslany, raised a number of points about the amount that we shall save by employing more people to deal with fraud and abuse. My understanding is that the net savings figure of £40 million relates to the extra resources devoted to this area, and a fuller Statement will be made to the House next week on this subject. But it is a net savings figure that we expect to get.
I hope I have covered in my remarks the answers to the main questions which have been raised. I am grateful for the support I have received for the non-contentious parts of the Bill, which I think help in a number of areas. For instance, there was the point which was made about home dialysis patients, and the point which my noble friend Lord Boyd-Carpenter

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made about pensioners. I think that the noble Baroness, Lady Phillips, and the noble Baroness, Lady Jeger, are pleased about the provisions concerning maternity pay which will mean that no loss is suffered once the earnings-related supplement goes. I feel this will help that small group of people.
Finally, the Government remain committed to standing by the statement which my right honourable friend the Prime Minister and others have made, and have repeated, that the Government's plan is to keep pensions and other long-term benefits up with prices. This is a guarantee that the pensioners will not fall behind others. The Government's record in this respect is good. If we look at social security benefits over a long period of time, we see that Conservative Governments have introduced a number of new measures. As my noble friend has quite rightly said, when the economy has improved, pensions have improved in real terms. I hope we may agree that we all want the economy to improve, not only because we should like the country to be more prosperous but because it is only a prosperous country which is able to help really effectively those who are the least fortunate of its citizens.
On Question, Bill read 2a, and committed to a Committee of the Whole House.

Iron and Steel Bill
4.42 p.m.
The Minister of State, Department of Employment (The Earl of Gowrie): My Lords, I beg to move that this Bill be now read a second time. The Iron and Steel Bill was introduced into your Lordships' House shortly before the Recess, having spent some three months under consideration in another place. The Bill has two distinct purposes. The first is to make extensive changes in the duties and powers of the British Steel Corporation and in the powers of the Secretary of State to give directions to the corporation. The second purpose is to effect a capital reconstruction of the corporation, to revise their borrowing limits and to reduce their interest burden.
The provisions in this Bill are necessary in order to ensure that the BSC can attain the objectives which underlie the corporate plan for 1981–82; namely—and obviously—to become internationally competitive and to end the era of persistent loss-making which over the years has been so expensive for the British taxpayer. These are commercial objectives and the Bill provides that the corporation can operate in a similar way to a commercial organisation, by enabling BSC to withdraw from activities on which a profit cannot be made. The Bill also removes the limits on the extent to which BSC can be privatised, whether by outright sale of assets or by joint ventures.
It is an essential element of the Government's policy towards the steel industry that BSC should compete fairly with private sector companies, and the Bill contains a new provision, inserted at Report stage in another place, which enables the Secretary of State to direct the corporation to set up separate companies for activities which are in competition with the private sector.
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The modification of the corporation's functions and the organisation of their activities is effected by Clauses 1 and 2 of the Bill. The corporation will no longer have the main duty to promote the supply of iron and steel products or to ensure that the reasonable demands of United Kingdom manufacturers are met. A number of their subsidiary duties will also disappear, such as, for example, the duty to promote exports and to promote research and development.
The second part of Clause 1, subsection (3), modifies Section 3 of the 1975 Act which confers upon the corporation their powers to carry on iron and steel activities, to sell iron and steel products and to carry on certain other activities. This modification will secure that the corporation have the legal power to carry on activities through companies in which there is private sector investment. The overall effect of subsections (2) and (3) is threefold. First, they will facilitate the formation by the corporation of companies to carry on any iron and steel activities, or other activities within their powers, and the holding of shares in companies which also carry on such activities. Second, they will enable the corporation to operate entirely through other companies in which they hold shares so that the BSC themselves need carry on no activities on their own. Lastly, they will enable the corporation to dispose of property and rights so as to reduce the undertaking of the corporation to minimal proportions.
Clause 2 is a lengthy and complex clause and, as I have already mentioned, it was introduced as a new clause during the consideration of the Bill in another place. The opportunity has been taken in this clause of bringing together provisions relating to the organisation of the corporation's activities into a new section, 4A, of the 1975 Act. This new section begins by imposing an explicit duty on the corporation to organise their affairs in the most efficient manner. The new Section 4A provided for in Clause 2 also modifies Section 4(5) of the Iron and Steel Act 1975 to enable the Secretary of State by order to direct the corporation to discontinue or restrict any of their activities, or to dispose of any of their assets. Hitherto these powers were restricted to activities of BSC's business other than iron and steel activities.
In addition to the power to direct the discontinuation of activities and disposal of assets, a new power will be available to the Secretary of State to direct that the property or other assets which are specified in an order under subsection (4) of the new Section 4A should be transferred to a separate company which shall be formed for that purpose. This is provided for in the Bill by subsection (7)(a). In order to ensure that the company so formed into a separate and identifiable accounting unit actually carries on the type of business which is intended, subsection (7)(b) enables the Secretary of State to prohibit the company, except with his consent, from taking on assets which can be used for the manufacture of products other than those indicated in the direction. All companies formed in this way will be wholly-owned by the corporation but it will, of course, be possible for private sector capital to be introduced into these companies when that seems desirable.
The new powers of direction provided in Clause 2 have been introduced, as I explained earlier, in order

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to ensure that competition between BSC and private sector companies is seen to be fair. The gravity of the situation has already been recognised by the corporation. They have given assurances about their pricing policies, and they are already transferring two of their businesses into separate companies—the pipe-makers Stanton and Staveley and the steel stockholders, British Steel Service Centres. To this extent, therefore, the powers which we are now taking should be seen as reserve powers only. But they are necessary even if it transpires that their main function is to serve as guidelines for the way we believe the corporation should manage those businesses which are in competition with the private sector. It is most important that the private sector should be able to see that the corporation are competing on equal terms, and these new provisions should go a long way towards providing such reassurance.
