Lords Sitting of 11 March 1981

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

Road Inspections: "Spaghetti Junction"
Lord Davies of Leek: 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 much it has cost to try to keep in satisfactory condition the system of criss-crossing roads on stilts, known as Spaghetti Junction, which was opened in 1971; and whether this viaduct system has been inspected and tested to find if any of it contains high alumina cement.
The Earl of Avon: My Lords, my right honourable friend the Secretary of State for Transport only has records which show the total expenditure on maintenance as opposed to that relating solely to structures. For the Midland links motorways, in the West Midland Metropolitan County Council area, this expenditure amounts to £l2½ million, since 1975, for the five years.
I am not aware of any use of high alumina cement in the structural members of the viaducts. The use of this type of cement when replacing some carriageway deck joints, which are not regarded as structural members, is considered acceptable.
Lord Davies of Leek: My Lords, I thank the noble Earl the Minister for that reply. Is he aware that the West Midlands County Council appear not to have enough engineers to keep a complete survey, particularly of the section known as Spaghetti Junction? Therefore, would it not be wiser for the cost of engineering and inspection of these to be a national burden rather than that it should be put upon local authorities? Secondly, is the noble Earl aware that 18,500 steel beams have been used in the construction of these links?—23 of them have already been found to be faulty on Spaghetti Junction. Has he any idea who is going to pay the compensation for this vast sum of money to keep the roadways in complete order? I do not want to raise a scare, but, in the hagiography St. Pachomius crossed the river Nile on a crocodile. He had a better chance than some people will have 10 years from now getting across Spaghetti Junction.
The Earl of Avon: My Lords, I was with the noble Lord, right up to his final remarks, which I think are slightly excessive. But, having listened last night until 2 o'clock this morning to the songs of the redshank, it is even more delightful to hear the noble Lord this afternoon. The consulting engineers were appointed on behalf of the department by the West Midlands Metropolitan County Council and work started in 1979. The inspections were substantially completed
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by the end of 1980 and all reports were expected to be submitted by mid-1981. As at 27th February—last month—47 reports out of a total of 133 have been received and, bearing this in mind, I should not like to comment in more detail on the noble Lord's supplementary question.

Ministry of Defence: Non-Industrial Staff
2.40 p.m.
Lord Renton: 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 many non-industrial civil servants were employed by the Ministry of Defence at the latest date for which figures are available; how many uniformed personnel were serving in the regular Royal Navy, Army and Royal Air Force on that date, and whether any further economies required will be achieved by reducing the number of those civil servants rather than by impairing the preparedness of the armed forces.
Viscount Long: My Lords, on 1st January 1981, the Ministry of Defence employed 125,641 non-industrial staff, compared with 343,200 personnel in the armed forces, made up of about 73,900 in the Royal Navy, 176,300 in the Army and 93,000 in the Royal Air Force. Reductions in the number of civilian staff are being sought as part of the Government's drive to reduce the size of the Civil Service. Between 1st April 1979 and 1st January 1981, the total has already been reduced by 17,200. The total number of Service personnel increased by 19,900 in the same period.
Lord Renton: My Lords, while thanking my noble friend for that reply and expressing great admiration for those civil servants who remain on duty when required, may I ask him whether it is necessary that the defence of our country should depend upon so many other civil servants, covered by his reply, who merely please themselves as to whether or not to remain on duty?
Viscount Long: My Lords, I join with my noble friend in the tribute that he has paid to the civil servants. Eighty per cent. of those who work for the Ministry of Defence in fact reported for duty, and I pay that tribute as well as my noble friend and others of your Lordships. I have no doubt that, if national security were at stake, all our staff—and I repeat, all our staff—would respond.

Coal Pits: Closures
2.42 p.m.
Lord Orr-Ewing: 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 many coal pits have been closed since 1970, how many were closed each year between March 1974 and May 1979 and whether they will publish the annual closures since nationalisation in 1946.
The Minister of State, Department of Employment (The Earl of Gowrie): My Lords, in December 1947 the National Coal Board operated 958 collieries. In March 1970 the board operated 299; in March 1974, 259; in March 1979, 223 and in March 1980, 219. Further details are given in the board's annual reports and accounts.
Lord Orr-Ewing: My Lords, if I have taken in those figures correctly, does that not mean that in the last 33 years some 600 pits have been closed and is this not a natural routine—a routine which has slowed down in more recent years, since it would appear from those figures that in the last six years only 40 have been closed? Is this not a procedure which happens in all mining operations in every country in the world and can my noble friend say why it is so exceptional that this should continue, particularly in South Wales at the present time, when the need to open up new and productive pits and to invest large sums in modernising profitable coal mines is so desperately essential for the well-being of our nation?
The Earl of Gowrie: My Lords, on many occasions the Government have made our commitment to the coal industry and the Plan for Coal quite clear. As my noble friend indicates, closures are a part—and have always been a part—of the orderly management of the industry. They have been taking place at a rate of around 23 per year. One hopes that this will resume, because, as noble Lords know to their cost today, not closing uneconomic pits of course comes very expensive.
Lord Blyton: My Lords, is the Minister aware that, while the coal industry has had a terrific beating over the years, we have never objected to the closure of pits where the reserves have gone and are nonexistent? But I want to emphasise this: a pit which is facing geological difficulties and is an uneconomic pit today can be a viable pit in, say, five or six months' time. That is why we as miners are opposing closure of economic pits, because uneconomic pits today can be made economic in a few months' time.
The Earl of Gowrie: My Lords, I am, of course, very aware of the noble Lord's experience in this field. I am glad to say that normal and orderly relations and negotiations between the Coal Board and the mine workers have now resumed, and that underlines our own commitment to the Plan for Coal.
Lord Elwyn-Jones: My Lords, can the noble Earl say how many new coal pits have been opened since 1970? Perhaps he has not that statistic immediately available.
The Earl of Gowrie: My Lords, I do not have it immediately available, but, of course, there have been the startling and extensive discoveries in the Midlands, at Belvoir.
Lord Paget of Northampton: My Lords, it is of course true that in any mining industry pits are closed periodically, but for the Government to suddenly start twisting the arm of the Coal Board and then to present a dozen closures together was a piece of tactless industrial idiocy which caused a great deal of trouble.
The Earl of Gowrie: My Lords, I do not think there was even an attempt at the interrogative form during the noble Lord's statement. I do not think the Government were twisting anybody's arm, least of all the coal industry's. It is arguable that the Government were subject to a little arm-twisting themselves.
Viscount St. Davids: My Lords, the noble Lord's original Question asked how many coal pits have been closed, whereas the noble Earl who answered simply gave the figure of how many were being operated at each particular time. There is a gap, surely, between those two figures, which is the number opened in those particular years. Ought not this to be included if the Answer is to fit the Question?
The Earl of Gowrie: My Lords, I accept that correction, though I did say in a supplementary answer that they were being closed at an average of 23 a year. It seems to me somewhat beyond the bounds of an oral answer that one should present the House with so many figures, and I truncated my original Answer in order to try to make it more easily understood.
Lord Orr-Ewing: My Lords, can my noble friend say whether in the majority of this very large number of routine closures alternative employment in nearby mines has been offered to the miners? And can he say whether the very rigid attitude in South Wales, which suggests that no further closures will ever be allowed, is influenced by the fact that the Executive of the National Union of Miners there is entirely dominated by people with communist affiliations?
The Earl of Gowrie: My Lords, I do not think that is the issue. Obviously there are problems in any industry, including the coal industry, where you get a concentration of employment in one industry in one given area. In fact in regard to the closures that have taken place continuously since the war I can confirm that in the majority of cases miners have received employment in alternative mines. But that has been more of a difficulty for the South Wales community, particularly in an area of high unemployment.

BBC External Service
2.48 p.m.
Lord Morris: 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 plans there are for any increase of broadcasting time by the BBC External Service, and in what languages.
The Earl of Avon: My Lords, from the end of March the BBC External Service's broadcasts in Russian will be increased by 30 minutes a day to a total of 45 hours a week, and their broadcasts in Turkish by 30 minutes a day to 10½ hours a week. A new daily 15-minute service in Pushtu will be introduced during the summer.
Lord Morris: My Lords, I thank my noble friend most warmly for that Answer. Is he aware that there are many who will be most grateful and admiring of Her Majesty's Government's initiative in this area? Furthermore, may I ask my noble friend whether he is aware of the effect that the cut of £6·2 million over the current year and next year in the capital costs of the BBC External Service has on the quality and on the audibility of broadcasting throughout the ambit of their broadcasts?
The Earl of Avon: My Lords, we attach the utmost importance to the audibility of the BBC external broadcasts and feel that although, of course, they have been subject to cuts, which are common across the board at the moment, they have done extremely well. To improve their audibility satellite feeds to the relay stations in the Eastern Mediterranean and the Middle East are being introduced, and four new transmitters are planned to be in service by mid-1982. A powerful new medium-wave transmitter will start broadcasting from Orford Ness in Suffolk in early 1982, and the BBC have eight new transmitters ordered for a planned new broadcasting station in the United Kingdom.
Lord Goronwy-Roberts: My Lords, while welcoming what the Minister has said about improving these services in the three countries he named—particularly if I may say so, the increased broadcasting to Turkey at the present time—may I ask him whether it is not also the fact that during the same period some very heavy cuts have been made in other parts of the world? Would he not agree that any further investment in this excellent service can only strengthen our diplomacy, improve our commerce and generally strengthen the influence of Britain in the world as a whole?
The Earl of Avon: My Lords, I agree entirely with the sentiments which the noble Lord has expressed. At the moment I am lead to understand that no cuts have been made, but my honourable friend Mr. Ridley is in consultation at present.
The Earl of Kimberley: My Lords, my noble friend said that the broadcasts in Russian will be increased by 30 minutes. Can he say whether, prior to that, in the past few months they had been cut by 30 minutes, or will the 30 minutes be a complete increase?
The Earl of Avon: My Lords, my understanding is that the 30 minutes is a complete increase. Last summer the Russians began jamming the BBC Russian broadcasts and they were then increased by a further four hours a week to help counter that.
Viscount Eccles: My Lords, while welcoming the increases in the broadcasts that my noble friend has announced, may I ask whether he can give an assurance that the BBC's broadcasts in English will not be reduced? I have just come from South America and the need for English news which can be depended upon is much greater now than it was even a year or two ago.
The Earl of Avon: My Lords, the Government have never had any plans to reduce the World Service in English.

Social Security Benefits Up-rating
Lord Denham: My Lords, at a convenient moment after 3.30 this afternoon my noble friend Lady Young will, with the leave of the House, repeat a Statement that is to be made in another place on the Social Security Benefits Up-rating.

Cumbria Bill [H.L.]
2.52 p.m.
Lord Inglewood: My Lords, I beg to move that this Bill be now read a second time. This Bill is one of a familiar series in the review of local government legislation required under Section 262 of the Local Government Act 1972. A number of these Bills have already been before your Lordships' House. This Bill substantially re-enacts existing powers and where appropriate includes common clauses. As can be expected, some clauses deal with matters of special interest to the county and it is inevitable that some petitions, in this case four, have been laid, but I submit that they will properly be dealt with in the Committee stage if not settled before, and it is the promoters' hope that some, if not all, will be settled before.
The clause with which I am concerned in particular is described as the "Protection of sites of archaeological interest"—that is, Clause 40. I believe that one noble Lord wishes to speak about this clause and hence my presuming to speak to your Lordships this afternoon. I should like to clear up in advance what may be a misunderstanding arising from confusing this clause with the provision in a recent Kent Bill—Clause 100 in that Bill as originally drafted—entitled "Control of metal detectors". That clause was much wider in its scope than the clause in the Cumbria Bill and far more exacting. What we are concerned with is the protection of sites of archaeological interest which are not otherwise protected, and we are not aiming particularly at the damage done by those who operate metal detectors, but at damage, whatever the cause may be.
The by-law making power under Clause 40 of the Cumbria Bill is sought by the local planning authority and would not extend to all and every open space in the county, as the Kent clause did, but to a few sites identified as of archaeological importance which, in fact, would also be set out in a resolution of the county council. Such sites are not covered or protected by the Ancient Monuments and Archaeological Areas Act 1979. As I have said, this is not aimed at the users of metal detectors—which is a hobby and a recreation, I

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believe, now growing in the country—it is not aimed at metal detectors as such, but at the damage which they or others may do in disturbing archaeological sites by any means.
Cumbria is in one way in a special position. Its population is not dense; its development over the years has not been as great as in some other counties; it is thinly populated and hence there are more undisturbed sites—Roman and pre-Roman—than in many other parts of England. I submit that the damage once done to sites of this sort cannot be easily repaired. I would submit that Cumbria is neither asking for powers which are found in existing legislation nor asking for powers in a local Bill which are more appropriately included in public general legislation. This is a wholly reasonable clause in a wholly reasonable Bill. My Lords, I beg to move that the Bill be read a second time.
Moved, That the Bill be read 2a—(Lord Inglewood.)
Lord Peart: My Lords, I should like to thank the noble Lord, Lord Inglewood, for introducing this Bill. I shall not elaborate on what he has said. He has said everything and no doubt other noble Lords may join in accepting the Bill. It is important for Cumberland and I hope that the House will allow the Bill to go through.
Lord Nugent of Guildford: My Lords, I rise to call attention to Clause 40 of the Bill to which my noble friend has referred, which would give local authorities in Cumbria new powers to make by-laws for restricting or prohibiting digging and other works in areas identified by them as being of archaeological interest. Cumbria is no different from other parts of the country in that respect. I understand that, in fact, the county council only intends to specify some 24 sites out of a potential of some 5,500 in the county listed as of archaeological interest. Clause 41 of the Bill has a wider impact, but is designed for the same purpose.
My reasons for intervening on the Second Reading of this Private Bill are twofold. First, to remind your Lordships that in the last Session the Select Committee, of which I was chairman, disallowed a clause with a similar purpose in the County of Kent Bill. Our Select Committee reached that decision in the light of the Home Office evidence that the Home Secretary would confirm by-laws by a local authority under Sections 235 and 236 of the Local Government Act 1972 imposing reasonable restrictions on the use of metal detectors. Despite my noble friend's eloquent plea on the matter I would say that there is a similarity in principle.
My second reason is that it is generally undesirable to proceed by a series of Private Bill powers to deal with a national problem, in this case particularly the use of metal detectors. In this case, in addition to the Home Secretary's powers, to which I have just referred, there are also the new powers under Section 42 of the Ancient Monuments and Archaeological Areas Act 1979 which expressly protect scheduled monuments and other areas of archaeological importance by making it an offence to use a metal detector in any such place, as well as other older national legislation touching on the matter. In those circumstances, I suggest that the
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Select Committee to whom this Bill will be referred—if that is the wish of this noble House—should seriously consider whether Cumbria needs the powers asked for in the Bill over and above the powers already existing in national legislation.
Lord Skelmersdale: My Lords, we are very grateful to my noble friend Lord Inglewood for introducing this Bill this afternoon. We have of course a great deal of business in front of us today, but I think that it might assist the House if I were to intervene very briefly at this stage to give the Government's view on the provisions in the Bill concerning the control of metal detectors.
The Government's view on this matter remains substantially the same as when a clause in the County of Kent Bill providing for a licensing system for metal detectors was considered by a Select Committee of your Lordships' House, so ably chaired by my noble friend Lord Nugent of Guildford, and subsequently disallowed. We considered then, and we consider now, that powers are already available under the general law for local authorities to make suitable by-laws to control the use of metal detectors in respect of certain areas of land. The Government are concerned that the system of by-laws proposed in Clause 40 of the Cumbria Bill should not overlap these existing powers.
Until last year my right honourable friend the Secretary of State for the Home Department was not prepared to confirm by-laws which sought to prohibit the use of metal detectors made under the enactments protecting public open spaces. He took the view that the mere use of a metal detector did not constitute a nuisance or damage the land, and, therefore, fell outside the scope of the by-law-making powers in question. It was only the digging that created the nuisance. However, local authorities and archaeological organisations argued very strongly that a by-law prohibiting digging is much harder to enforce than one prohibiting the operation of a metal detector because digging can be carried out quickly and metal detector users invariably dig up what they have located. Therefore, there was a case for prohibiting the actual use of metal detectors.
It was also considered that by-laws prohibiting their use on certain land would be infra vires. My right honourable friend the Secretary of State is, therefore, now prepared to consider by-laws prohibiting or regulating the use of metal detectors where the need to protect particular and usually quite small areas of land can be established; for instance, where an archaeological site or landscape garden needs this protection. I understand that four local authorities have submitted draft by-laws in accordance with the new policy and that these are now under consideration.
As to the Bill in general, there are no other points that I would wish to raise at this stage. I recommend that your Lordships give the Bill its Second Reading today to enable it to be considered in detail in Committee, as is customary.
On Question, Bill read 2a, and committed to a Select Committee.

Companies (No. 2) Bill [H.L.]
3.2 p.m.
Lord Lyell: My Lords, in moving the Motion which stands in my name on the Order Paper I would wish to draw your Lordships' attention to a small error. The fifth line of the order of clauses should read:
"Clauses 3 to 16 and 18 to 62"
instead of:
"Clauses 3 to 62".
With that in mind, I beg to move the Motion in this corrected form.
Moved, That it be an Instruction to the Committee of the Whole House to whom the Companies (No. 2) Bill [H.L.] has been committed that they consider the Bill in the following order, viz.:—

Clauses 1 and 2

Schedule 1

Clause 17

Schedule 2

Clauses 3 to 16 and 18 to 62

Schedules 3 and 4

—(Lord Lyell.)

Lord Ponsonby of Shulbrede: My Lords, I am glad that the noble Lord has amended the Instruction on the Order Paper, as I was concerned that we might have to consider Clause 17 twice.
On Question, Motion agreed to.

Industry: Efficiency and Competitiveness
3.3 p.m.
The Earl of Shannon The Earl of Shannon rose to call attention to the means whereby British industry may become more competitive in world markets; and to move for Papers.
The noble Earl said: My Lords, in rising to move the Motion standing in my name on the Order Paper I, like many others, have a deep feeling of apprehension at our present industrial situation. For nearly four decades it would appear that nationally we have been more concerned with ever more worthy and fair methods of spending our national wealth, rather than giving attention to the business of creating it. Admirable and laudable though this may be, it eventually means that we will run out of resources. That is just where we are arriving, or have arrived now.
I am particularly encouraged that so many of your Lordships have agreed to speak in this debate this afternoon. I am also most impressed by the quality and wide experience of those who are intending to participate. In particular, I am most pleased that the noble Lord, Lord Shackleton, has agreed to speak to his own Motion regarding standards during this debate. This is particularly appropriate as his Motion necessarily must form an integral and vital part of any debate or discussion on industrial competitiveness. In addition, three noble Lords have chosen this afternoon to address your Lordships' House for the first time. Like the others participating this afternoon, they will
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be speaking from a deep knowledge of various different sectors of industry. We wait with the greatest interest to hear what they have to say.
I hope that in this debate we will not dwell too long on historical aspects of the present situation, or attempt to apportion or lay blame along party lines. With great respect, there has been plenty of opportunity in the recent past during economic debates for all that to have been done already. I now hope that we may consider constructive suggestions for the betterment of all of us, and our nation in particular. For this same reason I shall not weary the House with lengthy statistics, all of which merely lead to a firm belief in the present situation as we already know it. Most of my contribution will refer to manufactured products, because this has been my industrial background. But in doing so I should like to make it quite clear that I am offering no disrespect to the valuable, invisible services which we offer to the world, or to our large and very important agricultural industry.
As is obviously quite clear, I have had absolutely no control over the Chancellor of the Exchequer in attempting to induce him to delay his Budget until he has had the benefit of all the valuable advice which I am sure your Lordships will give him this afternoon. No doubt he has variously done, failed to do, or done the exact opposite of what we think he should do and are about to advise him to do. Do we welcome the Budget? Yes, of course we do. But those little benefits for industry were surely too small, and in many cases were far too late to help many companies which no longer exist. But one must say what a pity it is that there was no cancelling of the now totally indefensible national insurance surcharge payroll tax or of the increase in the heavy oil tax. One really wonders whether such attitudes do not reinforce our belief that Her Majesty's present Government are not joining their long string of predecessors who, over the past decades, in fact gave one cause to wonder whether they were on our side or that of our competitors.
Of necessity, of course, we all speak from our own personal knowledge, and this is obviously restrictive in such a wide subject. For this reason I shall make only some very general comments about the subject as a whole by way of introduction. Then I shall concentrate on what is my main interest; namely, technology and industrial research, and the research associations, to which I shall make a number of references purely because I happen to know what they are doing. But this in no way means that they are exclusive in the particular work that they are doing; it just happens to be that I am more acquainted with them. Other aspects of this wide subject will no doubt be covered in detail by the other speakers from their own specialist knowledge.
At this time perhaps it is appropriate to remind ourselves of what in fact is competitiveness. I would suggest to your Lordships, first, that it is producing the right product; secondly, that it shall be efficiently produced; thirdly, that it shall be offered at the right price; fourthly, that it shall be effectively marketed; fifthly, that it shall be delivered at the right time; and, sixthly, that it shall be properly supported with after-sales service to ensure that a follow-up order is forthcoming. Then, this is an unusual one, seventhly, which I have added myself; that somewhere, somehow, somebody shall have an intent to be competitive.
Let us take these in greater detail. The product. The right product. It must incorporate the latest technology of its type. We now have instant communication around the world. It is no good offering to a market a technologically inferior product, because people are now well aware of what is available around the world and you will not get away with it any longer. It is no good to say that the old model is still selling. It probably is, but it is losing you reputation and losing you your market. You must have a continuous quest and an awareness of what is available and what is technologically up to date at the moment. Furthermore, it must have an appropriate and attractive design.
In this respect I would refer your Lordships, and any other industrialists, to the Corfield Report, which was issued by NEDO perhaps some two years ago. From that you will see that products must have eye appeal, and not only that but they must be seen to be well thought out. It does your image no end of good to be seen to have given the matter careful thought and to have designed it attractively and efficiently. Furthermore, and very important, it must meet the local standards and regulations of the market where you intend to sell it. That little subject I shall leave to the far abler tongue of the noble Lord, Lord Shackleton.
However, I should like to remind your Lordships that technology still moves ahead. The Furniture Industry Research Association has been successful in satisfactorily developing something which has so far eluded so many people dealing with standards for timber. It has produced a surface roughness gauge which will enable standards of surface on things like chipboard to be accurately measured for the very first time.
Another point that we want to impress upon our companies in this country is the stimulation of technological awareness. So many companies in this country, when they find falling profit figures, tend to make a dive for the established management consultants who then start talking about cash flow, use of assets, and so on and so forth, and the very last thing they think of is, "Are we making the right product in the right way?" A technological audit and a willingness to submit oneself to a technological audit is something we must impress on our companies if they are going to continue to be competitive and highly satisfactory in world marketing.
At this moment might I refer your Lordships to one or two examples of missed opportunities, and fortunately one or two opportunities which have been recently taken. The first one I should like to refer to was a joint operation in a project between a United States company and the Rubber and Plastics Research Association in this country, but it might have been any other laboratory. This project was successful in defining a method for the high level re-usage of rubber from waste motor-car tyres.
Unlike many of its previous projects and processes it was going to do so without a loss of property in the resulting product, although a high level of re-usage was involved. The patent rights which were obtained on this process were jointly shared between the American company, which was the sponsor, and the British laboratory. The American continent was reserved
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for the American sponsor, and the rest of the world to the British laboratory. It was made known, bruited abroad among British industry, that this new process existed, but there were no British takers. However, Sweden and Austria have jumped in and they are going to use it. What a pity!
Another one was the increased use of waste paper by eliminating what are known as the sticky contaminants in waste paper, which block up paper mills and cause no end of trouble in trying to make new paper from old waste paper. This was done by a British research association and the work was sponsored by the Department of Industry. It has led to a patented process which is highly successful, and we hope that British industry will not let this one pass by.
In the 1950s a British laboratory perfected a process of dust pressing of tableware in the ceramic industry. It was not used for various economic reasons at the time but now, oh dear, a German company is producing the machinery to make this type of tableware. However, on the brighter side in that particular industry the use of photo-polymer plates for decorating tableware efficiently and more cheaply than the present process has been developed in this country and is now fortunately starting to be used by British industry.
Another interesting one as a chemical system for producing resins from rock and clay. This was developed by the Paint Research Association, I think from memory somewhere in the region of about eight years ago. It was considered to be technologically brilliant at the time but uneconomic. That was before the oil crisis. In those days petro-chemical feedstock was cheap and easily available. Now, with the oil price rises, how much more valuable is this process, but still unfortunately it has not been taken up by British industry. However, great interest is now being expressed by that one nation that has no oil of its own and is entirely dependent on imported feedstocks. Needless to say, Japan.
There is a new process in steel castings. This, I think, will entirely revolutionise the present moulding procedure used in foundries. I do not know how many among your Lordships have actually poured molten metal with your own hands, but I have, both here and abroad. I think that I am in a small way qualified to say that I think this is one of the most revolutionary processes that I have ever seen in the foundry industry. It is a variation of the old lost wax, or cire perdu, process, brought really up to date. I would suggest that when this is finally unveiled as a patented process noble Lords who happen to have foundries in their groups will jump at this quickly, because if they do not their foundries are going to be out of business. Those are just a few examples of some cases where British technology has been adopted and others where, unfortunately, we have missed.
May I now go on to the next criterion, and that is that the product must be efficiently produced. Here again we must adopt the latest technology in manufacture. The proper use of technology will enhance the three major, although finite, factors in production; namely, land, if appropriate, labour, and capital. We must use those. Labour relations are of critical importance in production, but noble Lords with far greater experience than I will no doubt address the House on that, so I shall not embroider on that subject save to

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remind noble Lords of an interesting feature which is not sufficiently well known. That is that those countries which have the greatest population of industrial robots and automated machinery happen to be those countries which have the lowest levels of unemployment. I do not know why that should be the case, but it is.
We must give very intelligent thought to the training and retraining not only of our workforce but also of the decision-makers, and here a very efficient system is coming into operation where "hands-on" training is being made available with the latest types of equipment and machinery for managers, managing directors and chairmen so that they themselves can operate the new machinery to convince them that it is what they should buy, not just to train their labour force. We have a vast stock of existing technology in this country and it is through technology, which is a broad field including research and development, management and organisation, that our industry can reach for the greater efficiency, production and profit which we so desire.
Then we come to the question of the right price. Goods must be designed for the market for which they are intended. Occasionally we will have the technology push—in other words, the placing on the market of a totally unknown product will take place satisfactorily. But more often we must be concerned with the market pull: what does the market want? not what do we want to sell it? The product and its quality must be geared to the customer's requirements and his ability to pay. It is no good offering a highly sophisticated piece of equipment at great expense to somebody who cannot understand it and does not really want it anyway. It is like offering him a sports car when he has neither the roads for it nor the ability to maintain it, and really what he wants is a pushbike. If the product meets those requirements and is produced efficiently, the price should turn out to be correct. The well-known old story about mousetraps is, with respect, a lot of honey. However good a mousetrap you produce, the world will not beat a path to your door unless it knows you have that mousetrap. You have to find the customer and tell him, and if you have the right product at the right price, it should not be too difficult to convince him he should buy it.
Whether we opposed or approved our entry into the European Community, we are members of it, so please let us take it seriously. It is about the largest market grouping in the world and, as part of it, we should take it seriously and try to sell in it. I pay tribute to our ambassador to the European Community, Sir Michael Butler, who has produced from his office a valuable paper telling British firms what to do about the European Community and how to do it. If I had my way, I would make it required reading for everybody above the rank of manager in industry. I understand that this paper is due for publication soon. I urge the Government not to sit on it in the various departments, giving it the nod, but to get it out to industry because it is a most valuable paper.
Our products must of course be delivered at the right time. No matter how good a product or how right its price, it is pointless if a customer cannot have it when he wants it. Here the technology of production and labour relations are obviously critical, and in this connection I make my only other comment on labour
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relations: we must realise that it is very difficult to expect a complete change in attitude from a labour force, whether organised or otherwise, a whole generation of which has been paid what it wants, not what it is worth. Whether that was right or wrong I do not attempt to argue. It is what has happened and we cannot change it overnight.
I mentioned to your Lordships last year when speaking in a debate on productivity initiated by the noble Lord, Lord Schon, how the ratio of what we paid ourselves compared with what we produced. In the United States it was 3·6 to 1, 3·6 times more than they produced; in Japan it was 1 to 1 exactly; France, 2·3 to 1; Germany, 1·6 to 1; Italy, 5·7 to 1; and in the dear old United Kingdom, 13 to 1. We paid ourselves 13 times as much for what we did. I admit that in the last 12 months that has come down to 8·5 to 1; that figure I got from the television screen last night when the Chancellor of the Exchequer was talking about his Budget.
When a sale has been made, it must be properly supported. Almost every product during its lifetime requires spares, maintenance or repair. We must make sure that our after-sales service is what is necessary to ensure a future sale, even if the after-sales service is only advice on how to use the thing and does not necessarily supply spares and maintenance.
Then there is a criterion in regard to the intent: there must be an intent to be competitive, and none of the foregoing criteria will be met if we do not have a will and wish to succeed. Despite what may be political convictions or feelings of patriotism, there is absolutely no doubt that the one really good incentive to everybody is a reward. That must be seen to be there and be seen to be tangible and attainable, but I am sorry to say that recently taxation, the national insurance surcharge, interest rates and uncontrolled prices have all tended to destroy the incentive by reward.
It must be very difficult for Governments to exhort others to do various important and valuable things when the Government themselves appear to be slightly uninterested and almost even taking disruptive action in the areas which they control. We must have energy prices in line with those of our industrial competitors, as is clearly brought out by what has happened to our fibres industry, where the United States has been able to send to this country fibre made from subsidised petrochemical feedstock to sell at prices which have absolutely runined our indstry.
I take other examples from a light engineering business with which I am acquainted. Their gas prices have risen 75 per cent. in the last two years and the increase will be nearly 93 per cent. over three years. Their electricity has risen 87 per cent. in the last two years, yet during the same period their selling prices have gone up by 10 per cent. in 1979 and 8 per cent. in 1980, and they will have to reduce them by 2 per cent. to hold their market in 1981. One may ask, what have they done to help themselves? They have in fact reduced the energy content of their product from 8 per cent. to 4 per cent.—they have halved it. Yet they cannot but feel that, with those price increases, they are being sabotaged by their home Government. Another company with which I am acquainted have seen their prices remain static here but rise from 20 to

