Lords Sitting of 11 May 1983

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

Lebanon UN Force: British Contingent
Lord Inglewood: My Lords, I beg leave to ask the Question standing in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government what is the role of British troops in Lebanon and what is their current strength.
Lord Skelmersdale: My Lords, the role of the multinational force in Lebanon is to help the Lebanese Government and armed forces in the Beirut area. The present strength of the British contingent is 99 men.
Lord Inglewood: My Lords, can my noble friend please tell me who, in fact, has overall command of this force in the Lebanon, which is made up of the armed forces of a number of different countries?
Lord Skelmersdale: My Lords, it is, of course, a United Nations force, and the United Nations commander is in control of the various contingents, which include United States forces, Italian forces and French forces.
Lord Inglewood: My Lords, may I also ask whether there is any particular emphasis on the question of training and whether, in fact, these 99 men are composed of a number of different training teams? If so, is there any special role for them in that line?
Lord Skelmersdale: My Lords, the role of our contingent is to patrol undesignated routes and to report any trouble it finds to the Lebanese armed forces, who will of course deal with it as appropriate, it being in the Lebanon. As regards training, I am afraid that I have no information for my noble friend.
Lord Mayhew: My Lords, will the noble Lord make clear under what resolution of the United Nations these troops are operating? Is he quite sure that the facts he has given us are correct?
Lord Skelmersdale: My Lords, I am afraid that I do not have the Security Council resolution number in front of me, but as far as I am aware the facts that I have just given are correct.
The Earl of Selkirk: My Lords, can my noble friend say whether there is an overall commander, and, if so, what nationality he is?
Lord Skelmersdale: My Lords, I presume that there is an overall commander, but I do not know of what nationality he is.
Lord Cledwyn of Penrhos: My Lords, while accepting the need for the presence of our troops in the Lebanon at this time, could the noble Lord say for how long they are likely to be there? Is not a specific period set down? Are there any special conditions attached to their presence there; and, if there is a specific period, do Her Majesty's Government contemplate that it will be necessary to extend that period?
Lord Skelmersdale: My Lords, this contingent has been in Beirut since 8th February. The original request was for it to be deployed in the Lebanon for three months. In response to a recent request we agreed to extend this deployment by up to a further three months; that is, up to 7th August. We have no plans to extend the deployment beyond that.
Lord Kennet: My Lords, the noble Lord spoke of a request. From whom did the request come for this United Nations force to which we contribute?
Lord Skelmersdale: My Lords, from the Lebanon.
Lord Elwyn-Jones: My Lords, is it not a matter of great importance that we have contributed to this United Nations force? Should we not derive (as I am sure the people of the Lebanon do) some gratification from that fact?
Lord Skelmersdale: My Lords, I think it is a great credit to this country and to our armed forces that we have been asked to participate in such a force. Of course, we were delighted to do so, in the same way as we were delighted to accede to the recent request from the Lebanese Government to extend this deployment for a further three months.
Lord Leatherland: My Lords, as these British troops will be serving under a non-British command, can we have an assurance that there will be a British company sergeant-major looking after their welfare?
Lord Skelmersdale: My Lords, I did not say that the British troops are serving under a non-British command. I said that I thought it likely that there is an overall commander for the multinational force, which is rather different. But I can confirm that the 99 men are from the Queen's Dragoon Guards.
Lord Molson: My Lords, does the Minister not know the name and nationality of the overall commander?
Lord Skelmersdale: No, my Lords. I shall have to write to my noble friend.
Lord Kennet: My Lords, frankly, is the noble Lord not confusing the United Nations force in the Lebanon with the recent quadripartite American. French, Italian and British force? Could that not be the explanation of the apparent confusion?
Lord Skelmersdale: My Lords, no, I do not think that I am confused; but if I am, naturally I shall apologise to the House.

Angola: British Mercenaries
2.41 p.m.
Lord Mackie of Benshie: My Lords, I beg leave to ask the Question standing in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government what progress they have made in securing the release of the British mercenaries who have now been imprisoned in Angola for over six years.
Lord Skelmersdale: My Lords, we continue to press the Angolan Government at the highest level on the early release of the prisoners, and we shall maintain our efforts as a matter of high priority.
Lord Mackie of Benshie: My Lords, in view of the long time that has elapsed, and particularly in view of the success of the Americans in securing the release of their nationals from Angola, can the Minister tell me whether our representative there knew of the American efforts, whether he co-operated with them, and whether we are willing to do a deal? The Minister spoke of high level efforts but, with respect, they do not appear to have been very successful. I should like to know whether we are making real efforts, and efforts which may incur doing a deal of some sort.
Lord Skelmersdale: My Lords. I cannot say whether a deal is in prospect. If it is, of course, this would be confidential information. So far as our pressure goes, our Ambassador last made representations direct to the President when he had his last private audience on 9th February. But his normal channel of communication with the Angolan Government is through the Minister of External Relations, to whom he has frequently put the case for the prisoners' early release. The two most recent dates were 4th May and 7th May.
As regards the American deal to which the noble Lord referred, I do not know whether there was any British input into that, but most certainly the Ambassador would have known that it was happening.
Lord Gridley: My Lords, has my noble friend any information about the conditions under which these soldiers are imprisoned? Has any attempt been made by the International Red Cross to obtain information on this score?
Lord Skelmersdale: My Lords, it is inevitable that conditions in an Angolan prison are hard, but I can tell my noble friend that embassy staff visit the prisoners monthly. When they were last visited on 14th April, the men were reported to be in reasonable health. So far as the International Red Cross is concerned, I regret that I have no information.
Lord Cledwyn of Penrhos: My Lords, the House will be grateful to the noble Lord for the information he has given about the representations which Her Majesty's Government have made in this matter. Would he confirm that this matter was raised by his right honourable friend when the Angolan Foreign
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Secretary visited this country a few weeks ago? Would he not agree that the continued detention of these British mercenaries, whose presence there initially we certainly did not condone, can do nothing but damage any prospect of good relations between this country and Angola?
Lord Skelmersdale: My Lords, whatever our nationals have done abroad, this Government believe in making the greatest efforts not to endanger bilateral relations, between two particular countries, and I can certainly confirm that to the noble Lord. So far as his original question is concerned, yes, I can confirm that my right honourable friend, when he met his opposite number in London recently, raised the subject of these prisoners.

Cruise Missiles: Dual Control
2.45 p.m.
Lord Gladwyn: My Lords, I beg leave to ask the Question standing in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government why, if present arrangements for "joint decision" mean that there will be an effective potential British veto on the use, in war, of United States cruise missiles stationed in this country, the United States Government will only agree to confirm this fact by the installation of a dual key system of control if the United Kingdom agrees to purchase these weapons at prohibitive expense.
Lord Glenarthur: My Lords, as has been made clear on many occasions, the arrangements for joint decision are perfectly satisfactory and do not require supplementing or confirmation by some other means. Furthermore all dual key control systems have been based on the ownership and operation of the weapons systems involved, apart from the warhead. Such ownership carries with it the appropriate costs.
Lord Gladwyn: My Lords, is it not nevertheless a fact that, in the absence, so far as the cruise missile is concerned, of any dual operational control, the Americans can always in the last resort—I repeat, in the last resort—retain the possibilty of discharging these missiles without formal British consent, and that this is in practice a possibility which they are reluctant to abandon? Secondly, may I ask the noble Lord whether the denial of his noble colleague Lord Belstead on 3rd May last that cruise missiles were first strike weapons because,
"the NATO alliance … will never, strike first at another enemy" [Official Report. 3/5/83; col. 66.]
means that there is no prospect of the Americans ever making first use of nuclear missiles, or bombs for that matter, deployed on British territory?
Lord Glenarthur: My Lords, as my noble friend Lord Belstead has said on many occasions, the use of weapon systems operating from United States bases in the United Kingdom is governed by the understanding on joint decision-making between the Governments of the United Kingdom and the United States

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summarised in the joint communiqué issued in January 1952, and this has been ratified every time there has been a change of President and a change of Prime Minister.
Lord Beswick: My Lords, is it not a fact that since 1952 the destructive power of these weapons has enormously increased and the time-scale within which decisions will have to be taken has considerably reduced? In the circumstances of the future—involving a two-minute or three-minute flight time, probably—is the noble Lord really satisfied that there can be the sort of political discussion and decision-making envisaged in 1952?
Lord Glenarthur: My Lords, the situation remains as has been described. The agreement still exists. The agreement is satisfactory; and the noble Lord is incorrect when he talks about such a short flight time.
Lord Kennet: My Lords, can the noble Lord tell the House why it was that in 1958 Mr. Macmillan thought the national interest required him to buy the Thor missiles in order to attain a dual key? Last week, in debate, the noble Lord, Lord Belstead, said he did not know. Have the Government now found out and reflected on it?
Lord Glenarthur: My Lords, that is in fact another question. However, as I understand it, the situation then was that we had to buy the missiles but we did not buy the warheads. The warheads may not be sold to us under both United States national law and international law.
Lord Glenamara: My Lords, is the noble Lord aware that many of us who are not unilateralists believe that the Government's position on this is becoming quite untenable, as his right honourable friend the Member for Down, South, made clear in another place this week? If the missiles are American owned and the bases from which they are going to be launched are British owned, surely that constitutes joint ownership and is therefore the basis for dual key arrangements? Missiles are no good without the bases. The bases are British, the missiles American. Is that not joint ownership?
Lord Glenarthur: My Lords, the use of the missiles, either from actually on the bases or deployed, is a matter for joint decision under the arrangements which have been described to your Lordships on many occasions.
Lord Harmar-Nicholls: My Lords, with regard to the arrangements being untenable, is it not a fact that since 1952 every new Prime Minister, whatever party they have represented, has looked at it and has agreed the arrangement which stands today?
Lord Glenarthur: Yes, my Lords. I have said that before, and I am grateful to my noble friend for saying it again.
Lord Jenkins of Putney: My Lords, is the noble Lord aware that no nuclear missile can be fired from French soil without a French finger on the trigger? Is he
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further aware that no missile can be fired from Australian, Spanish or Swiss soil because there is none? If the Government will not put us in the second category, is it not high time they at least put is in the first?
Lord Glenarthur: My Lords, this country has in many respects relied for many years on United States assistance and presence, both conventionally within Europe and with its nuclear forces. The question of what the French do and what might happen in Australia is something for which I cannot answer.
Lord Pagent of Northampton: My Lords, when the noble Lord looks at this problem, does it occur to him that the Russians think that these weapons are aimed at them by the Americans? When the Americans produce these absurd terms for granting a dual key, the Russians think the weapons are aimed by the Americans, who want an independent power to strike first. To produce a 20-year-old agreement—
Lord Denham: The noble Lord is not asking a question, my Lords.
Lord Paget of Northampton: —dating back to before the Russians had a weapon to use is so dishonest that it raises every suspicion and puts us in great danger.
Noble Lords: Order!
Lord Glenarthur: My Lords, peace has been maintained through deterrence for over 30 years, and the facts speak for themselves.
Lord Bishopston: My Lords, does the Minister recall that in the recent exchange it was said that the 1952 agreement referred to the Thor missile? This is rather different, so does the 1952 agreement still apply in the case of missiles which are not owned by us? Will the Minister tell us briefly where the Government stand in our relationship with the United States? At the Geneva talks we are not present but the United States is. In the case of our having cruise missiles on our soil, the fact that there is no dual key means that operational control is in the hands of the Americans. Are we satellites of the Americans or are we allies, especially in the use of weapons based on our own soil?
Lord Glenarthur: My Lords, I am slightly troubled about how many different ways there are of describing the arrangements which have been in existence since 1952. In the case of cruise missiles, cruise is a different form of the weapons that have been in existence here for many years. For example, the F-111s are under exactly the same arrangements, and they are subject, in use, to joint decision.
The Lord Bishop of Peterborough: My Lords, to the Minister's mind, would it not be a sensible thing, in order to diminish the number of unverified assumptions which will be bandied about in the next three weeks to bamboozle the voting public, for the Government to issue 25 or 30 words of plain straight English explaining exactly how the veto or the control of these missiles will work if it ever unfortunately has to be operated?
Lord Glenarthur: My Lords, the Government have made clear on many, many occasions in your Lordships' House and elsewhere exactly how the 1952 agreement applies.
Viscount Trenchard: My Lords, will my noble friend agree that our peace and security depend on the NATO Alliance working in harmony, and that five countries are to provide sites for missiles of two kinds? Does he further agree that the worry about cruise missiles in the United Kingdom is more a theoretical than a practical one, hearing in mind that these missiles are in our country on bases guarded by our troops? They would have to be moved to sites for operation, escorted by our forces. Apart from the very thorough joint decision arrangement, will he agree that there is no possibility that these missiles could be used from our country against the will of our Prime Minister?
Lord Glenarthur: Yes, my Lords; and I am grateful to my noble friend. We welcome the presence of United States forces in this country as a visible symbol of their commitment to NATO's collective defence. It is inconceivable that a United States President would act against the wishes of the British Government in the use of these bases. Any reasonable approach to the defence of this country rests on the mutual trust and goodwill that exist between the members of the alliance; and the Government have no doubt whatever that the United States is fully committed to the collective defence of the West.
Lord Kennet: My Lords, are the Government not mistaken in saying that every Prime Minister since 1952 has been satisfied that the 1952 agreement on joint control is sufficient, in view of the fact that Mr. Macmillan, when Prime Minister, spent many millions of pounds on buying Thor missiles in order to have a physical dual key as well as the 1952 agreement?
Lord Glenarthur: My Lords, the Government are not mistaken.
Lord Glenamara: My Lords, in view of the noble Lord's reply to the right reverend Prelate, will he say, yes or no: have we a veto or have we not?
Lord Glenarthur: My Lords, the use of the weapons is subject to joint decision-making.
Lord Gladwyn: My Lords, would the Government be prepared, at some stage, to put this question to a vote in this House?