A further purpose of Clause 2 is to remove the power of the Secretary of State to give general or specific directions with regard to the way in which the corporation organise themselves internally. In other words, the efficiency of the corporation's own organisation will be left where it should be: in their own hands. Clause 2 also removes any obligation on the corporation to carry out a formal review of the way their activities are organised and to report their conclusions to the Secretary of State. As a consequence, Section 5(2) of the 1975 Act, the requirement to consult employee representatives in any review of organisation, is also removed. That does not mean that the Government or the corporation consider that consultation with employees should be abandoned. Indeed, we are greatly in favour of increased consultation. But on matters of organisation, the effect of the Bill is to place the primary responsibility where it belongs, on the corporation's own management, who must be free to decide the circumstances in which employees are consulted.
I turn now to that part of the Bill which effects a reconstruction of the corporation's finances. The need for a capital reconstruction stems from an over-ambitious investment programme in the early 1970s which, admittedly with hindsight, was entirely inappropriate to the level of demand which occurred later in the decade, followed by a delay in allowing the corporation to adjust their capacity to the lower level of demand. The corporation were thus left with investments, some of them in modern equipment, that had no potential value in the foreseeable market conditions. The corporation have reduced their capacity rapidly over the past 18 months, and in doing so have written off large amounts from the value of their fixed assets, and incurred considerable redundancy and closure costs.
The investments written off, the generous payments to redundant steelworkers and the loss incurred through inefficient operations in the past can never be recovered. The Bill will recognise the cost to the country by writing off some £3,500 million from the British Steel Corporation's capital. The immediate write-off is effected by Clauses 3 and 4 of the Bill. Clause 3 writes off the liability of the corporation in respect of the remaining borrowings from the National Loan Fund amounting to £509 million. This will provide the corporation with an immediate relief
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from interest in 1981–82 of £59 million. The corporation's long term interest burden will as a result be reduced to £60 million in this fiscal year. This latter figure will be interest payable on the foreign borrowing which will remain on BSC's balance sheet. Clause 4, by virtue of subsections (2) and (3), writes off £3,000 million of the capital invested in the corporation under Section 18(1) of the 1975 Act. When this immediate write-off has taken place there will remain about £1,800 million capital on BSC's balance sheet. These write-offs do not represent the commitment of additional funds, they simply recognise quite clearly that the greater part of the large sums invested by the taxpayer in BSC in the past are now worthless.
The remainder of Clause 4 makes provision for a further write-off before the end of 1982 of up to £1,000 million of capital subscribed under Section 18. It should be possible next year to assess more accurately the economic size and potential earning power of the corporation, and to make further adjustments to the capital structure, if that seems appropriate. At present it is impossible to say whether any further write-off will be required, and if so what its size—within the £1,000 million limit—should be, but Clause 4 provides that any such further write-off must be by order subject to affirmative resolution.
Clause 5 will reduce BSC's borrowing limit under Section 19 of the 1975 Act to £3,500 million. The provision relating to the borrowing limit will supersede the borrowing limit of £6,000 million set by the Iron and Steel (Borrowing Powers) Act 1981 which will be repealed by this Bill. After the write-off of £3,509 million capital as provided by the present Bill, the new £3,500 million limit will allow BSC to acquire £1,500 million further borrowing without further reference to Parliament. There is provision in Clause 4 for further adjustment to the corporation's borrowing limit. It will be possible by order subject to affirmative resolution to increase the limit to not more than £4,500 million or to adjust it to a figure between £2,500 million and £4,500 million if a further write-off of capital is effected as permitted under Clause 4.
These financial provisions therefore write off past mistakes and debts, and very painful they are. Together with the corporate plan they will assist in paving the way for the future of BSC. They will ensure that the corporation embarks upon that future unencumbered by past debt and with a considerably easier interest burden. My Lords, in that light I commend the Bill to the House.
Moved, That the Bill be now read 2a—(The Earl of Gowrie).
4.55 p.m.
Lord Ponsonby of Shulbrede: My Lords, I thank the noble Earl, Lord Gowrie, for introducing and explaining the technicalities of the Iron and Steel Bill and also for explaining the Government's intentions about the Bill. We welcome the financial provisions of this Bill but we have strong reservations about the disposal of public assets that could become a possibility under the Bill.
Steel-making capacity in the European Economic Community has for some years exceeded production and the effect of this has been to keep steel prices

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down. Therefore, British Steel has had to sell its products in a highly competitive market, made worse by inflationary pressures at home, and there is no prospect that those competitive pressures will ease. This situation has been compounded by the strength of sterling, particularly against the deutschmark and the yen, which have put British Steel at a competitve disadvantage. Indeed, I am told that Mr. MacGregor, the chairman of British Steel, has said that he could solve the problems of British Steel—at a stroke, I presume—if the pound was valued at only 1·50 dollars. I suppose this is one of the penalties which we pay for having the advantages of North Sea oil and a strong currency. This is some of the background against which British Steel has had to operate. I should also mention that last year's tragic strike in the steel industry did not help the industry itself, and that strike, I would submit, was caused by the Government's inflexible attitude at that time to that particular dispute.
Now the position is that we must all support this basic British industry, which is at the heart of our manufacturing capability. Therefore, we broadly support the financial provision of the Bill and the proposed future arrangements for the British Steel Corporation. However, I cannot say the same thing for those clauses which are based on the Government's doctrinal prejudice against nationalised industries. I could say a lot about this, but I fear that it would fall on deaf ears, and also I know that in the long run these clauses are likely only to be of academic interest in the present financial climate.