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25 per cent. abroad, depending on the exchange rate, which is something totally beyond their own control.
We were very pleased to see that interest rates have come down by 2 per cent. in the Budget, but what has that kind of reduction meant to companies in the past? In 1978 a small company with 130 employees required to service its working capital interest payments of £4,384. In 1979 it required £10,000, and in 1980 it required £25,130. All of that had to be found from within its gross profit margin, or not at all. I appreciate that heavy users of gas and electricity are due for negotiated reductions, and I appreciate, too, that the lowering of interest rates will help; but is that really enough?
I have gone through those seven criteria, and your Lordships will remember that in regard to at least two of them I mentioned that the latest technology is absolutely paramount. A few weeks ago many of us were privileged to hear the Prime Minister speaking at the Parliamentary and Scientific Committee lunch. During that speech she rightly laid great stress on the importance of technology for our industrial future, and she gave a graphic account of a recent party which she had held in Downing Street for inventors. That was magnificent, so far as it went. But I suspect that she has never designed, produced or marketed anything herself; otherwise, she would realise that, while it is wonderful to be an inventor, to leap up from your laboratory bench shouting, "Eureka!", or whatever one shouts, is just the beginning; it is not the end. The real operation is then implementing your discovery. If I may take an agricultural analogy, it would be like producing packets of seeds, but never growing the main crop. Of course, if one is to grow a satisfactory main crop, one must use the best seeds, but there is little future in producing the seeds alone. We have an enviable record of inventive capability, but a miserable record of adopting our own innovations.
The Secretary of State for Industry, in a recent address to NEDO, outlined United Kingdom successes—a very impressive list of successes of implementation. What a pity there was not another annexe to the document, showing all the inventions that we had made but never used! I have heard of a major international industrial group, which, as a matter of policy, have decided that the United Kingdom is no longer a suitable manufacturing base for their operations, but consider that its tradition, education and ingenuity make the United Kingdom a very suitable place to carry out R and D for the rest of their manufacturing operations elsewhere. There we are again straight back in the packets of seed business!
What incentive do we give to our research and development? We have a well organised Requirements Board system, under the Department of Industry. It suffers a drawback in that the only support it is able to give is limited to payments of 50 per cent. of the cost of projects, the other 50 per cent. having to be found by industry. For short-term research and research directly related to company products it is easy to find the other 50 per cent. But when it comes to what might be called generic research, which is of value to the industry as a whole but not necessarily in any way directed to specific products identifiable with particular companies, it is very difficult to secure
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the matching 50 per cent. I suggest that Her Majesty's Government may wish to consider whether that kind of generic research should not be funded as to 100 per cent.
On the whole, longer-term research is the proper function of universities, as part of their real mission in life, which is education, not, as some are now tending to do, acting as troubleshooters for industry. I think that that is brought about by a feeling that they should try to make themselves more apparently industrially relevant and, of course, in order to ease the cash situation. In doing that, they are usually merely duplicating an already existing facility, and doing so at a hidden and totally uneconomic cost.
I wish once more to refer to the address to NEDO of the Secretary of State for Industry. A very interesting statistic which was mentioned concerns what is spent on R and D funding in relation to industrial productivity. Germany spends 10 per cent., France spends 10 per cent., other EEC countries spend 8 per cent., and the United Kingdom spends 4 per cent., of which 3 per cent. goes on civil transport, so we really spend only 1 per cent.
I should like to compare that situation with the funding of industrial research in other countries. India makes no grants to industry for research, but 100 per cent. of the cost of all in-house company research and development is recoverable out of taxes—not gross profits. Pre-approved R and D projects qualify for 130 per cent. recovery from taxes. In France, the centres techniques are financed most successfully on a parafiscal system to the tune of around 80 per cent. in most cases, and such money is obtained for the benefit of R and D for French industry by a levy on imports. I wonder whether in fact this is not a breach of the Treaty of Rome, though, even if it is, I very much doubt whether it would worry the French much. May we contrast that system of getting foreign manufacturers to support home industry with the British system of applying national insurance surcharge, from which foreign imports are relieved, as a tax on British products?
In this country we have for some time had a system of statutory levy. It was imposed on various industries in the past at their own request, to pay for general research for the benefit of the whole industry. It leads to results which may not be patentable, and it presents a fair way of ensuring an equitable division of the costs among all beneficiaries, while not allowing "cowboy" or "pirate" firms to benefit from the results without making a reasonable contribution towards the cost. I understand that it is Conservative Party policy if possible not to allow that kind of levy. Recently, two surveys have been conducted by means of a questionnaire, in the furniture and cutlery industries, to discover whether they wish to continue with such a levy. Such levies are of great value to the industry as a whole, and it is unfortunate that it has been decided that the furniture industry shall not be allowed to continue with such a levy, although the industry voted for a continuation of the levy by a majority far greater than that by which the Conservative Government won the last election.
In conclusion, may I refer to one of our greatest competitors, the Japanese? Like many others, I am greatly impressed by their sense of purpose. Here we

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have the National Economic Development Office and ACARD. They have produced most valuable reports, but only in an advisory capacity. Our Prime Minister has been heard to refer to "United Kingdom Limited", and may I respectfully remind her and her predecessors that she is, and they were, the chairman of the board of directors of UK Limited. So far as I can remember, we have had little or no major decisions on industrial strategy from that board.
One example of Japanese success was the top level strategy decision, taken no doubt after much deliberation, that motor-cycles were for them. The Japanese did not invent motor-cycles, but decided that this was their market. So they went for it and they took that market. Of course, any Japanese manufacturer was free to make hula hoops if he so desired; but if he did so he was on his own and he did not get the extra assistance available to those who supported the major strategy.
Now what can we do along these lines? At present, we give assistance mainly on a geographical basis in an attempt to make a locally depressing situation slightly more palatable temporarily. But why do I have hopes that we might follow the Japanese principle? I will tell your Lordships. Because we did once emulate the Japanese; we once decided that North Sea oil was for us and we went all out to get it, and look what a great success it is. Great credit must be given to those companies who responded to this challenge, for the way they have worked, and for the new technology which they have created. Of course, it may be said that this was so obvious a decision, but how do we know that there are not others? After due deliberation and considering the wealth of expert advice available to them, could not our board of directors start making a few decisions along these lines, instead of being so preoccupied in sharing out the misery in an unimpeachably fair manner?
It will not always be possible to be right. The Japanese have made some mistakes and they have gone up unprofitable alleys, but this should not be an excuse for ducking decisions. There is only one thing worse than making a wrong decision and that is to make no decision at all and to give no leadership. My Lords, I beg to move for Papers.
3.43 p.m.
Lord Shackleton Lord Shackleton had given notice of his intention to call attention to the importance of standards in contributing to the efficiency and competitiveness of British industry and the quality of its products, the need for progress in implementing the Warner Report and the desirability of considering these issues within an international context, with particular reference to the European Communities; and to move for Papers.
The noble Lord said: My Lords, I rise to support my noble friend; I call him "my noble friend", but that does not mean I am a Cross-Bencher, nor even a social democrat, but he and I have been working together on a number of matters and he has played a very big part in initiating the Science Centre Project in addition to his activities in the research associations. In fact, he has shown all that experience and quality that one would look for from a retired professional soldier. I think we have all been very impressed.
Under the ingenious procedure we have in this House, the noble Earl has allowed me to insert into this debate a Motion that I have on the Order Paper and which, for the sake of the record, because it is not formally before your Lordships, I would like to read to your Lordships:
"To call attention to the importance of standards in contributing to the efficiency and competitiveness of British industry and the quality of its products, the need for progress in implementing the Warner Report and the desirability of considering these issues within an international context, with particular reference to the European Communities; and to move for Papers".
In a way, I regret having to confine myself to this subject since the speech made by my noble friend has been so interesting that it was a worthy sequel to the first-class debate we had in your Lordships' House a few days ago. There are many issues to which I would like to have referred. I would not have agreed that the Prime Minister was not very good at marketing. She seems to have marketed the Conservative Party up until now with some success. It is not a question of our running out of resources; it is our failure to use those resources that we are most concerned with.
I am very glad that my noble friend referred to the energy problem. He said that he did not dislike the Budget. Frankly, I do. I dislike it very much and I do so because I am also involved in industry; I happen to be chairman, among other things, of a large aluminium smelting undertaking where the cost of power—which the excellent NEDO Report may lead to being improved—and the rate of exchange are very serious handicaps.
I want to talk about a subject with which not all your Lordships may be familiar, and I must apologise if I fail to make my comments very interesting. Furthermore, because I have myself found difficulty in understanding all the technicalities involved, I will stick rather more closely to a brief than I usually do. I must say that when I came out of Government I found that I made much better speeches in Opposition than I did from the Government's Front Bench when I had to stick to the Minister's brief.
I am delighted that the noble Earl, Lord Gowrie, is going to reply to this debate and I am quite hopeful that we shall hear some valuable comments on many of the matters to which I will now refer. Indeed, standards are an unknown quantity to many people yet they affect our lives in many ways. They do have an important contribution to make to our efficiency and competitiveness. And by standards, I do not mean physical standards of weights and measures, but technical agreements.
I apologise for giving the following rather turgid description: a standard is a technical specification or other document available to the public, drawn up with the co-operation and consensus or general approval of all interests affected, based on the consolidated results of science, technology and experience and it is aimed at the promotion of the optimum community benefits. It has to be proved by a body recognised at national, regional or international level. In this country the body involved is the British Standards Institution, of which I am a past president, in common with the noble Baroness, Lady Seear, who has also been president of that admirable institution. This definition is rather

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complicated, but standards are not easy to describe. There are different types of standards to meet different needs; glossaries of terms to ensure that those involved in some particular fold speak the same language, so that they know what they are talking about. There are also methods of test, which are self-explanatory; specifications giving a set of requirements which a product should meet, and codes providing advice on accepted good practice.
Perhaps standards have rather a dull ring because so little is known about them, even though it has been estimated that something like half our GNP is affected by them. Life would be more difficult, more dangerous and more expensive without standards. They define and establish fitness for purpose so that a supplier of, say, manhole covers can be confident that if his product meets the standard it will meet his customers' needs, and his customers in turn will have a similar assurance. In other words, standards describe good practice; guiding, for example, those who are engaged in the safe use of cranes or ensuring access to buildings for the disabled. Standards reduce unnecessary variety. They make production more economical and efficient and they ensure compatibility. The absence of standards has severely handicapped some industrial developments in the past. This was true of computer systems, and unless we achieve good standards the whole of information technology may well be seriously affected. The difficulty in that area is fundamental to the success of our own industry. To move to another simple example, there was once a difficulty in finding candles to fit candlesticks. That was an early stimulus for standardisation.
Standards make available research and they reflect, or should reflect, market requirements, international as well as national. They are important for promoting trade, international and national; and a country which has national standards has to spell them out to meet its own market needs. But it is grossly uncompetitive to work to a number of different standards. Therefore, there is now an impetus, and a good one, towards international standardisation which has been particularly strong in the post-war period. Here again the representation of British interests—and I stress "British interests"—in the alignment of differing national standards is of major importance to United Kingdom trade.
The process of reference to standards offers Governments a simple economic instrument, for example, in the fields of health, safety and consumer protection. Where different Governments have adopted separate approaches, the result has been the creation of additional barriers of trade between countries as opposed to tariff barriers. A move towards dismantling these has been the work being done in the European Community in pursuing a programme of directives (some of which I hope will be more acceptable than some of the directives that we have had recently from Brussels). These are related to harmonised standards wherever possible, and here again the British Standards Institution has a role to play, particularly in providing the leverage which is so essential. This leverage has been made clear and its importance brought under the spotlight by Sir Fred Warner's report, Standards and Specifications in the Engineering Industry. Sir Fred will be well known to many noble Lords in connection with the great con
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sultant firm of Cremer and Warner. He is my successor as president of the British Standards Institution.
Here I should like to pay tribute to the NEDC and the work of some of the sector working parties in recognising the value of standards in reducing unit costs, in improving quality and delivery and creating better export performance. What is needed is a reduction in the endless proliferation of specifications and certification schemes for similar products.
The Warner Report sought to establish the scope for achieving this and the reason why I put down this Motion was my anxiety at the lack of progress on this fundamental report which is now four years old; and although some circumstances have changed many of the messages are relevant today. The potential of standards is not fully exploited. It is a pity that more progress has not been made in public purchasing in regard to British Standards, which accounts for over half our national expenditure. I hope that the noble Earl when he comes to reply, in view of the rather encouraging remarks which the Secretary of State for Industry made recently, will be able to report some progress in this area. This was recommended in a White Paper in 1967 but, 14 years later, too much of the public sector continues to insist on specials instead of standard products. So I think that any initiative from the Department of Industry will be vital to achieve progress in this area and I look forward to hearing something encouraging.
A recent example of a good decision has been that to convert British telecommunication standards to British Standards and, incidentally, we welcome the abandonment of public sector standards. I am sorry to be so technical but these are technical questions, of great importance to our progress, and the Government might examine the scope for similar initiatives in other public sector bodies.
There have been some positive achievements. Recognising that legislative requirements could produce a further diversity of specifications, the Warner Report said that the Health and Safety at Work Act should refer to British Standards and codes of practice and the Consumer Protection Act should be implemented by reference to standards. I am glad to say that progress here has been made. The inspectors support the voluntary use of appropriate British Standards and there is reference to British Standards in the regulations, and a great deal more could be done. A list of standards could be drawn up which might be produced jointly. The Consumer Protection Act allows for reference to standards but has the rather cumbersome Affirmative Resolution legislative procedure. This means there is a certain delay and we do not get the appropriate reference to independent certification except by a rather tedious process.
The third major recommendation called for the Government to set an early target for the completion of metric conversion. This is a very sore subject. Governments are frightened and this Government have been even more frightened than their predecessor. Noble Lords—including the noble Earl, Lord Halsbury, who is to take part in this debate—will remember the somewhat heated debate that we had on the subject of decimalisation. However much we may have preferred pounds, shillings and pence, the fact is that it is very expensive for us to have stopped. Now we

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have, in effect, two separate standards, one imperial and the other metric. I hope that the Government will take a more positive view because the change needs Government support. It cannot be left to industry, although much of industry has succeeded in doing a great deal.
There is another aspect of standards to which I should like to refer and that is certification and the quality assurance. The Warner Report said that the reduction in numbers of specifications and certifying bodies would help to reduce multiple assessment of suppliers and the sector working parties should report on this problem of multiple assessment and the feasibility of central registration of all quality assurance schemes. Here again, I hope the Government will give a great deal of emphasis. I should like to pay tribute to some of the civil servants who have been involved, but I should like to see a great deal more pressure coming from the top. Now we have had a Government publication, A National Strategy for Quality and a debate in NEDC on "An Approach to Quality" and, as one practical development, the establishment of the National Test Laboratories Accreditation Scheme. The decline in recent decades of Britain's reputation for products of the right quality continues to give rise to debate and there is still great scope for quality assurance and certification schemes in British industry.
I apologise for speaking so much about the work of the British Standards Institution but they are the people who have been doing the work and giving the lead. But they cannot achieve the results they want without more support and without a Government lead. British standards for materials, components and processes are the backbone of quality assurance programmes and British standards for sampling, inspecting and measuring are basic tools for quality assessment.
A new development of particular importance is a group of British Standards giving guidelines to assist companies in achieving and maintaining quality throughout production, from design to marketing, and after-sales service. The central one is British Standard No. 5750, Quality systems. No company should be without it. The Government should circulate this to every company, for I know of many companies who have never heard of it. It is based on a very successful quality assurance programme which was instituted by the Ministry of Defence 10 years ago.
Many noble Lords will remember the BSI Standard title "Kitemark" which was applied to third party certification schemes. There is again need for more promotion in this area. British industry is already required to provide proof of compliance with other countries' technical requirements in overseas markets. I do not want to take up too much of your Lordships' time in this technical way, although I could go on at considerable length on the subject of BS 5750. I should like to emphasise that standards are produced by partnership between all the interested parties—the users and the suppliers. They are effective only if they meet the needs of those involved. It is our responsibility to see that they do and they are used.
I should like to emphasise again to the Government that we should like to see a much stronger Government initiative and commitment to the use of British Standards throughout the public sector. Such an example
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from Government should help to secure recognition of the value of standards at boardroom level. I believe that many large engineering users would respond, if they had not done so already, to an initiative by Government. This is essential if the potential of standards is to be fully exploited. To increase our industrial competitiveness Government should vigorously promote BS 5750.
I should like to end by referring to one country which I will not say is further ahead than we are but none the less is an example that we should note. It is often said that some countries, particularly West Germany, achieve their strength and success in export markets because of their strong national standards system. I should have liked to have followed the noble Earl, Lord Shannon, in discussing the secrets of success particularly in Japan and France and the influence of MITI which the noble Earl will know in relation to Japanese industry.
However, I should like to refer to DIN, the German standards organisation, as an example. Their influential position in the German economy plays a major role in the success of German production. There we see the full and active participation of users of products both in the public and private sectors. There is a very strong relationship in policy and participation between the standards body in West Germany and all the governmental and public sector authorities.
Through legislative provisions—and perhaps I may say a more conformist society—there is a marked attitude among manufacturers, users and purchasers that compliance with DIN standards will meet their needs and give confidence to others. This owes a good deal to the marketing of that German organisation's skills. An enhanced national status for German standards through an aggressive policy of partnership supports their trading success. There are some parts of the world where it is decisive now and will be decisive for years. This is the message that we should leave with the Government. We hope that some policy for action will be taken as a result of today's debate.

Social Security Benefits Up-rating
4.4 p.m.
The Minister of State, Department of Education and Science (Baroness Young): My Lords, with the leave of the House, I shall now repeat a Statement which is being made in another place by my right honourable friend the Secretary of State for Social Services. The Statement reads as follows:
"I will, with permission, Mr. Speaker, make a Statement about the increases in social security benefits. The necessary up-rating order will come into operation on 23rd November next. This and the other up-rating instruments will be laid after the Social Security Bill becomes law.
"The standard rate of basic retirement pension for a single person will go up by £2·45 a week from £27·15 to £29·60. The rate for a married couple will go up by £3·90 from £43·45 to £47·35. Other long-term benefits which will be similarly increased include widows' pensions, industrial disablement

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pensions, non-contributory invalidity pension, and attendance allowance.
"The standard rate of sickness benefit and unemployment benefit will go up by £1·85 for a single person from £20·65 to £22·50, and by £3·00 from £33·40 to £36·40 for a married couple. The increases in invalidity pension will be somewhat higher—for a single person the increase will be £2·35 taking the pension from £26·00 to £28·35, and for a married couple the increase will be £3·75 a week, increasing the invalidity pension from £41·60 to £45·35 a week.
"In calculating the new rates of benefit, account has been taken both of the 1 per cent. adjustment provided for by the Social Security Bill, to which the House gave a Second Reading on 24th February, and of the forecast, given by my right honourable and learned friend the Chancellor of the Exchequer yesterday, of a 10 per cent. increase in the retail price index between November 1980 and November 1981. As I said on the Second Reading of the Bill, I would have wished that we did not have to make this adjustment, but, given the very tight constraints on public spending, which the Chancellor emphasised yesterday, we simply cannot afford the extra £225 million in a full year which the uprating of benefits would otherwise have cost.
"Supplementary benefits will all be increased next November on the same basis as national insurance benefits. War pensions will go up similarly and a Christmas bonus of £10 will be paid on the same basis as last year.
"For public service pensions, earnings-related components in national insurance pensions, and the pensions payable under the old graduated scheme, where there are no standard rates, the same principle of the 1 per cent. adjustment will apply. This will increase existing rates by 9·06 per cent. The same increase will apply to those who receive guaranteed minimum pensions from contracted-out occupational pension schemes.
"Last July I told the House that subject to economic and other circumstances we would maintain the value of child benefit in line with prices. As announced yesterday by the Chancellor, child benefit will be increased by 50p to £5·25 a week for each child—a 10½ per cent. rise—a little more than the expected rise in prices. One-parent benefit—the premium paid to lone parents—will go up from £3·00 to £3·30 a week. Thus, a one-parent family with two children will get £13·80 a week, compared with £12·50 at present.
"The prescribed levels of income for family income supplement will go up by £7·00 to £74·00 weekly for one-child families and the additional amount for each further child will be raised to £8·00 a week.
"I am glad to be able to announce, in the international Year of Disabled People, a substantial increase in mobility allowance from £14·50 a week to £16·50. This is an increase of nearly 14 per cent. and marks the importance which we attach to this allowance. We are particularly anxious to continue to make it possible for as many disabled people as can to lease or buy cars from Motability, and this
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increase will help to ensure the continuing success of that scheme. The VAT relief on adaptations to cars for the disabled and the other VAT concessions announced yesterday will also be welcomed by disabled people.
"Turning to invalidity benefit, the Chancellor made it clear yesterday that it will not be possible to bring this benefit into tax next year, but I am anxious to make a start towards the restoration of the value of this benefit in advance of taxation. I therefore propose to restore the value of the invalidity allowances this November. These are the sums paid on top of the invalidity pension and depend on the claimant's age when incapacity begins. The cost of restoring these allowances and of the increase in real terms of the mobility allowance, will be met from the contingency reserve. Our pledge to restore the value of the invalidity pension itself when it comes into taxation now stands unqualified.
"Rising fuel costs are causing increasing anxiety among needy people, and the Government have every sympathy with the difficulties which they face. Last November we introduced the most generous fuel assistance package ever. We raised annual spending on fuel aid to over £200 million, concentrated on giving substantial help to those in the greatest need. This year, we aim to protect the value of that advance. Supplementary benefit heating additions, therefore, including the special boost we gave them last year, will be increased in line with the expected rise in fuel prices between November 1980 and November 1981.
"The basic rates of heating addition and the central heating addition will go up from £1·40 a week to £1·65 (that is, to £85·80 a year). Around 1½ million people will benefit from this increase, including all supplementary pensioner householders over the age of 70, and supplementary benefit householders with children under five. The higher rate heating addition will rise from £3·40 to £4·05, or £210·60 a year. Over 400,000 people are getting this increase, and they include the most severely disabled, who get it automatically. These increases in heating additions will cost an extra £40 million in a full year, which means that our total spending on fuel assistance will rise to over £250 million and will benefit over 2¼ million people.
"The cost of this up-rating will be about £2 billion in a full year. About £1½ billion will fall on the National Insurance Fund, and the balance comes out of the Consolidated Fund. I shall be reviewing contribution rates as usual in the autumn and any necessary changes will take effect from April 1982. For the convenience of the House, I am circulating details of the new rates of benefits in the Official Report, and copies are available in the Vote Office.
"This package of measures will bring help to the least privileged members of the community. The increase in pensions maintains our commitment to protect the real value of the pension over the lifetime of this Parliament. The increases in child benefit and the premium for one-parent families fulfil the undertaking to maintain the value of child benefit which I gave to the House in July last year. These increases and that in family income supplement are an indication of the importance we attach to

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family support. The increase in mobility allowance and invalidity allowances for the disabled and the heating additions for the needy demonstrate our concern for these hard-pressed groups. Of course all of us, on both sides of the House, wish we could do more. But we have to take account of what we can afford. I hope the House will agree that the measures proposed are evidence of our determination to protect the most vulnerable in these very difficult times."
My Lords, that concludes the Statement.
Following are the details of new rates referred to above:
INCREASED BENEFIT RATES
(The Social Security Act 1975, as amended, is referred to as "the Act"; the Social Security Pensions Act 1975, as amended, is referred to as "the Pensions Act")

PART 1 BENEFITS PAYABLE FROM NATIONAL INSURANCE FUND (see also Parts 3 and 4)

Existing weekly rate £

Proposed weekly rate £

Basic component of Category A retirement pension* (section 6(1)(a) of the Pensions Act), Category B retirement pension* (section 7 of the Pensions Act), widowed mother's allowance and widow's pension

27·15

29·60

Category B retirement pension* (section 29(7)(a)(i) of the Act

…

…

16·30

17·75

Basic component of invalidity pension

…

26·00

28·35

Standard rate of unemployment and sickness benefit:

Beneficiary under pension age

…

…

20·65

22·50

Beneficiary over pension age

…

…

26·00

28·35

Invalidity allowance:

Higher rate

…

…

5·70

6·20

5·45

Middle rate

…

…

3·60

4·00

3·45

Lower rate

…

…

1·80

2·00

1·75

Maternity allowance

…

…

20·65

22·50

Widow's allowance

…

…

38·00

41·40

Child's special allowance

…

…

7·50

7·70

Guardian's allowance

…

…

7·50

7·70

The weekly rate of graduated retirement benefit payable for each unit of graduated contributions will be increased by 9·06 per cent. from 3·54 pence to 3·86 pence.
* An age addition of 25p is payable to retirement pensions who are aged 80 or over.
The following sums will be increased by 9·06 per cent.:

(a) additional components in the rates of long-term benefits calculated by reference to any final relevant year earlier than the tax year 1981–1982.

(b) increases of retirement pensions for deferred retirement under Schedule 1 to the Pensions Act.

(c) increases of graduated retirement benefit for deferred retirement under Schedule 2 to the Social Security (Graduated Retirement Benefit) (No. 2) Regulations 1978.

(d) increments in guaranteed minimum pensions under Section 126A of the Act.

PART 2 BENEFITS PAYABLE FROM CONSOLIDATED FUND (BUT SEE ALSO PARTS 5 TO 8)

Existing weekly rate £

Proposed weekly rate £

Attendance allowance

Higher rate

21·65

23·65

Lower rate

14·45

15·75

Non-contributory invalidity pension

16·30

17·75

Invalid care allowance

16·30

17·75

Existing weekly rate £

Proposed weekly rate £

Mobility allowance

14·50

16·50

Category C or D retirement pension*

Higher rate

…

16·30

17·75

Lower rate

…

9·80

10·65

*An age addition of 25p is payable to retirement pensioners who are aged 80 or over.

PART 3 INCREASES FOR DEPENDANTS Increase for a wife or other adult dependant of:—

Category A or B retirement pension

16·30

17·75

Invalidity pension

15·60

17·00

Unemployment benefit and sickness benefit (where beneficiary is over pensionable age)

15·60

17·00

Unemployment benefit and sickness benefit (where beneficiary is under pensionable age) and maternity allowance

12·75

13·90

Non-contributory invalidity pension, invalid care allowance and Category C retirement pension

9·80

10·65

Increase for a qualifying child of:

Widow's allowance, widowed mother's allowance, invalidity, non-contributory invalidity and retirement pensions, invalid care allowance, unemployment and sickness benefit (where beneficiary is over pensionable age) and child's special allowance

7·50

7·70

Unemployment benefit and sickness benefit (where beneficiary is under pensionable age) and maternity allowance

1·25

0·80

PART 4 INDUSTRIAL INJURIES BENEFIT

Existing weekly rate £

Proposed weekly rate £

Injury benefit:

(a) beneficiary 18 or over or entitled to increase for child or adult dependant

23·40

25·25

(b) beneficiary under 18 and not entitled to such an increase

20·65

22·50

Disablement pension:

(a) beneficiary 18 or over or entitled to increase for child or adult dependant

Degree of disablement per cent.