Nuclear Weapons: Underground Tests
2.57 p.m.
Lord Brockway: My Lords, I beg leave to ask the Question standing in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether they will reconsider their policy of testing nuclear
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weapons underground in view of the evidence of their effect on health and lives through radiation.
Lord Glenarthur: No, my Lords, Her Majesty's Government have no scientific evidence that the nuclear tests carried out underground at the Nevada test site present any health hazard to test personnel or to the population at large. We carry out only the minimum number of tests necessary to maintain the deterrent effectiveness of our nuclear forces.
Lord Brockway: My Lords, would the noble Lord be a little surprised if I said that his Answer astonished me? Is he aware that there is authoritative evidence in America that, as a result of tests at Nevada, workers a few miles away have been contaminated, that several of them have died within months and that over a insignificant area the incidence of leukaemia in children has increased by 40 per cent.? Does he not know that in 1979 a Committee of the House of Representatives agreed that 43 radiation leaks had occurred from these tests and that 28 of them had been as severe as above ground tests?
Lord Glenarthur: My Lords, the noble Lord is not quite correct. There have been claims in the technical press of a higher incidence of cancers in particular areas of the United States attributed to testing at the Nevada test site. On detailed examination, however, these claims have not been found to be scientifically well-based.
Lord Renton: My Lords, do not the Russians test their nuclear weapons to see if they work? So long as there is no danger to human life, is it not the most sensible thing to do to test them underground?
Lord Glenarthur: Yes, my Lords.
Lord Mayhew: My Lords, in view of the good record of this country under successive Governments in banning tests, will the Government consider taking steps to commence effective negotiations for a comprehensive ban on tests?
Lord Glenarthur: My Lords, a comprehensive test ban remains a United Kingdom objective. We will continue to seek an effective and verifiable treaty.
Lord Shinwell: My Lords, have any underground tests been undertaken in the United Kingdom? If so, is there any evidence that they have been detrimental to the health of anybody?
Lord Glenarthur: No, my Lords, no nuclear tests have taken place in the United Kingdom.
Lord Jenkins of Putney: My Lords, is not the reason for this that there is no area in this country big enough to conduct such tests? Is it not also the case that the Government are examining claims by British servicemen who have suffered damage, injury and death as a result of some of the tests which have taken place? In view of what my noble friend has said, is there not a prima facie case to look at the whole question?
Lord Glenarthur: My Lords, the answer to the first part of the noble Lord's supplementary question is that there is no place large enough in this country. So far as the other part is concerned, that dealt with nuclear tests which took place in the atmosphere.
Lord Bishopston: My Lords, have the Government considered the recent report of the BMA on the effects of nuclear energy, and will the Government make known their views on these horrific consequences at the same time as they make known the information for which the right reverend Prelate asked a few moments ago?
Lord Glenarthur: My Lords, I think that is a different question.
Lord Kennet: My Lords, in view of the recent Answer to a Parliamentary Question in the House of Commons which showed that this country was the only country to have carried out announced nuclear weapons tests in the world in the last two or three years, can the Government fill in the gaps by saying something about unannounced nuclear weapons tests which have been carried out by other countries in the last two or three years?
Lord Glenarthur: My Lords, I cannot say anything about unannounced nuclear tests carried out by other countries but I can say that the United Kingdom has carried out 15 nuclear tests in Nevada between 1962 and 1983.
Lord Brockway: My Lords, if I may, I will send to the Minister evidence which I have. May I ask him whether it is not the purpose of the tests to provide warheads for Trident at a cost of £5 million for each explosion? In view of the fact that installation of Trident is now a very controversial issue in this country, would it not be better to delay such expenditure?
Lord Glenarthur: My Lords, I have no information at all on costs but, as I have said, the purpose of these tests is to maintain the effectiveness of our nuclear capabilities.

Education (Fees and Awards) Bill
The Bill, having been brought from the Commons earlier this day and printed pursuant to Standing Order 47, was read a first time.
Importation of Milk Bill
The Bill, having been brought from the Commons earlier this day and printed pursuant to Standing Order 47, was read a first time.

Medical Bill [H.L.]
3.4 p.m.
The Lord Chancellor (Lord Hailsham of Saint Marylebone): My Lords, I rise to move that the House
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do now resolve itself into Committee (on recommitment) on this Bill. I would remind the House that if this Motion is carried I have to leave and to change and then get on to the Front Bench. I hope that your Lordships will forgive me if I show some slowness in doing so.
Moved, That the House do now resolve itself into Committee (on recommitment).—(The Lord Chancellor.)
On Question, Motion agreed to.
House in Committee (on recommitment) accordingly.
[The EARL OF LISTOWEL in the Chair.]
Clauses 1 to 48 agreed to.
Clause 49 [Penalty for pretending to be registered]:
The Lord Chancellor The Lord Chancellor moved Amendment No. 1:
Page 39, line 41, leave out from ("exceeding") to end of subsection (1) and insert—
("level 5 on the standard scale (as defined in section 75 of the Criminal Justice Act 1982); and for the purposes of this subsection—

(a) section 37 of that Act; and

(b) an order under section 143 of the Magistrates' Courts Act 1980 which alters the sums specified in subsection (2) of the said section 37.

shall extend to Northern Ireland and the said section 75 shall have eflect as if after the words "England and Wales" there were inserted the words "or Northern Ireland".").
The noble and learned Lord said: May I give a short explanation of this amendment which is here to give effect to the wishes of the joint committee although, at first sight, one would not gather that. The penalty for the offence involved in the section—that is to say, the maximum penalty for the offence of pretending to be registered as a doctor—was the same throughout the United Kingdom at the time of the passing of the Medical Act 1956. It was then £500. The penalty was altered by general provisions of the Criminal Justice Act 1982 from £500 to level 5 on the standard scale which made it £1,000. But because that Act extends only to England, Wales and Scotland but not to Northern Ireland, the penalty for the offence in Northern Ireland was not thereby raised.
The Law Commission and the Scottish Law Commission recommended in their report on the consolidation of the Medical Acts (Command 8839) that this discrepancy in penalties should be removed and that the same maximum penalty of level 5 on the standard scale should apply throughout the United Kingdom—that is, also to Northern Ireland. That is contained in paragraph 4 of their report. When this matter came before the joint committee, they felt (no doubt, rightly) that the appropriate penalty for an offence was not a question to be decided by the committee but one which ought to be dealt with on the Floor of the House. Hence, the Bill was amended by the joint committee to ensure that the position under the current law which is to be altered in this minute particular should be discussed here. The amendment I am proposing restores the effect of the Law Commission recommendation. I beg to move.
Lord Elwyn-Jones: As it would appear that the purpose is to achieve uniformity of penalty in regard to legislation affecting the United Kingdom, including Northern Ireland, this would seem to be a sensible proposal.
On Question, amendment agreed to.
Clause 49, as amended, agreed to.
Clauses 50 to 57 agreed to.
Schedules 1 to 4 agreed to.
Schedule 5 [Consequential amendments of enactments]:
The Lord Chancellor The Lord Chancellor moved Amendment No. 2:
Page 63, line 38, leave out ("26(4)") and insert ("29(4)").
The noble and learned Lord said: This amendment corrects a reference to a provision in the Dentists Bill. I think it is purely technical. The correction is necessary because several clauses have been inserted in the Dentists Bill during its passage through Parliament prior to the clause referred to in Schedule 5 of the Medical Bill and the number of that clause has subsequently altered. I beg to move.
On Question, amendment agreed to.
Schedule 5, as amended, agreed to.
Schedule 6 agreed to.
Schedule 7 [Enactment repealed]:
The Lord Chancellor The Lord Chancellor moved Amendment No. 3:
Page 68, line 37, column 3, leave out ("5") and insert ("6").
The noble and learned Lord said: This amendment is somewhat similar. It corrects a reference to a provision in the Health and Social Services and Social Security Adjudications Act. The correction is necessary because a new schedule was inserted in that Bill during its passage through Parliament prior to the schedule referred to in Schedule 7 to the Medical Bill and the number of that schedule has been subsequently altered. I beg to move.
Lord Elwyn-Jones: This is yet another of the revolutionary amendments which we are now accustomed to hearing from the noble and learned Lord!
Lord Foot: May I ask whether, if we should say no to this proposition, it will form part of the Tory Party's manifesto?
The Lord Chancellor: Undoubtedly—and so will the fact that it was opposed by the Liberal Party.
On Question, amendment agreed to.
Schedule 7, as amended, agreed to.
House resumed: Bill reported with the amendments: Report received.
(Then, Standing Order No. 43 having been suspended (pursuant to Resolution of 10th May): Bill read a third time.
The Lord Chancellor: My Lords, I beg to move that the Bill do now pass. I would like to thank all
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concerned who have helped me to get the Bill to this penultimate stage.
Moved, That the Bill do now pass.—(The Lord Chancellor.)
On Question, Bill passed, and sent to the Commons.

Hovercraft (Application of Enactments) (Amendment) Order 1983
3.12 p.m.
Lord Lyell Lord Lyell rose to move, That the draft order laid before the House on 21st April be approved.
The noble Lord said: My Lords, I hope it will be for the convenience of your Lordships if I speak to the two orders, standing in my name on the Order Paper, together. I beg to move the draft Hovercraft (Application of Enactments) (Amendment) Order 1983, and I shall speak at the same time to the Draft Merchant Shipping (Distress Signals and Prevention of Collisions) Regulations 1983.
I have to inform your Lordships that both of these instruments have been examined by the Joint Committee on Statutory Instruments, and I understand that they are satisfied as to the legal basis for the instruments. If I may detain your Lordships but briefly in explanation on these two orders, the substantive matters before your Lordships' House are the 1983 Regulations. These update the collision regulations which are agreed internationally through the International Maritime Organisation which is an agency of the United Nations and recognised the world over as the competent international authority on maritime matters.
The detailed rules are set out in the draft regulations at Schedule 1. These are the Merchant Shipping Regulations. Your Lordships will see that they cover such important requirements as the steering and sailing rules and the provision of sound and light signals. The first set of rules were agreed by the International Maritime Organisation as long ago as 1960, and the present rules were agreed by the IMO in 1972. They have been applied internationally since 1977. The rules are now observed by more than 80 maritime nations.
After very careful consideration, the IMO has agreed that some changes are necessary to the rules drafted in 1972. At the same time, the IMO did not wish to make extensive changes which might well cause confusions and uncertainties within the shipping world. Therefore, only a limited number of amendments have been adopted and these are listed for your Lordships' reference in the explanatory note to the regulations. Your Lordships will find that on page 31. They deal with such matters as exemptions for certain types of vessels from the effects of Rule 10(d). I should explain to your Lordships that Rule 10 on page 8 of the 1977 order which we are considering in conjunction with the draft order before us today is concerned with the special provisions for ships passing through traffic separation schemes—the Dover Strait is but one example. Rule 10(d) deals with those ships that can use inshore traffic zones. There are also important amendments to the provisions for lights and sound signals.
The International Maritime Organisation has agreed that these amendments should come into force