My Lords, we have spent quite a lot of time in this House since May 1979 debating and passing measures, despite opposition, allowing for privatisation to go ahead at the appropriate time whenever such action may be taken. In many cases, the Government will not find it possible to take any action on these measures until after the next general election, and by that time there will be a new Government which will see that these academic statutes on the statute book will not in fact take effect.
I think it is remarkable that, despite this doctrinal attitude, despite this doctrinal opposition to the public sector, the Government have been faced at the same time with the reality of life and have had continually to support the public sector. The Government have given substantial support to British Steel, to British Leyland, to International Computers; all of these are crucial industries which we cannot afford to be without.
In introducing the Bill, the noble Earl explained how the British Steel Corporation could dispose of assets; it could set up joint ventures. In fact it could at the end of the day find itself with nothing to do and with only some reserve powers. To a large extent we see a lot of this supposition as being really only of academic interest. The noble Earl has said that a great deal of public investment has been put into the steel industry, and he has rightly pointed out that a lot of this is in modern steelmaking capacity; and now he is saying, and the Government are saying, that this is worthless and it should be written off. Yet at the same time one can see that there could come a time when some of this investment could prove to be of priceless value, if there was an upturn in demand for steel, or if, for example, the pound lost its current
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strength. Therefore, to consign this extra capacity to the rubbish heap seems to be foolish. This was visibly brought home to me during the Easter Recess, when I found myself in Northumberland and motoring through Consett, seeing the vast steelmaking capacity silent and rusting away, so different from when I had visited it some years previously.
The Earl of Gowrie: My Lords, I am grateful to the noble Lord for allowing me to intervene. Before he leaves that point about write-off, surely he is not suggesting that the British Steel Corporation should still be burdened with the interest on that lost investment?
Lord Ponsonby of Shulbrede: My Lords, we welcome the proposals to write off the investment itself, but what troubles me is the plants concerned being allowed to fall into disuse, so that if they were subsequently needed they would not be available.
My Lords, on this day when the People's March for Jobs has finally reached the Palace of Westminster, and a delegation has arrived here, I should make clear that our main priority is to make certain that jobs are saved, and, whether those jobs are in the private or the public sector, if this Bill does anything to alleviate that situation then we support it. By the end of this year some 70,000 jobs will have been lost in British Steel over a 2-year period, and some 10,000 jobs will have been lost in the private sector. One questions whether this reduction in steelmaking capacity in the United Kingdom has been matched by similar reductions elsewhere in the European Economic Community, whether in fact we are being asked to take an unfair share of the burden in reducing steelmaking capacity. I should be glad to have a response from the noble Earl on that when he comes to reply.
As I have said, we oppose those parts of the Bill that undermine the future of British Steel. Our desire is to see British Steel as a thriving industry and we see it playing a substantial part in our future industrial prosperity. Without such a base we cannot remain an independent trading nation. With regard to the doctrinal parts of the Bill, we feel that, while perhaps this is an academic matter, it is wrong that those should be in the Bill at all.
5.6 p.m.
Baroness Seear: My Lords, I rise from these Benches to give general support to the Government's policy in this Bill, in particular to the intention to extend privatisation—if we have to call it "privatisation". I suppose that is the word, though I should have thought that the noble Earl, Lord Gowrie, with his skill with words would have been able to devise a better term.
Unlike the noble Lord, Lord Ponsonby, I feel that part of the problem of the steel industry today stems from the doctrinal obsession with nationalisation exhibited in the past by the Labour Party. Surely this is an industry which never was appropriate for nationalisation. It is an industry with a wide variety of quite different markets, both internal and external. An industry of this kind is surely far better handled not by one huge organisation such as the British Steel Corporation but by the development of private enterprise concerns able to discover new markets, to develop expertise and specialisation, and therefore to develop

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a steel industry for the future. So we welcome the Government's intention to see that this monopolistic control of the steel industry from which the industry has suffered for a considerable time is broken down.
We must, I suppose, also welcome the writing-off of the enormous losses. These figures are so astronomical that we say them with little realisation of the resources which have been wasted when figures of this kind are bandied about. It is an indictment of the whole way in which this industry has been handled. It is, in my view, an indictment of the policy of nationalisation of steel.
Of course, we recognise that the steel industry worldwide has had a very difficult time, that there is a gross over-production of steel. The problem has no doubt been exacerbated by the high inflation experienced in this country and by the very high level of the pound at the same time. But to pretend that it is this which really lies behind the troubles of the industry is, it seems to me, totally unrealistic. When the noble Earl speaks of cancelling this enormous debt, can we not ask him and his Government once again to look at other uses of this money? How much better off we should be today if, instead of this money invested in steel being written off, it had been put into the development of industries for which there really is a future.
We are now at least stopping the fatuous policy of pouring good money after bad. But let us not, as suggested earlier today at Question Time, continue with the idea that we do not want to put new public money into investment in new industry which will provide jobs for people who are losing the jobs in the steel industry. When it comes to the question of employment of people who have worked in the steel industry and whose jobs have gone, I know that a considerable amount has been done as regards retraining. But may we not ask that still more vigorous steps should be taken to enable men coming out of the British Steel Corporation to find their way into a variety of new jobs? Many of these men may not be skilled in the exact sense in which skilled jobs at present are calling for people. But I find it impossible to believe that men who have undertaken responsible and skilled work in the steel industry cannot easily he retrained either to fill jobs which are still unfilled and which require skills or to undertake the jobs which will be coming with new high technology industry.