100

44·30

48·30

90

39·90

43·47

80

35·40

38·64

70

31·00

33·81

60

26·60

28·98

50

22·20

24·15

40

17·70

19·32

30

13·30

14·49

20

8·90

9·66

b) beneficiary under 18 and not entitled to such an increase:

Degree of disablement per cent.

100

27·15

29·60

90

24·44

26·64

80

21·72

23·68

70

19·01

20·72

60

16·29

17·76

50

13·58

14·80

40

10·86

11·84

30

8·15

8·88

20

5·43

5·92

Maximum disablement gratuity will be increased from £2,950 to £3,210.

Existing weekly rate £

Proposed weekly rate £

Unemployability supplement

26·00

28·35

Increase of unemployability supplement for early onset of incapacity for work:

(a) if on the qualifying date the beneficiary was under the age of 35, or if that date fell before 5th July 1948

5·45

6·20

(aa) if (a) does not apply and on the qualifying date the beneficiary was under the age of 40 and he had not attained pensionable age before 6th April 1979

5·45

6·20

(b) if (a) and (aa) do not apply and on the qualifying date the beneficiary was under the age of 45

3·45

4·00

(bb) if (a), (aa) and (b) do not apply and on the qualifying date the beneficiary was under the age of 50 and had not attained pensionable age before 6th April 1979

3·45

4·00

(c) in any other case

1·75

2·00

Maximum increase of disablement pension in cases of special hardship

17·70

19·32*

Maximum increase of disablement pension where constant attendance needed:

(a) except in cases of exceptionally severe disablement

17·70

19·40

(b) in any case

35·40

38·80

Increase of weekly rate of disablement pension for exceptionally severe disablement

17·70

19·40

Increase of injury benefit for dependent children

1·25

0·80

Increase of disablement pension with unemployability supplement for dependent children

7·50

7·70

*or the amount (if any) by which the weekly rate of the pension, apart from any increase under sections 61, 63, 64 or 66 of the Act falls short of £48·30, whichever is the less.

Increase of injury benefit for adult dependant

12·75

13·90

Increase of disablement pension with unemployability supplement for adult dependant

15·60

17·00

Widow's pension—

(a) initial rate

38·00

41·40

(b) higher permanent rate

27·70

30·15

(c) lower permanent rate

8·15

8·88

Widower's pension

27·70

30·15

Allowance under Section 70 of the Act in respect of each qualifying child—

(a) higher rate

7·50

7·70

(b) lower rate

1·25

0·80

under Section 91(1) of the Act Maximum/aggregate of weekly benefit payable for successive accidents—

(a) beneficiary 18 or over or entitled to an increase in respect of a child or adult dependant

44·30

48·30

(b) beneficiary under 18 and not entitled to such an increase

27·15

29·60

Maximum weekly rate of lesser incapacity allowance supplementing workmen's compensation (Section 2(6)(c) of the Industrial Injuries and Diseases (Old Cases) Act 1975)

16·30

17·75

Weekly rate of allowance payable where disablement is not total (Section 7(2)(b) of the Industrial Injuries and Diseases (Old Cases) Act 1975)

16·30

17·75

PART 5 MAIN INCREASED SUPPLEMENTARY BENEFIT RATES

Existing ordinary weekly rate £

Existing long-term weekly rate £

Proposed ordinary weekly rate £

Proposed long-term weekly rate £

Supplementary benefit:

Husband and wife

…

34·60

43·45

37·75

47·35

Person living alone

…

21·30

27·15

23·25

29·60

Non-householder—age 18 and over

…

17·05

21·70

18·60

23·65

age 16–17

…

13·10

16·65

14·30

18·15

Existing weekly rate £

Proposed weekly rate £

Any other person aged:

11–15 years

10·90

11·90

under 11 years

7·30

7·90

Non-householder housing addition

2·15

*to be announced

Heating additions to supplementary benefit

1·40

1·65

3·40

4·05

Dietary additions to supplementary benefit

1·20

*to be announced

2·80

8·00

Blindness addition to supplementary benefit

1·25

1·25

Addition for claimant, or dependant over age 80

25p

25p

* After the February index of retail prices becomes available.

PART 6 MAIN INCREASED WAR PENSION RATES

All ranks receive the same increases, officers' rates being expressed in pounds per annum.

Existing weekly rate £

Proposed weekly rate £

Disablement benefits

Disablement pension for Private at 100 per cent. rate

44·30

48·30

Unemployability allowances

Personal allowance

28·80

31·40

Increase for wife or other adult dependant

16·30

17·75

Increase for child

7·50

7·70

Comforts allowance

Higher rate

7·70

8·40

Lower rate

3·85

4·20

Allowance for lower standard of occupation (maximum)

17·70

19·32

Constant attendance allowance

Special maximum

35·40

38·80

Special intermediate

26·55

29·10

Normal maximum

17·70

19·40

Half and quarter day

8·85

9·70

Age allowance with assessments of:

40 and 50 per cent.

3·10

3·35

Over 50 and not exceeding 70 per cent.

4·80

5·25

Over 70 and not exceeding 90 per cent.

6·85

7·50

Over 90 per cent.

9·60

10·50

Exceptionally severe disablement allowance

17·70

19·40

Severe disablement occupational allowance

8·85

9·70

Existing annual rate £

Proposed annual rate £

Clothing allowance

Higher rate

…

…

59·00

65·00

Lower rate

…

…

37·00

41·00

PART 7 FAMILY INCOME SUPPLEMENT

Existing weekly level £

Proposed weekly level £

Family Income Supplement:

Prescribed amount for family with one child (gross income below which FIS is payable)

…

…

…

…

67·00

74·00

Increase in prescribed amount for each additional child

…

…

…

…

7·00

8·00

Maximum weekly amount for a one-child family

…

…

…

…

17·00

18·50

Increase in maximum amount for each additional child

…

…

…

…

1·50

1·50

PART 8 CHILD BENEFIT

Existing weekly rate £

Proposed weekly rate £

Child benefit:

each child

4·75

5·25

Child benefit increase (one parent benefit):

first or only child of certain lone persons

3·00

3·30

4.12 p.m.
Lord Wells-Pestell: My Lords, I am sure the whole House would wish me to express its gratitude to the noble Baroness the Minister for allowing us to hear the Statement made by her right honourable friend in another place. The Statement makes it difficult, by the way it is worded, to ask the Minister any questions, but it lends itself to a great deal of comment. I will bear in mind what is required of a speaker in this situation and will try to rely, if I can, upon questions, and not too many statements.
Perhaps I may be permitted to say that on this side of the House we are glad that the pension is to be paid this year after 52 weeks and not, as last year, after 54 weeks, when the Government did the pensioners out of two weeks' pension. What we hoped was that the Government would have a change of conscience in this matter and would have brought in the increase in pensions on the 16th November next rather than on the 23rd, but I know that whatever question I put to the noble Baroness the answer will be (and I understand her position) that of course we cannot afford it.
I want to draw attention to what was said by the noble Baroness the Minister in the third paragraph, when she said that the standard rate of unemployment benefit for a married couple will go up from £33·40 to £36·40 per week. I ask noble Lords opposite whether they feel that unemployment benefit for a married couple is at all realistic at £36·40 per week. I know I shall be told the couple can apply for supplementary benefit, but unemployment benefit by virtue of national insurance should meet the needs of a
306
couple where the breadwinner is unemployed rather than that they should have to go (I was going to say cap in hand) for supplementary benefit. We feel that this is a very regrettable situation.
I want to refer, if I may, to the increase in child benefit of 50p a week. I think it ought to be remembered by noble Lords on all sides that we need to be realistic about this, and that we must relate what we say to the realistic situation. The Government were in office from May 1979 until November 1980—a period of 18 months—without increasing child benefit, although one of their election promises was that they would in fact do so much earlier. The increase which is to be given in November next of 50p a week will barely compensate for the increase due to inflation over the past year. I do not think anybody will deny that; and if child benefit is to be realistic it should have been a 95p increase in order to cover the 50p which was needed because of inflation last year and the extra 45p needed to cover inflation at the present moment.
Perhaps I may turn now to the family income supplement. I do so because I understand it is the Government's intention not to increase the tax threshold by the inflation rate, which they are obliged to do, if I have understood the position correctly, under the Finance Act 1977. It is obligatory on any Government to increase the threshold of taxation in line with the inflation every year, and this Government are refusing to carry out what is in the Finance Act 1977.
I realise that a Government are entitled to come to Parliament and, by order, if they can get the order through, be relieved of that responsibility. But it seems to me quite disgraceful that, having put this into the Finance Act after very careful discussion, the Government have decided that for this year, at least—these precedents are always bad—it will not be done. I raise the matter because at the present moment there are 80,000 families in receipt of family income supplement. Three-quarters of them pay income tax, and if the income tax threshold had gone up those people would in fact have been perfectly all right. I want to ask the Minister: now that the Government are not going to implement that particular provision of the Finance Act 1977, how many of the 80,000 will have to apply for supplementary benefit?
We on this side of the House are naturally glad, as I think all noble Lords will be, that there is going to be an increase in the mobility allowance, but, if I may quote from the Statement, it says:
"We are particularly anxious to continue to make it possible for as many disabled people as can to lease or buy cars from Motability, and this increase will help to ensure the continuing success of that scheme".
When your Lordships consider that the mobility allowance is going up by £2 a week and that petrol is going up by 20p per gallon, it cannot possibly be any incentive to people to buy cars; and those who have them will find it extremely difficult, in our submission, to go on running those cars.
I want to refer to fuel prices and to ask the Minister whether what has been done is at all realistic. The noble Baroness the Minister talked about the increase in gas and electricity prices. We realise that these are going up very substantially. But does the Minister know how many people on retirement pension—there are over 10 million of them—rely almost exclusively

307
on coal? Many of them are living alone in one room where they cannot store coal and they have to buy it in bags. If they live in a smokeless zone, they have to pay £1.35 for a 22lb. bag of smokeless fuel which means that they are paying something like £135 a ton. If they are not in a smokeless zone, they can buy 44lb. of ordinary coal at £1·83 per bag which means that they are paying something like £90 a ton for coal. I realise that there has to be a limit, but we in this House ought to try to see the background of so many of these people, and the Government's clawback of 1 per cent. for the so-called over-payment of last year is to be deplored.
The right honourable friend of the noble Baroness the Minister said in the Statement:
"This package of measures will bring help to the least privileged members of the community".
I do not deny that it will bring some help, but it is quite inadequate to meet the situation of a large number of people. It is the old story of the Government making the worst-off people in the community pay for their political mistakes and their policy failures. While we are glad to see these increases, we have very grave reservations as to whether more ought to have been given.
4.22 p.m.
Lord Banks: My Lords, I should like to join in thanking the noble Baroness, Lady Young, for repeating the Statement made in another place. I should like to welcome the increase in the mobility allowance to which she referred. It is entirely appropriate that there should be a real increase in that in the International Year of Disabled People. But I have three brief points of criticism of the general statement which has been made.
The first is a criticism of the 1 per cent. reduction in the 10 per cent. which is necessary in the current year to offset inflation. In the Statement, the Government say that we simply cannot afford this 1 per cent. But I would ask the noble Baroness whether it is a fact that, so far as national insurance benefits are concerned, the provision of the 1 per cent. would not have caused a deficit in the National Insurance Fund. Secondly, so far as child benefit is concerned, we join in welcoming the increase of 50p, but regret that it is not the 95p which would have been required to restore the position to what is was in April 1979.
My third point of criticism is of the failure, to which the noble Lord, Lord Wells-Pestell, has already referred, to index income tax allowances. That surely must lead to a greater intermingling of tax and benefit, and would the noble Baroness not agree that that must considerably accentuate the poverty trap? So far as invalidity benefit is concerned, I am glad to know that the pledge to restore the value of that is now unqualified. What is the position with regard to the other benefits which suffered the 5 per cent. reduction? Do the Government now feel that they can make a qualified pledge in respect of them?
I have two brief final questions. What is the position about the earnings rule, which the Government are pledged to remove in the lifetime of this Parliament? Are any steps to be taken in that direction?—a direction which the noble Baroness has herself
308
very eloquently advocated in the past. Finally, with regard to heating, while one must welcome the increase in the amount, is it not a fact that the scope of the heating arrangement will not be extended, and what does the noble Baroness feel about the position of people who are just above the supplementary benefit level and who are very much affected by high fuel prices?
4.25 p.m.
Baroness Young: My Lords, I was very glad to hear the welcome which the noble Lord, Lord Wells-Pestell, gave to the fact that the pension increase is to be paid after exactly 52 weeks. But I really cannot accept that we are not helping the poorest members of the community. Indeed, we have laid particular emphasis on helping those who are least well-off. If the noble Lord studies the Statement, I think he will see that the selective use of the money that we have available has been used to this effect.
He asked me, first, about unemployment benefit and the difficulties which an unemployed married couple would face with £36.40 a week. We all accept that it is very difficult when one is unemployed. But the noble Lord will, I think, accept that it is possible for unemployed people to have supplementary benefit and a number of other benefits which are given for people with low incomes, such as rent rebates and rate rebates. Although people may not like to apply for them they are, after all, part and parcel of what is available to poor people and I hope that those who are entitled to them will take them up.
Both the noble Lord, Lord Wells-Pestell, and the noble Lord, Lord Banks, raised points about child benefit and it is very valuable that we have been able to increase this by 10½ per cent. from next November and have in this Budget helped families with children. I have heard both the noble Lord, Lord Banks, and the noble Lord, Lord Wells-Pestell, make the point which I have made myself; that over a long period of time taxation generally has tended to help single people and couples without children more than families with children. In this Budget, at any rate, families with children are being helped and it would be churlish to complain now that the help is not as great as we should wish. Of course, we should all like more but they are being singled out for help and it is right that they should be.
The noble Lord, Lord Wells-Pestell, said it was quite wrong that what is known in common parlance as the Rooker-Wise amendment should not be agreed to, but I understand that the Act under which this amendment has been used in the past makes it quite clear that it comes into effect only when Parliament so determines. So, of course, it is right that Parliament should have an opportunity to consider this again.
Both noble Lords raised the question of Motability and, again, we have used what money is available to assist those who require help in the International Year of Disabled People. I am sure that the £2 a week increase in the allowance will be very valuable. Both noble Lords also raised the question of fuel prices. My understanding is that it is anticipated that fuel prices will rise by about 18 per cent. between November 1980 and November 1981. Again, we have used the money that is available to help those

309
who are most in need. I am afraid that I do not have the answer to the question which the noble Lord, Lord Wells-Pestell, put to me, about those who use only coal. But if I can get the figures for him, I shall write to him on that point.
The noble Lord, Lord Banks, raised the question of the 1 per cent. reduction in pensions. As he knows, we have kept to our commitment that retirement pensions will keep up with prices over the lifetime of this Parliament, and the Social Security Bill, which is currently in another place, takes account of the 1 per cent. reduction which is necessary to put right the fact that last November the 16½ per cent. increase was 1 per cent. over the rate of inflation. I think he is raising a completely different issue when he asks whether payment of the 1 per cent. would have caused a deficit in the National Insurance Fund. The point about increases in pensions is that they should keep up with prices. The effect on the National Insurance Fund is a separate matter.
Turning to the 5 per cent. de-indexing of certain benefits which was the subject of a Bill in this House last year, as the Statement makes clear we are already taking steps to increase the invalidity allowances which are paid to invalidity pensioners, who are the worst off. This is supplementary help. By increasing those invalidity allowances and making an unqualified statement that we shall restore the value of invalidity pensions and bring them back into tax, we believe that this will help invalidity pensioners.

Industry: Efficiency and Competitiveness
4.31 p.m.
Debate resumed.
The Earl of Gowrie: My Lords, this seems to be an Anglo-Irish day in the House of Lords, with the noble Earl, Lord Shannon, the noble Lord, Lord Shackleton, and now myself. And I see that my noble friend Lord Bessborough has his name down to speak. Sometimes I think that this particular little pocket of black feet, or pied noir, in our society has sometimes become ignored, so I am glad that we are all trying to fly the flag today.
Also I congratulate the noble Earl, Lord Shannon, and the noble Lord, Lord Shackleton, for having attracted three maiden speakers: the noble Lord, Lord Benson, whom we know, among many things, for his sterling work on the Royal Commission on the Legal Services, my noble friend Lord McAlpine of Moffat, who has kept up standards in the great construction industry in this country and, of course, my noble friend Lord Matthews. I congratulate him on keeping up quality and standards in the press, as I think nearly everybody who appears in photographs in his great newspaper still has all his clothes on.
I am rather nervous of the noble Lord, Lord Matthews. Once I referred to him by name in a debate in your Lordships' House at a time when he was being rather fiercely critical of my own department. My reward for this was that the noble Lord was ennobled the next day. And a week later, in a leading article, I was mentioned somewhat unfavourably. But I suppose that is an ordinary, occupational risk which politicians take. In any case, I think junior Ministers
310
are grateful for publicity of whatever kind, or wherever it comes from.
We are to debate a twin subject: the issues of competitiveness and the relations between competitiveness and standards of quality control for our products so that they will be sold more competitively in world markets. In our debate on unemployment last week, I stressed that our policies as a Government had two overriding aims. The first aim is to continue to bring down domestically induced inflation, by which I mean that proportion of price rises which is caused by devaluation of the currency at home. The second and hardly separable aim is to improve the competitive position of our industry: to bring it into line, so to speak, with the very successful and very competitive other bits of our economy—agriculture, retailing, financial services, journalism, for instance—as well as into line with the many sectors of industry which are themselves still successful. That is why I very much welcome this debate and the continuity it provides with that earlier theme, as both of these Motions underline the importance that we have to attach to improving our competitiveness.
I think nobody can doubt, today of all days, the Government's commitment to the control of domestically induced inflation. I do not want to go over that ground now or to repeat the commitments that were made here last week and which the Budget Statement has of course confirmed, but I do want to make it very clear to the House that it is our analysis that greater competitiveness depends on greater investment in industry and that greater investment in industry cannot take place in an unsuitable financial climate, or an unstable financial climate.
In a notable maiden speech, I think about a year and a half ago, the noble Lord, Lord Lever of Manchester, reminded us that there was no shortage of capital in this economy. We have the corporate social capital of the great insurance, building and pension funds as well as of other financial savings institutions. There is no shortage of capital in the economy. But, the noble Lord, Lord Lever, reminded us, there is a shortage of profitable ventures to attract the money. I qualify this a little, admittedly in the different context of today's debate. There is a shortage of profitable ventures within the manufacturing sectors of our economy because these are what have lost competitiveness overall. Some manufacturing industries are still highly competitive and I rejoiced to hear some of these itemised by the noble Lord, Lord Shannon, in his opening speech. I may mention others in just a moment. But we have lost manufacturing competitiveness overall.
Nor is this shortage of profitable manufacturing ventures the only trouble. There is the problem of rival attractions for investment. To put this bluntly, you do not in an era of inflation, of currency instability, put your money very readily into industry. The first call on money is the search for investments that will beat inflation. So you get the rush into consumer durables—"Let's buy them quickly before they go up"—into property or into the savings or pensions funds which invest principally in inflation beating assets like property. That too, unfortunately, is not the only rival attraction for investment. Inflation, followed by the inevitable counter-inflation policies, puts a great

311
strain on Government budgets. As you lose industrial competitiveness, people lose jobs, the Government lose revenue and, as if this were not bad enough, the Government have to pay out more in benefits. As you struggle to regain industrial competitiveness, people have to be bought out of uncompetitive, over-manned industries. In a humane and civilised society it is of course only right that people should be bought out, not thrown on the scrap heap, and that there should be training and re-training provisions for them as well as the benefits to which they have become entitled.
But that is all hugely expensive. So Governments have to borrow money, and this borrowing pre-empts the resources which might otherwise find their way into long term investment. If my right honourable friend the Chancellor had yesterday decided to increase rather than reduce his own overdraft, so to speak, as many people of all shades of opinion would have liked him to do, the difference would have had to be funded. And that funding is the rival attraction which I am talking about. That becomes the profitable avenue for investment: lending money to the Government and compelling the Government to keep interest rates high as they are compelled to offer people a decent return.
We were criticised in the debate last week for failing to distinguish between spending and borrowing for current requirements and spending and borrowing for the future—for, let us say, a big programme of investment-led, not consumer-led, reflation. Speaking as an employment Minister, I should dearly like to see an exciting programme of improvements to the infrastructure: the roads, railways or airports. I should love the surge in demand, not least in the private sector, and the jobs that would thereby be created. But that money would still have to be borrowed or taxed. We have had to increase taxes against all our wishes.
If we increase our borowing also, the pain which the consumer suffers now, which can be short term, will be felt by industry as a whole, whether it is public or private industry and because the lead times are longer for industry the pain will be felt by industry for a long time and will result in an even greater loss of competitiveness, confidence and jobs. I hope therefore that your Lordships will see that the tough decisions on public borrowing are altogether inseparable from our continued drive towards greater competitiveness and the pressures that we are having to continue to bring to bear, at least for a while longer, on this industrial society.
My Lords, you would expect me, as an employment Minister, to say something about the role of wages in the drama of our competitive decline, and these again were touched on by the noble Earl, Lord Shannon. I am thinking in particular of the decline in our labour-intensive manufactured goods that people at home and abroad will buy at prices they can afford. I believe that the main factor in our declining competitiveness has been our input costs. There is evidence that in this country our input costs are a great deal higher than elsewhere. One breakdown of the figures illustrating our loss of competitiveness suggests that 60 per cent. of the fall since 1978—and that fall is about 50 per cent. itself—and about half the fall since the beginning of 1979—and that fall is about 40 per cent. itself—were due to labour costs rising
312
faster in the United Kingdom than in the competitor countries.
I am quite prepared to say that we are all to blame: we can blame weak management or restrictive labour practices or labour monopolies, or the upward pressure of on and off incomes policies, or Governments inflating their way out of trouble for this melancholy decline. However, our analysis is that this area of dealing with wages is an area which can only be tackled effectively for any length of time at company level and based on a realistic assessment of what is happening in an economy and what is happening in a given company. The impetus behind many of the very high settlements negotiated in recent years was theoretically an attempt to keep up with inflation. In fact these merely contributed to inflation. What is more, until recently, average earnings were rising faster than inflation and without corresponding increases in productivity—or, in the context of this debate, I could say without corresponding increases in competitiveness. That of course was all damaging to our international competitiveness.
Again, the figures spell it out. Between 1975 and 1980 unit labour costs rose here by 85 per cent.; in France the figure was 43 per cent.; in the United States of America, 33 per cent.; in Germany, 11 per cent., and in Japan they actually fell by 2 per cent. My Lords, do you wonder that the Chancellor has been obliged to take back from consumers some of the real gains which they have made but which our productivity and our competitive position unfortunately do not yet allow us?
I am glad to say, after these rather gloomy figures, that the discipline provided by the recession and reinforced by the Government's tight money squeeze has resulted in a substantial moderating of wage settlements in recent months, and that is, of course, very welcome. But this praiseworthy restraint will have been wasted if there is a wage explosion when the economy recovers. Unit labour costs represent an area where we can make real strides towards closing the gap with our major competitors if we can only make the most of the opportunity when the upturn comes, but, if wages once more outstrip productivity gains by another wide margin in the next round, this country will slide even further away from international competitiveness and the consequences of that—not least for employment—will be very grave. Do you wonder, my Lords, at the scepticism which makes us believe that the reflation which our critics are calling for would once more be swallowed up in renewed wage pressures and renewed inflation? The fruit of the gains we have made is what has to fortify the investment and the renewal that we need.
The noble Earl, Lord Shannon, mentioned high technology and the rate at which we adapt to the speed at which technology is changing. I think it is commonplace that Britain is passing through a transition from one kind of industrial society to another. Many of the stresses and strains—which we are, I think, as a matter of social fact, hearing remarkably well—are in my view due less to policy differences between different political groups than to rites of a passage that we can no longer afford not to undertake. We are moving from a cheap-food, low-wage, high-manned and low-technology industrial society to a dear-food,

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high-wage, lower-manned and higher-technology society. We are making this move under the impetus of great competitive pressures in areas where we used to be strong, like manufacturing.
We are under pressure, too, from parts of the world which used to be weaker and poorer than ourselves. Because we are a trading nation our standard of living depends on adjusting to this competition and taking it on—not running away from it—and we have to move from here to there. "Here" is an industrial landscape, an important part of the whole economy, which is besieged by three enemies: world recession, structural change and our tight money squeeze. "There" is not Utopia—to which I think only fools aspire—but an economy in much better balance with the mix of jobs, skills, opportunities and regional possibilities.
Without any question I believe that the most advanced society today—and again it has been mentioned several times in this debate—in purely industrial terms is Japan. Japanese industry has adapted to dear energy and technical change with considerable success and without social trauma. Not in the same way, perhaps, but in some way, we have to do the same, and that is why I welcome the inward investment which Japan is undertaking in this country and the industrial habits that we are learning from them. This, together with the fight against inflation, is why we, as a Government, are keeping up the disciplines and the pressure to adapt on our national allies in industry, and of course part of that adaptation—and, unfortunately, a very expensive part—is the shedding of surplus labour, which is essential to the successful future of manufacturing industry and to the levels of employment in those other bits of the economy which depend on a successful manufacturing side.
My Lords, I shall close with a reference to standards and to quality, and I shall deal in a little more detail, if I may, with the points put to me by the noble Lord, Lord Shackleton, if given leave to wind up. I, too, should like to pay tribute to the Warner Report and to Sir Fred Warner. British industry over many years has won and held an enviable reputation in world markets for the quality of its manufactured goods. Our best firms still have a reputation for quality that is second to none. I am thinking of such sectors as defence equipment and arms, information technology, offshore equipment, aerospace—and I understand that there is very good news from America in respect of Rolls-Royce today—chemical products, luxury vehicles and luxury manufactured goods generally, whether they are cloths, high fidelity equipment or manufactured foods. We are rightly proud of all these achievements and other noble Lords could contribute their own lists.
However, since the war there have been signs that part of our fall in the world market share has been associated with a decrease in overall competitiveness due not to the wage and inflationary elements that I have been speaking about but to non-price factors. Overseas firms which combine market research designs with a strong awareness of their customers' needs on quality and delivery have been capturing an increasing share of the markets, so of course I agree that more systematic attention to quality is needed in future and I welcome the stress laid by the noble Earl, Lord Shannon, on good design. Greater sophistication of users' requirements and increased discrimination by
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purchasers is already increasing the competition for some of our at present most advanced designs and products. During the next decade further industrialisation in low-cost countries will surely heighten price competition for all developed countries. We also have to absorb the effect of North Sea oil on our currency. So even more than some of our chief competitors we have to adopt techniques for minimising production wastage and keeping our prices keen. The successful companies—and the noble Lord, Lord Shackleton, itemised some of these techniques—will be those who maintain and strengthen their performance in these respects.
My Lords, the Government's view therefore is that the key rôle in achieving quality in goods must be to rely on individual manufacturing firms. The successful manufacturer ensures that he knows what quality features in his product his customers want rather than expecting to find customers for what he produces. He has the means for ascertaining those requirements and a management system capable of ensuring that they are satisfied. While, of course, top management commitment is at the heart of this success, a co-operative approach within companies is, I think, essential. Each employee at every level has to be brought to see that product quality is in his own interests. This is another area where the Japanese have been very successful and where we must quite frankly adapt their success and imitate them. I can tell the House that in all our industrial training schemes now we are trying to build in attention to quality and quality control techniques.
I can also say that public sector purchasers are considering the practicability of quality-assessed supplies, and that Government departments, which are of course themselves huge purchasers in this economy, are examining the scope for greater co-ordinated use of product certification; and the noble Lord, Lord Shackleton, urged that upon us. We are, therefore, putting our own house in order, and we urge others in the economy to do so as well because although, under the pressures and disciplines of recession, counter-inflation policy and all the rest, we in this country are painfully beginning to make improvements and mend our ways, in spite of this we have to remember that others, our competitors, are themselves coming under similar pressures and are adapting what may be their own better habits themselves. So I welcome the chance this debate has given us all to remind ourselves that competitive pressures increase all the time, and that we have little time to lose.
4.53 p.m.
Lord Gregson: My Lords, may I, too, thank the noble Earl for introducing the first subject of today's debate, and for doing so in such a wide-ranging speech based on his very considerable knowledge. I should also like to congratulate the noble Earl on the timing, considering the importance of the subject relative to the events in another place yesterday. May I also thank my noble friend Lord Shackleton for introducing the second subject of today's debate, which is such an important part of the overall question of Britain's competitiveness in world trade. Of course, one has to acknowledge Lord Shackleton's considerable contribution to the furthering of the generation of standards,