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on 1st June 1983. Therefore, the approval of your Lordships' House is being sought to this country fulfilling its obligations to the IMO to ensure that United Kingdom ships wherever they may be, and other vessels in our territorial waters, comply with the new rules.
At the same time we are taking the opportunity to make the regulations under Section 21 of the Merchant Shipping Act 1979 which gives my right honourable friend the Secretary of State powers by regulations to deal with safety matters on ships. I hope your Lordships will agree that it is sensible that the collision regulations are dealt with in this way. The draft regulations therefore revoke the earlier collision regulations and the Distress Signals Order of 1977 as it applies to ships. This was made under powers contained principally in the Merchant Shipping Act 1894. One of the consequences 'of making these important amendments which apply to ships is the need to ensure that they are applied also to hovercraft. It is for this reason that the first Motion standing in my name on the Order Paper is before your Lordships this afternoon.
The 1968 Hovercraft Act provides that hovercraft should be treated as vehicles in their own right rather than ships or aircraft. The 1968 Act, however, recognises the important need to ensure that relevant safety rules are observed by hovercraft operating in a marine environment.
The Hovercraft (Application of Enactments) Order 1972, which was made under the 1968 Act, applies to hovercraft a number of enactments relating also to ships. These include, to take as examples, provisions relating to the carriage of dangerous goods, to distress signals and also to the prevention of collisions. The purpose of the amendment order is to bring the existing provisions in line with the changes to be introduced in the new 1983 collision regulations relating to ships.
With that brief explanation of the two orders before us today, I hope your Lordships will agree that the changes proposed in these two instruments are sensible and also that they have particular regard for the general safety within the marine environment. These have been carefully considered by the International Maritime Organisation and we are content with the conclusions of the IMO. For that reason, I commend them to this House, and beg to move the first order, dealing with hovercraft, that stands in my name.
Moved. That the draft order laid before the House on 21st April be approved.—(Lord Lyell.)
Lord Ponsonby of Shulbrede: My Lords, may I thank the noble Lord, Lord Lyell, for explaining so succinctly the purposes of these two orders, and for dealing with them together, which I am sure is for the convenience of the House today. I am glad to know that the Joint Committee have approved both these orders. I wonder whether the noble Lord could say, with regard to the existing orders, how many prosecutions have been made for contravention of the existing rules, and what has been the level of success of those prosecutions? At the same time, can the noble Lord, Lord Lyell, say whether prosecutions have been taken against foreign flag vessels, and whether or not
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such prosecutions have been proceeded with in United Kingdom courts?
Lord Lyell: My Lords, we are very grateful for the close attention and the detailed scrutiny paid to these orders by the noble Lord, Lord Ponsonby of Shulbrede. We are also grateful to him for the reception he has given to these orders. I hope I did not detain your Lordships for too long. As the noble Lord noted, they are a trifle complicated, but very important. The noble Lord put to me a triple-headed question, and I will attempt to answer the three parts of his question. He asked me about contraventions of the rules. Since 1977, the Department of Trade has taken some 50 cases in respect of infringements which were made by United Kingdon flag vessels. Most of these have been in respect of offences in connection with the traffic separation schemes and, of course, when the department has definite evidence that a foreign flag vessel has contravened these rules, the facts are reported to that particular flag state. Again, we are advised that since 1977, which we are conveniently taking as a base here, proceedings have been taken in approximately 450 reported offences.
Referring to the arrangements for taking action against foreign flag vessels, all the relevant facts are reported to the foreign Administration, who are then required to consider what action should be taken under their own national legislation. We consider that this procedure has worked well over the years and the IMO takes a special interest in ensuring proper consideration by all flag states of any offences which are reported in this way.
Referring to the third supplementary question by the noble Lord—the taking of proceedings against foreign flag vessels in the United Kingdom—as the noble Lord will have noticed, the regulations give specific statutory authority to take such action for contraventions in territorial waters of the United Kingdom. We reserve the right to do so, but the assumption is made that the ship is coming to, and will berth in, a United Kingdom port, and that the master can be located swiftly and a summons served. As your Lordships will understand, there can be practical difficulties as regards enforcing the law in this particular way.
I hope I have been able to give some satisfaction to the noble Lord, Lord Ponsonby, in replying to his questions. We are very grateful for his detailed scrutiny and for the reception this order has received from your Lordships this afternoon.
On Question, Motion agreed to.

Merchant Shipping (Distress Signals and Prevention of Collisions) Regulations 1983
Lord Lyell Lord Lyell rose to move, That the draft regulations laid before the House on 21st April be approved.
The noble Lord said: My Lords, I have just spoken to these regulation and I do not believe that your Lordships would wish me to say any more. I beg to move.
Moved, That the draft regulations laid before the House on 21st April be approved.—(Lord Lyell.)
On Question, Motion agreed to.

Solvent Abuse (Scotland) Bill
3.22 p.m.
Lord Ross of Marnock: My Lords, I beg to move that this Bill be now read a second time. It is a very short Bill—it is a Bill of three clauses, two of which are fairly formal—but its importance is not to be judged by its size. There has been growing concern in Scotland (and, indeed in England, if the facts be known) about the behaviour of children concerning solvent abuse. It causes harm to the children, distress to the parents and, indeed, from the point of view of passers by or even neighbours, a sense of danger.
The fact that we have a Bill today is a recognition of the work done over ten years by a man who died a year ago, the late James Dempsey, Member of Parliament for Coatbridge and Airdrie. I think he first raised this subject in the House of Commons in 1968, arising out of a tragedy that happened in his own area. Since that time more and more people have shared his concern, and I know that in 1981 the Scottish Office was moved to make inquiries into what could be done, and into the incidence of the practice. Just last year it commissioned a special report from two people in Edinburgh University about the whole subject. We have not had that report yet, but the Secretary of State was sufficiently concerned to announce on 16th January last year that from a preliminary report he felt he should introduce legislation along the lines of this Bill.
It was Mr. David Marshall, member of Parliament for Shettlestone, Glasgow, who anticipated that in a Ten-Minute Rule Bill which was accepted by the House, received its Second Reading and had a full Committee stage and a full Report stage and Third Reading. Now, with the support of all parties in the House, this Bill arrives on our doorstep today. May I say that I am grateful to Mr. Marshall for his initiative. I am also grateful to the Scottish Office and to the Secretary of State for lending their unqualified support. I am particularly grateful to the Lord Advocate and the Crown Office for the fact that it has been very well drafted indeed.
I am not going to explain the facts; I think everyone knows the problem. What has worried people is what could be done about it. We do not want to create for children a new offence, and the Bill does not do that; but it is obvious that the children need care and guidance—some kind of care and attention—and the parents, too. When it comes down to it, eventually there is a parental responsibility which parents must accept and share with others in curing this difficult condition for their children.
I have to apologise that it is purely a Scottish Bill, although it is also an English problem. The reason is that in Scotland in 1968—and I am not going to tell your Lordships who was Secretary of State at that time—we dispensed with the juvenile courts and instituted a system of children's hearings at which, on the decision of a reporter (who generally tends to be a person with legal qualifications), children in need of care are brought before a panel of lay people; and in Scotland these lay people are drawn from all sections of the community. The parents are there; the child is there; the police are not there. There is no paraphernalia of a court about it. It is very informal,
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and I am glad to say that over ten years the panels have built up a very good reputation for dealing sympathetically and firmly with cases like this.
Section 32 of the Act says:
"A child may be in need of compulsory measures of care … if any of the conditions mentioned in the next following subsection is satisfied with respect to him …

"(a) he is beyond the control of his parent; or

(b) through lack of parental care he … is exposed to moral danger; or

(c) the lack of care".

The child is at risk. Other conditions cover truancy from school or committing an offence. "Care" is defined, as it will be for this Bill, too, as including protection, control, guidance and treatment. In that informal atmosphere the child is central to the hearing, but the parents are there. The panel comes to a decision on what should be done.
Unfortunately, that list of grounds for a reference to the reporter and, through the reporter, to the children's panel does not include anything that would deal with solvent abuse. I think the draftsmen are to be congratulated on how they have done it. They have added another ground for bringing a child before the reporter and the panel, which is that the child has misused "a volatile substance" (and that phrase "volatile substance" has been deliberately chosen because some of the substances used by children are not necessarily solvents, and it will cover that) by,
"deliberately inhaling, other than for medicinal purposes, that substance's vapour";
because the child might inhale a spray for some condition such as asthma, or may accidentally inhale, or it may be a "one-off' and never happen again.
I think we are fortunate that we have this system in Scotland. It enables us to take this action, and it is the first recognition of solvent abuse to appear in a statute. It is not the end of the road. It is only the beginning of the road. I know that the Secretary of State for Scotland is awaiting further reports from the people whom he has commissioned to draw up reports as to what else can be done.
There are many people who say that we should have inserted a list of all the substances in an Act of Parliament. That is almost impossible to do, because there are so many substances. It is not just glue sniffing. Very often, it is not glue at all. It may be butane gas or something else from an aerosol. There are all kinds of sprays. Children do not know the danger. They are sometimes attracted to the substances by being goaded into it by others. These substances are not necessarily addictive, but they can cause harm and the distress to parents is enormous.
There was a fatal accident inquiry in Scotland just the other week. It was a very tragic case, indeed, of a brilliant child who died as a result of this practice. I think that in 1981 there were 33 deaths throughout the whole of the United Kingdom, and in Scotland there were 14. But the Chief Constable of Glasgow reported over 1,700 cases and 11 deaths. There is concern in Strathclyde, Glasgow and the Grampian area, and action is being taken there, with the financial support of the Scottish Office. At the moment, it is all a question of being voluntary and there is a clinic in Glasgow. But there are cases where authority is required, so that a child can be taken with his parents

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before a panel and a decision can be made as to treatment. It may well be that the reporter himself will deal with the case and the child may never have to go to a panel. But it may have to do so, and the panel can then decide what should be done. The whole matter is handled privately and quietly, but firmly, and I am sure that this is the best way to make a start.
As I said, there are so many substances and, if you put into the Bill a list of what a child can or cannot buy, it could be used by those who want to try these substances. So that is not the way out. The other method is to deal with the person who is supplying. I am glad to say that, in many cities and elsewhere, retailers are deliberately applying strict controls and not selling to children unless they are accompanied by parents. They also want to be assured that such substances will not be used for inhalation. Some kinds of restriction on sales may have to come. It depends very much on what we find out and on the decisions that are taken in cases which are presently before the courts. But that is for the future.
This Bill is a big advance in relation to a problem that has been worrying us all. We have discussed it in this House and it has been discussed elsewhere, and at last we have some kind of action. I am sure that, having taken this action, we shall get more information about the extent of the problem. It is not just a town or city problem. There was evidence given in the other House that people in the countryside are also concerned about it. I am glad that there has been such all-round party support for this Bill and I beg to move.
Moved, That the Bill be now read a second time.—(Lord Ross of Marnock.)
3.34 p.m.
Lord Mackie of Benshie: My Lords, I should very much like to support this Bill. I do not intend to speak for long, because the noble Lord, Lord Ross of Marnock, has covered the field with his usual competence. The Bill, like many of the other things with which he is concerned, is a very sensible and necessary measure, and I am sure that we are all very grateful to him and to the Members of the other place who brought it forward.
I should like also to congratulate the Government. It is a pity that we are not in a permanent state of preparing for an election, because all the doctrinaire nonsense has been dropped and what we have done in the last few days has been to pass very sensible measures. In fact, one wondered whether the Government had been sniffing something else—such a change there was. If we get these sensible measures through, it will be a great bonus, and if we get other changes after the election period that will be a great bonus, too.
An election certainly does something to the Government. The noble and learned Lord the Lord Chancellor has chaired us for at least 20 years, but I can only describe his actions as gazelle-like as he put through the Medical Bill. So perhaps the election will do good in many ways, apart from offering the chance of a totally new type of Government. I commend the Bill and I am personally grateful to the noble Lord, Lord Ross of Marnock, for bringing it forward, because this problem is a great evil in Scotland.
Lord Campbell of Alloway: My Lords, I apologise to your Lordships for the fact that my name is not on the list of speakers, but I gave it in late at the Table. The speech of the noble Lord, Lord Ross of Marnock, on this Bill is of the greatest possible consequence—a consequence which far transcends the confines of this Bill, for it is the first step on the road to the statutory recognition of a very serious social evil. It is not the end of the road, as the noble Lord said, but the beginning of it. In welcoming this Bill in its application to compulsory measures of care for children in Scotland, is it not to be hoped that in due course consideration may be given to the creation of a new substantive offence of general application on either side of the border, so that by this means in the main, by magisterial intervention, steps may be taken where appropriate to deal with this type of practice or addiction which, though once trivial, may all too soon assume the proportions of a menace?
3.37 p.m.
Baroness Macleod of Borve: My Lords, I should like very briefly to intervene. I have had quite a lot of experience of dealing with young people and I realise only too well that, both north and south of the border, this addiction is becoming far more prevalent than I think most of us are aware of. It is high time that such a measure was brought before both Houses. So I should like to welcome this measure and congratulate the noble Lord, Lord Ross of Marnock, who has introduced it.
I hope that something is also done in the British courts, because, although I am not in favour of its being made a criminal offence, I am very much in favour of the general public, and parents and school teachers in particular, making the children in their care far more aware of the problems that are created by sniffing glue et cetera. Boot polish is another substance. As the noble Lord said, it is almost impossible to prevent children buying these substances. Therefore, in my view, it is up to the adults who have control of these children to try to make them aware of the possibility, not only of injuring their own health or their brains but, as the noble Lord has rightly said—and I know some of the figures—of dying as a result of sniffing these substances. It is high time that this measure was brought before your Lordships' House and I certainly warmly welcome it.
3.39 p.m.
Lord Lyell: My Lords, your Lordships will have been fascinated to hear about these problems. We are glad to confirm the support of the Government for this Bill and to congratulate both the noble Lord, Lord Ross, and the honourable Member of another place who achieved the unusual distinction of getting a Ten-Minute Rule Bill to this stage in your Lordships' House. Certainly the first thing I shall do on leaving the Chamber is to draw the attention of my noble and learned friend the Lord Advocate, and my right honourable friend, to the encomiums which were so kindly delivered by the noble Lord, Lord Ross. I shall also convey the compliments of my noble neighbour Lord Mackie. I just wonder what my noble neighbour and I sniff, apart from the scent of the noble Lord's