We know that people today can learn very quickly. Modern training methods mean that they can acquire these skills. Two things are needed: first, that the training facilities are there and, secondly, that when these steelmen have been trained they are given a welcome into the new industry with the minimum amount of restriction on who works with whom. Unless we take a vigourous line on that, we shall be sacrificing human assets, which will be far worse than sacrificing the physical assets which are being written off at present.
I regret the action that has been taken by the Government in removing the requirement for consultation inside the industry. The noble Earl, Lord Gowrie, says that that would be undue interference with the way in which the industry is run and that the decisions to be taken about these matters are properly taken by the managements inside the industry.
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I am entirely in support of the idea that we do not want the Minister or the Minister's civil servants telling people with considerable expertise in running the steel industry how they ought to do it. With that I should be entirely in agreement. But it is surely most unfortunate that at this time a requirement to consult should be removed. Maybe if it did not already exist it might or might not be appropriate to put it in—I believe that it would be appropriate—but to take it out at present seems folly.
When an industry is being re-organised and reduced as this one is; when new developments need to be introduced; and when we need the maximum amount of collaboration and understanding between management and labour in very difficult and painful conditions, surely the maximum amount of consultation and participation is called for. It is a tactless gesture, if nothing worse, to remove a requirement to consult just at the very time when the maximum amount of consultation is what is needed if there is to be a new start in what is left of the steel industry.
5.13 p.m.
The Earl of Gowrie: My Lords, I am grateful for the remarks of the noble Baroness, Lady Seear, and the noble Lord, Lord Ponsonby of Shulbrede. This whole Bill seems like a somewhat technical Bill concerned mainly with financing and writing-off previous investment and interest charges within the general pool of Government expenditure; but I think that it is, in fact, a lot more than that. It is, as I think the noble Baroness appreciates, though not alas! yet the noble Lord, Lord Ponsonby, a really terrifying indictment of how job protectionism costs money and jobs. If this industry had been allowed to adapt its capacity at an orderly pace to the needs of the market, those people who were displaced would have been able to seek work and find it in a much more propitious general atmosphere for employment and a no less propitious atmosphere in terms of the redundancy compensation which a civilised society provides. Again and again we have seen that the illusion has spread that if one works in a nationalised industry one's job can be saved—and, of course, it can so often be saved for a bit longer. But when time runs out and the money inevitably runs out, all the more jobs go at a cataclysmic rate.
The noble Lord, Lord Ponsonby, talked about our doctrinal prejudice against nationalised industries. The lack of flexibility, the enormous and undisciplined costs which are now burdening the taxpayer and preventing the Government from spending money in all sorts of other directions in which many of us would like them to spend money, and the job losses that I have just mentioned, are exactly the kinds of conditions in these jumbo public sector industries that underlie our doctrinal prejudice. In fact, I would not call it "doctrinal": it is a result of being bruised where it hurts for all of us—that is to say in the pocket and in job losses. I agreed with the noble Lord, Lord Ponsonby, when he said that the condition of the British Steel Industry had been made worse by inflationary pressures at home; and, of course, the career of the British Steel Industry over the last 10 years has partly contributed towards those inflationary pressures, and again we very much regret that.

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We have often been over the field about, as it were, virtuous public spending for investment and unvirtuous public spending. The difficulty—apart from the question that all money spent by Governments, whether spent in virtuous causes or unvirtuous casuses, has to be borrowed or taxed—is that a great deal of this investment which the present Bill is having so sadly to write-off and at such cost to the country was considered absolutely admirable and sensible at the time. It was put into very forward-looking capacity and forward-looking plant and yet, as we have seen, a lot of it—although not, I am happy to say, all—has come to nothing.
The noble Lord, Lord Ponsonby, asked me a question about the reduction in capacity. British Steel will have 3 million to 4 million tonnes of reserve capacity as against 14 million tonnes in operation at present. This provides a generous margin. In Europe, France has reduced capacity over the past few years, and Belgium is considering rationalisation proposals for its steel industry and I may say, without any pleasure, that the Belgian steel industry is, of course, in very considerable financial difficulty. So we are all to some degree in this boat at present.
The noble Lord also mentioned Mr. MacGregor. I know Mr. MacGregor and I am very pleased to pay tribute to his ability and the extraordinary tasks that he has undertaken and the very considerable achievements which he has realised. But, of course, when the noble Lord was worrying that we might be writing-off plant which, as it were, had a future, as I made clear in my speech, a great deal of the cost and the write-off of these huge sums which I itemised a few moments ago, has in fact been the cost of buying people out of work. It is a sad fact in the modern economies in manufacturing, though not in other spheres of activity, that one either has to have cheap labour or one has to have very productive labour. Productive labour means nowadays not people who work hard, but overwhelmingly machinery rather than men. That is a fact of life under successive Governments and throughout the western world.
I agree that there would have been other and better uses for the money put into British Steel. With hindsight that is, of course, an easy thing to say. But one can understand the considerable caution with which all once-bitten-twice-shy modern Governments now approach earnest appeals that they should undertake further massive spending and investments in industries whose future is also painted extremely brightly. Speaking as an employment Minister rather than an industry spokesman for this purpose, I should of course like to see an exciting programme of investment and the demand, not least in the private sector, that would be created thereby. But successive Governments have got it very wrong in the past as to what will or will not succeed, and I think that at least a certain amount of caution should be urged on all Governments at the present time.