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especially being the president of the British Standards Institute; and also, of course, that of the noble Baroness, the predecessor of Lord Shackleton.
I might say that considering the complex and detailed nature of the problems that were reported on by Sir Frederick Warner I think it would have been better if each subject had had a place of its own on your Lordships' agenda, although I promise that I do not intend to make two speeches this afternoon. I should also like to comment, as other speakers have done, on the fact that we have three maiden speeches this afternoon. I well remember that the day on which I was introducing the debate on the Finniston Report was also the day on which one of the noble Lords was introduced. I said then that since we now had a civil engineer in the House I looked forward very much to his maiden speech. It just so happens that, by coincidence, we have two noble Lords involved in civil engineering; and, of course, Lord Benson, who is so well known. So I look forward to the contributions which those noble Lords will make to our debate.
My Lords, there is no doubt that this country must maintain its position as a major trading nation in the world if we are to provide even a reasonable quality of life for ourselves and our children. With a population of over 50 million we cannot feed or clothe ourselves, or provide the raw materials that are essential to maintain our industry, from the resources within our country. It is, therefore, crucial that we restore our competitive position, which has been so drastically eroded in recent times. It is true that the accidental advantage of North Sea oil and gas is providing a source of wealth that is distorting the short-term economic scenario and providing a soporific effect, but this is a very dangerous situation which must not be allowed to lull us into a false sense of security since the resources of the North Sea are finite. We would be foolish indeed if we fell into this trap when we have the object lesson of the problems that have faced the Dutch available to us. There is also the curious statistic of the United Kingdom maintaining export levels despite the drastic fall in competitiveness in world markets, but here again we must beware of a false sense of security since within these figures there is a large component of export orders secured before our competitive position deteriorated, which are not being repeated and much of which is now being supplied at ridiculously low margins, or even at a loss.
In introducing the substantive subject of the debate the noble Earl referred to seven criteria, on which he then proceeded to comment. I think our forefathers did much to simplify those seven criteria, because from my university days I remember an old adage of the 19th century that said that our competitive position in industrial goods consisted of the right product at the right price at the right time—and I should like to expand on the problem we are debating this afternoon on the basis of those three criteria the old adage proposed, in reverse order.
First, the right time. Our great grandfathers were not referring to a need to meet delivery dates, although meeting delivery dates is of vital importance, as the noble Earl told us. No; what was meant by the right time was being in the market plce at the right time and knowing what the market wants, whether it be an
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improved textile, a new fibre, a new alloy of steel or the most advanced micro-electronic equipment. It is probably better to do nothing at all and avoid wasting money and effort than to arrive in the market place too late. There is a desperate need for industry and government to improve commercial intelligence and market research, and for the Government to inspire industry to meet the needs of the market place with a greater sense of urgency. Nobody wins the jackpot for being left at the post.
Then, the right price. That must be the price that the market will pay for the right product at the right time, unless we were foolish enough to attempt to trade at a loss. Costs must be a critical feature. The two factors most affecting external trading are productivity and exchange rates. It is all too easy to criticise the low productivity in the United Kingdom as stemming from the Luddite minds of the workforce and the trade unions. The media revel in it. But careful investigation and case studies have proved that volume variance, that is the workload, and investment are by far the most dominant factors that affect productivity. It is ironic that, despite a massive reduction of employment in manufacturing industry of 1,100,000 in the lifetime of this Government, there, has resulted, according to the Financial Times, a reduction of individual productivity in the manufacturing industries of some 5 to 7 per cent. It is incredible.
It is essential, if productivity is to be improved, for there to be a dramatic increase in the volume of new orders and an even more dramatic increase in the rate of investment in advanced manufacturing processes and equipment and I can see little encouragement to industry in the Chancellor of the Exchequer's speech yesterday. I think that that is a considerable understatement. On the question of exchange rates, I hope that in the last few weeks sufficient has been said by the appeals of the CBI, engineering employers and other trade associations and by the TUC to bring home the urgent necessity of bringing down the ridiculous exchange rate which has brought industry to its knees. I do not believe that a reduction of interest rates, unless they are brought down well into single figures, will be sufficient in itself. The distortions that are applied from the petro-currency effect of the North Sea will have to be dealt with by intervention and controls, otherwise the dismal picture outlined by Forsythe and Kaye in their famous, or should I say infamous, paper delivered to the Institute of Fiscal Studies will come to pass. That is the demise of manufacturing industry in this country.
Finally, the right product. This is where I believe the real crisis exists. We are being left behind in the technological race, not only by the major nations in the western world, but we are now being threatened by the rapidly developing second and third tier countries. South Korea, Taiwan, and Singapore are all coming on to the market place with better products than we have developed. I have often spoken in your Lordships' House about the desperate need to nurture innovation for the future well-being of the United Kingdom and I hope it is now becoming apparent to the majority of people that we cannot sell an out-of-date, badly designed or unreliable product at almost any price and that is the crucial state where we are at

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present lodged. There is an urgent and desperate need to foster innovation, industrial R and D and product development, and to organise better quality.
It is indeed ironic that when the need is greatest, industry is in the worst state in history to respond to the challenge, because innovation, industrial R and D and the organisation of quality cost money and, other than some very paltry sums from Government, that has to come from the profits generated by industry. It does not come from the profits made in the City of London. It has got to come from the profits made in the workshops and I assure your Lordships that if you talk at the present time to any industrialist his retort would be, "what profits?".
This Government, by pursuing the policies they have, have squeezed both the profitability and the liquidity of industry to such an extent that it is now completely unable to respond, and without massive Government intervention private industry cannot avoid the desperate spiral of absolute decline to which it is irrevocably committed. It is essential that the Government must pump prime innovation and product development throughout industry in both the private and public sectors, and can I make it clear that I am not merely referring to the so-called sun-rise industries, which is the latest jargon of those with an axe to grind. We must include the basic industries such as textiles and steel, which still have tremendous potential for investment and application of the new technologies. There is a thousand times more potential in a new steel making process, or a new textile manufacturing route than in a coin-in-the-slot game of "Star Wars".
Two essential elements of the right product factor of our competitive position in world trade have been dealt with in the Warner Report. Those are standards and specifications and the organisation of quality and we cannot divorce either from having the right product in the market place at the right time. The clear message that I get from the Warner Report on both these subjects is that of fragmentation and duplication and a lack of co-ordination and a lack of determination in Government to resolve the problems that exist.
Having said that, I should like to place on record my appreciation of the work of the British Standards Institution, despite the fact that it lacks sufficient support both from industry and from Government. Considering the tremendous influence that Government agencies and nationalised industries have on the purchase of plant and equipment in this country, one would have thought that it is not beyond the wit of man for the Government to co-ordinate their activities for the benefit of industry, particularly since the establishment of national and international standards and specifications are absolutely crucial to assist industry to maximise its export potential. I wonder whether the Minister, when replying to the debate, can tell us what has happened to the public sector standardisation team set up in 1970 and tell us what progress has been made in this vitally important area of Government activity, or is this one of the Quangos that disappeared from sight in the recent slaughter?
Turning now to the other question, I do not think that I need to stress to your Lordships the importance of quality in defending the United Kingdom position.
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It is absolutely vital and yet, here again, we find fragmentation, disagreement and lack of drive to bring about a national movement that is critical in matching the competition from abroad. Despite the valient efforts of the British Standards Institute and people like Sir Frederick Warner, we have still not got a national quality assurance board and almost every Government agency and nationalised industry still has its separate quality assurance organisation and standards. I really do urge the Government to redress this situation with all urgency, and to say that industry would indeed be grateful to have this problem resolved. Our export performance would benefit and I am sure industry would be better placed to stem the ever-growing tide of imports.
One other aspect of standards and specifications, and indeed quality standards, is their over-zealous use by some countries to frustrate imports. A great deal has been said about this subject, particularly relating to France and Japan and I would say that if these tactics continue to be used as an obstacle to fair competition in world trade, then they must be dealt with formally and the problem brought to a quick resolution, even if this means retaliation by the application of sanctions, because it is a serious and insidious technique which must not be allowed to continue.
On a number of occasions I have listened to the Secretary of State for Industry lecturing on the havoc wrought on the economy of this country by the anti-business culture and the industrial devastation it has produced. This Government, of which the Secretary of State is a member, must go down in the history books as the outstanding manifestation of the anti-industry culture, and I can only hope that miracles still happen and that the Government will totally reverse their attitude in the second half of their term of office. Otherwise industry will be decimated, unemployment will continue to escalate and the very social fabric of this Kingdom will be threatened.
5.9 p.m.
Baroness Seear: My Lords, it is ironic to be discussing the competitiveness of British industry the day after the Budget when there were so many lost opportunities to improve that competitiveness. There was no reduction in the national insurance surcharge; virtually nothing was done to change the level of the exchange rate of the pound which appears to be practically as high today as it was yesterday; and nothing has been done to increase the flow of money into the investment which industry so badly needs. Was it really impossible to extend the use of the indexed bond, which is being offered to the pension institutions, to a far wider public—what is so special about the age of 50?—in order to raise money which would have been used for the investment of industry? If the Government believe in their anti-inflation policy, they need offer a very small return on top of indexation, and the cost of the borrowing of that money would be very little in comparison with the benefits that would accrue from the investments which could then be made.
Last week we discussed the folly of economising on capital investment as well as economising on

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revenue. We on these Benches sympathise with the need to economise on revenue spending, but we stand where we stood last week on the nonsense of failing to put more resources into industrial development. That is what competitiveness requires. So today, in this debate, all we can do is to look at those matters where we can take action, given that the investment is not likely to be there.
First and foremost in the limited area in which we still have some room to manoeuvre is better use of manpower resources. Here I know that the noble Earl, Lord Gowrie, has much sympathy with what we on these Benches would like to see done and is, I believe, in many ways attempting to do what he can to ensure that these things are done. Before dealing with the major area of better use of manpower resources, I should like to take up one point made by the noble Earl, Lord Shannon, when he referred to the very great importance of trade inside the EEC—where, after all, the bulk of our exports now go and where an increasing proportion ought in future to go—and to ask that far greater attention should be paid to the teaching of languages to people going into industry. It is absurd for us to attempt to sell throughout the EEC and, indeed, in South America, with a lack of equipment in resources for those who have to do the job of selling.
In the past British industry has rested far too much on its ability to have ideas, to design goods to manufacture, and has had a certain contempt for marketing, for it is a contempt for marketing if you do not send out salesmen and people in the marketing field who are able to speak in the language of the customers whom they are approaching, and to speak with a full knowledge of the language, with all its nuances and idiosyncrasies. Therefore, money should be devoted to crash courses and also to much more thorough training in languages. Those of us who work in any way with people from the EEC are constantly conscious of the way in which our competitors stream ahead because of their ability to talk in the language of the customers with whom they are dealing.
Secondly, if we believe in competitiveness and if we believe—and the Government declare that they do—in making better use of resources, perhaps I could anticipate a future debate and say that the Government cannot really believe that this will be achieved by cutting back on the work of the industrial training boards. They are already in the field to improve the effectiveness of manpower, and to improve it where it matters, which is inside the place of work. The evidence is quite clear that the most effective training is carried out inside the place of work, not in Government establishments outside the place of work. This is precisely the role of the industrial training boards, supplemented of course by their own training courses; basically, their role is to improve the level of training inside the place of work. I implore the Government to think again before they use the powers which they propose to take to cut back the work of the industrial training boards.
However, when it comes to better use of resources, it is of course true—and many people in industry will tell you this—that, although we need more investment, a very great deal more could be done with the investment
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that we already have if more effective use was made of existing resources. One way—indeed, ultimately the only way—to do this is to have far better understanding and commitment within the place of work as to what is involved in running a successful business, to get the flexibility, the willingness to learn new techniques and the willingness to try new processes. If we had that we would be able, even now, to improve our competitiveness without the additional investment, which it does not look as though we shall get. Not long ago I was in a works which was in avery difficult position; they were saying that if only they could get greater flexibility in the workforce over the willingness to take on new jobs in exchange for the ones that they already had things would improve; but outmoded ideas as to what was appropriate for people to do restricted them in developing this flexibility which, in a company which was on the verge of going bankrupt, could have saved them.
If we are to do this, then it is bascially an issue of industrial relations, but it is also an issue of incentive. Here again I say to the noble Earl: why in yesterday's Budget was further encouragement not given to profit-sharing schemes, and to the whole effort that is needed to link the interests of the workforce more directly to the profitability of the undertaking? In this country we have to overcome a deep-seated belief that there is something suspicious about profit-making. Yet surely the best way to do this is for people to see that if there is a profit, not only are their jobs more secure—and perhaps some are beginning to sec this now, although the lesson has been learned in the most costly way possible—but that they will, indeed, benefit immediately by return in their own pockets.
A start was made on this in 1978 and in an earlier Budget the Government did something to improve encouragement to link people more closely to the fortunes of their undertakings. There is nothing whatever in yesterday's Budget to encourage greater co-operation inside the place of work. What has been done with the development of industrial democracy, or whatever term you like to use, for harnessing the interests and determination of the rank and file and of middle management to the fortunes of the concern? This Government, and I believe the noble Earl himself, believe in schemes of this kind. They did not believe in the compulsory scheme proposed by the Bullock Committee, and nor did we on these Benches. But that is no reason for doing nothing. I should like to ask the noble Earl when we are likely to hear more about this, because this is one of the fundamental ways in which to get the increased competitiveness that we seek and it is far more necessary to do it now, when the capital will not be forthcoming, when the Government have not given the encouragement to industry for which industry had hoped.
In addition to making better use of manpower, I believe that there is another fundamental change in attitudes in industry which would greatly help our competitiveness. I was going to say that it is a return, but perhaps it is not a return; perhaps it never existed. It is the development of the very simple idea—the truism—that the consumer is the person who matters. Today it is so often the case that producers, in both the public sector and the private sector, regard the consumer as an irritating cross which has to be borne,

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whether the consumer is trying to get someone from the electricity board to read his meter (I know that this is a bit of a King Charles head of mine) at a time when he has repeatedly told them that he will be in and not at a time when he has repeatedly told them that he will be out, or whether it is a consumer trying to get a builder to repair broken panes or a flooded floor, with the builder not coming at the time he is asked or, when he has come, all too often the job having to be done a second time; and in my experience you cannot even get a bill out of him. What kind of approach to consumer service is that?
Let us remind everyone that there is no point in having production if there is no consumer; that the sole justification for having producers is that there are consumers. This is very old fashioned, but I believe that the revival of this idea would do more to revitalise British industry than anything else. When I talk about producers, I am talking about both management and the workforce. Indeed, I regret to say that sometimes what passes for good industrial relations is little more than collusion between the two sides of industry to do down the consumer.
There are other things which, if we were really thinking about the consumer, we would be doing. There is the attack on monopoly. For my part I am delighted that the Government are bringing competition into the nationalised industries. If they can discover any more Sir Frederick Lakers lurking around waiting to break down the monopolistic powers of the nationalised industries, then the sooner they bring them to the forefront and back them the better.
How about monopoly in the private sector? We do not seem to have heard much about reference to the Monopolies Commission. I would ask the noble Earl who is to reply: how long does it still take to get a finding from the Monopolies Commission? I think I am right in saying that the average time is about three years. We cannot wait this length of time for monopoly-busting in this country if we want to become competitive.
Then there is the question of quality—quality which, of course, ties up with price. That is, getting a better return for the money you pay in terms of good quality. Here the question of the work of the British Standards Institution, to which reference has already been made, comes in, and the report of Sir Frederick Warner. That work has gone on for a considerable length of time, but on far too small a scale and with far too little support.
As the noble Lord, Lord Shackleton, said, I had the great honour—the most unsuitable honour, I always thought—to be his predecessor as president of the British Standards Institution. In those days the qualification seemed to be that you were a Member of your Lordships' House. They have now had the wisdom to get a distinguished engineer to be their president, which on the whole does seem to be a better specification.
Lord Shackleton: My Lords, would the noble Baroness allow me to intervene? Tributes have been paid to us, and I feel that we really ought to pay tribute to the staff of the British Standards Institution and all the members of the committees. I am sure she is going to do that anyway, but I missed my chance.
Baroness Seear: My Lords, I am glad to be reminded because, to be quite frank, I was not. I am delighted to do so, and all the more delighted because I am glad to see that they are in the Gallery. The British Standards Institution not only operates to improve quality in manufacturing in this country, to reduce costs by the rationalisation of specifications based on standards; it also works in a most distinguished way in the international field. The experts of the British Standards Institution are playing their part—and a leading part it is—in standard-setting inside the EEC and throughout the international field. This means that the British level of standards, British quality measurements, are an influence upon developments far outside this country.
That being so, surely the institution needs the greatest possible support from the Government in honouring their undertakings to the representations made by the British Standards Institution. Here I refer to the development of metrication. The British Standards Institution developed standards of metrication years ago, and every understanding of the position was that metrication would become the policy of the Government. I know that the previous Government intended that metrication should be brought in, but pressure of public opinion, to which the Government bowed at that time, was such that this did not happen.
It is ridiculous that those standards were worked out years ago but that many manufacturers are still operating in both imperial and metric standards. How utterly wasteful this is, especially when something over 90 per cent. of the people to whom we sell overseas have in fact metrication as their own internal standard. Can the Government really not have the courage to dig out the whole issue of metrication again, which no doubt they hope has quietly gone away, and see that this particular waste does not continue any longer?
These are just a small number of things which the Government must do if they are to make good some of the damage caused by yesterday's inadequate Budget. At least they could give continuing support themselves to the work of the institution. It is understaffed; it has had to cut back its staff. Its staffing proportion compared to its German opposite number is quite inadequate. This is another area where Government spending would be a form of investment which would pay dividends over and over again. Why this capitalist Government do not understand the importance of investment passes my comprehension.
The Earl of Gowrie: My Lords, before the noble Baroness sits down, could I return her to my speech, to which I noticed she was kind enough to pay great attention? We are very keen on investment, but the problem in this economy is how you finance it.
5.26 p.m.
Lord Benson: My Lords, this is the first occasion on which I have had the privilege of addressing this House. I should like to make some observations on the broad issues and then to speak on only a narrow sector of the subject. Much of our industry in this country is lean, taut and competitive, and it has been brought to that position in part by the present recession. A comparatively small increase in volume now, which must surely take place, will have a dramatic effect on unit costs.

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But much of our industry is not in that state. It is not difficult to discern the impediments which prevent it from being competitive and profitable. Many of them have been imposed upon us from without, but many more are self-inflicted and self-imposed. High interest rates; an unstable exchange rate; low productivity; late deliveries; strikes; sloppy management; bad inspection; excessive wage demands; poor sales representation abroad; inadequate expenditure on research and development; and a totally inadequate capital investment programme.
Whenever I look at this formidable list I am reminded of my cousin Theodore. As a young medical student he had great difficulty in passing his examinations. Eventually an exasperated parent said: "Theodore, I cannot understand this. You have taken the examinations so many times you must know every question the examiners can ask you". He said, "Yes, father. I do know all the questions. It is the answers I don't know". That is the situation we are in. We know all the causes, but we seem incapable of learning and applying the answers. Time, my own incapacity, and the usage of this House prevent me from attempting so huge a canvas, but I should like to make one observation with conviction.
In this country we live by our industry, and unless all of us are prepared to work to a common purpose the outlook is glum. By all, I mean the Government of the day; the Opposition of the day; management at every level; the unions; the City, and individual citizens from the chairman of the board to the most recent apprentice; and a default by any one of them is damaging to our industrial effort, often permanently. Unless this common purpose dominates our decisions and our attitudes there is no hope whatsoever of recovering the markets we have lost at home and abroad. Nor yet of establishing new markets sufficient to sustain the population of these islands. Deep, ingrained prejudices, entrenched positions, often selfish in character, will I fear take years to eradicate. In so far as it is not already in post, we shall have to seek or to breed leadership of adequate stature.
I wish to speak on a single narrow sector of this huge subject—financial management. It has been my lot in life to examine many businesses, both large and small. Those who are not competitive, who have failed or have been unsuccessful and unprofitable, have one common fault running through them all—an inability to realise quickly enough the damaging effects of inflation and weak financial policies. The signs are unmistakable: an inadequate return on capital employed, excessive borrowing, inadequate retentions, dividends, when expressed in real terms, paid out of capital, wrong pricing policies, bad estimating, loose control of stock and debtors and an inability to plan forward, particularly cash flow, which results in an erratic investment programme.
Not all, but many of those would have been avoided if it had been realised early enough that accounts prepared on the historical cost convention, both annual and management accounts, are misleading and need to be adjusted to real terms and to reflect the effects of inflation. Particularly is this the case of fixed assets and stocks. Unhappily, there are many people in this country who have not yet been able to adjust them
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selves to this modern form of accounting. They decry, deride and denigrate it, and that is a grievous impediment to industrial progress.
I have recently been reading the life of Lord Lister. His great discoveries of antiseptic surgery were met with opposition, ridicule and apathy. Indeed, when his opponents noticed that the incisions they made in their patients' bodies were beginning to suppurate, they expressed great satisfaction and referred to it by the disagreeable name of laudable pus. The analogy is complete. Until we in this country learn that management and annual accounts prepared under the historical cost convention are no better than laudable pus, so long will a large number of our businesses move remorselessly and deservedly to the mortuary. I can summarise in a sentence what I want to tell your Lordships: Let us not emulate my cousin Theodore, but let us learn the common purpose—I now speak in metaphore—that historical cost accounts are no better than laudable pus.
5.33 p.m.
Lord Schon: My Lords, it is an honour and privilege to speak following the noble Lord, Lord Benson, who I congratulate on his maiden speech. I hope we shall hear him on many occasions in your Lordships House; he has much to contribute.
The subject of the Budget has been mentioned several times, as has the fact that a reduction in interest rates is a direct little saving which may also reduce the value of sterling below its highest point and thus help in some way our exporters rather than our importers. Moreover, I have noted an indication of a willingness on the part of the Government to accept some flexibility in the cost of gas and electricity. However, the main subjects we are discussing in this debate, for which we are grateful to the noble Earl, Lord Shannon, and the noble Lord, Lord Shackleton, are productivity and competitiveness, two sides of the same coin.
In speaking to this subject, it is difficult to avoid appearing critical of our performance. I therefore start by being complimentary to our agricultural industry and to part of our service sector, such as banking and insurance, which have proved themselves second to none vis-à-vis their competitors in the world. To achieve industrial competitiveness, we must have higher productivity, and we need that very much. However, for what I would call human reasons, and psychological reasons in particular, it is hard to increase productivity in this time of high unemployment.
While in a very limited sector of industry, it is claimed, the recession has increased productivity, I have learnt through 27 years of intimate contact on a day-by-day basis with management and the people directly involved in production that lack of business and visible stockpiles of products ready for sale tend to reduce productivity. This tendency is based partly on selfishness—you do not want to work yourself out of a job—but more on a desire not to work your mate out of a job. I have learnt to understand and appreciate that attitude.
The only real way to increase productivity in prevailing circumstances is to sell more. How can we do that? Here I must ask your Lordships to forgive me for repeating what I have said on previous occasions; I may be repetitive but I am certainly consistent. I

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have been brought up to appreciate that to sell more, you must find a willing buyer, and the erudite buyer looks for quality, price and service. As for quality, I know we can achieve it. We can be innovative, we have the ability to be up-to-date and to be as good as anyone else I know, but we are poor exploiters of innovatory achievement. We are good on the technical side but not so good on the commercial side.
As for price, I am afraid the first thing which everybody must appreciate is that to ask for more money without producing more is inflationary, and it is generally accepted that inflation is the forerunner of unemployment. It is logical that if you ask for more money without producing more you are pricing yourself out of business. If that were generally understood, then the question whether we should have a formal prices and incomes policy would not be necessary. If we produce more per person, and if we produce more of the right quality from the same plant, our competitiveness is likely to improve. That is the precondition for more sales abroad and for coverage of the home market rather than importing from abroad to cover home requirements.
In coming to the third point—service—I start by saying that I accept the right of everybody to withdraw his or her labour—namely, to strike—but I hasten to add that strikes in whatever form and at whatever place do not help to increase our credibility as reliable suppliers. It is essential from our point of view, if we want to get business, that we improve our credibility just as much as it is necessary to improve our capability to be productive, because when our competitors are producing and using microprocessors and so on we must match their effort and install microprocessors as well, and we must be better at it.
I cannot help but remark that we have plenty of planners, economists and theoreticians of all kinds, but we do little to express our appreciation of the fact that the salesman above all is dealing with people who, metaphorically speaking, are on the other side of the fence. Whether we like it or not, we have to learn that the sales department is an important department—probably the senior service.
Let me now come to strategic selling. We have to use our purchasing power. Some of the raw materials that we need in this country have to be imported. So do finished products and some services. We should make every effort as others do to make these imports with the thought in mind of maximising our exports. Some of the raw materials that we need are imported in ship loads. Let us make sure that some products that we have available go back in the same ships, instead of sending the ships back in ballast. There is a certain port in the North-East of England which serves as an importing point for iron ore. Coal is mined not far from this port. Why is this coal not loaded into the iron ore ships when they go back, instead of sending them back in ballast?
About 200 companies in this country are responsible for two-thirds of our exports. Have we made inquiries of these 200 companies as to what more they need to increase their exports even further? And why do we not encourage other companies to make an effort to be in contact with these exporters, to learn from their experience?
We live in a mixed economy. I am not suggesting
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that Government should be involved in running private industry, but could not Government give more of a helping hand, such as is the case in other countries—France, Japan, and Germany come to my mind—to show goodwill towards industries which want to sell more abroad?
Above all, we must learn as quickly as possible to appreciate that "we" and "they" do not mean the members of management and the members of unions in this country. "We" means us, and "they" are our foreign competitors. In this context, management and unions have from the beginning to be aware of what are the manufacturing targets, and above all, naturally, what the sales plans are. As the noble Baroness, Lady Seear, and other speakers have mentioned, communications within industry are of paramount importance. If management and unions are out of step, we have no credibility and no chance whatsoever to create more wealth.
Let me give an example. We have plenty of coal in this country, though not necessarily easily accessible. We could increase the sale of coal. We could increase the utilisation of coal—and the noble Lord, Lord Benson, with his experience, knows something about this; he was part of a team that looked into the matter—at home and make liquid fuel, though not necessarily immediately. We have liquid fuel in this country to last up until the end of the century. Nevertheless, we could start to think in terms of making liquid fuel, such as is done in South Africa, for example. I am assured that in the National Coal Board we have technologies at least as good as those practised in Sasol, in South Africa.
Having the coal here, we, too, could develop a liquid fuel-producing capacity on the basis of coal as raw material, to meet not only our own requirements, but also those of other countries. The manufacturing facilities needed in this context are very expensive. It would involve a major capital investment. How can one find money for such investment without the knowledge that there is understanding of the importance of co-operation between management and unions in the coal industry?
We here in this place of limited influence, rather than of power, must use our best endeavours to convince the majority of the British people of the urgent necessity for co-operation to acquire a greater share of the world market. Let us forget the party political approach. Let us, for purely selfish reasons, think in national terms to achieve our object; to increase our exports, to regain the share of the world market that we have lost, to satisfy home needs to the best of our ability from our own resources. Incidentally, all that would answer many of the questions that are so much in our minds now in our discussions following the recent Budget.
5.45 p.m.
Lord McAlpine of Moffat: My Lords, I rise with a certain feeling of alarm. Having spent 12 very happy months' sitting here, I have learned a most impressive lesson; namely, that here your Lordships have someone who is very much an amateur about to address an audience of very professional and sophisticated people. Therefore, I crave the indulgence of your Lordships. While as a businessman I appreciate