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potatoes and soft fruits. But, whatever it is, it has certainly brought his approval and that of his party to the Bill that is before us today.
I thank my noble friends Lord Campbell of Alloway and my noble friend Lady Macleod of Borve, both of whom. I am sure, appreciate that this short Bill applies only to Scotland. If I may digress, when my noble friend Lady Macleod of Borve referred to solvents. I was appalled to hear her refer to boot polish. I have looked at my own shoes which I see may be in need of some treatment, but when I remember that on my way to briefings this morning I observed columns of Grenadier and Coldstream Guardsmen I begin to wonder whether an epidemic of boot polish sniffing is rife in Her Majesty's Brigade of Guards. I shall try to find out whether boot polish is included in the term "solvents".
The success of both the noble Lord, Lord Ross of Marnock, and the honourable Member for Glasgow, Shettleston, in piloting this measure through both your Lordships' House and another place is indicative of the widespread support throughout Scotland for the proposed action. The Government regard solvent abuse as a foolish and potentially dangerous practice. They are anxious to take or support any action which is likely to be effective in order to discourage the practice and to check its spread. In Scotland, as we heard from the noble Lord, Lord Ross of Marnock, the uniquely Scottish institution of the children's panels offers a basis for such action, of which the Bill seeks to take advantage.
The Scottish Office conducted a substantial consultative exercise in 1981 and 1982, in which a large number of Scottish bodies and individuals were asked for their views on how solvent abuse should be dealt with. These bodies included health boards, directors of social work, the police associations and a very wide spread of educational and legal interests. Those who responded were almost unanimous in their opposition to the idea that solvent abuse should be made an offence, and very few supported the creation of an offence of selling or supplying solvents to children. A clear majority, however, agreed that there was a valuable role to be played by the children's hearing system in dealing with children identified as caught up in solvent abuse, although they differed on the appropriate means of referring a child to the reporter to the children's panel.
After considering this very complex and thorny question at considerable length, my right honourable friend the Secretary of State for Scotland announced on 16th December last year his intention to seek an apropriate legislative opportunity to introduce a new statutory ground for referral which was linked specifically to solvent abuse. In Scotland, as I am sure the noble Lord, Lord Ross of Marnock, and those of your Lordships who are interested in child care north of the Border and who are acquainted with the legal structure in Scotland will know, anybody can refer a child to the reporter to the regional children's panel on any of the grounds set out in Section 32(2) of the Social Work (Scotland) Act 1968. When the reporter receives such a referral he has discretion to refer that child to a children's hearing as in need of compulsory measures of care. I should stress that the new ground of referral,
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which the Bill is intended to introduce, does not make it an offence for a child to inhale solvents but instead defines a circumstance in which he or she may be in need of care and protection. The Bill before us today incorporates a number of Government amendments which were tabled in another place. These amendments, which were welcomed by the sponsor of the Bill in another place, are intended to set out the new ground in the most appropriate and practicable terms.
We are of the opinion that the children's hearing will provide a unique opportunity to explore constructively, in an informal setting, as we heard from the noble Lord, Lord Ross of Marnock, any personal problems from which a child may be seeking escape by persistent abuse of solvents; or it may hear about any wider family problems which may be putting pressure on the child. The hearing will have the power to impose compulsory measures of care, if this seems likely to be helpful for the individual child. However, I should emphasise that this approach is not, and is not intended to be, a universal remedy, nor would we expect every child detected as being involved in solvent abuse to be referred to a hearing. In most cases the children give up the practice after a short time.
The Government would not see this useful piece of legislation as in any way supplanting or substituting for the continuing and developing work of the police, teachers, doctors and nurses, social workers and others whose task involves the counselling and advising of children who are caught up in solvent abuse and of the parents of those children. Again, while all the agencies which are concerned should make parents aware of the help which is available to them, it is the parents themselves who have the primary responsibility and, above all, concern for their children. I hope that the Bill will make a useful contribution to tackling the problem. I commend it most heartily to your Lordships and I congratulate the noble Lord. Lord Ross of Marnock, for bringing it before your Lordships this afternoon.
Lord Campbell of Alloway: My Lords, before the noble Lord sits down, may I ask him whether he would accept that the intervention of my noble friend Lady Macleod of Borve was a serious intervention, that it was made in the light of considerable practice and experience and that it ought not to be treated with such levity?
Lord Lyell: My Lords, of course I accept that my noble friend Lady Macleod of Borve has considerable experience of these matters. However, she referred—I listened very carefully to her speech—to boot polish. If I offended my noble friend Lady Macleod of Borve, I apologise unreservedly. However, she appeared to show no signs of offence. If I have upset my noble friend Lord Campbell of Alloway, I apologise unreservedly to him.
Viscount Massereene and Ferrard: My Lords, before my noble friend sits down, may I ask whether this measure will apply to the use by children of snuff? Certain brands of snuff are extremely strong. Is snuff a solvent? My noble friend the Chief Whip is fond of using snuff, but he of course is an adult. However, if very strong snuff were to be used by children it could

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be very harmful, especially to the membranes of the nose and to the brain.
Lord Lyell: My Lords, I do not know whether snuff is in any way addictive or harmful to the brain or to any of the organs of children or adults. I understand that snuff is not a solvent, as defined by the Bill. If, however, I discover anything about snuff which is in any way harmful to children, I shall certainly inform my noble friend.
Lord Ross of Marnock: My Lords, I am very grateful to those noble Lords who have given a general welcome to the Bill and for the valuable contributions which they have made. I explained in my Second Reading speech, to the frustration of the noble Lord, Lord Campbell of Alloway, and the noble Baroness, Lady Macleod of Borve, that this can be done only in Scotland because of the unique nature of the children's hearings. There is no reason why we should hold back. Furthermore, if this had been an English Private Member's Bill it would never have reached this House in time. The noble Lord, Lord Glenkinglas, who was here earlier today, set up a second Scottish Committee in 1960 which enables Private Members' Bills that are purely Scottish in nature not to have to wait in a long queue in another place. They are able to bypass that queue and go straight to that Scottish Committee.
This Bill was a Ten-Minute Rule Bill on 1st February. That was only two and a half months ago. It then had to receive its Second Reading in another place, and it then went to the special committee, had its Committee stage, went back to another place for its Report stage and Third Reading, and then eventually came to your Lordships' House. I am sorry to say of the organisation for Private Members' Bills in England and Wales that it cannot normally be done as speedily as that—but we have this opportunity and I am sure that the noble Baroness, Lady Macleod of Borve, will not object if we take it and take it for this particular purpose.
The noble Baroness made a very good point (and I am sorry that I missed it) about education. There has to be a fine balance. Suggestions have been made about a great publicity drive, but we have to be careful not to make this matter almost enticing to children by giving it too much publicity. There has to be balanced publicity and I am perfectly certain that the Scottish Health Education Group will be looking into something of that kind.
I should like to thank the noble Lord, Lord Lyell, for what he said—although he left out the very important contribution that the Government made. The Government inserted Clause 2 at Committee stage in another place, and Clause 2 provides the money We could not have done very much about that here. But this does show the dedication there is when we encounter something on which we believe that action must be taken. This point was made in a rather frivolous way by the noble Lord, Lord Mackie of Benshie, but when we see that action has to be taken, and when we see the opportunity to take that action, then we in Scotland can do it. Not for the first time are we leading England—and we shall be glad to see England coming along with us.
On Question, Bill read a second time; Committee negatived.
Then, Standing Order No. 43 having been suspended (pursuant to Resolution of 10th May): Bill read a third time, and passed.

Industrial Production
3.53 p.m.
Lord Cledwyn of Penrhos Lord Cledwyn of Penrhos rose to call attention to the Government's record on industrial production and to the need for new and urgent measures to stimulate industrial growth; and to move for Papers.
The noble Lord said: My Lords, when my colleagues and I chose this subject for debate today, we did not know that a general election was to be held in June. At that time there was a belief that the Prime Minister would "march right down to the end of the road" in a resolute fashion, as she had always given us to understand she would wish to do. Now we are told that the national interest demands a general election. The fact is that weeks of vacillation created uncertainty, and this in turn created a momentum of its own. The vacillation was clearly due to the fear of what may lie at the end of the road in the autumn and early next year.
The subject of our debate, however, is especially appropriate at this time. As I want to be perfectly fair to the Government at what is an unsettling time for them, I shall start by saying something upon which everyone in your Lordships' House will agree—namely, that Britain's prosperity depends on the success of her industrial performance. That success in turn depends on the one hand on the state of the world economy and on the other on the way in which the Government of the day conduct their industrial and economic policies.
It is also fair to say that all Governments since the war, and especially in the past 25 years, have been saddled with enormous problems. What are the words engraved on the hearts of Chancellors of the Exchequer? They are "devaluation", or "the balance of payments", or "inflation". They all reflect the instability of the economic situation, both here and elsewhere.
We in Britain have had to make major adjustments to our policies and attitudes. We have seen our enemies in a war which they lost become our successful competitors in peace. The reaction of some people has been to say, "There ain't no justice". We have witnessed the dissolution of a great empire. For all that it has gone fairly smoothly, this also had a fairly traumatic effect. Dean Acheson said:
"Britain has lost an empire and not yet found a role".
We also lost extensive markets for our exports and the benefit of low cost raw materials. We have seen great technological change, and this is continuing apace, as was brought home to us in the Statement on advanced information technology the other day. Successive oil crises involving steep price increases have been another factor.
I have made these fairly obvious points in order to reinforce the argument that all post-war British Governments have had to deal with acute problems,