That said, I welcome the general reception that the Bill has had. I shall consider the point that the noble Baroness made about participation. Of course, it would be rather unreasonable for a Government which is urging participation on firms, but urging it in a way that is tailored to their specific needs and to their
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collective arrangements, to leave statutory requirements on the books in this case. That was thought by us to be an inconsistency. However, as the noble Baroness knows, I am keen on the issue and I shall look at that point; perhaps we can return to it when we discuss the Bill at later stages.
On Question, Bill read 2a, and committed to a Committee of the Whole House.

Local Government and Planning (Amendment) Bill
5.22 p.m.
Lord Nugent of Guildford: My Lords, I beg to move that this Bill be now read a second time. The Bill amends the substantive Town and Country Planning Act 1971, Part V thereof. Its start was in the other place where it was promoted by my honourable friend Mr. Stephen Hastings and has, of course, had all stages approved in the Commons. Noble Lords and noble Baronesses who are privy to the mysteries of planning legislation will remember having seen something very like this Bill in the Local Government, Planning and Land Act which my noble friend Lord Bellwin introduced here in November 1979. Noble Lords will also remember that the House had more than enough of that Bill and that in order to save your Lordships' staying powers the Government dropped this piece of legislation—Schedule 12, as it then was. That is why it comes back again now.
Some further improvements have been made to the Bill now before the House but, as the noble Lord, Lord Ponsonby, tried to reinstate the schedule by an amendment last October and again there was no time, I hope that the noble Baroness, Lady Birk, will welcome it in its new form. The substance of the Bill is in the schedule, which re-enacts Sections 87 and 88 of the 1971 Act on enforcement, and Sections 96 and 97 on listed buildings. The schedule runs to some 16 pages. Its length and complexity is only exceeded by the Notes on Clauses, which run to some 60 foolscap sheets, which it has been my duty, but not my pleasure, to plough through.
In a word, the interest in this Bill is primarily for the professional, which very much includes the noble Baroness, Lady Birk. Planning, which is so immensely complicated in practice, is absolutely simple in principle. It is, in principle, the legal process of defining the balance which is to be struck between the interest of the owner in his property and the interest of the community in what he does with it. The local authority, through its planning officer, is the authority which has to carry out this function on the ground. It is inevitably invidious, because it is either attacked by the owner, who is restrained from doing what he wants to do with his property, or by the public, who complain that a local amenity has been damaged by a development which the local authority has failed to check.
In passing, I should like to pay a tribute to the planners, many of whom are friends of mine, who are most able men of the highest integrity and who are not appreciated as much as they might be. The

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complex legislation about planning defines how this balance is to be struck and how decisions are to be enforced. This Bill is concerned with enforcement, and the schedule amends the machinery of enforcement in the 1971 Act. This amendment Bill is based on the expert report of Mr. George Dobry, Q.C., in 1975, followed by extensive consultations between the Department of the Environment and the Local Authority Associations. Broadly, its effect is to refine and sharpen the machinery of enforcement so that it will more precisely carry out the wishes of Parliament, both to conserve the public interest while at the same time preserving the rights of private ownership.
Enforcement is an everyday matter for local planning authorities, usually starting in small matters with the complaint of a householder who is being disturbed by some new activity of a neighbour. A simple example illustrates how this often goes. A typical complaint arises where a householder is developing a motor car repair and servicing business in his domestic garage. It starts by one or two motor cars coming for repairs, and soon develops into several cars permanently standing outside in the street, cluttering it up to the inconvenience of the neighbours. Meantime, he will, of course, have built on to his garage in order to increase the accommodation. Eventually the neighbours get fed up with the inconvenience and complain. The owner has broken the law, first, by a change of use of his domestic garage to commercial premises and, secondly, by the structural extension that he has built on to his garage. The local planning authority then serves an enforcement notice on him requiring him to cease his trading activity within a stated period and demolish the addition that he has made. He is also informed that he has a right of appeal to the Secretary of State.
No great complication arises in such a simple example, but in the case of a major construction, where the contractor proceeds with structural work significantly outside the planning consent, very big issues are involved and the problem of dismantling the offending work becomes very serious and costly. Similarly with a listed building where unauthorised alterations or demolitions are being made, very big issues are involved, together with the problems of whether they should be replaced or what should be done.
This Bill does not change the basic principle of enforcement, but it makes two useful practical improvements. First, instead of being limited, as now, by Sections 87 and 96 of the 1971 Act to requiring the property to be restored to its previous condition and that only—that is to say, by demolishing the offending structure which has gone beyond the original consent or, and this is more complicated, where a demolition has taken place, obliging the contractor to rebuild what he has demolished—this amending Bill will allow the local planning authority the alternative, if it considers it proper, to require that suitable steps be taken to alleviate the damage to amenity or the effect of the unlawful works. This is obviously a useful piece of flexibility.
Secondly, the schedule deals with the appeal arrangements for a property owner. As I have said, a right of appeal is an essential part of maintaining he balance between property owner and public
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interest, but appeals take time and there is a natural incentive for the property owner to extend the process. Meantime, of course, the nuisance to the neighbours continues or, worse still, unlawful construction or demolition may be continuing and worsening the breach of the planning consent. Irreversible damage may be done, especially to a listed building. The object of this amendment is to give the Secretary of State more effective control over the time involved in the appeal process so that it shall not be abused at the expense of the public. At the same time the property owner's right of appeal is fully preserved.
There is an innovation in this Bill whereby the Secretary of State will have power to make regulations covering the appeal procedure and he has undertaken that before doing so, if the Bill becomes law, the Secretary of State will on the one hand consult with the local authority associations to make sure that the machinery is exactly right, and on the other hand with the Council on Tribunals to ensure that the property owner's private interests are properly protected and the fair balance is maintained.