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the great importance of technology and standards of high nature, I regard them as the handmaidens of management, and to my mind if this country is to survive, the most important thing is to secure good management. Now, what is good management? It is a combination of sound leadership and communication. The communication should be between the very top management and the middle management, because the middle management is the core of the future. They are the people who should regard themselves as being impresarios of talent. When they look around they should be spotting the young men, giving them a chance.
But it is not always easy. In my experience, I have found that if a man is really good at his job, the boss will not promote him because he does not want to lose someone who can do so much good work. At the same time in looking around for talent—sometimes unsuccessfully, perhaps even committing errors of judgment—I have asked, "What do you think of young Bill Smith. Do you think he is a good man?" The manager would say, "Yes, but he has a terrible lot to learn, you know, sir". The answer to that was to wait one's time, put the man in another job, where he had a better chance, and promote him. When the manager said that the young man had a terrible lot to learn, what he really meant was, "That fellow is going to pinch my job unless I am very careful".
We must help the young people who have talent. It is not easy with young people. The problem is how to develop their self-confidence without developing their conceit? There is only one way to do that. That is by taking the risk of giving them rather more responsibility than perhaps one thinks they are capable of. I know that this could cost one money, but it is the right thing to do. If the young people do not succeed, one has to push them away. But one must be ruthless with oneself and give these young people the chance, because Britain has been made by young people. Unless we can encourage our top and middle managements to do that, we shall not succeed. I regard headhunting as a ghastly evil, born of desperation. That remark may be objectionable to some people; I am sorry.
We used to own a marvellous, great empire. We have heard about the winds of change. Industry is in the teeth of a veritable hurricane, but it is striving to succeed. When I was a boy at school the atlas was all coloured pink. Everybody thought British in all the great countries around the globe. Fashion is important in industry. It was fashionable to have everything that was British. Therefore industry just made the things and told the chaps to buy them. It was quite simple.
Today life is different. We have had—not because we wanted to—to substitute the British Empire by the Common Market, and so, my Lords, we have to start all over again and see what we can do. We are dealing with people who know the techniques of the Common Market. I spent a very happy day in Lucerne, with a man called Mr. Shingler. He has an elevator-making business, rather like Otis. He explained to me that they had virtually no home market. Therefore, they sent people all round the world to learn what type of elevator was required, for what type of building.
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Then they made an effort to design elevators to meet what would be the demand in the various countries.
It is no good saying that we must create an immense home market to improve industry; we must go around the world and find out what people want and discover how to make it cheaper than other people can by leadership and by the promotion of the best people.
We must learn decent manners. When our exporters write abroad they write in English; they think everybody in the world should speak English! When the Japanese come to England to buy things we do not speak to them in Japanese and are very surprised if they do not speak good English. We must learn good manners. We are facing change. I believe we can export very well.
I know that your Lordships have had far more than your ration of bad news. The noble Lord, Lord Gregson, was kind enough to mention civil engineering. There is a difference between the professions and I am merely a civil engineering contractor. Recently I had reason to look at some statistics about exports in 1974 by members of the Association of Civil Engineers. In 1974 they were responsible for exports all over the world valued at £1,400 million. In 1938 they were responsible for exports valued at £36,000 million, which I believe I am correct in thinking represents a ninefold growth. They received £500 million in fees and that was an invisible export which nobody really knows very much about. Apart from that, people were sent all over the world and received a salary in local currency. This was probably tax free and they may have saved this money and brought it home with them. Is that not something to be proud of? We do have the technical skills and that is a technical profession. I have mentioned the matter of good manners. I was very fortunate in my Scottish parents, who endeavoured to drill into me that the two most important words in the English language were "Please" and "Thank You", so please give a little attention to what I have said and thank you very much for your kind attention.
The Earl of Bessborough: My Lords, I cannot tell you how happy I am to congratulate my old and noble friend Lord McAlpine on his delightful maiden speech to which we all listened with such attention. His family is so well known and his great firm is well known all over the world. I need only say how warmly we welcome him here and how much we look forward to hearing from him frequently.
I should also like to congratulate my noble friend, Lord Benson, who like me, incidentally, is a West Sussex Peer and is not one of Lord Gowrie's Anglo-Irish team which has ventured to speak rather a lot this afternoon. But he too is so well-known and has such a long entry in Who's Who that we must all know that he will be a very great asset to the Cross-Benches. He made a most impressive speech. Incidentally, I am very happy to find myself sandwiched between two maidens! My noble friend Lord Matthews is another very distinguished industrialist and I think we should congratulate him on deciding to speak today. I hope he will often do so, and I hope also that he may give more frequent mention to our debates in his very important organ. With two such distinguished industrialists, one a distinguished

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civil engineer and the other so prominent a financier and chartered accountant, I feel sure this will result in a great improvement to our economic and industrial debates in your Lordships' House.
Like other noble Lords I should like to congratulate the noble Earl, Lord Shannon, and the noble Lord, Lord Shackleton, for putting down their Motions on this interesting day, the day after my right honourable friend Sir Geoffrey Howe presented his Budget in another place. I am especially grateful to both noble Lords because this is not the first time we have debated together similar industrial questions, which are closely related to industrial research and development, and science and technology generally. I believe it may have been due largely to the noble Earl, Lord Shannon, that my noble friend Lord Jellicoe suggested that I become chairman of the committee of inquiry into the research associations, and I am very glad to see my deputy chairman, the noble Lord, Lord Energlyn, here this afternoon and I am pleased he is going to be speaking.
Our committee produced a report on industrial research and development, the success of which must make major contributions to British industry's competitiveness in world markets. I believe we should all welcome the measures announced by my right honourable friend yesterday to help small firms; the reduction in MLR, the reduction in some industrial fuel prices, business start-up schemes and the various incentives to investors. Some people may say that these are small mercies, but I consider them to be a highly significant, even massive, package which should certainly improve our competitiveness and our export potential. However, basically our competitiveness in world markets must depend, as I believe other noble Lords accept, on our inventiveness, on our capacity to originate and innovate, and as the noble Lord, Lord Gregson, said—on our ability to produce new products that people want all over the world. Financial incentives are certainly important and useful, but if we produce certain products, such as textiles and steel, in a quantity greater than people want, financial incentives will not in themselves solve our problems.
That is why, like the noble Earl, Lord Shannon, I am so interested in research and development, whether it be in large or small firms at their own expense, or through the kind of co-operative research which the noble Earl and I know so well, or through Government research establishments, the research councils, the universities, and possibly exploited by the National Research Development Council, of which the noble Lord, Lord Schon, was so noble a head—or even by way of defence research, for I would not minimise the importance of spin-off or fall-out from defence research. We must innovate and we must show ingenuity and imagination in our applied research, not that we should forget fundamental and basic research.
We should take a page out of Japanese enterprise, which puts great store on market research before it is decided to market a product for which they believe—or are virtually certain—there will be world demand.
I am an advocate of conducting applied research on what one might call a pound for pound or £1 for £2 basis, on the principle that the Government might well see fit to contribute when an industry itself is prepared to risk some money. I am also not averse to co-
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operating with our American or Japanese friends; with firms in the United States or in Japan, as well as with firms within the European Community. Indeed, for some 20 years, including those years when we were in opposition and when I was close to my noble Leader in this House, Lord Soames, in the European Parliament, I have pressed for a greater degree of European technological co-operation in various sectors—but particularly in aerospace, micro-electronics, steel and shipbuilding, to name a few. There are many others too. I believe that perhaps the most important of them at this time is robotics.
I was glad to learn from my honourable friend the Minister of State for Industry, Mr. Kenneth Baker, on Monday that current Government support for robotics was running at £1·3 million a year, but I was distressed to hear from certain other Members that this was believed to be considerably less than the sums devoted to this sector by Japan, France and, I think, the United States. As the noble Earl, Lord Shannon, said, it is an interesting fact that in the areas and industries in America where robots are most used the unemployment figures are, paradoxically, the lowest. I think I know the reason for that. The noble Earl did not give one. I shall not do so, either—but I think I know it. This emerged clearly from recent lectures on the subject by Sir Henry Chilver, a great authority on the subject, who is vice-chancellor of the Cranfield College of Engineering and Aeronautics.
Another area which should have a very high priority is very-large-scale integrated circuits. The Japanese are giving £75 million this year to develop very large integrated circuits, getting more components on to one chip. Not only Britain but Western Europe as a whole must make every effort to be competitive with the rest of the world. But, as we said in my report on industrial research some years ago, we must be sure that co-operative research programmes reflect current industrial needs.
I now come briefly to the remarks made by the noble Lord, Lord Shackleton, on standards. I agree with everything that he said, and I am not going to repeat it. Here again, I should declare a past interest as a former deputy chairman of the Metrication Board, of which the noble Lord, Lord Ritchie-Calder, was chairman. This was a Quango which, in my view, has now wisely been wound up but which, in its time and under our successors, the noble Baroness, Lady White, and my noble friend Lord Orr-Ewing made us conscious of the need, especially for export, to manufacture in metric as well as still sometimes to imperial standards.
Here I would say how impressed were the noble Lord, Lord Energlyn, and I by the contributions made by the research associations to industrial standardisation in all its forms, particularly in the preparation of BSI and ISO standards and the increasing involvement, very importantly, in EEC standardisation procedures. It is a remarkable fact, as the noble Lord, Lord Energlyn, looks back at that report, that many of the 32 conclusions and recommendations that we made are still relevant today. I should like to join in the tributes paid to Sir Fred Warner and his report. But, to return to my main theme, I believe we must develop creative industry based on new ideas, new designs and a real

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understanding of markets. In the past our attempts at high technology often proved abortive simply because we did not combine marketing skills with technical ones as well as cost-effectiveness. It makes no sense to manufacture goods here which have little or no skill content and which equally well may be made more cheaply elsewhere.
I should like to comment here at the end of my remarks on two or three smaller firms in which I have no personal interest, financial or otherwise, but which have been very successful indeed and which may have lessons for others. I mention their names because I think they deserve mention. The first is a firm called Netlon of Blackburn. Doctor Mercer, the company's chairman, inherited a textile works. The company was very weak and he decided that there was no future in cotton. He eventually designed a method for making net by plastic extrusion. Your Lordships may have seen the net for packaging oranges in supermarkets, but it has many other extremely interesting and important applications in the world.
Dr. Mercer was elected a Fellow of the Royal Society for his innovation. Then he concentrated on marketing the product, and the Blackburn company gradually increased in size; but he was unable to develop the idea world-wide on his own. Instead, he followed a policy of licensing, and Netlon is now made under licence in 26 different countries and its worldwide revenue is between £130 million and £150 million. An interesting thing about Netlon is that it is now struggling to introduce a new product called Tensar, which consists of a mesh of high-tensile plastic which can be used as a reinforcing material. It can be used as a wind break, as snow fencing and for retaining embankments; and, through an improved version which has high strength biaxially, I think they are going to produce a useful invention.
The research cost more than £3 million, of which the Government contributed £780,000 through the relevant requirement board. The market for Tensar is believed to be larger than for Netlon. It could be used as a reinforcement for soil, concrete, asphalt and plastics. The noble Lord, Lord McAlpine, probably knows about this. An enormous application is for constructing asphalt roads to overcome rutting and cracking caused by heavy vehicles. Four of the seven big American petrochemical companies want to be involved; but Dr. Mercer does not want to give away any part of the equity. There is a problem. I know several Middle Eastern countries which are interested for their big desert civil engineering projects. I hope it will be possible to get this product off the ground, hopefully as a purely British development—the equivalent, perhaps, of float glass in the 1950s.
A second firm is Dolby Laboratories. This firm was started by Dr. Ray Dolby, one of the original inventors of Ampex Videotape. He came to Britain to do a doctorate at Cambridge University and thought out the idea for reducing the hissing noise from tape recorders. He patented it, and his company, in Clapham Road, managed to get its standard accepted throughout the world and almost every hi-fi set made (including all major Japanese sets) uses the Dolby system. The company employs about 200 people and has a turnover of £7 million to £8 million 15 years
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after the original invention. It does other things, too, and its success is one which other companies could emulate. The sad thing is that Dolby decided in 1975 to leave Britain and go to the United States. His research laboratory and the North American marketing operation now work from San Francisco, although manufacturing and world-wide marketing are still here in Clapham Road. Dolby felt, among other things, that the industrial climate in Britain at that time was not conducive to enterprise.
A third firm I would mention is Micro Consultants and its offshoot, Quantel Limited of Newbury. Micro Consultants was set up in 1967 to make scientific and industrial data systems, and has reinstrumented, among other things, the Trawsfynnyd nuclear power station. In 1973 the men who started the business set up a new company, Quantel, which exploited the developments of Micro Consultants and applied them to television broadcasting. Quantel make machines which digitise television signals and which can store a complete frame or picture in a computer-type memory.
Using this technology, it is possible to build television converters which lose no quality and they have been sold all over the world. All three big American television networks use them. There is much more that I could say about this firm but my time has run out. These firms have won recognition all over the world and this I believe is hopeful.
The conclusions that I draw are: first, where low grade or high volume manufacturing is required, it pays to licence other people to do it. Secondly, clever ideas sell well and enable companies to go ahead fast, provided that there is a market. Clever things which nobody wants must fail. Thirdly, it is easier to become established in narrow fields such as I have mentioned—for example, in tape noise reduction or television—than in less readily definable markets. All three firms that I have mentioned exploited a particular technical skill and found ways of extending it through new applications to build a larger company.
How do we get bright young people in this country who know both the technical and market problems to consider launching their own company? Bodies like the NRDC—and I do not know whether the noble Lord, Lord Schon, is still in his place—may be too demanding in their insistence on equity; so perhaps may the TDC, ICFC and indeed the merchant banks. It would be better, in my view, to find a way of financing new young firms through private sources. That means making it attractive for people to gamble on them. After all, as several noble Lords here know, we do not penalise people for gambling on horses or on football teams. Yet in the past we have punished them through exorbitant taxation. We have sometimes penalised someone who backs a British idea and comes up trumps. If we could get the gambling framework right so as to encourage the entrepreneur, the whole aspect of British industry could change. I am off to Silicon Valley at the end of the month and I shall see there how different the atmosphere is; and yet we in Britain can be competitive, too.
6.13 p.m.
Lord Matthews: My Lords, may I thank my noble friends Lord Gowrie and Lord Bessborough for their

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kind and friendly comments. I cannot promise further coverage in my newspapers; but I suspect that my editors will be watching the House of Lords more closely if I am here.
I should like to begin with a quotation from 1933 of the Chancellor of the Exchequer of the day, Neville Chamberlain, as we began to recover from the recession in the early 1930s.
"Our credit has been fully restored. We are almost embarrassed by the amount of money coming to London. From having slipped to the position of third exporting country of the world we have once again regained our position as the best",
I am sure we would all have been cheered had our present Chancellor of the Exchequer been able to make a similar statement yesterday. Instead, we are faced with declining manufacturing industries and the disappearance of companies with household names, and high unemployment still rising.
I recognise that it is not only in this country that this position prevails. The whole of the Western World, with few exceptions, is going through an extremely difficult period. However, unfortunately this country is suffering to a far greater extent than the majority of the others, with inflation at over 20 per cent. in 1980 compared with an average of 10 per cent. for our major competitors; and, but for the good fortune to be blessed with oil around these shores, I dread to think what state we would be in today.
The decline in our manufacturing industries has not been brought about by the recent so-called monetarist policy. It has, of course, been going on for some considerable time and a straight comparison between Western Germany and ourselves—a country of similar size and population—over the past 20 years shows that they have increased their production at a rate of 50 per cent. greater than ours—3·3 per cent. per annum against our 2·1 per cent. During the same period, German car production, for example, has doubled from 1,752,000 cars to 3,669,000 cars. Our production has fallen below what it was 20 years ago. Our output is now less than 1 million cars per annum.
Do the Germans work longer hours to have produced this miracle? The answer is "no"—in fact they work an average of 41·8 hours per week against our 43·2, including overtime. But clearly they work more efficiently than we do, so what do the Germans have that we do not? I suggest sound rational trade union practices which, with strong, responsible management, give them four prime virtues of commerce; namely, productivity, price competitiveness, delivery on time and effective after-sales service.
The Germans have a trade union structure (which your Lordships will recall we helped to form) of one union to each industry which reflects the realities of the last half of the 20th century. We have a trade union structure which reflects the multifarious crafts of the past century, compounded by the class war and political expediency. It is an insuperable handicap and it has been entirely self-imposed.
It is a fantasy for me to suggest that we could look forward to a change in our trade unions to reflect one union for one industry. However, I believe that our trade unions will eventually have to make some radical changes in their structure whereby individual unions identify themselves with a particular industry and accept the use of high technology with reasonable
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manning levels. I have an example in my own company's works where new equipment has lain idle for over 12 months—not because there is a dispute on manning levels, but because two unions cannot meet to agree which one of them is going to be responsible for the operatives using this equipment.
In a changing world the competition has become even more competitive with a number of new nations emerging with their own highly mechanised industries, sometimes designed and installed by us, and were demarcation is an unknown word. Every opportunity to use higher technology is taken by them, and every day it becomes more difficult for us to compete. Obviously, the more competitive the markets, the more you cut your prices, my Lords, and the more difficult it becomes to maintain standards. It is sad to see that a number of British companies with household names, who had built up their reputation on the quality of their own goods manufactured in this country, have over recent years been marketing imported products.
It is a soft option to become a service nation and I believe that would only last as long as the oil flows; and, of course, unemployment would continue to increase. So, therefore, we have to change our ways. We have been tasting the cream and it has now gone sour. Our present plight has been contributed to by the varying policies of successive Governments with wage restraints, excessively high taxation and inflation which has destroyed enthusiasm and incentive.
I believe that the British working man is equal to his counterparts anywhere in the world and is better than most, given the right environment and the right incentives. I feel that it is in this field that we need to concentrate our minds and have a much more imaginative approach to encourage workers, management and investors. Perhaps the Chancellor, Sir Geoffrey Howe, in yesterday's Budget, gave just a chink of light in this direction with his further help to the small businessman. As he indicated, we are coming to the bottom of the trough of the recession. It is essential, if that is so and the situation improves, that he should extend his help to industry generously so as to create the atmosphere and the incentives to go forward and be competitive once again.
6.21 p.m.
The Earl of Halsbury: My Lords, it is a great pleasure to follow the noble Lord, Lord Matthews, who has acquitted himself well in that very trying ordeal we have all been through at one time or other, the making of a maiden speech. Such a speech is supposed to be non-controversial. So far as I am concerned, this speech conformed to the model and I agreed with everything that he said. Under the classical categories of modesty, wisdom and wit, he has won his spurs, and I am sure I will be voicing the good wishes of your Lordships if I say that we shall look forward to hearing him again on many occasions in the future.
On the two Motions before us, I am going to speak only very briefly on that in the name of the noble Lord, Lord Shackleton, to comment on his reference to standardisation by metrication and decimalisation, with both of which I have had a great deal to do in the course of my life. They both involve aligning the measures we use with the language we talk, of which the arithmetic we do is part, and any other system of

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measurement is really quite ridiculous. I was a director of a heavy engineering company in the days when we had to quote for a very large European contract in metric. That occupied so much of the time of the drawing office that we said, "Why take two bites at the cherry? We have most of the drawing office working in metric on one contract; let us metricate 100 per cent. from now on". That cost us a fraction of 1 per cent. of one year's profit, and the job was finished, over the horizon, and we could look forward to the future and never bother about it again.
On the Motion in the name of my noble friend Lord Shannon, I should like to resume the arguments I was putting forward on the Motion of the noble Lord the Leader of the Opposition last week with regard to the redeployment of labour, and deal first of all with a throw-away line by the noble Lord, Lord Thorneycroft, who simply said that unemployment had been rising inexorably under all parties and under all Prime Ministers for 20 years. The noble Lord did not expand on that; he dealt with it in a sentence. I must, however, say a little more about this because, although it is perfectly true in the form in which he said it, it did not disclose that there were in fact three régimes during that period. There was the tail-end of the post-war demand-pull period, with unemployment running at about a quarter of a million, which terminated at the end of the first Wilson Government. There was then a period of about eight years which terminated with the end of the Heath Government, during which unemploymentwas steady at a figure of about half a million. There were two excursions into the three-quarters of a million range in 1971 and 1972, but there was reversion to normal again in 1973–74. I think these were connected with the U-turn of the Heath Government during that period.
From 1975 onwards inflation took off, and we have been running now for years past at 1½ million unemployed, which has increased significantly in the course of the last 12 months. I want to relate that to what I said last week about the natural, painless, redeployment factor that exists in the economy due to the fact that a professional career time is about 40 years and a non-professional career time a little longer. That gives a retirement recruitment redeployment potential of 2½ per cent.; that is, 25 per cent., a quarter of your labour-force per decade and half your labour-force in two decades. Against that, as a target, I want to look at what we have done in the last two decades; that is, 1960–1970 and 1970–1980. In the first of those periods we reduced our manufacturing employment from 16 million to 13 million and we increased our service industry employment from 6 million to 9 million. That was an effective redeployment of 3 million on a labour-force of about 22 to 24 million over the period; and that was within the 2½ per cent. redeployment factor to which I have referred. But that was all we did during the first decade.
During the second decade the figures have been steady. We are still employing about 13 million in the manufacturing industries and about 9 million in the service industries. In my view, had we gone on with the redeployment we would not now have had over-manned manufacturing industries and we would not be short, as we so often are, of personnel in the service industries.
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Let me take the National Health Service as an example. They are short of people and the people are short of money. I sorted the whole thing out, working for Mrs. Castle under the Wilson Government in 1974–75, and left the Health Service with a rational structure covering everything from doctors, nurses and midwives to the 10 paramedical professions and the speech therapists—and everybody was content at that point. It has subsequently gone back, as I predicted that it would, and it is still short-staffed and complains that it is under-paid.
Many people feel it is wrong to transfer people from manufacturing industry into the service industries, but I do not believe that. I think it is the right thing to do; and we have to keep up the productivity of the manufacturing industries. Supposing that it takes three men to do what four men did physically but they produce twice as much, then everybody is twice as well off notwithstanding the fact that you have three men in productive industry and one has been transferred to a service industry. That is an example of what we did during the 1960–70 decade, when we had low unemployment, and it is what we did not do during the 1970–80 decade, when we had increasing and higher unemployment.
I come next to foresight, commercial and technological. Here one must learn to recognise certain patterns which repeat themselves. I should like to refer very briefly to the textile industry. You start off by exporting cheap cotton cloth to the Chinese and the Indians. That game is too easy to last for ever; it does not last. You then have two options. One is to increase the quality of what you are making and go into the high-quality textile industry, which the Italians have done so successfully. The other is to export not textiles but textile manufacturing machinery. We had quite a significant success in that because at one time after the war our exports of textile machinery from Lancashire were in excess of our exports of textiles. But that again will not last for ever. The third stage will be to manufacture the control engineering equipment that automates the textile machinery. And during all this process of transferring the product, as it were, across the technological board, the conversion factor of what you are making is rising, rising, rising the whole time, and it is therefore becoming a more profitable source of exports in the balance of trade.
Two headings under which the Japanese have taken the lead strike me very forcibly. Perhaps I might say at this point that in the early 1960s I headed an OECD mission to Japan to write a report on the relations between industry, government and the universities in Japan; and I came back convinced that within a decade the Japanese would be the world's No. 2 economy. That prophecy was fulfilled, and now they have become not only No.2 economy but the No. 1 pacemaker.
There were two pieces of foresight that the Japanese scored heavily with. One was the giant tanker, and I want your Lordships to note that there was no high technology involved in giant tankers. There was nothing more than the commercial courage to go ahead and build them when the Suez Canal was closed. Anybody could have done it. The Japanese were the ones with foresight and the commercial nous to go ahead and do it—to build the first tanker, to fill it up with oil, to send it around the world demonstrating

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its economics to everybody. From that point on, the Japanese tanker industry just took off and they went on building bigger and bigger tankers in the most modern, up-to-date shipyards, but beyond being modern and up-to-date there was nothing new or original about them.
The other way in which the Japanese have shown commercial and technological foresight is in backing robotics. I have been a prophet of robotics for I do not know how long, because I believe that they are the real answer to the monotony and fatigue which a workforce suffers when it is on the assembly line. The robot is the answer to the assembly line. But unless you are continually transferring people out of manufacturing industry into the service industries, you will, of course, then get unemployment on the assembly lines when you introduce your robotics. However, I do not believe that anybody ever withstood for any length of time the desire to take advantage of technological opportunities to improve his standard of living, and I think that if organised labour withstands the introduction of robotics it will be backing a losing horse, because people will adopt them and the high standard of living that that implies.
I come now to the next phase of what I believe for the future. In the beginning, there was just shank's pony, and then in 3,000 B.C. we domesticated the horse. From that time to the middle of the last century that is all we had in the way of transport facilities. Then, in the middle of the last century, the railways gave man social mobility, and the bicycle, followed by the motor car in this century, gave him personal mobility. That personal mobility is of tremendous importance to people and that is why the family car is one of the main features of family life.
I am going to peep into the future, to where man achieves intellectual mobility; the ability to move about in the realm of ideas and thoughts, of which you can see a forecast in the form of the toys which we have in the Library—Prestel, the link to STAIRS in the Queen's Room and the other machine that they have. I have forgotten its name for the moment, but I shall think of it. We now have three of these toys to play with at this stage. And, of course, at home we have our television sets, our radios and so on. But I look forward to the day, 30 or 50 years from now, when the family cathode ray tube will be as important in the family drawing-room as the family motor car now is in the family garage. Just as a house has a garage in-built, so we shall have something like that with a data processing system in every household. It will be part of the children's education. It will be your morning newspaper. I am sorry if I am destroying the industry which is so ably represented in your Lordships' House by the noble Lord, Lord Matthews. But it will be your daily newspaper. It will be your workbench, because I foresee that most of the administrative classes will work at home. Why do we pack them into enormous buildings built by the noble Lord, Lord McAlpine? Simply so that they can be near to the files in which the information that they use is stored. If they can bring this information into their own homes by keying in and pressing buttons, they can do their work in the home. Think, my Lords, of the relief that that will be to the transport industries, when there are no more commuters—
Lord Stone: My Lords, what would you do in your spare time?
The Earl of Halsbury: My Lords, that is the real problem in all this. How are you to keep a workforce of 25 million, or thereabouts, out of mischief, happy and occupied with something or other when, literally, there is no manual work required for them to do?
May I remind your Lordships of the etymology of the word "labour", because once labour has gone I do not see what we are going to need a Labour Party for. The word means "torment". That is why we talk of a woman in childbirth as being in labour. It is the word that the Latins used for torture. If we turn to the French languages, we talk of travail. Travalla, in Latin, was the rack. That is what labour used to be in the pro-history of humanity. But a draftsman does not need to be in a drawing office. Give him a cathode ray tube and a light pen and he can work at home.
How people will use their leisure profitably, I do not know. Possibly, they will become carpenters and make tasty furniture for people who like that kind of thing, in consideration for the people who like tasty furniture doing some service or other for them. But I shall not peep too deeply into the future, save to ask: what will happen to the transport workers, what will happen to the print industry, when all this comes true? They will have to join my redeployment and the painless mechanism I have indicated—the ranks of the others.
The same will be true of the microprocessor revolution as was true of the computer revolution. I have been in the computer revolution from the days before there were any computers. I literally saw the first computer come off the first manufacturing line and I have been associated with it in the 30 years that have followed. It is easy to say that it made a revolution. It did not. It was a steady progression. Always there is a bottle-neck. The bottle-neck was never our ability to make computers. It was always our ability to decide what we were going to use them for. Even when we decided that, we found that we had to train a whole new generation of schoolmasters, university lecturers and so on to teach people how, and the same will be true of the microprocessor.
Currently, you can buy one, if you are so minded and have the money, to play chess with. Children's toys and so on are great fun, experimenting with rockets to the moon via a little keyboard or doing sums. That will not be the real, ultimate application for them. They will have a deeper application and it will not be revolutionary on a short timescale. I believe that in the future the microprocessor will give our descendants a fuller life and that they will see it as a revolution only in retrospect. Improved productivity means enhanced emancipation from that terrible thing—labour. Let us take no counsel of our fears, but press on with it. Our danger is not that it will move too fast, but that we shall move too slowly.
6.38 p.m.
Lord Irving of Dartford: My Lords, I want to deal with matters relating to competitiveness which are of the greatest importance and urgency for industry, and I hope the House will forgive me if I concentrate on the energy problem. In July last year on the Gas