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and that various policies have been tried in an effort to resolve them. If I criticise the Government, it is against that background and with an acknowledgement that whichever Government are in power, the task remains a formidable one.
Four years have now passed since the last general election, and we are entitled to make a judgment on the Government's record, bearing in mind their election pledges. The Conservatives said, for example, that they would,
"concentrate more on the creation of conditions in which new, more modern, more secure, better paid jobs come into existence."
They went on:
"This is the best way of helping the unemployed and those threatened with the loss of their jobs in the future".
They were, as we can all recall, very critical of the level of unemployment under the Labour Government, as they had every right to he. We were certainly concerned about the level of unemployment then—although it is important to make the point that more men and women were at work in 1979 than there were in 1974, when we took over from the Government of Mr. Edward Heath.
The Party opposite criticised industrial output under the Labour Government. They said that they were extraordinarily sensitive to the needs of small businesses, and stated, again in their manifesto,
"To become more prosperous, Britain must become more productive and the British people must be given more incentive."
This is what they said four years ago. Well, there it is. That was one of the main planks of Conservative policy upon which they won the 1979 general election.
The question we are entitled to ask in this debate is this: has Britain become more productive? Are we a leaner, fitter nation as Conservative propaganda describes it? A good many people are leaner, but I am sure they are not fitter. Largely as a result of this Government's policies we are a poorer, less productive, less prosperous and far more apprehensive nation than we were four years ago.
I do not believe that the noble Lord who is to reply to this debate, or the Prime Minister, or any of her colleagues can claim with any degree of conviction that their policies have succeeded. I venture to predict that when the noble Lord, Lord Trefgarne, comes to reply he will claim that Government policies are now beginning to work and that the suffering of the past four years has been necessary for the future health and prosperity of the nation. We must look very carefully at those two propositions.
After these four years, the facts are grim indeed. Just under 3·3 million people are out of work, with all that implies in economic and social terms. We must remember, too, that the method of calculating unemployment figures has been somewhat altered by the Government. Under the old formula they would have been more than 3·3 million. Furthermore, there are a very large number of women not registered for work who are employable.
Under this Government, manufacturing output has been at its lowest level for 15 years. This country, which was the world's first industrial nation, has been running its first ever trade deficit in manufactured goods. The one bonus we have, North Sea oil, tends to
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conceal the realities of the decline. We have been the victims of the politics of obstinacy, which have worked in a most damaging and callous fashion. In four years our economy has changed in a significant way. It has shrunk more than at any time for 50 years and changed shape faster than at any time since the millions returned from the war in 1945 and 1946.
I spoke of job losses in manufacturing industry, and I recognise that losses in some sectors are inevitable as industries become more capital intensive. If we take the years between 1963 and 1979, manufacturing employment shrank by an average of 0·7 per cent. per annum. Since 1979, the pace of decline has accelerated sharply to 7 per cent. per annum. Other jobs have also been affected. Between 1963 and 1979 public sector employment increased by 2·2 per cent. a year. Since 1979 it has fallen by 1 per cent. a year. We think that the public sector has a vital role to play in the recovery of this country. But even in the private services, where jobs were expanding by 2·4 per cent. per annum between 1963 and 1979, there has been a fall of 1 per cent. since the present Government took office.
My Lords, that is the dismal scene as we survey it this afternoon. No part of Britain has gone unscathed, while some have suffered more deeply than others. What is most depressing is that the region most dependent on manufacturing, the West Midlands, is the worst hit of all. I will come to the signs of possible recovery in a moment, but I must emphasise again that the fall in industrial output in Britain since 1979, with all its consequences in terms of unemployment, in terms of lost resources and of competitiveness, and in its long-term implications for Britain, must be the biggest single failure of this Government over the last four years. Great companies have suffered by contraction, among them firms like Courtaulds, Dunlop, Metal Box, ICI and GKN. One of the most depressing items on television every week is the catalogue of closures and job losses read out by the newscaster.
But it is the small companies which have suffered most, and, mark this, it is the small businesses which the party opposite specifically pledged themselves to help in 1979. We must not forget the Government's statement then:
"Too much emphasis has been placed on attempts to preserve existing jobs. Government strategies and plans cannot produce revival, nor can subsidies. Where it is in the national interest to help a firm in difficulties, such help must be temporary and tapered".
As a result of this policy, a large number of small firms have gone to the wall; bankruptcies and insolvencies have increased. A record 12,000 companies failed in Britain last year alone. And it is not only the so-called "lame ducks" which have fallen by the wayside; it is good, promising, fledgling firms which might have succeeded with a little encouragement. There is not a noble Lord in the House who is not aware that that is the case. This has been particularly damaging in areas of high unemployment like Scotland and Wales and the North of England. The Government promised, in the person of the Prime Minister herself, to "maintain strong regional policies". But regional aid in this period has been cut by 44 per cent. by this Conservative Government.
The Observer newspaper published some very revealing information about the industrial scene generally last Sunday. They said that is was only desperate measures which had kept many companies going, and that companies making products which have been household names for over a century have closed down or been shut by their parent group. The majority, after a long struggle, have been forced into liquidation or receivership. The Observer says that in some cases—and I think this is a point that I must in all fairness make and concede—
"the reasons lie within the company, poor management, unwise expansion, failure to adapt to changing markets or foreign competition".
But they go on to say that in nearly all cases the collapse has been accelerated by economic conditions.
Our charge against the Government is that, allowing for the known difficulties, they failed because of their blinkered monetarist approach to do sufficient to save good well-established firms and small promising firms from extinction. The Observer also gave a list of many of these firms; I will not repeat them now, though I have them before me. It is a depressing and frightening catalogue of firms throughout Britain, from John O'Groats to Lands End, of which we are all aware, which have been closed down not because the managers were incompetent or the workforce idle, but because the Government's policies failed to match up to the challenge of these difficult years.
This also needs to be said. If the private sector has taken a hammering, Britain's biggest losers have been in the public sector, steel, airlines, cars and ships. Here again, if the argument is that there was over-manning, which the noble Lord may say in reply, we say that the Government have allowed things to go too far into decline, in many cases beyond the point of no return. There are good firms which have closed their doors, where the buildings are empty, where the grass is growing on the tarmac, which will never open again. It is one of the most depressing features of our time. It is a terrible indictment.
Lord Orr-Ewing: My Lords, I am most grateful to the noble Lord for allowing me to intervene. As he appears to have left the criticism of policy in regard to the small firms, ought he not in fairness take account of the fact that every month in the last year 10,000 new small firms have started up to more than offset in many cases those that have closed down? In a fair presentation should not this be taken into account?
Lord Cledwyn of Penrhos: My Lords, if I may return to the weekly list which is catalogued by the newscaster on Independent Television, not only does that list give the names of the firms that have closed down and the numbers of men and women who have lost their jobs, it also gives details of the new jobs that have been created. Of course, we welcome the new jobs, but they are nothing compared to the jobs that have been lost, either in number or in quality.
My Lords, we have had enough of this scorched earth policy from the Government. Now that we have well over 3 million people out of work, now that the damage is done, the Government are prepared to spend large sums of money on youth opportunity and youth training. I do not oppose that. I support every reasonable measure which will help young people at
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this time. But I would say this to the noble Lord and to noble Lords opposite: if the Government had operated a more imaginataive policy, a more sensible and compassionate policy, over the last four years, by putting this £15,000 million to more constructive use in the regions and in help to smaller firms when they needed it, we should not be in the parlous state we are in today. The money would have been invested in jobs and not in training for an uncertain future. The criticism of the Government's present expenditure is that while it is a good thing for these young school-leavers to go into training rather than be on the streets, there is no guarantee of work for them at the end of the 12 months.
I hope I shall not be charged with being partisan when I say this, for it is advice which bodies friendly to the Conservative Party, such as the CBI, have been giving to the Government for the past four years. I will not go further into detail about insolvencies, but the House will be aware that the increase in the numbers is very deeply disturbing. May I say in passing that it is a matter of comment that the Government have done nothing about the recommendations of the Cork Report. Sir Kenneth Cork said that the Government—and I quote his words, they are not mine—would be "stark staring bonkers" not to take action to introduce new legislation. After all the time that has passed since the report was published no action has been taken by the Government in the industrial field on a report which was of the first importance to British industry.
There are other critics and, while they are not unfriendly towards the Government, they voice doubts about the firmness of a productivity breakthrough. I hope that we shall hear something from the noble Lord about this. For example, Mr. John Muellbauer in the Financial Times of 20th April, while acknowledging the breakthrough which began in 1980, notes that from the end of 1979 to the end of 1982 the rate of growth was below that for 1970 and that productivity growth is unlikely to rise above that of the 1970s unless there is a substantial recovery in new investment.
Again, the NEDC in a report of 30th March dealing with sector assessments has important points to make. To take just one example, the industrial intermediates such as chemicals, plastics, man-made fibres and so on, say they are experiencing the most severe problems. The report states that there are two particular United Kingdom problems: one is the high cost of electricity to energy intensive users compared with their continental competitors, and the second is that rationalisation has proceeded further in the United Kingdom than anywhere else in Europe. That is what has contributed to our unhappy condition today. The question that is raised here is whether the Government are ensuring that our industries are competitive with their European counterparts. The NEDC ends its report by recommending different supporting packages to assist the problems which the sectors face. The Government have not been taking account of what independent observers and advisers have been telling them over the past two or three years.
I turn now to the prospects of economic and industrial recovery. We must, of course, welcome any sign of real recovery, and I hope that it is well based

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and permanent. We are told that industrial production rose by 0·2 per cent. in January to its highest level for nearly two and a half years, and more than 2 per cent. above a year ago. The Central Statistical Office said that the underlying level of output, adjusted for changes in stocks, was little changed in the latest three months at 2 per cent. to 2½ per cent. above its lowest level in spring 1981. It is fair to note, therefore, that any recovery is from a very low point. The CSO also points out that the increase was entirely accounted for by a rise in North Sea oil and gas output and that over the same period other output has shown no change whatsoever.
The CBI has welcomed the apparent improvement but has also uttered words of caution. Its deputy president, Sir James Cleminson, stressed that the latest increases
"were from a very low base"
although he thought that industrial groups were showing
"a growth in confidence".
We must all hope that this confidence is fully justified.
There is one matter of the utmost importance. No expert, pundit, or prophet, is able to give us any kind of assurance whatsoever that unemployment will be brought down much below its present appalling level. We believe—and I think this applies to all the Opposition parties in the House—that positive specific action should be taken to introduce measures to deal with unemployment. The truth is that we all think that the Government have gone too far in their adherence to monetarism. The lives of too many people, in terms of their right to work and their dignity, have been sacrificed on the altar of monetarism. If nothing is done there will be a grim harvest of discontent in this country.
We believe that there should be a national plan over five years to co-ordinate expansion and public spending. We believe that there should be a national planning council, involving managements and trade unions. One of the Government's major failures is that they have succeeded in creating a wide gulf between themselves and the unions in this country. They have alienated the very people whose co-operation they so badly need if this country is to recover. We believe that there should be co-ordination and planning with all the leading companies in this country and that regional development plans should be formulated and strengthened.
Our chief concern today, however, is with the Government in power. Let me remind the House once more of the chief results of their stewardship over four years. There are nearly 3,300,000 people out of work: one in seven of the labour force in Britain. That is the highest unemployment figure of any industrial country in Europe apart from Spain and is the biggest increase in unemployment in the whole of the industrialised world. There have been 30,000 bankruptcies in the past three years. The fall in employment in manufacturing industry has been deplorable. In metal manufactures it is 37 per cent.; in coal and petroleum products it is 35 per cent.; in textiles, 33 per cent.; in mechanical engineering, 22 per cent.—the heart and soul of British manufactures.
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What of the young and the school-leavers? Forty per cent. of the unemployed are under 25, and two out of three school-leavers cannot find work. It is a grim and deeply worrying picture. To cap it all, this unemployment will cost £17 billion in tax revenue and benefits. On a conservative estimate, it costs £5,000 to £6,000 per annum to maintain an unemployed person in unemployment and social security payments, lost income tax, lost VAT and lost national insurance contributions. That is the cost, and that is where the North Sea oil revenues have gone.
I must remind the House, once again, what the party opposite said in its 1979 manifesto:
"The Conservative Government's first job will be to rebuild our economy and to reunite a divided and disillusioned people".
I regret to say that after four years the nation is far more divided and far more disillusioned than it has been for many decades. The Government have had four years to test their policies. They have shown themselves to be obdurate and unimaginative. They have brought inflation down for the time being—and that is the great crusade they boast about—but at what price? Their medicine has controlled one disease but it is slowly killing the patient. The moment has come for new men and new measures and, more than that, for a great effort to unite the nation once again and to bring hope where there is despair. That will be our objective over the next few weeks. For Britain's sake, we must succeed. My Lords, I beg to move for Papers.
4.19 p.m.
Lord Thorneycroft: My Lords, it is a pleasure, as always, and certainly a great honour to reply to the noble Lord, Lord Cledwyn of Penrhos, who delivered an admirably argued speech to the House. It is a speech which is reinforced and elaborated in an admirable document I found in the Library, called New Hope for Britain. From the combination of the two, I should be able to muster a few tentative comments on the remarks that he has made.
The noble Lord is right to recognise the gravity of the issues that confront us. Perhaps it is not a bad thing that here in your Lordships' House we should have possibly a rather quieter discussion about some of those problems than may be taking place in the country over the next three weeks. He is right in saying that our prosperity depends in part upon what happens in the world outside but also on how we conduct ourselves against that background. It is about that—which is one of the large strategic issues—that I want to say a few words this afternoon.
The noble Lord asked me one question: are we leaner and fitter as a nation? In a way it is the easiest question to answer. We are leaner and fitter. Go anywhere in industry and you will be told the answer to that one. I wish to God it was the only question that had to be answered! There is an enormous parade of other problems, not least among them this massive unemployment. As the noble Lord said, it has not been under one Government or for a few years. For something like 20 years or more, our record has been less good than we would wish. On jobs, growth, productivity and competitiveness we have not matched our rivals in the world. It is time that we all had deep thoughts about how to tackle problems of that character.