There are a number of minor and consequential amendments with which I need not trouble your Lordships, but I should just mention one new duty which is imposed on local planning authorities; that is, to keep a register of enforcement and stop notices. I am told that this can be done without involving additional manpower. In fact, of course the information is already in the files of local planning authorities, so it is simply a matter of formalisation, but it will be a great convenience to all interested members of the public who want to find out what notices have been issued. I think I have covered the main points in the Bill, and I beg to move.
Moved, That the Bill be now read 2a—(Lord Nugent of Guildford.)
5.32 p.m.
Baroness Birk: My Lords, I should first like to congratulate the sponsors of this Private Member's Bill, Mr. Hastings in another place and the noble Lord, Lord Nugent, here today in having succeeded in getting this far through the legislative process. I should also like to thank the noble Lord for the cogent and lucid way in which he explained the Bill, which saves me going over a great deal of it again as background because he has covered it so well. As he says, it is a complicated subject.
It is never easy to get private legislation on the statute book. I hope—certainly with the Government's help—that this Bill will be one of the small minority that finally receive Royal Assent. Certainly we on this side of the House support the basic principles embodied in it, which were again explained so well by the noble Lord, Lord Nugent. As he said, it originates from discussions which were initiated by the Department of the Environment many years ago under the previous Administration. In fact, I think it was during the time that I was a Minister there.
At that time lengthy and detailed discussions were held between representatives of the local authority associations and departmental officials in order briefly to tidy up and tighten the legislation on the enforcement of planning controls. Therefore, the provisions on enforcement that were set out in the

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No. 1 Local Government Bill, and as they are amended in this Bill, have the support in principle not only of the Opposition, the House, but of the three local authority associations.
The Government's decision to remove the schedule on enforcement from the No. 1 Bill when it was reintroduced as the No. 2 Local Government Bill in another place was, as I understood it then, because the No. 1 Bill was already complex, controversial, and large enough. So unfortunately the provisions on enforcement had to be sacrificed despite the fact that they were non-controversial. As these proposals are essential to improve the system of planning enforcement, I and my noble friend Lord Ponsonby moved that the schedule be reintroduced into the No. 2 Bill during the Committee stage in this House.
At that time the Minister, Lord Bellwin, expressed support for the amendment in principle, but in turning it down at that time he said that it was the Government's intention to come forward with legislation on enforcement as soon as legislative opportunity presented itself. He said at col. 1031 of Hansard of 13th October 1980:
"I cannot tell him when [we will be able to do it] because I truly do not know.
We all want the same thing. I hope it will not be too long, but I cannot tell him exactly when it will come".
It has now come by means of a Private Member's Bill although, as I understand it, the Government have in fact done the major drafting for it.
Therefore, while we give our support to this Bill key changes have unfortunately been made to the version originally tabled in the No. 1 Bill. The most important change is that the opportunity to update fines for breach of enforcement orders has been lost. This was a point that was pressed very strongly during the Committee stage in another place. It was felt that the £50 daily fine, which is the fine at the present moment, ought to be increased to at least £100. At that time the Minister responded by saying that he would give serious consideration whether it would be appropriate to make a move on fines in this House. That is at column 1073 of 15th May. I hope that the Minister will now be able to tell us when he speaks today that amendments will be tabled at Committee stage and that the level of fines will be based on those set out in the No. 1 Bill but updated to reflect the substantial inflation which has occurred since the autumn of 1979.
Further, the original No. 1 Bill proposals on enforcement included improvements to the legislation on waste land and tree preservation enforcement. This was in Schedule 12 to the No. 1 Bill, page 205, Section 14. Briefly, what it was saying was that if someone has a wasteland order served on him and does nothing to tidy up the land, then something could be done about it, whereas at the moment nothing can be done about it. He has in fact to make it worse before the local authorities can take action. The tree preservation enforcement order has also been dropped and is also something on which, as I understand it, there is no difference of opinion between us, or in fact between anyone, but that is out of the Bill. Both these sets of proposals have been dropped for reasons which have not been made clear.
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In another place the Minister, when challenged on this point, said that the advice of the mover of the Bill was that to enable him to process a Private Member's Bill it would be necessary to restrict its scope. But as the Bill has now quite comfortably and easily reached your Lordships' House and the proposals contained are non-controversial and had been set out in earlier legislation, having been the subject already of critical scrutiny by parliamentary counsel, I am sure that the Minister could bring back these proposals in the No. 1 Bill. Although there may be minor drafting errors there should be no problem in eliminating them now and including these important provisions in this Bill, which the Association of County Councils have written about and also feel strongly about. I hope the Minister will now accept that these proposals can be reintroduced without delaying the passage of the Bill.
A further point over which concern has been strongly expressed has been the omission of specific provisions on minerals. The No. 1 Bill contained provisions which would have meant that in the case of mineral workings an operator would not be able to appeal against an enforcement order on the grounds that planning permission ought to have been granted for the working. In 1976 the report of the Stevens Committee on Planning Control over Mineral Working stated:
"It is clear to us that the essential significance of the most serious breach, of unauthorised winning and working … is that the harm done by such working is largely if not wholly irremediable. The working ravages the land, and although in theory an enforcement notice can require the restoration to be carried out, it is frequently impracticable to replace what has been unlawfully taken. It is, therefore, of the highest importance that unauthorised working should be promptly detected and immediately stopped. The present procedures do not encourage this: quite the reverse".
In our Circular 58/78, published by the last Government, we recognised the problem and said the then Government were—
"in full accord with the Committee's view of the potential seriousness of unauthorised working".