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Corporation Bill, I raised the question of the very large differential between gas prices charged to British industrialists as against those charged to their competitors in Europe and North America. I then mentioned three industries which were suffering very severely—the paper industry, with which I am happy to be associated; the chemical industry, and the clay-using industries. I indicated then that gas to industry on the continent was 30 to 50 per cent. cheaper than in the United Kingdom, and 50 per cent. cheaper in North America. The noble Earl, Lord Gowrie, disputed those figures and said that there was not that disadvantage; or, at least, he said that if it existed it was a short-term problem. But he undertook to monitor gas and other energy prices.
Between then and the end of the year, the department and the CBI carried out a monitoring exercise. In the debate on energy in October, I catalogued nearly 20 industries which were suffering from the same kind of problem in relation to the cost of gas and other forms of energy, and to which energy represented, as it did to the paper industry, something like 10 or 15 per cent. of total cost. Later I expressed some concern that these two exercises were being undertaken separately, because I believed that they would not necessarily lead to agreement, and in this respect I was correct. The exercise proved abortive, and a further period of delay resulted. As a result of this, however, a task force was set up under the chairmanship of the director-general of Neddy which reported to the Minister on 5th March confirming entirely what industrialists had been saying for the last 12 months about the cost of gas as well as other forms of energy to high energy users.
I want to stress that British industrialists have not been asking for cheap energy or for preferential treatment but that they should be allowed to compete on equal terms with their foreign competitors. May I remind the House of what the task force said:
"For an important group of energy intensive users, (representing some of the remaining 50 per cent. of industrial electricity and a significant proportion of gas by volume) United Kingdom gas and electricity prices had moved significantly ahead of those being charged to some major competitors on the Continent by the end of 1980. This situation continues. Heavy fuel oil was cheaper to Continental competitors for most of 1980, though the position had improved by the end of the year but remains volatile".
This is the most significant part of the report:
"These developments have worsened the competitive position of this group of users".
In the case of gas, the differences in cost of interruptable supplies were up to 15 per cent. and in firm supplies up to 20 per cent. In the case of electricity, in France and Germany the differential was as high, in some cases, as 35 per cent. I ought to mention that in the paper industry there are 26 companies which use more than 1 million therms of gas a year. In general terms, the economic climate, compounded by the Government's policies, continues to give to United Kingdom competitors a 25 per cent, price advantage. This is caused particularly by the linked problems of the high value of the pound, high inflation and high interest rates, together with the price of energy to which I have referred.
During the last 14 months I regret to say that in
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the paper industry they have lost 17 mills, 46 machines and 9,487 employees. In the last 12 to 18 months the volume of newsprint made in this country, which was 25 per cent. of the total requirement, has fallen to below 10 per cent. and at this rate will disappear entirely.
Therefore it is in this gloomy context that yesterday's Budget must be viewed. I think the statement made by the Director General of the British Paper and Board Federation echoed that of many industries when he said:
"The Budget was a bitter disappointment. All that we have been asking for is an opportunity to compete on equal terms with paper makers overseas".
What was asked for by industry was that the special tax on heavy fuel oil should be abolished. All that the Chancellor of the Exchequer was able to offer were some unspecified concessions on high volume tariffs. Secondly, he was asked that the duty on Derv should be reduced by anything up to 10p. In fact, it has been increased by 20p a gallon, which is a very severe blow to this industry and to others. This additional expenditure will cost the paper industry, in the case of one group alone, £0·4 million, and it will cost the total industry something like £2 million to £3 million. Transport costs can be between 5 per cent. and 10 per cent. of total costs. That is in addition to the other problems of energy in any industry. This blow could offset any relief, if this is really forthcoming, on high volume energy tariffs.
I said "unspecified concessions" because it is difficult to know what the Chancellor really meant in his pronouncement yesterday, for the British Gas Corporation has been negotiating with some industrialists for new contracts taking into account, as requested by the Government, the difficulties facing industrialists. However, these are for new contracts, not necessarily for renewable contracts. It is also a slow and tedious process which will come too late for many companies. The Chancellor's promise that the British Gas Corporation will hold its prices until the end of 1981 will do little or nothing to deal with the problems of differentials between the United Kingdom and Europe and America.
There was a phrase in the Chancellor's speech yesterday which I will read:
"The overall consequences of dealing with energy prices would be to put up the cost of gas purchased by the British Gas Corporation and, with it, the United Kingdom import bill".
Many of us are unclear of the precise significance of that statement, and I hope that the noble Earl will be able to clarify it.
Industry is grateful for the fall of 2 per cent. in the MLR. It will certainly lower the cost of overdrafts, but because of the poor prospects and low profitability of many industries it will do little, in my view, to encourage investment. It looks like having little or no effect on the value of the pound; as it was so confidently anticipated and leaked, the effect has already been discounted and lost.
I should like to end by repeating, even at this late stage, what the paper industry and others asked of the Chancellor. They asked first that there should be a freeze on all energy prices for energy intensive industries until those of our European and American competitors have caught up. Secondly, they asked

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that the Chancellor should give an immediate rebate to energy intensive industries to offset higher United Kingdom energy prices so that in the short term energy costs are no higher than in European countries. Time is running out for many companies. I hope that the Government will act soon.
6.47 p.m.
Lord Energlyn: My Lords, I am so pleased that the noble Lord, Lord McAlpine of Moffat, referred to the invisible earnings of our professionals. We do not know the exact figure but I gather that there is a minimum of £2,000 million of foreign currency coming into this country. One might naively say that as a result of this expertise being sold on a contractual basis, British industry should have a spin-off into the hardware involved in the contracts. But it does not work like that. The reason why our consultancy practices are among the foremost in the world is because we are British. It is the integrity, honesty and clarity of the advice that is given to a client which has caused this vast and important income for Britain. But it is left to the client to buy the goods. If British industry is not producing the right goods, then it cannot expect to break into the markets created by our consultancy practices.
Having said that, no mention—I have listened to every speaker—has been made of the contribution of our nationalised industries to this income. The Electricity Council has a company selling expertise. It might be chastening for the noble Lord, Lord Irving of Dartford, to know that the Gas Council has an international consultancy service which,
"in 1970–71 when it was formed earned £108,222 in fees. By 1974 that had risen to £3 million, plus. In 1976, it was nearly £7 million, and ever since it has kept above the £3 million mark".
That is a contribution which has been made by the know-how of the Gas Council's research organisations to the productivity of this country. I shall refer to the spin-off from that a little later.
I want to take up now the point which was raised by the noble Lord, Lord Schon. He could not understand why a ship bearing iron ore to the North of England could not export coal from England. It is claimed that because we have been importing coal we have no place in the export markets of the world for coal. In the 1930s, however, we were the number one exporter of coal. I want to take up that claim.
Before I continue I should like to make it perfectly clear that what I am about to say is in no way a criticism of the National Coal Board. Even more important than that, it is in no way an indication of a view that the Government may have been wrong in investing in the coal industry. On the contrary, this investment of the Government in the coal industry will, in my humble opinion—and I hope to prove it to your Lordships in a moment—be one of the most prudent and lucrative investments that they have made. In other words, what I am going to try to do, with your Lordships' permission, is to look at this statement that we have no place in the export markets of the world.
If you look at figures, you are always running into difficulties, but recently—in fact in 1980—the Massachusetts Institute of Technology called a world conference under the title "Coal—A Bridge into the
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Future", and any figures that I use are derived from this quite remarkable report, a copy of which is deposited in your Lordships' Library. It says that the 1977 production of coal in the United Kingdom was 108 million tonnes and that in the year 2,000 it will be about 162 million tonnes. Then, looking at the world market, there is a world production of 2,450 million tonnes in 1977, which is expected to rise to 6,780 million tonnes.
The question I pose is this: Is there no room for us in a vast market for coal? Most of that coal is consumed in the countries of its origin, but there is nevertheless an export of coal and the figures given show that there is an export into Europe of 287 million tonnes. That is the figure that I should like your Lordships to remember because, in my opinion, that is the market on our doorstep.
Before you can enter any market, as has been said by many noble Lords, you have to have the right quality. Now there is coal and coal or—to put it in another way—coal is composed of a number of different ingredients. I am not going to embark upon a petrographic lecture on coal, but it may interest your Lordships to know that all over the world when technologists are talking about coal they use what is called the Stopes classification. This classification was done by none other than Marie Stopes at the beginning of this century. She was the first woman paleobotanist and she brought a typically feminine rationale into looking at coal. It is most important to grasp this because what she said was that coal is a bed of rock. A bed of rock is composed of minerals and, likewise, coal is composed of minerals. She pointed out that it is composed principally of four minerals: vitrain, the bright glassy one; clarain, the dull one; durain, the hard one and fusain, the dirty one.
If we take fusain, that is virtually fossil charcoal. On the world market, fusain fetches anything over £200 a tonne and that is the stuff that they pour out of the washeries when they are washing coal at the present time. So there is a market. When you come to look at South Africa, as has been mentioned, they make petroleum out of coal, and the principal reason for that is that their seams, and one in particular, are almost completely composed of vitrain—the glassy one. It is quite easy to convert vitrain into a petroleum-like product but what jiggers it up is the presence of the other minerals, durain, in particular, and fusain.
We should therefore look at the mental process of an oilman. When he finds an oilfield, the next thing he thinks about is, "Where am I going to put the refinery?" To get into the world markets we have got to put refineries at our collieries. There is nothing new in this because among the first chairmen of the National Coal Board was Sir Hubert Holdsworth, who was a distinguished scientist, and his right-hand man was Dr. Idris Jones, the late lamented brother of the noble and learned Lord, Lord Elwyn-Jones. In 1951 Idris Jones and Holdsworth evaluated the whole system of coal processing and all the R and D has been done. You may ask, why has the Coal Board not used it? There was no market for it. The market has only arisen in the last four or five years and I maintain that we should move into that market.
The noble Lord, Lord McAlpine of Moffat, mentioned simplicity and, when I am called in to advise

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anybody, I say to them, "Let me have a look at your chemistry or your physics or your engineering. Ah yes! Now, the moment you go above O-level chemistry or O-level physics or O-level engineering you are going to increase your overheads, and your profit margins will be reduced. Therefore you must look at the simplicity of the operation". It is a curious thing, but very often the simplest things do not occur to one. If we think back over 10 years, the idea of containerising cargoes was just an idea, but today it is standard practice. If you think of what happens to the local dump of coal and the local coal man, he puts it into sacks and he delivers the coal in sacks. The reason is quite simple: first, he knows how much coal he is selling and, secondly, he does not waste any on the way.
Taking that simple prospect, I am going to put the idea to you, my Lords, that we now start to containerise coal and see what effect that has on our commercial potential. The first thing to realise is that the coal of the future is not lump coal; the coal of the future is powdered coal—what we call pulverised fuel. It burns better than lump coal and it has been proved for 50 years that it is the best type of coal to use on a furnace. So, we powder coal, and, if we powder coal, we now have the modern surface active agents that can divide these particles of coal into vitrain, clarain, durain and fusain, and all these four commodities have a different commercial value. So you bleed off your vitrain and send that to the chemical industry as a feed stock. You bleed off your fusain and you sell that as a sophisticated chemical in a variety of industries. What is left is the sort of fuel that burns quite as well as the gross coal in a power station.
The next step is to put it into bags, not load it into a truck which has to be emptied into a dump and then the dump has to be dug by a digger and the coal put into a conveyer to be taken into the power station. Worse than that, when you take it to your exporting port, you have a dump of coal which has to be fed into the hold of a ship. That ship then has to carry the coal to its destination, and there were absolutely fascinating figures given in the symposium on the cost of ship off-loading, unloading and trans-shipment, because many harbours are incapable of taking large vessels. Now, if you put this coal into bags and then you go to the firm of my noble friend Lord Bess-borough and put the bags into his nets, you can load them down into the hold and pick them out of the hold when you reach your destination.
The Earl of Bessborough: My Lords, may I interrupt the noble Lord for a moment? It is not Lord Bess-borough's firm: he has no interest in them whatever, except for their great technological achievements.
Lord Energlyn: My Lords, I do apologise to my noble friend. As he knows, I sometimes get carried away. What I really meant to say was the company he referred to in such an effective way. These people have produced plastic nets with great bearing capacity. I think the noble Earl would agree with that. They can carry phenomenal weights of material. You can see these lowered into a ship, into a clean hold that you are going to empty when you get to the other side. So imagine a ship like that, leaving England,
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going to New Zealand and bringing back the return cargo. The operation then becomes economic, as your Lordships will see if you study the figures the conference has produced.
Next, I should like to narrow this down to give your Lordships some examples of what we might do wtih our neighbours, our so-called European friends. The market in Europe is something like 37 million tonnes. That is well within our capacity to produce without any embarrassment to the demands of Great Britain. Just take one or two cases. Suppose we look at Finland. Finland imports 4·1 million tonnes. When you look at the balance of trade between Finland and Britain, we buy more from Finland in the way of timber and what-not than they buy from us. Why, therefore, should they not buy our coal in exchange for their timber? There is one good customer. Then, take our friends across the Channel in France. They need 14 million tonnes of coal. Why not buy it from us? Containerised, you put it in barges, you lift it out of the barge so easily; you have not got the difficult task of loading and unloading. The odd thing is that I questioned people who were at the conference and it has never occured to them to containerise coal. So I ask the Government quite seriously to look at this potential.
Then I come to the other feature of coal which is uppermost in a lot of people's minds, and that is the mobility of coal. We are talking about fluidised beds. Let it be to the credit of the National Coal Board, and particularly of people like the late Dr. Idris Jones, that they were writing papers about fluidised beds in the early 1950s and 1960s. So all the knowledge and technology is in this country. I do not think that there is anybody in the world who knows as much about coal, thanks to Marie Stopes, as we do. What we have to do is to know how to market it. In order to market it, we have got to refine it.
Then we come to another factor and it is this: in South Wales, there was a Canadian who some 15 or more years ago started to wash coal out of coal tips which the National Coal Board did not want to be bothered with. Within four or five years the firm was in the top league and was making millions of pounds profit out of washing coal out of tips. It has now become a realistic thing to look at all the coal tips of Britain. If you make a quick calculation, we are talking about 500 million tonnes of coal in coal tips and it is far easier to win that coal than even to work it by opencast mining. I suggest quite seriously that we have here a potential source of small coal, which is the most desirable coal today, although not in the past.
Then, you ask what you are going to do with the mud. You can pour it back into those derelict workings from whence it came. Certain of the tips have a peculiar property, in that they can be converted into cement. So I can visualise washing the coal out of tips and I reckon, taking the Ryan experiment in South Wales, we could have something like 4 to 5 million tonnes of coal coming out of those tips over the next 10 years—cheap coal which we could use, releasing coal for export. You pour the mud back into the ground. You cannot do that when a mine is being worked, because there are grave difficulties over ventilation, production of methane, explosions and so on. But, when a pit is empty, you can put the mud

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underground. Again, you put it into bags and take it underground, and in bags you can stack it tight and it will remain there undisturbed for ever.
What I am really trying to say is this: in my humble opinion, I believe we have a place in the export markets of the world, if we now use our imagination, thrust out and enter those markets. In so doing, we shall revive our maritime trade, because I hope that those ships will go out full of my bags and return clean with a cargo of cheap produce.
7.8 p.m.
Lord Mottistone: My Lords, it is always a pleasure to follow the noble Lord, Lord Energlyn, but I hope that on this occasion he will perhaps forgive me if I do not directly follow him except to welcome his closing remarks about the restoration of our supremacy in maritime trade. I would indeed dearly love to see that, quite apart from being intrigued by his general remarks about the possibilities of coal. Our other scientific contribution came from the noble Earl, Lord Halsbury. I thought his best contribution, in a splendid glimpse of the future, was to instruct us that we are opposite the torment party. I am not sure that I would not have thought it was the party of torment, even if, in a sort of a way, it has the noble Viscount, Lord Hanworth, supporting it, too.
Lord Gregson: My Lords, it is good for the soul.
Lord Mottistone: My Lords, I think we must thank the noble Earl, Lord Shannon, very much for inspiring us to this debate. He certainly has attracted a splendid list of speakers, particularly three maiden speakers. One would not wish to be discriminatory among them; one must congratulate the noble Lord, Lord Benson, the noble Lord, Lord McAlpine, and the noble Lord, Lord Matthews. I do not see any of them at the moment, but that spares me the embarrassment of trying to say which I thought was the best.
My Lords, I will unashamedly be guided in what I have to say by the recently-produced medium-term strategy (I think they call it) of the CBI, entitled The Will to Win. I noted that the noble Earl, Lord Shannon, referred as his additional point to the will to be competitive. I suspect he might have seen The Will to Win and translated it in that sense to meet the title of this debate. I would certainly very much support the two points. The CBI says we must satisfy the customer and we must be competitive, and many noble Lords have spoken about that. I would suggest to your Lordships that when we indeed do both those things we are among the world's leaders in both production and export. I think it is that which is the key to the problem.
The CBI goes on to say that we must restore competitiveness by cutting costs, by improving efficiency and industrial relations and—and here the Government can help—by improving the framework in which business operates. In this outline paper the CBI is seeking to show industry the sort of contributions which businesses can make to help themselves improve competitiveness. It also suggests what contributions the Government and government departments can make. I propose to concentrate on the latter point. Apart
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from the fact that several noble Lords have mentioned various aspects of what industry can do, I think the problem which faces us is not so much what industry can do and what Government can do, but how the two can blend together.
I take very much the various points that my noble friend the Minister made, and particularly that the appallingly difficult present circumstances are very restrictive as regards the Government's freedom to do all that they would like to do as their share towards improving the position for the competitiveness of industry. However, I think that whatever the Government do there is great difficulty in getting the matching, as it were, between the needs and the demands of industry and the functioning of the vast bureaucratic machine which is there to aid the Government in their activities. I think there is a great lack of knowledge when people do not have industrial experience from which to make the decisions and give the advice which is necessary.
The CBI's paper makes the point that Government departments do not have the discipline of the market to encourage economy and the elimination of waste. Nor, I would suggest, do they have the experience of the discipline of the market to know really what it is that it is reasonable for industry to want and where they can best help it. Perhaps I might suggest to my noble friend the Minister that that is the area where Ministers must be the solvers of the key problem.
Therefore, I believe that the Government's problems are even greater than the problems of industry. Nevertheless, they must be ruthless in attacking waste and overmanning; they must reduce the costs that they impose on business; and they must have cost control targets equal to those of industry. Specific contributions which the Government can make to competitiveness are to avoid policies creating additional costs; to have a realistic exchange rate and that point has been touched on by other noble Lords—and to have supportive trade policies. I like the thought of that, but I wonder just what it means.
I should like to turn to costs through taxation. We all expect costs through taxation, but I would suggest to my noble friend that they must be fair if industries are to be competitive. That applies as much on the home market as it does to exports. If companies in an industry do not have a fair competitive position at home, they will have less of a firm base from which to develop production for export.
In the food processing industry, in which I must declare an interest, there are no better examples than biscuits and confectionery. Those food products have long been leaders in the European Community, both in overall production and in export. Because of arbitrary and anti-competitive taxation policies on selected foods (which include all chocolates and chocolate-covered products) from which our main competitors are spared—and I would emphasise the words, "from which our main competitors are spared"—our competitors are beginning to show signs of overtaking us, especially in the chocolate confectionery market. I would mention in passing that Germany, which is a particular threat, has an across-the-board VAT applicable equally to all types of food.
I was most interested to hear my noble friend the Minister saying in the course of his speech that one of

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our problems has been that we were moving from a cheap food policy to a dear food policy. I would be very grateful if, when he comes to reply, he could say whether that was just a very general statement or whether it was, in fact, an advance warning of a definite trend which the Government themselves support and would like to encourage. It could be that it is in that sort of area that the type of matters about which I am complaining might indeed be solved.
Your Lordships may be scornful that I am talking about sweets—and one can look at the matter in that way—but I am also talking about a major export-earning product and about the practical disincentive to export that the Government can create by the imposition of an anti-competitive taxation policy. I am not sure that the Government realise that their discrimination within the application of VAT is an anti-competitive taxation policy, but that is what it is. The Government, therefore, have something to answer for in that the people in the departments that administer the VAT probably do not know anything about competition, anyway. Indeed, that relates back to the point I was making earlier.
Other examples of bad taxation have been mentioned by other noble Lords. For example, there is the payroll tax which is known as the national insurance surcharge. That applies to all industry and cannot be identified as anti-competitive as between sectors of industry. However, it is a serious disincentive to competitiveness of British industry internationally as, indeed, also is the anti-competitive effect of the Government's energy policy, to which the noble Lord, Lord Irving of Dartford, referred at some length.
One could go on, but enough has surely been said to show the Government that while industry can do much to help itself so, too, can the Government help, especially by being vigilant to identify all the areas in which their activities can hamper competitiveness in British industry, both directly and indirectly, at home and abroad. Of course the Government want to help, but to do so they must develop the will and the ability to adjust policy to help productive industry to be competitive world-wide.
7.17 p.m.
Viscount Hanworth: My Lords, I must say that I do not particularly enjoy making a speech from my new position in what I would term the "choristers' stalls" and, having made my speech, I am afraid that I shall return to something a little more comfortable immediately below me.
In speaking on the first Motion in this debate I should like to try to analyse some of the reasons why British industry is in its present state, as I think that that may be a helpful background for deciding what might be done to improve matters. If there were only one or two reasons for our decline it would be relatively easy to concentrate upon them. However, there are many. I propose to mention seven, but each of those main headings—which, of course, are arbitrary—has a number of possible sub-divisions. In trying to make such an analysis, it seems to me very important to distinguish between cause and effect. Low productivity, poor quality of goods and unemployment are all obvious defects produced by
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underlying maladies in our national industrial corpus.
If I were asked to give just one general reason for our decline I would say that it was due to our failure to make gradual changes, which were obviously needed, in time. The noble Lord, Lord Schon, summed that up rather neatly in our last debate by saying that the British only see the writing on the wall when they have their backs to it. That leads me on to my first point: human relationships—more often called industrial relations.
At the end of the last war it should have been patently apparent to all management that they would no longer have a big stick to wield over blue-collared workers, whether or not they wanted it. The only alternative was leadership, inspiring people with a sense of purpose and a corporate spirit—call it what you will. In fact, in most cases management did not employ the most elementary techniques of achieving this end. There is still much that could be done in this direction and talking about the need for communication has obscured the issue. To many communication simply means passing more copies of papers around. I think that we should all remember the Duke of Wellington's dictum about there being no bad troops, only bad officers.
Secondly, when I joined a large company in 1959, management still believed in their hearts that Britain made the best engineering goods in the world and it was the customer's misfortune if they did not buy them. This inhibited a good marketing approach in its widest sense. The effects of this are still with us today. Some detailed facets of the problem have already been mentioned; for example, delivery dates and the need for our salesmen to have foreign languages. Even more unfortunately, because it takes a long time to put right, not enough of our really able young men have been going into industry. It has been thought to be a second-rate and unpleasant career.
Thirdly, although we are an outstanding nation as far as research and new ideas are concerned, we signally fail as regards development and putting the ideas into a marketable product. The wartime development of radar is perhaps a classic case, although under wartime conditions there were excuses for that. Atomic energy is a more recent example, but there are many others. Probably the status of our all-important engineers has a great deal to do with this failure. Fourthly, small businesses are the acorns from which large oaks grow. We have fewer of them than, for example, Germany, and in the past they have not been given the encouragement that they deserve.
Fifthly, I come to investment in new plant and other capital equipment. Industry needs to be able to see a reasonably certain future before making long-term capital investment. Constant changes in Government policy and a mass of inhibiting regulations, with added financial burdens, have been a very strong deterrent. Adversary politics between the parties are very greatly to blame. However, high interest rates and inadequate financial returns are perhaps the major deterrent today.
Sixthly and seventhly are the economic and financial climate and the unions. These are probably the two most important inhibiting factors. However, I do not want to say much about either of them. The economic and financial climate has been discussed at length by the CBI and others, and noble Lords far

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more qualified than I have already mentioned this and, of course, the demerits of the Budget. I would only make the rather sour remark that as all economists seem to disagree, the financial system seems to be our master, not our slave.
As to the unions, unreasonable pay demands, failure to take a longer-term view of their members' interests, plain selfishness engendered by the interests of far too many unions and unnecessary strikes are things which a nation cannot afford. The unions have shown themselves even more conservative to change in their own organisations than parliamentarians.
I think that it is all summed up by what the noble Lord, Lord Hankey, said in the previous debate about the visit of the Russian trade unionists. The TUC representatives asked them to say what was the main function of the Russian trade unions. They replied that it is, of course, to increase productivity. On their being asked whether they were not interested in increasing the wellbeing of their members, the reply was "Oh, yes, of course, we are, but how can we do that unless productivity rises?"
Finally, I should like to make the point that, quite apart from the social effects of unemployment and the cost of unemployment benefits, we must remember the hard indisputable economic fact that the more people who work usefully—and I repeat usefully—for the longest reasonable time, the richer the nation would be. Of course, there are many reasons why, with improved technology, unemployment at the moment is inevitable, and palliatives such as work-sharing, shorter working hours, and so on are necessary. But palliatives they are; they should be seen as such, except in so far as the nation may, in the future, like to take greater riches in terms of greater leisure.
But what about our inability to pay for so many social benefits and services, which are acknowledged as being desirable but which we cannot afford? I realise that in this analysis I have made a few direct recommendations, each of which merits a full length speech, but I hope that this analysis may highlight some of the areas where others can, in fact, think more deeply and produce more useful answers to our fundamental problems.
7.28 p.m.
The Earl of Gowrie: My Lords, perhaps I may have the leave of the House to wind up briefly just on the points that have been put to me and with nothing in the way of an additional speech; except of course to congratulate our three maiden speakers who steered a difficult course very well, because this has been an interesting debate and, as in all interesting debates, one is liable to steer into the waters of controversy.
The noble Lord, Lord Benson, dealt with inflation in such a way—and I hope it does not abuse his speech to say this—that the Government draw considerable comfort from it. My noble friend Lord McAlpine said, "Give young people a chance", which is perhaps not too controversial; I would certainly agree with it. But he also indulged in a little controversy by saying that head hunters were a ghastly evil born of desperation. I have no doubt that letters from eminent headhunting firms will pour into this House tomorrow. The speech of my noble friend Lord Matthews encourages
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me to look forward very much to his contributions when he is not making an uncontroversial speech. Indeed, we look forward to hearing all the maiden speakers again.
The noble Lord, Lord Shackleton, who I do not see in his place, has asked me questions about public purchasing and the influence of standards. Certainly the influence of standards in promoting successful implementation of the Government's new purchasing policy is very crucial, and we are having continuing discussions between the Department of Industry, all other Government Departments (as I said in my initial remarks), the nationalised industries and other public sector organisations. As I said in my opening speech, we are trying to set our own house in order, but other people should follow suit in encouraging the introduction of new products and processes, promoting better design, and matching specifications to the needs of the world markets, preferably by reference to British Standards where these are suitable.
The noble Baroness, Lady Seear, mentioned the Budget. Certainly we were able in the previous Budget to give improvements on profit sharing and some tax reliefs there, and of course we should have liked to have done more in this Budget, and that will have to wait for resources. We have made a start. I certainly agree with her on her Bullock points, to use a shorthand, although I think it is an important part of our philosophy about this area that it must be the firms that give the lead in working out the arrangements that best suit them with their own managers and employees. I think we share a suspicion of centralised direction of this kind, but I take every opportunity I can to say that just because the Government are desisting from centralised legislation, it does not mean that we think that this issue should lie down and go away. It is a crucial one, and again I made reference to it in my original speech.
Both the noble Baroness and the noble Lord, Lord Shackleton, and the noble Earl, Lord Halsbury, mentioned metrication. Again, the answer is somewhat the same as the Bullock point. There are no legislative obstacles to people using metrication. Public sector purchasers are committed to the metric system, but we think it best that the pace of the programme should rest with industry itself. Again it is a matter of argument, but I am not sure that centralised direction from Government other than by example, which we have in fact performed, would be efficacious.
A rather technical answer to the noble Lord, Lord Shackleton. I hope, when he reads it, he will understand it better than I do. BS5750 is readily available from the British Standards Institute. It costs £5, and it is up to firms to obtain this standard and pay the £5 for themselves. The noble Baroness asked me why it took so long to get through the Monopolies Commission. I applaud her pleasure in privatising, to use that unpleasant term. As she knows, we are proceeding as fast with privatising as we can, but of course monopolies can be troublesome in the private sector. We are aware of the problem of delays. We have recently strengthened the Commission. Where delays occur, this is usually a reflection of the complexities of the issues involved. The Commission's investigation is a quasi-judicial proceeding and the parties are often legally represented. That makes it rather