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I want to compress my remarks into one area, which is how we tackle the main trading structure of this nation. I agree with the noble Lord that, unless we get that right, none of the rest will work at all. We can all spend hours swapping statistics and taking the ones which look the most attractive for the moment. I am sure that that will go on a great deal in the future. But I want to talk about the strategy and the way we tackle the thing. I agree with the noble Lord that both private and public interests have a huge part to play. I think we are all delighted that Lord Ezra will be speaking in this debate. I have respected him, and the great contribution he made in the coal industry, for many years.
For my part, I want to talk about that structure. I want to talk about markets. Lord Ezra, with all his experience of coal, may agree with nothing else, but, if I may say so, he will agree that markets at least matter. If we do not have the markets, nothing else—no expenditure of money; no nothing—will help. That is the structure of world trade. I do not know everything about it, obviously, but I know a little about this subject. I was President of the Board of Trade for five years and Chairman of the British Overseas Trade Board, and I have worked in industry and exports most of my life. Even if I do not know all the answers, at least I know the topic.
To give just one short recollection, nearly 30 years ago I was a member of a British Cabinet, a Tory one. Winston Churchill was its Prime Minister. Leo Amery and the old guard of the Tory Party were great believers in imperial preference. At the party conference they had put down a motion attacking the General Agreement on Tariffs and Trade. I wanted to oppose it. The Cabinet thought I should lose, and I remember Winston saying, "Let him try". It is a rather dangerous thing to say just before an election, but there was always a good liberal element in Winston Churchill, and he was always for having a go. At any rate, we tried, and won. That moment marked—not my speech or that victory—a sea change in the structure of world trade. It meant the moving of this country out of the narrower world of imperial preference into the world of what was then known as wider trade and payments; and it is in that world that we live with international trade rules. Part of my argument now will be that the preservation of international trade rules is of immense importance to this country. Whatever our difficulties, they are likely to be made far worse if we abandon that trading system.
It seems to me that today we are at another such point. I shall try to describe why. The policy which Lord Cledwyn of Penrhos has been arguing (or the background to the speech that he made and which is contained in this Labour Party document) is to inflate the economy. I shall not do all the debating on inflating the economy which will no doubt be gone into. It is set out brilliantly in paragraph 10 of this document. I need not lend it to the noble Lord: I am sure he has it. But there is not the slightest doubt that they intend to inflate the economy, and the effects of this inflation are, as a matter of fact, admitted in the Labour Party document. They are not challenged. They are, I think, sometimes a little more obscured by the SDP, but they are admitted here. They are that there will be a demand for higher wages—that is
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openly said—and that prices will tend to go up. I shall not argue those areas—not today. The most important effect is that there would be a surge of imports, and that is acknowledged. They then seek to tackle the problem of that surge of imports.
What they propose to do is to stop them by controls, tariffs and quotas. All of that is in direct contravention of the General Agreement on Tariffs and Trade and the trading rules and regulations under which our export trade is conducted at the present time. They then go on to say they will leave the Common Market. I am not arguing in detail the rights and wrongs of all that. What I am saying is that it is inevitable in their policy that they say these things. Once you have decided to embark upon inflation as a policy, you are committed to these consequential events. You cannot inflate in this country and leave it under the trading system that exists today.
In a way I respect their frankness. I am bound to say that my vision of an inflated island economy protected against the rest of the world I view with horror, but I am not here to talk about the horror I feel. I am here to deal with the facts. I am saying that, once you embark upon this policy, you break those rules. I think it would probably be disastrous for this country. I think, incidentally, that it would be disastrous for the third world. If there is one fear that the third world has at this moment it is that the developed world may embark upon a continuing policy of protection. If I may say so to the noble Lord, Lord Cledwyn, for the Labour Party to be the leaders in that advance—or retreat, as I had better call it—into a protectionist world, is a matter to which I hope the British people will give the gravest consideration.
No country, not even this one, is an island. We export from this country about a third of everything that we make. I think Winston Churchill once said that if we stopped exporting like that, half the population would have to leave; and he pointed out that there might be quite a debate about which half. I cannot conceive of this country deprived of exports on that kind of level. We are—and I would ask the noble Lord, Lord Cledwyn, to follow me closely here—very vulnerable to retaliation, perhaps much more vulnerable than any other great trading nation in the world. We are vulnerable because we export much more. In this country our exports per capita are far greater than those of Japan, the United States of America, or France. So if we start the tit-for-tat battle of import quotas and the rest, we can be hit far harder than we can hit back.
At the moment, notwithstanding all the difficulties, the recession, and all that, in world trade this country is placed in a remarkably advantageous position. We have the rules of the General Agreement on Tariffs and Trade. There is no discrimination against us. We must pause before we enter a world in which everybody can discriminate against everybody else. That would be a chaotic world for anybody in which to trade, let alone one of the greatest exporters in the world.
Not only do we have that position. Within the general rules we have a big preferential area of trade in Europe. We have enormous advantages from that. If we leave Europe, what do we negotiate, and with whom? What on earth do we do? If we leave Europe, we cannot have a half preference area. We would never

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negotiate that with the rest of the world. If we think that we can just make any deal we like, irrespective of the world outside Europe, what happens to the General Agreement on Tariffs and Trade? Is it part of the policy of the Labour Party to renegotiate the General Agreement on Tariffs and Trade as well? It has never said so. I should be interested if anyone who is to take part in today's debate can give us a hint of what would be the broad parameters of such talks. I do not ask for an indication of what would be the results, but rather some idea of what kind of approach there would be to such negotiations.
We are not allowed to have, and no one would ever negotiate with us, a half preference area in Europe. Anybody with even only the most elementary ideas of what goes on in international trading would know that that was not possible. So, if we leave Europe, we are already in trouble, and, if we try to renegotiate, we are in far deeper trouble still. I would beg the Labour Party to think before it tears up this sytem of trading. When I was arguing with Leo Amery 25 or 30 years ago, at least he had a case. He stood for imperial preference. It was there. It was something; and he was doubtful about the GATT. But we are asked to leave the GATT and Europe for a dream. It would be the wildest gamble, and I believe that many noble Lords opposite know it. It is an action that should be considered before the Labour Party finally does it.
There are other consequences to consider. Production, growth, and jobs depend upon investment, and investment depends in part upon profits. But there is also a dependence upon foreign investment. Who is going to invest in this country as a small, protected island, inflating its economy, largely cut off from the world of wider payments and trade? Who is going to invest in such a country? Will the Americans put in money? Will the Japanese put in money? And what happens to the jobs? If the Labour Party want to fight the election on the employment question, so be it. Let it explain to those who are seeking jobs in this country how on earth their future is going to be secure in a narrow, separated, isolated condition of that kind—
Lord Molloy: My Lords, will the noble Lord allow me to intervene? I have listened with some fascination to his speech, bringing back memories of the 'thirties and speculating on what will happen if some of the courses which he has interpreted were to be Labour Party policy; for instance, disrupting the GATT, and leaving the Common Market. We are in the most disastrous situation we have ever been in since the end of the war; we are adhering to the GATT, and we are still in the Common Market. That is what this debate is about.
Lord Thorneycroft: My Lords, the noble Lord's point is a perfectly fair one. If as a nation we find ourselves in great difficulties, with grave problems, against a background of international trade such as it is today, we must not, for heaven's sake, worsen that background. I say, do not deprive us of such advantages as we have. Do not kick us in the teeth at the very moment when we want everybody to have the maximum advantages.
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It seems to me that if those policies were pursued, we should lose large parts of our export trade. We should lose the preferential advantages of being in Europe. We should lose the benefits of the trading rules on non-discrimination, without which, frankly, I do not know how our exporters in this country would be able to exist. We should lose most of the foreign investment coming in. We should lose a good slice of our invisible trade, which hangs upon the success of international trade and is of inestimable value to us. We should lose jobs. I trust that, against that background, at least the noble Lord, Lord Ezra, and, I hope, some other noble Lords who are to take part in the debate, will urge caution before the policies which the noble Lord, Lord Cledwyn, has commended are pursued.
4.39 p.m.
Lord Ezra: My Lords, we all owe a debt of gratitude to the noble Lord, Lord Cledwyn of Penrhos, for introducing this very important debate, particularly at this time. I do not believe that your Lordships' House could be debating a subject of greater importance than this one, nor at a more relevant time. As a relatively newly-arrived Member of your Lordships' assembly, I regard it as a very great honour to be able to participate in the debate. I also regard it as a very great honour to be speaking after the noble Lord, Lord Thorneycroft, whom I have known for many years during the course of his very distiguished career. I have had the opportunity of working closely with him, particularly when he was the first chairman of the British Overseas Trade Board. I fully concur with his view, which he so eloquently expressed, that we must do everything within our might to develop our trading position in a free and liberalised trading world.
The acuteness of the industrial situation that faces this country needs no demonstration. I had come today laden with statistics, but I shall spare your Lordships a recital of them because I am sure that all the basic statistics are well known. The question that arises is what we are going to do about the situation from now on. That is the issue to which I should like to try and address my mind. In the first place, we need to analyse and decide clearly where we are. There are indications of some revival, but, on all sides of this House and throughout the country, everyone is uttering words of caution over how we treat this revival. We were caught out, about this time last year, when we thought that things were getting better, but they did not. Maybe, this time round, they will continue to get better, but the situation is undoubtedly very patchy.
There is a revival in a few sectors of industry, but not in most. There is a revival in some enterprises, but not in most. There are signs of revival in some parts of the country, but not in most. So this is apparently a very delicate plant.
Furthermore, I believe that one of the effects of present policies pursued by the Government may be stimulating the patchy nature of this revival. As emphasised in an exchange earlier in this debate, the Government have paid a great deal of attention to stimulating small businesses. No one denies that this is very important. Equally, they have devoted a great deal of attention and are spending a considerable amount of money on stimulating high technology.

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They have recently devoted, I believe, the very large sum of £350 million to the stimulus of research in the fifth generation of computers. That is very important. But the fact is that the vast mass of British industry lies between those two areas; that is, between the small enterprise sector, on the one hand, and the high technology emerging sector, on the other.
There are the large basic industries; there are the construction industries; there are the big engineering industries; and there is the bulk of manufacturing industry. It seems from the statistics that the maufacturing sector as a whole has suffered most. If you look at the published statistics—I hope I shall be forgiven for quoting one set of statistics—they show that, comparing the year 1979 and the year 1982, the last full year, activity in our manufacturing industries has diminished by 15 per cent. This figure has to be compared with those in France and Germany, our two main competitors on the continent, where the diminution has been of the order of 4 per cent.
Undoubtedly, the world situation has played its part. But the difference between us and our main comparable continental competitors suggests that there are other special factors on the British scene. One of those factors, in my view, is that as a result of various policies pursued in recent years we have had a massive reduction in the proportion of investment in our industrial sector. This is, I believe, the most serious aspect of our present situation. What can we do about correcting this without again rushing headlong into inflation? Undoubtedly, the conquest of inflation that the Government have achieved is very important. There are however other aspects in our economic affairs. The health of our industrial economy is also of vital importance. I believe that the time has come when we have to address ourselves much more seriously to that problem. How can this be done in a sensible and rational manner? No one can give a complete answer. If they could, I have no doubt that they would be the people most in demand in this country. At least, however, some suggestions can be made.
I should like to draw upon my own industrial experience to suggest what I believe can contribute. We have to start with our infrastructure, with the fabric of our country. I believe that the fabric of Britain today is reaching a stage of progressive decrepitude and that it needs renovation and repair. In your Lordships' House only recently there was an important and well-informed debate on the water industry. That debate, supported by Members from all sides, demonstrated that there is a progressive deterioration in the systems supplying us with water and dealing with sewage. But because it is largely unseen and still somehow working, nothing much has been done. Like the householder who can try to ignore the odd leakage through the roof hoping that somehow it will go away, we know from our own domestic experience that if we ignore the first signs of decrepitude the bill that we have to pay at the end of the day is very much larger.
Looking at the fabric of our country, consisting not only of water supply and sewerage systems but also of roads, railways, public buildings and edifices and public housing, it seems to me that these are all things to which we should now be giving special attention. We have given them diminished attention over the
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past few years. In a discussion with the Institution of Civil Engineers the other day I was shown conclusively how public sector construction and maintenance work coming to its members—all of them are in the private sector—has been diminishing radically over recent years. This question of the fabric therefore seems to me to be of vital importance, not only because it is sadly in need of repair but also because, in the present state of world economic affairs, this is precisely the right time to get the fabric right. If we wish to get the maximum benefit possible from what might he a slow but, it is to be hoped, certain recovery in the world economy, let us for goodness' sake start from a firm base. Let us not find that our efforts, in due course, are hampered by the fabric giving way.
I can say from my personal experience that when you try to do these things at a time of strong recovery the resources are not available. The construction resources and the skill resources will not be there; they will be tied up in other things that attract a quicker return. Those things I am talking about will only provide a slow return in money terms but a vital return in terms of' what the country can contribute towards stimulating recovery.
There is a related aspect to which I should like to draw your Lordships' attention, again based on my own industrial experience. If a really determined effort is directed towards major public investment projects, it is possible to have them supplied and constructed on a competitive basis from British sources. The effect of going into carefully-selected public projects, which will largely require the services of the private sector in order to get our infrastructure right, can be stimulated by positive purchasing policies. My own experience in the coal industry, which has a purchasing bill of £1,000 million a year, was that we set out deliberately to stimulate suppliers from Britain to quote and to get the business on a competitive basis. There was no question of buying British at any price. We must not fall into that trap. We must make sure that the British resource is a competitive resource, and, at the end of my time, on that basis we were obtaining no less than 97 per cent. of all that we purchased in the way of goods and services from competitive British sources. If we were to launch into a desirable, carefully coordinated series of capital projects to get the fabric (as I have called it) right, and if we were to make sure that competitive supplies and services were provided from within our own resources in this country, that could have an instant impact not only upon the creation of wealth but also upon employment.
There is a third related aspect to this which, again, I can draw on my own experience to illustrate. If we were to co-ordinate our work on major projects in that way, carefully thought-out, supplied and constructed on a competitive basis, we would build up—and I am sure that the noble Lord, Lord Thorneycroft, will appreciate this—an increased export capability. This was certainly the case in the coal industry in my time, because by making absolutely sure that we stimulated the technologies among the mining machinery manufacturers, all of whom were in the private sector, we were able not only to advance the technology within our own pits and to improve our performance but also to provide them with much increased export opportunities. Therefore, I believe that on the back of