Although the whole package of the committee's recommendations was not accepted, we proposed instead—
"to introduce legislation making unauthorised mineral working an offence subject to appropriate penalties; and to make provision to secure restoration of the land. We propose further that for this purpose unauthorised working should include working beyond a date specified by a permission or a condition, or the commencement of operations (or a particular phase of operations) without obtaining an approval required by condition to be obtained before operations (or a particular phase of operations) should commence".
That met to a great extent the recommendation of the Stevens Committee, and again, both the Association of Metropolitan Authorities and the Association of County Councils support the original proposal, although it is recognised that operators may still try to delay the enforcement process so that they can continue to extract valuable material from the ground. At present, a mineral operator can very profitably carry out his operation without planning permission and in defiance of an enforcement notice for some considerable time. This problem was clearly recognised by the Stevens Committee, which therefore made the recommendation I have read out.

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If, when the town and country planning minerals legislation was going through this House, we had thought the matter would be omitted from the Bill before the House today, I should have tried to get the necessary provision inserted in that earlier measure. I am afraid it is now too late for that. I am therefore asking that the proposals relating to waste land, trees, minerals and fines should be reinstated, as it were, and put down as amendments to this Bill.
My final point is that of listed buildings. I welcome the changes which were spelled out splendidly by the noble Lord, Lord Nugent. In another place, an amendment tabled by Mr. Heddle, which would have taken the matter a stage further, was withdrawn, although the Minister said that the Government recognised the desirability of strengthening the repairs provisions of the Town and Country Planning Act 1971 but that Mr. Heddle's amendment would not have achieved the Government's aim. I have disagreed with the present Secretary of State on many matters, but on this occasion he has indicated his great interest in conservation and has made a number of excellent decisions in this field. Listed buildings are now of great concern and over the years the publicity which has been given to them has increased greatly. However, legislation is urgently needed to enable both local authorities and the Secretary of State to have the necessary powers to stop the decay, demolition and disrepair of buildings before it is too late.
For example, in many cases the penalties are too small, while in other cases the Crown Court, where there is no maximum, often does not take the opportunity it has. A recent glaring example was at Monks-path, where the penalty handed out by the Crown Court was ludicrously low. I suggest we should consider the possibility of recasting the structure of some of the offences. For instance, demolition without permission should probably be a separate and identifiable offence. Building within the curtilage of a listed building is another area which is urgently in need of alteration and improvement.
However, it might be argued that such matters would alter the Long Title of the Bill and that there might otherwise be problems in using this measure as a vehicle for the changes I have described. I should like to hear the Minister say the Government have in mind either special legislation in this sphere or that they will find a slot for making such changes in the not too distant future. However, what are immediately necessary and I believe come within the ambit of the Bill are provisions to give local authorities and the Secretary of State power to compel owners to pay to put listed buildings into good repair where substantial work is needed without having compulsorily to purchase the building, which is a cumbersome procedure which leaves the local authority with buildings it cannot keep up and buildings with which the Secretary of State does not know what to do.
At present, the only provision covers emergency repairs under Sections 101 and 102 of the 1971 Act, but by inference they are for only minor repairs. One could unfortunately give a number of examples, but the one I have in mind—I was dealing with it for practically the whole time I was a Minister—was the gradual decay of Barleston Hall, owned by the Wedgwood
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Company, where in spite of an offer of a considerable sum by the Historic Buildings Council, one could not get the company to take any action, although I had many conversations with them and at one time we thought we had come to an agreement. If the local authority or Secretary of State was able to undertake repairs to such a building, the company could be billed with the costs involved so that the building would be saved and there would be no question of it being left to decay or of it having to be compulsorily purchased. I should like to hear the Minister's views on that point.
This is an important and necessary Bill, although complicated and not very glamorous in legislative terms. It could easily be made more effective if the amendments I have suggested on fines, wasteland, trees and minerals were accepted—and hopefully even one on listed buildings—in principle by the Government and brought forward in Committee. Indeed, with the help of the Government draftsman I should be happy to table such amendments myself. I say that because I should not like to find myself in the position of the Minister saying my proposals were good in substance but badly drafted. I look forward to a reply from the Minister which will be acceptable to me and to the noble Lord, Lord Nugent, to whom we are grateful for the work he has undertaken in bringing the Bill before the House.
5.49 p.m.
The Parliamentary Under-Secretary of State, Department of the Environment (Lord Bellwin): My Lords, I too welcome the Bill, which Mr. Stephen Hastings introduced in the other place as a Private Member's Bill, and I am grateful to my noble friend Lord Nugent for his typically clear and concise introduction of it in your Lordships' House. As the noble Baroness, Lady Birk, said, it fulfils a hope I expressed to the noble Lord, Lord Ponsonhy, last October when we were discussing amendments in Committee on the Local Government. Planning and Land Bill. I said then that I hoped it would not be too long before we had an opportunity to consider amendments, on which we are all agreed in principal, to the enforcement provisions in Part V of the Town and Country Planning Act 1971 for planning control and control over listed buildings.
These are important provisions, as my noble friend Lord Nugent said, because they are the means by which local planning authorities seek to enforce their decisions on development control matters and control over listed buildings. Unless there are effective enforcement provisions for these purposes, the decisions which planning authorities take will be flouted and this brand of planning law will be brought into disrepute. These provisions are also important to my right honourable friend the Secretary of State for the Environment because they seek to improve the present arrangements for him to process and determine enforcement appeals and listed building enforcement appeals. At present there are on average some 6,000 enforcement appeals per year and the Secretary of State needs effective efficient machinery to deal with this large volume of work. Our experience has been that enforcement appeals sometimes cannot be processed as quickly as we would like, because too much depends on the willingness of appellants and planning authorities

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to respond to requests for essential information and formal statements which are required before a public inquiry can be held by an inspector. The enabling power to make procedural regulations for this purpose will therefore help us to give people a better standard of service when an enforcement appeal is made, and with the wide discretionary powers which my right honourable friend will have to determine appeals, he will be able to tailor his decisions more accurately to the circumstances of the individual appeal.