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difficult simply to cut through with directives. New style reports on public sector bodies under the Competition Act of last year are now taking only months to complete. I think that is reasonably good news.
Apart from one or two strictures on the Budget, may I congratulate the noble Lord, Lord Gregson, on an admirable speech, with a very large amount of which I agreed. He was in favour of productivity and in favour of profits, although I thought that he associated profitability with the excellence or otherwise of one Government or another, whereas I should have thought that what firms had been putting out in wages had something to do with profits. Certainly we have a long way to go to explain to people—and here again the Bullock point is important—how important profitability is to investment, and therefore to future levels of employment and competitiveness.
The only point at which I really quarrelled, apart from the party political ones, with the noble Lord, Lord Gregson, was when he said in, for him, almost a contemptuous tone that people are buying coin in the slot Star Wars machines. It was the noble Baroness who reminded us that the consumer does really matter, and if people want to buy such things, one must not depise them and indeed one must congratulate the many British firms that even now are manufacturing and exporting.
Lord Gregson: My Lords, may I just make a correction on that point? I did not really say that people were buying them. The point I was making was that these were being held up as outstanding examples of sunrise industry. I consider them to be a very minor market compared with the more massive markets available in the more stable industries that exist in this country.
The Earl of Gowrie: My Lords, I am glad to take correction from the noble Lord, as long as we encourage entrepreneurs and manufacturers to manufacture things which people want to buy. It is clear that we are manufacturing these machines, that people at home and abroad want to buy them, and we are doing very well on them. One of the reasons why the Eastern bloc is in such a mess and the Far Eastern bloc is doing so well is that the latter are highly sensitive to not only consumer demand but shifts in consumer demand at any given point all over the world.
The noble Lord, like the noble Baroness, urged a reduction of the exchange rate. I do not think that there is an easy way of doing this. The pound has eased somewhat, I am glad to say, in recent days, but any Government in possession of energy and also in possession of a determined counter-inflation policy are going to have a high currency. When my right honourable friends abandon their counter-inflation policies, as I for one very much hope they will never do, then we would see a slide in the pound.
The noble Lord, Lord Gregson, asked me a question about BSI. It received a grant in aid of £2,150,000 in the current year, and on a pound-for-pound basis with industry, for the next financial year the grant will be rather over £3 million if matched by equal industrial subscription. I hope that that point, as well as the
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point of our co-ordinating the development of quality assurance arrangements in various sectors of our industry, will give him some assurance.
The Public Sector Standardisation Team was indeed discontinued to avoid unnecessary costs, but public sector bodies have been asked to use British Standards wheresoever possible. I think in this country we are prone to think that the presence of a body to do something is a guarantee in itself that it will be done. That is not necessarily the case. One can get on and see that things are done without providing the necessary institutions.
My noble friend Lord Bessborough made an admirable speech, not least because he was not afraid to use lantern slides, and gave us instances of three companies, among many in this country, which are highly competitive and highly successful. One of the difficulties one sometimes has working in a Government department is that it is rather hard to get hold of physical slides, or not to feel that perhaps the Minister is making an unreasonable plug for a given firm, or that he will incur the ire of the competitor of that given firm if he mentions them. Therefore, I am glad that my noble friend stuck his neck out and told us three success stories. I also recommend to the House a sentence from my noble friend's speech, when he said that it is little or no good for this country to manufacture goods here which have little or no skill content. Surely that is the way in which our economy has to develop.
I hope that the House will read in conjunction the speeches of the noble Earl, Lord Halsbury, both last week and this week, as they are very much part of a piece, and they are among the most intelligent and analytical approaches to this problem that I have myself come into. I hope that he might perhaps take a leaf out of Lord Kaldor's book and have them issued by Hansard together so that we can all attend to them. He said that robots were the answer to our assembly lines, and made a point which I often try to make myself whenever I can. Of course now that we are frightened of unemployment levels, and quite understandably so, we take refuge in our industries, our old industries, and try to maintain them, but in fact if we were not frightened of high levels of unemployment we would be continuing to vote with our feet by leaving traditional heavy manufacturing industry as we were doing right throughout the 1960s and 1970s. I hope that as the recession and inflation stabilise and as confidence returns that people will see that the important thing is to automate these kinds of heavy industries and to use the wealth thereby created in other sectors of the economy.
The noble Lord, Lord Irving of Dartford, and I have crossed swords many times about energy policy. I think he certainly won one recently, and the Government, under the aegis of the NEDC report, are looking at the problems of big consumers. But for those eager addicts, or seismographs, of a U-turn wherever they may lie, I might point out that really this is not a shift of ground—not that that necessarily matters—on energy pricing, but it is an effort to understand and to compensate for the movement of sterling against very high energy consumers. We are as committed as ever to economic pricing.
On energy subjects, we had a fascinating disquisition from the appropriately-named noble Lord, Lord

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Energlyn, and I will send it (I will do it personally through my private office) to my honourable friend Mr. Moore, who is the Minister responsible for coal. One learns something new in each debate in your Lordships' House. I in my innocent way had always associated Marie Stopes with sex, not with coal, and I am delighted to have had that cleared up.
My noble friend Lord Mottistone urged us to cut Government waste. We have the continuous example of the Rayner exercises going on now, in the Civil Service and we are taking his advice there. My noble friend asked what I meant by moving to a dear food policy, and whether it was some sinister weapon in the Government's armoury which might be unleashed. That was not the point I was making. My point was that in the 'fifties and early 'sixties, with Commonwealth preference and cheap commodity prices in the world, we in this country had cheaper food than our European competitors had in theirs, and that kept wages low and perhaps encouraged manufacturers to invest less and take on more labour. That transition has been painful to us, but it is certainly not a transition we can avoid. I shall make the point about VAT in the confectionery industry to my noble friend Lord Cockfield.
The noble Viscount, Lord Hanworth, announced that he was debating with me for the first time from the choristers' stall. I always longed to meet a Social Democrat in the flesh, and this has been an interesting and new experience. The noble Viscount said we must desist from adversary politics. I hope that he and his colleagues will promise to desist from adversary politics on behalf of the Social Democratic movement. More seriously, he made the point, with which I think we all agreed, about not downgrading the status of those involved in marketing. As a temporarily-retired commercial traveller myself, I must agree with that.
He talked about the status of engineers, and we have often debated that issue in the context of the Finniston Report. I hope it is not too material of me, but to some degree (and it may be regrettable) the problems of status are fundamentally the problems of pay. If we had lots of engineers in their 30s earning what, say, barristers in their 30s can earn, we should not have too much anxiety about status. However, I was glad to see that the noble Viscount acknowledged that the Budget gave small business the encouragement it deserves. I will see that my various right honourable friends in the various departments I represent, not least my own crucial one of Employment, take all points on board; and I am grateful to the House for having given me leave to reply to the debate.
7.44 p.m.
The Earl of Shannon: My Lords, we come to the end of what I think we all agree has been a most interesting and constructive debate. As I forecast, many noble Lords have given us the benefit of their highly specialised and expert knowledge. Our three maiden speakers acquitted themselves with great distinction. The noble Lord, Lord Benson, referred to our self-inflicted restrictions on industry and stressed the importance of working with a common purpose. The noble Lord, Lord McAlpine of Moffat, emphasised the need for good management and sound and progressive leadership. The noble Lord, Lord Matthews, forecast the
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necessity of modern trade union structure. I know that I speak for all noble Lords when I say that we congratulate our maiden speakers and will welcome their future contributions on the basis of their performance today.
In his original speech, the Minister noted the strong Anglo-Irish contingent participating in the debate this afternoon. Perhaps therefore I was wrong in my speech in suggesting that this debate should more appropriately have taken place before the Budget so that we really could have given the Chancellor some helpful advice. I was wrong in that because, in view of what the Minister said, the debate obviously should have taken place next Tuesday, and I would inform the uninitiated that that is the Feast of St. Patrick.
I admit that I cast a fly over the House with my statement about industrial robots reducing unemployment. The noble Earl, Lord Bessborough, almost rose to my fly but then declined it, though the noble Earl, Lord Halsbury, took the fly completely and gave a full and interesting description of how this apparent anomaly comes about. He went on to abolish the industries of at least two of our maiden speakers and for good measure, with devastating etymological logic, then destroyed the Labour Party completely.
The hour is late and it is quite beyond my ability to do justice in commenting on the expert contributions that have been made this afternoon, and already that has been well done by the Minister. I thank all those who have contributed and I hope that their expert and knowledgeable observations will be valuable to Her Majesty's Government. They might even help them repair the errors of their ways and encourage them to further efforts in the fields where they are on the right path.
Finally, I will once again refer to the figures given by the Secretary of State for Industry in his address to the National Economic Development Office; namely, that the British Government give only one-tenth of the support to research and development in industrial productivity as do the West German Government, so perhaps there is a very good case for considering whether we should improve on the figure. I conclude by once again thanking noble Lords who have contributed to the debate and I beg leave to withdraw the Motion.
Motion for Papers, by leave, withdrawn.

Licensing (Amendment) Bill [H.L.]
7.47 p.m.
Lord Gainford: My Lords, I beg to move that the Bill be now read a second time. This short Bill is presented in order to modify Section 81(4) of the Licensing Act 1964 which concerns the revocation of special hours' certificates. The permitted hours for the sale or supply of intoxicating liquor where a special hours certificate is in force are specified in Section 76 of the Act. With certain limited exceptions, the evening closing hour on weekdays is extended to midnight and is further extended, when music and dancing continues beyond that hour, to 2 a.m., and in certain parts of London to 3 a.m., or the hour at which music and dancing ends, whichever is the earlier.

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The procedure of applying for the grant of a special hours' certificate differs slightly between registered clubs and other premises licensed for the sale of liquor. In the latter category I have in mind particularly discotheques, public houses and proprietary clubs. To summarise the difference, a club which is run by its members for its members—there are some common ones like the Athenaeum and the Carlton—are registered clubs. If a club is under an owner who offers some particular service, such as food, drink, dancing, cabaret and such like, to the public after they have been admitted to membership (for example, what is commonly called a night-club) then that is a proprietary club.
At present a special hours' certificate must be granted by licensing justices with respect to premises licensed for the sale of intoxicating liquor other than registered clubs, provided that the following two conditions are fulfilled: first, a music and dancing licence has been issued—in London the authority for issuing this licence is the Greater London Council; secondly, the premises are structurally adapted and are to be used for the purpose of providing music and dancing, and for the provision of substantial refreshment to which the sale of intoxicating liquor is ancillary. In other words, the premises are not to be used merely for the sale of intoxicating liquor.
Applications for the grant of special hours certificates for registered clubs are made to a magistrates' court, and the court is bound to grant a certificate if conditions similar to those for licensed premises apply, except that in place of the condition that there must be in force a music and dancing licence for the premises, there is substituted a need for the court to be satisfied that a certificate has been issued by the entertainments licensing authority (again, in London this is the Greater London Council) as to the suitability of the premises for the grant of a music and dancing licence.
If I may be permitted to digress for a moment, I would say I have had experience of the work of inspecting buildings where there was made an application for an entertainment licence or an application to alter any part of the premises already licensed, as well as the work of making regular inspections when a licence has been granted. That was when I was an employee of the Greater London Council's architect's department, in the building regulation division. The rules are strict, but practical, and they minimise to the fullest possible extent the chances of a disaster such as the horrific fire in Dublin last month.
In the case of a special hours certificate granted for a registered club the Licensing Act provides that the chief officer of police can apply to the magistrates' court for the revocation of the special hours certificate, at any time, should the premises gain an unfortunate reputation for disorderly conduct. But at present no such power for revocation exists in respect of discotheques, public houses, and proprietary clubs.
In the Greater London area the Greater London Council and the Metropolitan Police are alarmed at the increase in violence at licensed premises providing entertainment, and I am sure that local authorities and police forces in many other regions of the country are similarly concerned. Some of the establishments of the kind that I have mentioned, to which special hours
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certificates have been issued, have become the scenes of disorderly conduct. Some managements have endeavoured to curb this by employing people who are officially referred to as security attendants, but who are commonly known as "bouncers". But it seems to be the case that where such people are employed there are further incidents of disorderly conduct.
As it stands at present, Section 81(4) of the Licensing Act gives scope for the revocation of a special hours certificate for a registered club on the grounds of disorderly or indecent conduct, but not for the other types of premise to which I have referred; namely, discotheques, public houses, and proprietary clubs. Thus an unfortunate anomaly exists. The Bill intends to remove the anomaly by making an appopriate extension to the power of revocation in Section 81(4). In view of the strong connection that is considered to exist between drinking and violence, the police feel that the Bill will greatly assist their efforts to combat crime and violence. My Lords, I beg to move.
Moved, That the Bill be now read 2a.—(Lord Gainford.)
7.54 p.m.
Lord Boston of Faversham: My Lords, the noble Lord, Lord Gainford, is to be congratulated on introducing the Bill and the way in which he explained it and on having identified this anomaly in our licensing laws. I think, too, it is a fact that our licensing laws are almost excruciatingly intricate, and he has quite clearly mastered the complexities of this branch of our law. On the other hand, it does not necessarily follow that once an anomaly has been identified, we should go ahead and reform the law automatically, unless it can be shown that there is a problem, that there is a way to solve it, and that it ought to be solved.
Until I heard the speech of the noble Lord, Lord Gainford, I proposed to raise two points in connection with the Bill. First, I had proposed to inquire as to any knowledge of the extent of the problem, but the noble Lord has already addressed himself to that point. I was also going to venture to ask whether there was any information about the way in which the police regarded this particular proposal, but the noble Lord, Lord Gainford, has addressed himself to that point, too. So he has anticipated the only two queries that I had been planning to raise, and certainly he has satisfied me on both points, if I may say so with thanks. So I believe that it has been useful for the Bill to be introduced, and it seems to me that if your Lordships decide to give it a Second Reading, and it is eventually passed, it will serve a very useful purpose.
7.56 p.m.
The Parliamentary Under-Secretary of State, Home Office (Lord Belstead): My Lords, I should like to express my thanks to my noble friend Lord Gainford for his clear description of the Bill's intentions. I agree with the noble Lord, Lord Boston of Faversham, that our licensing laws are very intricate, and I was delighted to hear from my noble friend a definition of the difference between the Carlton Club and a nightclub. More seriously, it was most helpful to have my noble friend's very clear explanation of the problem which the Bill seeks to put right.

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The Government think that this is a measure which will provide the police with a useful weapon in their armoury to combat violence and hooliganism at licensed premises where late-night drinking takes place under the authority of special hours certificates. As Lord Boston has said, my noble friend has described for us the increasing problem of violence at these premises, especially in the Metropolitan Police area. The Government recognise the trouble that can be caused in this way, as well as the concern of the police in relation to it and their desire to be able to take swift remedial action. Therefore, the Bill is in principle entirely acceptable to the Government, and we hope that in due course it will become law.
I should like to add one point. In considering the Bill I think it right to bear in mind that Section 77 of the Licensing Act 1964 provides that if the licensee of licensed premises, who is the holder of a licence for public music and dancing, applies to the licensing justices for a special hours certificate, the justices are bound to grant the certificate. As I understand it, they have no discretion in the matter. As my noble friend said, the grant of a special hours certificate effectively extends the hours for alcohol to be sold to two o'clock in the morning, and three o'clock in Inner London. It is true that in the near future, when the provisions of Sections 2 and 3 of the Licensing (Amendment) Act 1980 are brought into force, the justices will have discretionary powers to limit the operation of the special hours certificate to an earlier period. But the point is that if things go wrong, and a chief officer of police considers it right to apply for a club special hours certificate to be revoked, there is no provision in the 1964 Act for a special hours certificate for licensed premises to be revoked immediately, and the Bill of my noble friend Lord Gainford seeks to correct that anomaly.
As I have already said, I join with the noble Lord, Lord Boston, in welcoming this measure. The Government think that it will enable the police to deal more effectively with the incidence of violence at badly-run premises, and I would therefore support my noble friend Lord Gainford in moving that the Bill should now be given a Second Reading.
Lord Gainford: My Lords, by your leave, I am most grateful to the noble Lord, Lord Boston, for his encouraging remarks and to my noble friend the Minister not only for his encouraging remarks but also for the interesting and useful facts which added to what I have already said. There is now nothing left for me to do but ask your Lordships' House to give this Bill a Second Reading.
On Question, Bill read 2a, and committed to a Committee of the Whole House.

Appropriation (Northern Ireland) Order 1981
8 p.m.
The Parliamentary Under-Secretary of State, Northern Ireland Office (Lord Elton)The Parliamentary Under-Secretary of State, Northern Ireland Office (Lord Elton) rose to move, That the draft order laid before the House on 23rd February be approved.
The noble Lord said: My Lords, the order is being made under paragraph 1 of Schedule 1 to the Northern Ireland Act 1974 and provides for the appropriation of both the 1980–81 Spring Supplementary Estimates and the Sums Required on Account for 1981–82 by Northern Ireland departments. These spring Supplementary Estimates represent for the most part relatively small adjustments to the spending plans of Northern Ireland departments for this financial year. This is because the major augmentation of the 1980–81 Main Estimates was made by the autumn Supplementary Estimates, which were covered by the Appropriation (No. 3) (Northern Ireland) Order 1980. That order was debated and approved by your Lordships in December last.
Detailed information on the draft order is to be found in the Estimates volume and the Statement of Sums Required on Account, copies of which have been placed in the Vote Office and the Printed Paper Office, and also in the explanatory memorandum which I have circulated to noble Lords who participated in the last appropriation order debate. There are, nonetheless, a number of important items in the present draft order to which I should like to draw your Lordships' attention.
First, I should like to mention some of the principal features of the supplementary provision which is being sought. Under Class II, Vote 4, Functioning of the Labour Market, noble Lords will see that additional provision of £7·7 million is being sought for the Temporary Short-Time Working Compensation Scheme. Expenditure on this scheme was originally estimated at £3·3 million but, due to the continuing difficulties experienced by Northern Ireland's industry, demand for grant assistance under the terms of this scheme has risen considerably, and it is now estimated that the scheme will cost some £11 million in 1980–81.
At this point I should emphasise that the decreases shown under Class II Vote 4 in the spring Supplementary Estimates volume are for the most part not reductions; they eflect earlier reallocations which could not be shown in full in the autumn Supplementary Estimates because of the conventions governing the presentation of the Estimates. The balance represents some internal reallocations within the programme of the Department of Manpower Services which have become necessary in order to meet changed circumstances.
Under Class VII, Vote 1, Protective Services, your Lordships will see that £100,000 is being sought for additional costs arising from the firemen's pay dispute. Your Lordships will recall that because of possible industrial action by firemen last November it was necessary to invoke emergency arrangements under which the armed forces would provide a skeleton fire service using the Green Goddess appliances which are held for civil defence purposes. The 30 appliances held in Northern Ireland were put in a serviceable condition and deployed to the army and the Supplementary Estimate is required to meet the costs involved.
On those Votes for which the Department of Education is responsible, token supplementary provision is sought to indicate the additional requirements for the pay of teachers in schools and institutions of further education. A reassessment of these costs shows an additional requirement of £1·6 million in Class VIII,

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Vote 1, schools, although no actual increase is necessary in the total voted provisions because of reductions in provision for capital grants to voluntary schools. Noble Lords will remember that these reductions were detailed when the autumn Supplementary Estimates were presented with the Appropriation (No. 3) (Northern Ireland) Order 1980, but again it has not been possible to incorporate them in an Estimate until now.
I have considered it particularly important to retain the number of full-time teachers in the current academic year and the supplementary provision sought is necessary to meet the cost of the original allocation of teachers. As noble Lords will, however, be aware, some marginal savings are being sought through a revision of the rules governing the appointment of substitute teachers, and these are currently the subject of detailed discussions with the teachers' unions. The revised assessment of the cost of teachers' salaries in institutions of further education, shown in Class VIII, Vote 2, Higher and Further Education, is £300,000. In this Vote, offsetting savings arise on student support, on which the uptake of awards has been less than expected.
Turning to the provision for health services, your Lordships will see that supplementary provision of some £9·2 million is sought under Class IX, Vote 2, Family Practitioner and Other Services. These services are, of course, demand-determined and are not subject to cash limits. The largest proportion of the additional provision sought relates to the payment of fees to medical and dental practitioners and pharmaceutical chemists. The increased expenditure on those services is partly offset by a reduction of £150,000 in the planned expenditure on welfare foods, for which demand has proved lower than anticipated.
In the social security field, the draft order incorporates provision for additional expenditure arising from an increase in the number of unemployed. An additional £5 million is sought in respect of supplementary benefits under Class X, Vote 2, Non-Contributory Benefits, while the additional £½ million included under Class X, Vote 4, Administration, reflects higher administrative and staffing costs.
I shall now turn to the other element in the draft order, the Sums Required on Account for 1981–82. These amount in total to £944,360,200. It is necessary to have these sums available to Northern Ireland departments by the beginning of the new financial year, so as to enable services to continue until the balance of the 1981–82 Main Estimates are debated with the next appropriation order. That will probably be in early July. The Sums Required on Account for 1981–82 are calculated on a standard formula of 45 per cent of the total provision for the previous—that is, the current—financial year. There are a few exceptions to this rule where it is known that expenditure plans will differ significantly from this pattern. They do not therefore give any indication of the total provision which will be sought for 1981–82. It is the Main Estimates that will provide the detail of the spending plans of Northern Ireland departments for 1981–82.
I believe I have now referred to all the most important features of the draft order, but I know that noble Lords will wish to raise other points. I am most grateful to those who have given me advance notice of
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matters of particular concern to them. I shall try to answer as many questions as possible at the end of the debate; those questions to which I cannot give an immediate reply will be dealt with in correspondence as swiftly as possible. I commend the draft order to your Lordships, and I beg to move.
Moved, That the draft order laid before the House on 23rd February be approved.—(Lord Elton).
8.9 p.m.
Lord Blease: My Lords, I should like to thank the noble Lord for outlining this draft appropriation order in some detail. I should also like to thank him for a copy of the explanatory memorandum, which I always find very useful. I regret that it was not possible for me to give the Minister the usual due notice of the matters I wish to raise here this evening, but on previous occasions he has kindly dealt very expeditiously with matters I have raised by writing to me, and I would be grateful if he could reply suitably to those matters which he may not be in a position to answer here this evening.
Last March, when we considered a similar appropriation order, the noble Lord mentioned the late hour at which the House was sitting. He drew attention to:
"The custom of dealing only in general terms with money matters over which this House does not have power".
That is from volume 406, No. 97, column 1279 of the Official Report. However general may be the terms we are expected to deal with in these appropriation matters, I consider this order to be important to the people of Northern Ireland. At the same time, I have no desire to give undue credence to an unhelpful if not a charade-type of ritual form of approval. The financial provisions in this order and in other appropriation orders govern crucial economical and social decisions concerning the wellbeing and self-respect of Northern Ireland people.
It is my opinion that these appropriation orders are not being dealt with in a manner considered conducive to the encouragement of responsible public accountability and attitudes. Both in this House and, more particularly and importantly from the elected representatives' position in the other place, the order-in-council procedure places us in a Catch 22 situation. We are boxed in and unable effectively to influence vital decisions already taken against the pronounced views of representatives of community interests in Northern Ireland concerning their livelihood and the prosperity of the Ulster people.
In the absence of a devolved assembly, I believe there is an urgent need to review the parliamentary procedures for dealing with appropriation and financial matters. I suggest there is wide support for a change, either by the appointment of a parliamentary Select Committee for Northern Ireland or by the establishment of a Northern Ireland Public Finance and Accounts Commission.
The Official Report of this House of Wednesday last, 4th March, records my view about chronically high levels of unemployment and the acute deprivation in the Province. It is not my intention to repeat tonight the detailed statistics of the plight of the unemployed, the aged and the young people in the Province. Sufficient to say that few if any in Northern

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Ireland consider that this appropriation order or the Budget yesterday will ease the crippling burden on Northern Ireland industry and the community. The headline of the Belfast News Letter this morning declares: "It is a vicious Budget: vicious, faulty and unsound".
This Budget, in the opinion of many persons in Northern Ireland to whom I have spoken by telephone today divides the Northern Ireland population and underlines and reinforces the difference between the poor and the rest of the population. We should be very conscious of the need to listen and care for minority groups for in this century when great injustice has been done to minority, violent consequences have followed. Today, the voice of the poor, who are the largest minority—40 per cent. of the population—has not been heeded. We will fail to listen to that voice at our peril. The Budget may have contributed significantly to the instability of society and it is little comfort to the people of Northern Ireland to know that further declines in living standards there may help to boost entrepreneurial activities in the South-East of England. That is the best that can be achieved, in the opinion of many, by the feeble measures introduced to assist new industry. Certainly, it will not assist industry in Northern Ireland.
When we considered the autumn Supplementary and Appropriation Order (No. 3) I stated then that the Government was widely off course as far as economic development strategy could be envisaged. This order confirms the view expressed then and demonstrates just how widely off course the Government are. How other can we explain the appropriation of £20 million? None of it is for industrial promotion or for economic regeneration or for productivity improvement. This £20 million is mainly to pay for unemployment through factory closures and short-time working. The Minister mentioned this in some detail.
If we turn to page 2 of the spring Supplementary Estimate—Class II, 4, A7—we find that the original estimate of £3,283,000 has risen to £11 million (already mentioned by the Minister) for the temporary, short-time working compensation scheme. This is an unproductive form of expenditure and has been reallocated from other sources.
I should like to put this question to the Minister. Is it not a fact that some 25,000 people are now working short time under this scheme and that this number is likely to rise for some time to come? Is this not a hidden form of unemployment; and that the figures for unemployment in Northern Ireland are really much higher than those publicly portrayed because of this hidden form of the short-time working arrangement?
Page 3, Class 4, A3, "Enterprise Ulster". I think the Minister will know my view about the excellent scheme we had working for a number of years. Here is a transfer of £392,000 from the present provision and the reason given for the transfer is because of reduced activity. At this late hour I do not wish to go into details of points that I want to raise; but can the Minister say if there has been any decision taken to review and progressively improve the structure and objectives of "Enterprise Ulster" particularly in consultation with the trade unions? We realise that after a time of working of this experimental scheme, it may need some re-adjustment. I would certainly urge the
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Minister to ensure that there is no rundown of this "Enterprise Ulster" scheme.
On page 3, again, Class 2, 4, B: "Rehabilitation and Employment of Disabled Persons". We all know that this is the International Year of the Disabled. I think it is pitiful and pathetic if not ironical to read that the explanation for the transfer of £159,000 from this particular Vote is reduced activity. I have had a number of persons raise with me the inadequacy of the rehabilitation scheme; but to have it further curtailed I think is an indictment of the whole approach to the handicapped and disabled in Northern Ireland—if not to the unemployed.
I should like to ask the Minister to confirm whether the Government rehabilitation centres for unemployment for disabled persons are being run down and reduced. In "Industrial Training", under Sections C1, C2 and C3, we have a transfer of £1,006,000 from Government training centres. The Minister will know of a report issued within the last few days by the Equal Opportunities Commission which drew attention to the fact that the number of trainees in training centres has been cut from 1,150 in 1978 to only 343 in January this year. Of course, as the Equal Opportunities Commission naturally would, they draw attention to the fact that only five girls served apprenticeships in Government training centres out of a total of 1,963. This compares with the,situation in Great Britain as a whole where girls occupied some 45 per cent. of openings under the training opportunities schemes. Girls in Northern Ireland take only 11·3 per cent. of the places. I am concentrating on only one aspect of this particular report which deals with the training of girls; but I think that if Northern Ireland is to be regenerated and acquire new industrial skills we cannot afford to run down the industrial training schemes.
I should like to put two questions to the Minister. Can he indicate what consultations have taken place with both sides of industry in Northern Ireland about the reduction in Government training? Can he in any way indicate how many additional apprentices have been taken on by employers now that the training scheme has been more or less agreed to be operated by employers at employers' premises?
I have had a number of matters raised with me but the hour is late. The Minister will know my connection and concern over the years with the Youth Opportunities Scheme, and I should like to put a question to him. Is there a place now available for all unemployed school-leavers in the Youth Opportunities Scheme in Northern Ireland? He will also know of the criticism of the Government's decision about the payment of unemployment benefit taken by a number of educational boards. Just a few days ago the Belfast board condemned the change which could mean young people losing several hundred pounds if they stay on at school and take examinations and finish a course of education. The Reverend Albert Sleith said that the move would cause criminal vandalism. I quote:
"It is one of the most obnoxious pieces of legislation I have ever seen".
The senior education officer, Mr. Bob Stewart, reported that the new rules could create a very unfortunate situation and could mean very real financial problems for families in the lowest income group.