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carefully selected major capital projects to improve, repair and renovate the basic structure of Britain we can ensure that this works its way through the industrial economy and that it gives substantial additional work at a time when it is needed to the sorely-pressed construction and engineering industries, and, through them, to their subcontractors. Thus it would work its way positively through the economy.
As a result of that we could also get increased employment at a time when it is obviously needed, and increase our export capability. I believe that the time has come for a positive, vigorous, carefully thought-out policy to be adopted along those lines. I believe that it can be adopted without risk of a renewed inflationary surge. On the contrary, I believe that such a policy could contribute to increasing our national wealth, increasing employment and increasing our overseas earnings.
4.53 p.m.
Lord Gallacher: My Lords, I have opted to speak on a somewhat controversial subject, as the debate so far has shown, but I hope to do this in a non-controversial way. If I stray over the narrow dividing line, I hope for the understanding which I am told your Lordships usually extend to first-year apprentices.
The main concern of employers and workers has been and is that, at a time of world recession, aggravated by the rise in world oil prices, Britain opted for strong deflationary policies which made the position difficult for the nation as a whole. Technological change, combined with dearer money, has meant considerable hardship for industry. Liquidity problems alone have forced the closure of many firms and serious reductions in the labour force of those continuing in business.
Unemployment figures are serious both in terms of their taxation cost and the unused resources which they represent. Business confidence is a fragile affair. Once lost, it is difficult to restore the willingness to invest. If interest rates are historically high, even those who wish to borrow are deterred because they are doubtful of their ability to meet lending charges.
If insufficient taxable profits have been made, there is no offset against loan charges, so the firm, be it large or small, is in a trading situation from which it is difficult to break out. Cheaper money is essential to recovery.
In another place a Question was answered on 4th May about the total industrial investment in Britain as a proportion of gross national product for the years 1962 and 1982. The reply indicated that, in percentage terms, United Kingdom investment in industries covered by the index of industrial production, including assets leased from service industries, expressed as a percentage of gross national product was 6·9 per cent. in 1962 but only 5·3 per cent. in 1982.
In the economic indicators section of British business for the period 6th to 12th May 1983 there is further evidence of the slow rate of recovery despite a more optimistic CBI industrial trends survey for the quarter ended April 1983. For example, in three months to February 1983 the manufacturing index
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was only 1 per cent. higher than in the previous three months and unchanged from the same time a year earlier.
CBI forecasts suffer from the absence of information about retailing, although I am aware that attempts are being made to provide for a retailing input. The abolition of statutory deposits for hire purchase in July last undoubtedly boosted credit sales of certain consumer durables, but there are limits to the extent of this, particularly on an on-going basis, as even consumers need to be confident before getting too heavily into debt. Thus consumers' expenditure on the Department of Trade's preliminary estimate and in volume terms was virtually unchanged in the first quarter of 1983, so the increases in the last quarter of 1982 are just about being maintained. In any case, a large part of consumer durables represents imported goods, so the benefit to British industry is reduced by the extent to which foreign makes are chosen. The same comments apply, unfortunately, to clothing and footwear sales.
Both the TUC and CBI have asked the Government for some reflation to ease the problems of workers and employers, but so far the response has not been significant. Of course, there are sharp differences between the TUC and CBI about the amount and nature of the expansion they wish to see, but there is mutual concern about the state of economic activity and there must surely be a more positive response by Government this year.
Industry feels that it faces an uphill task in a recessionary situation. If the pound is strong, exporting is difficult. If the pound weakens, particularly against the dollar, interest rates rise. In either event, industrial costs, particularly energy, seem high to manufacturers by comparison with those payable by competitors, especially in the EEC, which are poor in energy resources by comparison with the United Kingdom. There now appears to be an acceptance of the manufacturers' cost problems, but it has taken some years, much advocacy, and not a few business failures to obtain recognition of industry's need for a better competitive base.
The encouragement of small firms is particularly welcome in this the European year of Small and Medium Sized Enterprises. The Government's continuing assistance is both practical and timely. It represents a continuation of policies initiated by the previous Administration in which my noble friend Lord Lever played a significant part.
The new firm does, however, need a sympathetic economic environment if it is to flourish. Dear money and low demand represent a harsh climate for any business, but particularly for a new one. It is to be hoped that the Government will follow through what they seek to do for small business by giving them a fair economic wind in their early years. Without this, the failures could exceed the beginners so that their contribution to employment creation will be much less than everyone hopes. Large firms are still the dominant employers in the United Kingdom and they too need easier monetary policies. The tragedy of business failure is no less great because one is not personally touched by it. When established firms go to the wall, employment is lost and so, too, is capital.

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Provision for bad debts by joint stock banks is a barometer of the state of the nation. Very substantial debt appropriations have been made by most banks in recent years. Although a large part of this relates to overseas lending, enough is in respect of United Kingdom firms to at least call in question the nature and extent of the recovery process which is said to be under way.
Perhaps the saddest feature of the decline in industrial activity is the manner in which it has spread throughout all regions. Britain now has problems in every region. This makes selective assistance on a geographical basis an arbitrary process. The longer recovery is delayed the greater will be the totality of the problem. The retail price index in March showed a year on year increase of 4·6 per cent. The cost of achieving this, in both economic and social terms, has been high, yet borrowing rates are still of the order of 12 per cent. to 13 per cent. even for good class risks. Surely this differential is too high.
Government is best able to prime the investment pump. It must encourage the country to believe that it is prepared to play a positive part in economic revival. At present, Treasury responses have been a disappointment, especially following the last tripartite meeting of the National Economic Development Council. The extent to which pump priming encourages capital expenditure over revenue spending is a matter for ministerial decision. What is certain is that too many industries have suffered, some grievously, and too many people who ought to be employed are unemployed. That coincidence of adversity may yet threaten the social stability of Britain, although no one wishes to see this.
5.1 p.m.
Lord Harris of High Cross: My Lords, it is a great pleasure to congratulate the noble Lord, Lord Gallacher, on his highly competent, well-informed, and cogent maiden speech. He said at the outset that he was launching himself on somewhat controversial waters, but I think we can all agree that he managed to keep upright, and we look forward to hearing from him again in our future debates. At the other end of the spectrum from the maiden speaker it was, as always, a joy to hear the noble Lord, Lord Thorneycroft, whom I commend to Lord Gallacher as a model of the old hand that none of us can ever quite emulate. I was particularly delighted, as a free trader, to hear his formidable case against the temptations—not only for the Labour Party but also for Conservative Ministers—to drift into the short-term expedient of restriction on trade.
I turn to the Motion of the noble Lord, Lord Cledwyn. I must congratulate him on the remarkable timeliness of this Motion criticising the Government's record at a time when we approach the full light, or it may prove twilight, of the general election campaign. As always, it is easier for me to admire the manner of the noble Lord rather than the matter. Indeed, as he got into his stride—and I listened to his decorous but effective battering of the Government—I was reminded of the Irishman who asked, "Is this a private fight, or can anyone join in?" I have a contribution to make that will, I hope, complement something he said, because he referred fairly briefly at the beginning
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to the long history of post-war economic difficulties which have enveloped Governments of all parties. But naturally he moved on quickly to the more controversial matters of the last Government's record since 1979.
My Lords, I hope it might be of service if I try to fill in something of the missing background to that speech, because we must go back well before 1979 if we are to make any kind of judgment on recent developments. For example, have any of us forgotten all the endless agonising in the 1960s and 1970s over the British disease? Does the noble Lord, Lord Cledwyn, not recall all the talk of the economic league tables which showed our progressive decline from among the leaders to a straggling laggard in real income per head of developed nations?
I doubt if anyone in the House easily remembers the post-war Anglo-American Council of Productivity which brought together the TUC and the Federation of British Industries in a rare search for ways of achieving greater efficiency. In 1953 it published a report with the hopeful title, We Too Can Prosper, which makes instructive reading some 30 years later. The author of this report was Mr. Graham Hutton, a lifelong friend of mine. I recently read again with special care that he attributed the better performance of United States industry chiefly to their more intensive use of modern machines through the greater flexibility and mobility of labour. In contrast, Mr. Hutton referred to the strong Luddite tradition of British trade unions which, allied to weak management, he thought had given rise to what he then explicitly called, "concealed unemployment". It is my view that it has been, above all, the failure of managements to tackle restrictive practices in industry that explains Britain's long relative economic decline.
Of course, over all that period politicians have made endless speeches about productivity. The Conservative Party, it may be remembered, invented the National Economic Development Council, and the Labour Party conjured up national plans without number, and largely without effect. Both parties multiplied subsidies; at one time for capital investment, and then for the employment of labour. But I would argue that no sustained progress was made until after 1979.
If we go back to 1964 when a certain Prime Minister was lighting his pipe by what he called, "the white heat of a technological revolution", at the very same time an American consultant, William Allen, hit the headlines in the Sunday Times with an article asking:
"Is Britain a half-time country, getting half pay for half work under half-hearted management?"
His bleak answer gave countless examples from many differing industries where it took two or three British workers to produce as much as one in other countries, often with similar plant.
Two years after William Allen's article there was a debate in this House in May 1966 when the noble Lord, Lord Byers, from the Liberal Benches opened a discussion on the need to increase efficiency. In that debate he estimated that,
"between 10 per cent. and 20 per cent. of the working population was under-employed".
In the same debate, the noble Lord, Lord Shawcross, claimed that there was:

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"concealed under-employment of at least 2 million men and women",
and he went on to argue that they would be available in expansionary times for redeployment in other industries and services.
If all this is even approximately true of that period, we are bound to ask why was it that managements and unions failed to grasp the nettle of slack working habits. I believe it is a non-political revelation that these restrictive practices were deeply embedded in industry and indeed go back more than half a century to the birth of British trade unionism.
Lord McIntosh of Haringey: My Lords, I wonder whether the noble Lord would permit me, before he leaves the question of restrictive practices and William Allen in particular, to ask this question. Would he not recognise that Mr. Allen's success in the Esso refinery in Fawley shows that it was management that was at fault rather than the unions' restrictive practices?
Lord Harris of High Cross: My Lords, I must defer this argument to another occasion. I would by no means exempt management from a large share of the blame, but I am coming on to ask why did not management do something about it. I am saying, first of all, that the restrictions of which I talk were deep-seated and had come to be widely accepted. I want to remind noble Lords that when we look even in recent years to examples in printing, in the docks, in railways, in shipbuilding, even, alas! recently in the car industry, we find that where managements do tackle restrictive practices or overmanning they are in for costly battles which, in some cases, can set a term to the existence of their companies. But, above all, against the confrontation that would have been involved to tackle these problems, it was so much easier for the CBI and the TUC to get together at their cosy meetings and to press Government to stimulate demand for inefficient labour in the sacred name of Keynesian full employment policies. That is the nub of my criticism of that period. I believe it has been the major cause of Britain's record inflation, and I think it is also the explanation of Britain's poor record of growth and the consequent industrial decline.
The lesson that is ignored by today's self-styled "reflationists" is that monetary expansion—though again and again intended as a stimulant to employment and growth—simply acted as a sedative that sapped the will to tackle the root causes of our poor industrial performance. Even worse, these political pep pills became addictive, so that increasing doses yielded a diminishing effect on employment and output, with worsening side-effects on inflation. As Hayek has pointed out, more and more jobs became dependent not only on the continuation of inflation, but on its acceleration. That helps to explain why the Labour Government's success after 1974 in getting inflation down pushed unemployment up—under a Labour Government—very close to 1½ million.
It is true that the real wages of British workers rose more slowly than elsewhere, but they still rose faster than flagging output. Positive proof of this among a great many conflicting statistics is shown by the decline in the real rate of return on capital from an
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average of 10 per cent. in the 1960s to below 5 per cent. in 1979, which was an ill omen of higher unemployment still to come.
The crime with which this Government are charged is simply that they have refused to accommodate the higher inflation that would have been necessary to keep workers in over-priced jobs. The Government are not guilty of reducing or deflating demand, but only of allowing demand to grow more slowly to bring inflation down from above 20 per cent. to below 5 per cent. In the process of so doing, the concealed unemployment of the 1950s and 1960s has come out into the open and onto the register. I agree that it is nothing less than a tragedy that this long-overdue corrective for the enfeebling British disease coincided with a record world recession on top of a structural shift of industry into new products and new sources of supply for older products.
I conclude with the thought that there is a silver lining to the heavy clouds of unemployment. It is that in many sectors of industry there has been a dramatic rise in productivity since management and trade unions found that they could not take the soft option of inflating their costs and their prices. As I have said before, Mrs. Thatcher is like the wife who has hidden the gin—and that is not popular, especially among old soaks, who are by no means confined to the Labour Benches. I believe it gives us the best chance since the war to expand our production and employment as the world recovers from a recession which has been little more than a return to earth after the prolonged illusory joy-ride of international monetary inflation.
5.14 p.m.
Lord Jacques: My Lords, I first congratulate my noble friend Lord Gallacher on his maiden speech. It was just right in length, in content and in tone. I have known my noble friend for 40 years at relatively close quarters. I believe that because of his personal qualities and his experience he can make a substantial contribution to the work of this House.
Within the next few days we shall be starting an election, and one of the choices which our people will have is whether they want a managed economy or a market economy. A managed economy is not the same but similar to what we had in the first 20 years after the war. In spite of all the problems and all the criticisms that we may have of the first 20 to 25 years after the war, let us remember that it was that economy which gave us full employment: it was the economy which gave us the welfare state; it was that economy which doubled our standard of living in real terms. It did not do so badly.
The alternative is a market economy; that is to say, an economy in which we depend too much on market forces; so much so that for prolonged periods our resources are not fully used. Because our resources are not fully used, we cannot afford the welfare state except by frittering away our receipts from North Sea oil and by selling assets that we should retain because they would be useful to the nation. Those are the only terms on which we can keep our welfare state. Without those sources of income, the welfare state would have been devastated in the last four years.
Our unemployment is not primarily due to the international recession. The recession affects not only