My Lords, if this sounds too much like more fine tuning I will simply say that fine tuning is not to be despised in development control matters. Indeed, as many of us who have served on planning committees know, it is often possible with small adaptations or carefully phased planning conditions to make a particular development acceptable which would otherwise not be permitted.
The noble Baroness, Lady Birk, expressed concern that the Bill does not contain everything that she would like it to contain. I accept that, but we should rememeber that it is not easy for a Private Member to sponsor a complicated Bill, and the Bill as drafted contains what are to my mind the essential amendments to the present enforcement provisions in the 1971 Act. The noble Baroness said that this Bill should have contained the provision which was in Schedule 12 to the 1979 version of the Local Government, Planning and Land Bill, to take away (a) in Section 9 88 (1) of the 1971 Act for minerals enforcement appeals, thus removing a mineral operator's right to appeal against an enforcement notice on the ground that planning permission ought to be granted, or a conditional limitation on a planning permission ought to be discharged.
I agree that there are arguments on both sides. The important thing, as so often with enforcement and planning control, is to get the balance right. One argument is that if the ground (a) appeal was removed, planning authorities would be in a stronger position to enforce planning control effectively on mineral operators; and that they need to be in a stronger position because the damage done by unlawful mineral working is irremediable. I am not yet convinced that enforcements should be tougher in this respect on mineral operators than on anyone else. The fact is that even if the ground (a) appeal was removed, a mineral operator could still submit a fresh planning application to the local authority at the same time as he submits an enforcement appeal to the Secretary of State. The practical effect would then be that if the authority refused the application, there would be the likelihood of a planning appeal to the Secretary of State. Since a planning appeal would usually be made in these circumstances, the result would be that the Secretary of State would have to consider the planning merits of the unlawful mineral working. In other words, there would still be the equivalent of a ground (a) appeal.
Having said that, in consultation with my noble friend Lord Nugent of Guildford, I am willing to consider any further representations made by the noble Baroness and by the local authority associations on this point, if they wish to pursue it. We could then examine this point in detail at Committee stage. Indeed, I gladly undertake together with my noble friend to look carefully at the other points which the noble
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Baroness, Lady Birk, has raised, and we will see whether all or any of them can be introduced at Committee stage. I do congratulate my noble friend Lord Nugent of Guildford on introducing this Bill in your Lordships' House and I join him in hoping that further progress will be speedy and successful, so that the further improvements it makes to this part of our development control and listed building legislation can be realised and practised as soon as possible.
As to the point made by the noble Baroness, Lady Birk, about compelling owners to put listed buildings into a state of good repair, I am not sure as to how far one would be able to go with this. I can immediately think of problems which compulsion would bring, but just as I undertook to consider her other points, I would want to come back on this point at a later stage. Meanwhile, I again thank and congratulate my noble friend Lord Nugent of Guildford for introducing this Bill.
Baroness Birk: My Lords, before the noble Lord sits down, I wonder whether he could answer a question, which could be of help when we reach Committee stage? The amendments I was putting seemed to me to fall into two parts. First, there were those amendments on fines, trees, wasteland and minerals, which were in Schedule 12 of the No. 1 Bill. As the noble Lord seemed to be opening that door a little, it would be helpful to know why, if those items were in the No. 1 Bill and were also asked for in another place, and had already been drafted by parliamentary counsel, is there any difficulty about them? Secondly, although I agree that the point about listed buildings is a different one, because it was not in the schedule, I am frankly mystified why there should be any difficulty about something which has already appeared in a schedule in a Government Bill.
Lord Bellwin: My Lords, I understand entirely that we are talking about two separate issues. There is really no mystery or difficulty about the first category which the noble Baroness mentioned. So far as I am aware, there should be not much difficulty in bringing these forward and I was being my usual cautious self in the way that I put the matter, just in case, in the event, there should be any difficulty with some aspects of it. In principle at least I entirely accept what the noble Baroness has said.
5.57 p.m.
Lord Nugent of Guildford: My Lords, I should like to thank both the noble Lord and the noble Baroness for their very kind reception, and I also wish to congratulate the noble Baroness, Lady Birk, on her welcome recovery; it is nice to hear her in such good voice again after her indisposition before the House went into recess. As ever, the noble Baroness showed a most impressive grasp of the complexities of this obscure subject.
With regard to the points which the noble Baroness so cogently put to my noble friend, I have a great deal of sympathy with the point about mineral appeals. I was interested in the argument which my noble friend Lord Bellwin put up. The mechanical problem here is that the extractor would probably be able to find a way around things. This would make an interesting

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little debate in Committee and it is a point with which I have some sympathy, in the same way as I sympathise with some of the other points made by the noble Baroness. She made a cogent argument that if certain items appeared in the previous Bill then they must be pretty good.
Clearly, the noble Baroness is opening up a new and very important subject in this question of listed buildings and again I have a great deal of sympathy with her view, though I dare say there might be such onerous financial implications that it might not be possible. In any event, it is an interesting point and one that we can discuss in Committee. I think I need do no more than thank noble Lords for their generous reception and beg to commend the Second Reading of the Bill.
On Question, Bill read 2a, and committeed to a Committee of the Whole House.