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May I ask the Minister whether he will look at this new arrangement for curtailing the payment of unemployment benefit to persons at the end of the school-leaving year? Regarding the arts in Northern Ireland, the Minister will also know of the concern that has been expressed regarding cuts in grants. In a report of 23rd February this year it was indicated that Ulster receives less money for the promotion of the arts than any other part of the United Kingdom. In England, grant aid per head of population came to £1·21. In Wales it was £1·77. In Scotland it was £1·61 and in Northern Ireland £1·14. That is below the national average of £1·28. In Northern Ireland, again we have been sacrificed and are again the poor relation of the whole of the United Kingdom in this particular field of the arts. I hope that the Minister will follow what I am saying in my garbled way but I am trying to be as quick as I can.
I will omit a number of matters that have been raised with me as there is someone present who will probably wish to mention farming. However, I would say that the farming community has my whole-hearted support in this particular time of their difficulties. There is no doubt that the Northern Ireland agricultural industry is facing one of the greatest crises in its history. Whatever the EEC may come up with in the next few days, they cannot hope to meet their shortfall in income which is forcing so many small farmers to the wall. Someone has said that they have had a drop of 80 per cent. in their real income in the past two years. I think that is catastrophic for anyone attempting to carry on in the farming community in Northern Ireland.
My last point deals with the industrial development policy of the Government. The Minister will be aware that a number of representative bodies and responsible persons from Northern Ireland have put forward views to the Northern Ireland Office and the Secretary of State about the need to have more streamlined, co-ordinated and effective means of creating employment. I understand that a consultative forum involving industrial development institutions and the Northern Ireland Economic Council was established and held its first meeting in June of last year. May I ask the Minister whether he can indicate what progress has been made by this forum towards the agreed objectives for co-ordination and job promotion?
Energy and transport have been matters about which people have written to me. This was dealt with at some length in the Commons when this order was debated on Monday. One point was omitted and should like the Minister to consider it. During the summer months we have had the opportunity to purchase low priced coal. That helps to ease the burden a little for retired people. I shall not deal with Schedule 2 to the order: the sums requested on account. I look forward to taking part in the debate when the Estimates are more clearly known.
8.27 p.m.
Lord Hampton: My Lords, I also should like to thank the noble Lord, Lord Elton, for his explanation of this order, and for his courtesy in supplying information in advance. Ever since I heard that these two orders for Northern Ireland had been held over to today, I have pictured the plane-loads of ex-Prime
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Ministers, Governors and MPs let alone the other distinguished people—pouring into the country to take part in this debate. However, for myself, I hope, if I can, to play a constructive part.
I believe that some speakers in the debate on this appropriation order in the other place fell into the trap of an indiscriminate attack on everything that the Government are doing in the Province, and I shall attempt to avoid that mistake. But let me voice criticism on two important points. The first is the Budget. I follow the noble Lord, Lord Blease, in much of what he has said. The Budget seems to have done little or nothing for the people of Northern Ireland. The harsh measures will bear down painfully where there is already poverty, and nothing has been done to level out energy costs throughout the United Kingdom. It can be argued that a country that has no indigenous fossil fuels—as Ulster has not—must bear the consequences. But surely today we have reached a stage where those least able to help themselves are not mercilessly sent to the wall.
Secondly, I should like to point out that, in an interesting debate on unemployment last week, a number of noble Lords—including the noble Lord, Lord Blease, and myself—referred to the seriousness of the economic situation in Northern Ireland today. However, the noble Earl, Lord Gowrie, made no reference whatsoever to the problems of the Province when he came to his—in most ways—skilful winding-up speech.
The order that we are debating today appears to be just a series of figures; but of course it covers a depth of human problems. My party disagrees with the Government on some of their policies but in no way do we accuse them of heartless promotion of unemployment for narrow party ends. However, the suffering, as we read—and again the noble Lord, Lord Blease, has mentioned this—in many parts of the Province is still considerable. It seems somewhat cynical that those over here with job security and good conditions should strike when others have not even humble work with which to occupy their hands.
My own family will in the next few years be leaving school and university and I just hope that they will not be confronted by the dismal prospect of unemployment, with all the loss of confidence and lowering of morale that that can bring. But at least they live in an atmosphere that is little influenced by the terrorist, with the temptation of excitment that he can offer to idle hands. We cannot afford not to invest in the future and the rising generation. I know that the Government accept this. History will judge whether they did enough.
I was particularly struck, in the debate on this order in the other place, by a reference to the problems of remoteness for the farming community and the insufficient support in general being given to agriculture. Perhaps the noble Lord, Lord Moyola, will have personal experience in this field, but I submit that a swingeing increase in the price of petrol is hardly likely to help. And is it really keeping a sense of proportion to invest in the De Lorean car plant to the value of, I believe, £32,000 for every job provided?
I would end by questioning whether people are entitled to call themselves "loyalists" when they react to the authority of Westminster as they have

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done recently. There is, alas! no magic wand to put matters right in the Province, but there is some encouragement to be drawn from an article in the Economist of 10th January, which said that a sense of proportion was returning and that people in Northern Ireland were now more worried about the state of the economy than about protests in the Maze Prison. I believe that that is progress, even if the economic situation is still critical. I believe that it is most important to be optimistic.
8.32 p.m.
Lord Moyola: My Lords, I should like to start by offering my congratulations to the noble Lord, Lord Elton, on his succession to the Department of Agriculture, which has given many of us great pleasure. We wish him well there and hope that he will have a profitable and enjoyable time. I would add, as an afterthought, that I hope the farmers of Northern Ireland will also have a profitable and enjoyable time during his term of office there.
It is the farming side to which I should mainly like to address my remarks tonight. I want to say to him, if he does not know it already, as I am sure he does, that in Northern Ireland farming is in a very serious situation indeed and something urgently needs to be done to help. I know there have been over recent weeks discussions between the Secretary of State and the Farmers' Union. The first question I should like to put to him is: is there any hope that the outcome of those discussions will soon be announced? Even if there were no details available, if a promise was there and the intention to help, it would do an enormous amount of good.
The noble Lord knows the difficulties only too well and therefore I shall not labour them in any great detail. The noble Lord, Lord Hampton, has already touched upon the subject which I think is the important one at this moment: that is the problem of remoteness. I feel that, because of our remoteness, the present agricultural system works unfairly. It works unfairly simply because of the strip of water which divides us from the mainland and because that strip of water turns us into a small and somewhat isolated community.
If we look at the more important commodities, I would hope to be able to demonstrate this point. To take milk as one example—it is probably not the worst or the most difficult of farming problems in Northern Ireland, although it is difficult enough—milk for manufacturing commands a bad price throughout the United Kingdom and the Government, in order to help farmers, subsidise the liquid market. Whether success can be achieved depends on where the bulk of the milk goes: does it go to manufacture or into liquid? In England about 50 per cent. goes to the liquid market, but unfortunately in Northern Ireland the figure is only 20 per cent.
I will not attempt to go into details as to how the end product is arrived at because I should certainly get confused if I tried and I should confuse the House even more; but the fact is that the English farmer is benefiting to the tune of something around 10p per gallon as a result of this particular subsidy, whereas the Northern Ireland farmer is benefiting only to the tune of 4p. So that is a substantial difference, and on top
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of it, of course, the Northern Ireland farmer has the extra cost of fertiliser, feedingstuffs and so on.
Turning to feedingstuffs, in Northern Ireland, we produce only about 20 per cent. of what we need. The rest has to be imported through the United Kingdom and bear the extra cost of transport across the Irish Sea: something between £12 and £15 per tonne. It has to be remembered, too, that because we are a small community and therefore cannot consume anything like what our farmers produce, a large portion of the farmers' produce has to go out across the Irish Sea again and incur more transport costs. So, while theoretically we are on the same basis as Britain, I think it must be plain that we are enormously handicapped by that strip of water and, so far as feeding-stuffs are concerned, we need a minimum of £12 per tonne of help in order to put our farmers on equal terms as regards profit or farmers' incomes.
Take beef: the returns are bad. They are bad everywhere but I think they are particularly bad in Northern Ireland. I may be wrong but I personally blame it on the fact that the breeding herd has been reduced in numbers; it is down by something like 30 per cent. in the last five years. That is probably due to the abolition of the calf subsidy and the breeding herd subsidy. As a result of that, there are fewer stores on the market and therefore they are more expensive to buy and, when the animal is finished, the farmer simply does not make as much profit. But again, without going into the sums, I am told that if we farmers in Northern Ireland had been farming in Great Britain during the last year, the overall return for farmers on an equivalent number of cattle would in fact have been an extra £12 million. That is fine, my Lords, but I say that the system is operating unfairly and we need in Northern Ireland some special form of help.
Years ago there used to be a grant known as the "remoteness grant" and that used to help to compensate for the strip of water. If I remember rightly, certainly in the time when I was in the Minister's shoes, it ran at about £3 million or £3,500,000 a year. The bill which would now be incurred, if it were based on the difference between farmers' returns for comparable quantities as between Great Britain and Northern Ireland, would be £12 million for beef, £15 million for milk and £15 million for feedingstuffs, making a total of £42 million in all, which is a sad reflection on inflation over the years. But the point is that our problem was recognised in those days. I would not say that the remoteness grant, as such, was always used to cover the specific problem of transport costs, but it was always of great benefit to farmers and I simply would like to remind the Minister that the Irish Sea has not dried up in the period in between. I hope that he will find some means of correcting this particular imbalance.
The noble Lord, Lord Hampton, touched very slightly on the political scene, and I hope it will be in order for me to say something very briefly about it. The main issue in Northern Ireland, at the moment, is the Dublin Summit of last December, and I do not exaggerate when I say that very many people have been worried about what took place then. A badly worded communiqué—and I make no bones about it—came out. It was a communiqué which could have been read in whatever way you wished, according to your

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political views. The Summit seemed to be surrounded by an air of secrecy, which made everybody suspicious, and, of course, by the time that the participants had put their own political gloss upon the whole thing, everybody in Northern Ireland was thoroughly confused.
Following on from that, I should simply like to say that many of us were enormously glad and grateful for the Prime Minister's visit last week, and for the reassurance which she gave that we in Northern Ireland were not about to be cast adrift. Of course, there are a lot of people whom those reassurances will not sway, but it should be said that, while many people in Northern Ireland would do a great deal to stay part of the United Kingdom, they do not relish the recent happenings under the guise of countering some kind of suspected sell-out—and I hope an imaginary, suspected sell-out—in Dublin.
Those same people know full well that, whether we have to leave the United Kingdom or stay, depends upon keeping the goodwill of our friends over here and, above all, the goodwill of people in your Lordships' House and in another place. They know perfectly well that the goings-on that we witnessed in recent weeks are losing us friends here, and losing us the support and goodwill which we have had in such abundance over the past troublous years. Because we want to keep our friends, I should say that many of us regret very much the happenings of the last few weeks, done on the pretext of protecting Ulster.
8.43 p.m.
Lord Elton: My Lords, I am grateful to noble Lords for their reception, or for a great part of their reception, of the order which I have moved for Northern Ireland. Your Lordships were kind enough to give me some warning of many points, but many others have come to me out of something resembling a clear sky, and your Lordships will, I hope, be patient with me if, occasionally, I hesitate and shuffle my papers.
The noble Lord, Lord Blease, made some interesting comments at the opening of his remarks about the way in which matters such as these are handled, and he is not happy with the way in which this is done. I think I might say, by way of an introduction to what I have to say, that it is because we have direct rule that the order which your Lordships are now discussing is available for your Lordships to discuss at all. Your Lordships will be aware that, for the rest of the United Kingdom, money is provided by Bills and not by orders and your Lordships cannot touch a Money Bill. So, to that extent, the Province has an advantage over the rest of the United Kingdom, at least as regards this House. The noble Lord may think that it is a tenuous advantage, but it is one which it is open to him to improve and make more valuable, and with great regularity he succeeds in doing so by his constructive and, sometimes, critical remarks.
The setting up of a Select Committee for Northern Ireland is not really a matter for this House, nor indeed for me. But it is a suggestion which I do not doubt will be noted in the places where it is proper that it should be considered. I should also say to him, and, indeed, to the noble Lord, Lord Hampton, that the subject of the present debate is not the Budget for the financial year
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1981–82, which they spoke of with such vigour. It is the appropriation order to round off the financial year 1980–81 and to make provision, in no way proportionately related to next year's Budget, for that period of the next financial year which will have to elapse before the guidelines set down by the Budget can be implemented in the main Estimates which will be debated, as I said, in this House somewhere around the beginning of July. Therefore, if I appear to duck some of the issues which have been raised, it is simply because this is not the time to reply to them.
Arising out of that, I should also emphasise what I said in my introductory remarks, that many of the reductions which figure in this appropriation order are, in fact, the numerical expression of those reductions which were introduced by, described and, in the appropriate debate, discussed in the Appropriation (No. 3) (Northern Ireland) Order which we discussed before Christmas. I know that this is confusing. I find parliamentary financial proceedings confusing in the extreme, in any case; more so than private financial transactions.
But the fact is that the accounting procedures of Parliament did not permit the inclusion in the Commons' figures of the consequences of a number of the decisions which were expressed in the Appropriation (No. 3) Order. That will have to be my reply to one or two things about which the noble Lord expressed a resentment, which would be more understandable if what we were doing was a further round of reductions beyond those to which he reacted with such clarity on the last occasion when we debated appropriation in this House.
The noble Lord, Lord Blease, drew our attention to a number of matters related to training and unemployment. I would draw his attention, if it has not already received it, to a new scheme entitled Action for Community Employment which is being funded from additional monies made available by Government towards special employment measures and which will commence on 1st April this year. The scheme will have the same objectives and be broadly similar to the community enterprise programme in Great Britain and, like it, will focus on the longer-term unemployed. It is estimated that 450 jobs will be created in 1981–82 under the ACE, at a cost of £1·7 million.
The noble Lord then referred to the reduction of £412,000 in the provision for Enterprise Ulster resulting from reduced activity, and also from a concerted effort by officials in that enterprise to reduce plant and material costs. This is a measure not only of a reduction of activity, but of greater efficiency, so that the reduction in activity is not commensurate with the reduction of money. The reduced allocation for Enterprise Ulster in the coming year, which has resulted in the announcement of some redundancies in the organisation, has been made in the light of Government policy to give high priority in public expenditure to promoting investment in viable employment in the private sector, thus strengthening the economic base.
I can sympathise when the noble Lord says that to anyone who is unemployed it does not matter whether a new job which occurs is a nationalised or a private sector job. It is our experience that the potential for growth and vigour at an early stage in the private sector is very much greater, partly because it depends

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on so much smaller units than nationalised enterprises, and I believe that the emphasis of Her Majesty's Government's policy is the right one. After redundancies of just over 3,500 employees on 1st April this year, the average number of Enterprise Ulster employees is expected to be 1,150 during the 1981–82 financial year. The noble Lord will appreciate that it is not possible to shelter Enterprise Ulster from the whole of Government measures to promote productive employment, particularly their support for industrial investment to strengthen the Province's industrial base. The additional sum of £9·4 million made available for special employment measures in 1981–82 has been earmarked for the continuation of job maintenance and support schemes, temporary short-time working, and job release, expansion of the Youth Opportunities Programme and a new scheme, to which I have already referred, targeted specifically towards adult long-term unemployment.
The total of 7,000 youth opportunities places is to be increased to 10,000. It is hoped that up to 350 additional Youth Opportunity Programme places will be provided in 1981–82 by Enterprise Ulster, for which additional monies will be paid as part of the programme.
In response to a request from the Government, Enterprise Ulster will endeavour to reduce the average cost of each job in their organisation from the present figure, which exceeds £7,000. This can be achieved by concentrating upon more labour intensive projects. Depending upon the extent of this reduction, my honourable friend the Minister for the Department of Manpower Services may examine, with the organisation, towards the end of the year the scope for Enterprise Ulster to participate in action for community employment.
I will probably write to the noble Lord in expansion of Enterprise Ulster and move on now to note his stricture that most of the measures noted in the appropriation order are remedial. Indeed they are. I repeat that the function of an appropriation order is in itself remedial. It is to adjust existing programmes to the targets and the target costs which are expected to be achieved when the main estimates are submitted and to correct any errors of judgment as to what the final demand in a particular programme will be, not merely in response to policy changes but also in response to cost. The uptake, for instance, of non-cash-limited services has to be met from the monies voted at this time.
I note the per capita comparison which the noble Lord made for the Arts, for which I am responsible. I suppose that this is the time to acknowledge what all noble Lords who will speak in the House on this subject always say: that things are worse, generally speaking, economically in the Province than they are in the rest of the United Kingdom. We have exceedingly high rates of unemployment, though not so much higher than in some other parts of Great Britain as would seem to be the case if one made the comparison only with the average for the whole of the United Kingdom, which is a common comparison. We have to respond to that. We have responded to it by very much higher per capita payments from public funds to the Province as a whole which even exceed the greater need, by some measurements, by a small amount. We have to do other things to speed our recovery. That
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means taking money from the non-economic—the social and educational—programmes and putting it into economic programmes. It is a hard decision but it is one which had to be done.
I will deal with the noble Lord's points on agriculture when I come in a moment to the remarks made by my noble and very friendly friend Lord Moyola. I was glad that the noble Lord, Lord Blease, was able to conclude by making friendly remarks about the cheap summer coal scheme. The noble Lord, Lord Hampton, referred to the question of electricity costs which are a matter of great concern throughout the United Kingdom, and perhaps of greater concern in the Province because there the cost is higher. May I remind him of the undertaking which was very recently given by the Prime Minister in the Province. She said that the Government accept that these tariffs are an unreasonable burden upon the Northern Ireland community and that they are a real obstacle to economic development and that the Government have been examining the best way of tackling the problem. She said that we have decided to bring Northern Ireland electricity tariffs more closely into line with those in England and Wales and to keep them there. The tariff increases due on 1st April will be reviewed in the light of this decision. I cannot say what the outcome of that review will be but it is clear what its intention is, and it seems to me to be one of the most heartening things which the Province has heard for some time.
The noble Lord, Lord Hampton, together with the noble Lord, Lord Moyola, whose benign face looks down upon my desk and is looked at with emotions which change according to what he last said to me when I was in this House, was kind enough to congratulate me upon my appointment to his seat. I am very glad to sit in it even if, as he put it, I am wearing his shoes. Both noble Lords referred to the geographical disadvantages placed upon the Province because of the expense of getting across the water. People tend to forget that not only does it cost around £12 per tonne to bring in raw material but that it also costs around £12 per tonne to take out the finished product. This is at all times a disadvantage when we are dealing with our closest large market. At a time when the punt is as weak as it now is—the noble Lord did not say this—of course it is a greater disadvantage because there is a greater pressure to sell in Great Britain and a greater obstacle to sales in the rest of the Province. That is not so simple as it sounds, because of the operation of the Monetary Compensatory Amounts. I have to say that I am very well seized not only of this but of many other disadvantages under which the Northern Ireland farmer—whether he be a small or a large farmer, whether he is in milk, or beef, or pigs or poultry, whether he is on the hills or in the valleys—is operating. It is a very difficult situation to be in. I have already made it my business to visit a fair number of farms and to meet a considerable number of farmers. It is a process that I shall continue with pleasure, though it leads me to meet constantly people who are most anxious to have some sort of succour.
The noble Lord, Lord Moyola, referred to the remoteness grant. This is a blanket grant of a type not favoured by the Common Market. I wonder whether a blanket grant is exactly what we want. It is no good ignoring for ever the fact that circumstances

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are different in different parts of the world and that one ought to tailor the industry to fit what the land will support and what the climate makes to thrive. In other words, simply to give equal encouragement to everything produced in an area is not the way to solve a long term problem. There are other ways to do it. The less favoured area schemes are already in operation in the Province and generate a considerable amount of budgetary support for the people who are farming within them. Indeed, we are at present preparing an approach to the Common Market to get those areas extended. This would be welcomed.
The noble Lord, Lord Moyola, did no more than express in very muted fashion the very real difficulties and concerns of the farming community in Northern Ireland, which he knows far better than ever I shall. I have to reassure him by saying that not only I but the Secretary of State are very well seized of these difficulties and have them under very close and urgent scrutiny. The fact that we have not yet been able to make an announcement should not in any way colour the expectations of the industry or of the noble Lord as to the outcome of those considerations. He will understand that, while I accept absolutely the desire for an early reply—and that reply will be given as early as it is possible for us to give it—it would be entirely wrong for me to give any indication of its contents at this stage. It would be difficult to find phrases sufficiently neutral to prevent their meaning being, as it were, invested with wildly exaggerated properties. I assure him and the industry on this occasion that the Government do realise what is going on and do realise the difficulties. They wish to assist and they are considering as urgently as may be what that assistance can be.
Both the noble Lord, Lord Hampton, and certainly the noble Lord, Lord Moyola, adverted to political matters. Of course this is in fact a debate on financial matters but I am very glad that the visit of my right honourable friend the Prime Minister to the Province and the forthright phrases which she there uttered on the whole question of the status of the Province have registered. People realise that she means what she says and that, when she speaks, she speaks the truth. If your Lordships could have seen—and the noble Lord, Lord Moyola, and possibly the noble Lord, Lord Blease, did see—the astonishingly wet and windy weather in which the Prime Minister arrived at her gathering and the calmness and aplomb with which she addressed it, I think they would have realised that this was entirely symbolic of the lady who leads this country. I have the greatest confidence in her approach to this issue. I believe that those who feel, or have felt, themselves at risk, should take comfort from her sterling qualities. That is as much as I think I should say on political matters in a debate on finance. If I have omitted any points I shall write to noble Lords.
On Question, Motion agreed to.

Local Government, Planning and Land (Northern Ireland) Order 1981
9.1 p.m.
Lord Elton: My Lords, I beg to move that the
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Local Government Planning and Land (Northern Ireland) Order 1981, a draft of which was laid before the House on 29th January 1981, be approved. The draft order contains proposals corresponding to some of the provisions in the Local Government Planning and Land Act 1980. Because of the different system of central and local administration in Northern Ireland very few of the proposals are of relevance to Northern Ireland. The provisions in the order corresponding to those in the Great Britain Act relate to rating valuation and planning matters and to new town land disposal. There is also a provision which seeks to increase maximum fines for certain planning offences and a provision which would confer functions on Belfast City Council in relation to two industrial estates in that city.
I now propose to outline briefly the matters with which the order deals. Presently in Northern Ireland the amount of rates recoverable pending determination of an application for revision of a new valuation list and any subsequent appeal is limited to the amount last levied plus half the difference between that amount and the amount of the new charge. Article 3 will confer power on the Department of Finance to vary the amount by order, thus making it possible to reduce the considerable sums left outstanding during lengthy appeal procedures.
Allowances to owners who are obliged to pay rates on property occupied by others, or who do so by agreement, are presently fixed by statute. Article 4 confers power on the Department of Finance to vary the percentage allowances by order as a means of recognising the role played by such owners in collecting the rates.
The application of domestic rate relief to private garages and private storage premises which are physically separate from dwellings and form separate hereditaments does not presently apply in Northern Ireland. Article 5 extends domestic rate relief to such hereditaments. The statutory right to pay rates by instalments is presently in Northern Ireland restricted to occupiers of dwelling-houses. Article 6 will extend that right to non-domestic ratepayers whose property has a rateable value between lower and upper limits to be prescribed by order and will give statutory force to some administrative arrangements already in use.
Article 7 will enable the Department of Finance to prescribe by order a reference date to which values assessed in future general revaluations will relate. It will also confer power to prescribe in relation to specified or unspecified classes of property the methods by which net annual values are to be arrived at. This could relieve the Valuation Office of much oppressive and, of course, expensive fieldwork.
Article 8 will relieve the Commissioner of Valuation of the obligation under current legislation to publish a new valuation list every five years and will instead give power to have general revaluations at dates to be prescribed by order.
Article 9 provides that occupiers of fish farms shall be exempt from liability to pay rates, on the same general basis as occupiers of agricultural land. Existing legislation does not recognise the importance of this new and growing industry.

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The order also contains some planning provisions. Article 10 gives the Department of the Environment for Northern Ireland the same powers to make regulations to prescribe planning fees as have been provided for Great Britain under the Local Government Planning and Land Act 1980. The fees are intended to meet part of the cost of the development control system to help reduce spending from the public purse. A consultation paper has been issued proposing a scale of fees for Northern Ireland in line with the charges for England set out in regulations now laid before Parliament. Fees will be charged for applications for planning permission and for consent to display advertisements. The new charges will not apply to appeals or to applications for listed building consent. Article 11 increases the maximum fine for certain planning offences to give parity with similar increases in Great Britain made by the Criminal Law Act 1977.
Provisions relating to disposal of land in Northern Ireland's new town areas of Antrim, Ballymena, Craigavon and Londonderry and contained in Article 12 will empower the Department of the Environment for Northern Ireland to dispose of new town land for purposes other than the development of the new town. Presently power of disposal is limited to purposes connected with the development of the new town and this precludes disposal of surplus new town land. The Crichel Down principles will be observed in all such cases.
Finally, Article 13 would confirm Belfast City Council as the owner of lands which at 1st October 1973 comprised the Balmoral and Duncrue Street Industrial Estate in Belfast. It would also confer on the City Council the power to develop and manage these lands for industrial purposes and also to manage an area of land adjacent to Balmoral Industrial Estate acquired in 1974. These industrial areas have been controlled and operated by the City Council since local government reorganisation in October 1973. This provision is required to remove doubt about the authority of the City Council to develop and manage these estates which were acquired under a variety of powers. It is not intended to extend these powers to other district councils. I commend the draft order to your Lordships and I beg, to move.
Moved, That the draft order laid before the House on the 29th January be approved.—(Lord Elton).
Lord Blease: My Lords, I thank the noble Lord for his very full explanation of this complex and detailed order. The Minister has gone into considerable detail in respect of the order and, as I understand it, it is designed to bring the situation in Northern Ireland into line with the position in England and Wales. There is only one matter I should like to ask the Minister to clarify for me. It is on page 6 of the order, paragraph 10,
"Fees for planning applications
105A.—The Department may by regulations make such provision as it thinks fit for the payment of a fee of the prescribed amount in respect of"
applications and appeals. Honestly, I think that that is putting a lot of power into the hands of a department. I feel that there ought to be some provision in respect of regulating the fees by some form of order before both Houses.
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Also I should like to ask the Minister, in respect of the planning appeal, who or what constitutes the Planning Appeals Commission. Is it outside the department or is it a separate judicial body that may be impartial in such appeals? I feel that a commission set up by the department would not be the correct body before which such an appeal should be heard. Perhaps the Minister may satisfy my reservation on those two questions. With that I would agree that the order should be approved.
Lord Elton: My Lords, perhaps I should apologise for being so extensive in my introduction of the order. It is very difficult to know which bits noble Lords want to look at particularly. I did notice that it took me only four minutes; I see that I am already debited with two minutes of the noble Lord's speech, so I shall run over time again.
As to the question of the charging of fees, may I say first of all that anyone proposing to carry out development can at the outset submit an application for a determination under Article 30 of the Planning (Northern Ireland) Order 1972 as to whether planning permission is in fact necessary, and that there will be no charge for that type of application. As to how much charges will be—and the point the noble Lord is more interested in, as to how it is arrived at—my honourable friend whose responsibility it is hopes to publish a consultation paper in the near future proposing a scale of planning fees for Northern Ireland. The fees will be in line with those prescribed for England in the regulations laid before the House on 17th February this year. Some of the fees are on a sliding scale subject to a maximum charge, while others are at a flat rate. Outline planning permission for buildings would cost £40 for each one-tenth of a hectare, or just under a quarter of an acre, subject to a maximum of £1,000. Applications for full planning permission or approval of reserved matters, detailed plans for buildings, would be charged at £40 for each new dwelling-house, or in the case of commercial or industrial buildings £40 for each 75 square metres of floor-space, subject to a maximum of £2,000.
As to improvements to private owner occupier property, a consultation paper was recently published setting out proposals to allow householders to extend their homes without planning permission by 15 per cent. or up to 70 cubic metres whichever is the greater; it is very difficult to visualise. If these proposals are implemented, there will be no fee for most house extensions because planning permission would not be needed. If someone wants to extend his house by more than 15 per cent., then where house extensions requiring planning permission are concerned a flat rate charge of £20 is proposed. Nowadays extending a house by over 15 per cent. would cost several thousand pounds and would of course increase the value of the property very considerably. In this context, a planning fee of £20 is perhaps not so significant.
I hope I have said enough to set the noble Lord's mind at rest on this matter, or at least to let him know what it is that he has to be worried about. As to the matter of the location of the appeal, I think I would be well advised to write to the noble Lord, which I will do shortly.
On Question, Motion agreed to.

Lloyds Bank Bill
Brought from the Commons; read 1a, and referred to the Examiners.
Animal Health Bill [H.L.]
Reported from the Joint Committee with an amendment, and recommitted to a Committee of the Whole House; Bill to be printed as amended.
Statute Law (Repeals) Bill [H.L.]
Reported from the Joint Committee without amendment, and recommitted to a Committee of the Whole House.