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this country; it is international. The figures which compare our country with other similar countries show that our suffering has been greater. For example, our real gross national product has declined by 2·5 per cent. since 1979, but in other Western countries, plus Japan, which are members of the OECD, there has been an increase of 3·4 per cent. in their GNP; about 6 per cent. difference between their perfomance and ours. In 1979, our unemployment was only one half of 1 per cent. more than the average for the OECD countries. Now, it is 4½ per cent. more.
It is quite clear from these figures that the primary cause of our increased unemployment is not the recession. Nor, is it technical improvement, including the use of the chip, that increases productivity. Technical improvement reduces cost. It reduces prices. It increases our real income. It increases demand for other goods and services. It does not create massive unemployment.
The primary cause of our unemployment is the method that has been used to control inflation. There is a choice of method, but the method that has been used during the last four years has caused havoc. Due to over-reliance upon the control of money, we have had excessive interest rates. What does the phrase "excessive interest rates" mean? It means that the survival of a firm does not depend in its efficiency, but upon how far it is dependent upon capital at the current rate of interest. If it is not dependent upon borrowed capital, it will find it easy to survive, but if it is, it will find survival quite difficult, no matter how efficient the firm might be.
This policy also gave us a false exchange rate for sterling because it did not reflect domestic prices. Because the exchange rate did not reflect domestic prices, it was kept high to reduce the costs of our imports and therefore our inflation. However, at the same time, it made it exceedingly difficult for our industry to export and, at the worst period, our exporters were at a disadvantage of 50 per cent.—something which has not been known before in any industrial country. Even today, after the depreciation of the pound in the last few months, our exporters are at a disadvantage of 25 per cent. so that we have quite a way to go before they are put in a reasonable position for competing on the world market. These things have caused the unemployment, and the economic policy has been to rely upon these things causing the unemployment, because that was the way of controlling inflation. Unemployment damped down the demand for increased wages because of the fear of unemployment. Consequently, we had control of inflation by fear rather than a more constructive control.
There must be an alternative to that. It is uncivilised. I believe that this is the alternative. Instead of trying to put the trade unions in a straitjacket, which recent legislation has attempted, we should have consultation with them, consultation at national level. At local level, the members of trade unions should be treated as partners in the business. If we do that, then we shall get much better industrial relations and a civilised control over inflation.
I should like to commend to the House an industrial relations agreement negotiated between Toshiba, the
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Japanese electrical firm, and the electricians' trade union. Some time ago they negotiated an agreement on consultation and negotiating procedures and, in the words of the trade union officials, "It is an agreement in which our members are treated as partners and not as servants". That is the first thing that has got to be realised in any industrial negotiation. This particular agreement has embodied in it a clause which lays down that, in any difference on wages and working conditions between the company and the trade union, the matter shall be referred to an independent arbitrator who shall make an award either to the company or to the trade union, but shall not compromise.
That brings something new into industrial relations. It means that there is a discipline which may hitherto have been absent: both sides tend to be more responsible because, if they are not more responsible, then the arbitrator is likely to give the award to the other party. I believe that, by looking at agreements of this kind, we can improve our industrial relations and, if we improve our industrial relations, we shall be able to have methods of controlling inflation which are far more civilised than the method that we have used in the past four years.
Finally, I would say that the present indications of a sound recovery are not there. We are investing in manufacturing industry 26 per cent. less than we did in 1979. Equally important, we have 40 per cent. less apprenticeships in industry than we had in 1979ߝ40 per cent. less! This is not the stuff upon which we can rebuild the future. We need something much more positive than that. We certainly need much more investment and, on the supply side, we need to give confidence. I believe that we can give that confidence if we improve industrial relations on the lines which I have indicated. I believe that it is the biggest hindrance to reinvestment. On the demand side, we have to reduce drastically the rate of interest; we have to do everything necessary to reduce the rate of interest.
In particular, we have to have exchange controls so that the savings of our people in pensions and insurance are not invested abroad to take away their jobs. We want the money invested here. If firms and employees contribute to pension schemes, it is in their interest and in the nation's interest that the money should be invested here and that we should create conditions in which that money can be invested here. The choice of the nation in economic policy in the next few years is whether we are going to do these things consciously and manage them or whether we are going to rely abnormally upon the forces of the market.
5.26 p.m.
Viscount Trenchard: My Lords, let me add my congratulations to the noble Lord, Lord Gallacher. I hope that he will contribute often to our debates. Let me also say to the noble Lord—for whom I have great respect—who introduced this most important debate that I have sufficient regard for his timing in placing the Motion at this time to say that I think he has done the House of Lords a great service in putting on this extremely important debate on a subject on which we shall be no doubt hearing a great deal more throughout the election. In particular at this moment, our

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industrial recovery, the building of new wealth for this country, is the prerequisite of every desirable facet of national life. There can be no more important subject. Neither can the level of unemployment—which doubled in the final years of the last Labour Government and which has gone on increasing ever since—leave any of us other than most worried and determined to try to work out the best way to create real jobs.
Having said that, I confess that I was nearly speechless with astonishment at some of the remarks of the noble Lord, Lord Cledwyn of Penrhos. Fortunately or unfortunately, as you wish to view it, I was not quite speechless and, as a yesterday Tory "wet" Minister at the DoI, I intend to make some comments which should perhaps be entitled not so much The Confessions of a Wet as the The Conversion of a Wet. I am sorry that my noble friend Lord Thorneycroft, who made such a marvellous contribution to our debate today, is not present to hear me say that in fact I started to dry out at about the moment when he was reported to be experiencing a feeling of rising damp.
However that may be, let me come to the reasons for my astonishment that a man of the eminence of Lord Cledwyn—whom I have known for a long time and who was in ministerial office when I was outside it in industry—should have made some of the remarks that he made today. It was tenable to hold those views in, say, 1979; but I believe that they are not tenable at a moment when British industry generally is proving that it is internationally competitive for the first time in over 20 years. Of course, there is the patchiness that the noble Lord, Lord Ezra, mentioned and, of course, it is not in each and every industry; but, in fact, in a static and stagnant market we have levelled out; and you cannot do that if you are not competitive overall.
The noble Lord, Lord Hams of High Cross, made a valuable contribution on the hidden unemployment of the years in the '60s and '70s. I agree with the noble Lord, Lord Jacques, that our present problems are not all the result of the world recession, although the seriousness of that must not be underestimated. To me the important point, and the one I feel many of those in Government of both parties in the '60s and '70s have still not realised, is that during those two decades world markets doubled, and that this unprecedented and enormous growth—it was both of these two things, and I think that we shall not see the like of it again—alone saved us from massive unemployment many years ago.
In 1960 we had almost 20 per cent. of world markets for manufactured goods. By the later 1970s we had between 8 per cent. and 9 per cent., a half-share of a doubled market. The reason that it did not show was this growth. What did show was that country after country, once far below us, soared in this period of unique opportunity to levels of wealth and standards of living double, and even more than double, our own. Sixteen countries now stand above us in the table of GDP per head as a measure of national wealth. We are only just above Portugal and Spain. All this new wealth created in the '60s and '70s passed this nation by. We were blinded, however, because of this huge growth in the total world market. The truth was masked from our people.
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I remember at that time the older factory employees saying to me, "It can't go on like this, can it, Guv'nor?" It did. They said that because the perceptive had noticed the growing flood of foreign motorcars, television sets and other consumer goods into our own market. Those who travelled abroad noticed others were getting richer, but for all that, life was not too bad for us; except in a very brief period in 1976 when our average standard of living dropped for the first time since the war. Your Lordships may remember that that was the year when a young Member of Parliament, as he now is, Richard Page, took the Workington seat, for many years the seat of the noble Lord, Lord Peart, a stronghold for Labour for years and years, with a 22 per cent. swing to the Conservatives.
However, that return to reality was short-lived. More money was printed by the then, as it happened, Labour Government—and our Governments have been guilty of this in the past, too—and the seeds of further inflation were again sown. Although there were many problems, as the noble Lord, Lord Cledwyn of Penrhos, mentioned, which faced all Governments in those years, it is in my view the fact that they were also, although they did not realise it, aided and saved by this enormous world growth. Their policies through the '60s and '70s, often labelled under the popular title of expansion, did little more than increase inflation and uncompetitiveness, and cause a further loss of market share. Subsidies and the unsustainable levels of public expenditure, for the wealth of the country as it was and is, resulted only in increased taxation which destroyed jobs and initiative; and the area of small business, which has been raised today, in my opinion had the worst results for any country in Europe. The brave steps which have now been taken are beginning to show what the inventiveness of this country can again do in small businesses.
One could go on and on talking about the follies of the policies of those years. The same policies today in a static market can only produce total disaster. They were the policies which led to our losing half our markets in less than two decades. I have tried to demonstrate why the public did not react to the Government's peddling of such dangerous policies or potions. In any normal decade, doctors prescribing these cures would have been strung up because the patient would have been nearly dead. Unemployment would have soared, as it finally did in the last years of the Labour Government and has gone on doing ever since.
But what of today? Our market share of approximately 9 per cent. is stable—if anything, it has grown a little. Overall we are at last proved to be competitive, first by holding a static volume in a static market as we did in 1981 and 1982, with the monthly ups and downs, and now by edging up in a market which is little more than static, which is only fractionally growing. I am aware of figures which suggest that we are less competitive than we were in 1978. They are proven wrong for reasons which I have given. As a one-time Tory Minister of the DOI, I know their base, because I had a large part to play in their introduction in an effort to make my then Secretary of State, Sir Keith Joseph, realise how great our accumulated uncompetitiveness was at that period, and with the

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exchange rates ruling in 1979 and 1980. At that time in fact I did forecast to him that we would lose between 15 per cent. and 20 per cent. of our manufacturing industry. That is what we did lose. Listening to the noble Lord, Lord Cledwyn of Penrhos, at times he gave one the impression we had lost a much larger chunk of our manufacturing industry. Against our accumulated uncompetitiveness, in a sense it is surprising that we did not lose more.
But our industry today is simply not comparable with that of 1978. That is why the comparisons with 1978—and I know their base—are not in fact valid. Some of the least competitive have gone; the product ranges have all changed. Premiums and not discounts are achieved in home and export markets, where the reverse was the case. We had to sell cheap because of our unreliability and failure to deliver on time and our resulting accumulated reputation. We are now getting premiums across the products of most of the private sector and some of the public. If we were still 20 per cent. uncompetitive, as Shirley Williams suggested on the BBC this morning, we could not have bottomed out and now started to rise; we would still be falling through the floor.
In retrospect, I have to admit as a former "wet" that I did not believe, with a pretty long, 30-year, full-time industrial experience behind me, that it was possible to change the attitudes of management and the workforce to increase productivity to new, all-time records, and I hope the Government Minister who replies to this debate will quote the figures of increased productivity which, at a time of static and in many indvidual cases of falling volume, are remarkable to a degree which I think most industrialists would have found incredible a few years ago. Indeed, we have transformed our competitiveness in just a few years in a way that I did not believe was possible.
The rough justice—and it was rough—the cruel and intense pressure on industry, the ghastly growing unemployment, in fact have made us overall competitive in a shorter period; and as to the long-standing ills which the noble Lord, Lord Harris of High Cross, recounted so clearly, which are recorded and observed by international and national observers, experts and economists over the years—perhaps only in this way could those ills have been put right in such a short time. My old Secretary of State, then Sir Keith Joseph, took much criticism for what he knew was extremely tough medicine but in my belief it has worked and he was broadly right.
What we need now is real and steady growth. We do not want excessive or fast growth caused as it would be in a plant, for example, by an undue dose of nitrogen, or the printing of money, which can cause quick growth, no roots and no substance to the stem. That kind of growth can and will wither and will only take us back into the world of uncompetitiveness from which we are just emerging. We can have real, steady growth. Our costs have gone up less than those of other manufacturing countries as a whole in the last few years—substantially less. With a little world volume growth and a little increase in shares of the markets our productivity will improve further. Volume growth on a real basis, as any industrialist knows, makes it so much easier in fact to get productivity increases.
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There is no reason why we should lose the increasing momentum now. Of course industrialists, although they have all said that industrial recovery is now coming, are rightly cautious—and they must be cautious, as all responsible people are. Above all else, we must keep present attitudes and wage moderation if we are really to get our international competitors on the run; and, my Lords, we can get them on the run for the first time for 30 years. The time for catching up with their living standards—and we are far, far behind their living standards—must come after, and as a result of, creating new wealth and after we have won back some of our lost years of markets.
We are inclined to be cynical and, above all else, to be self-critical in this country after the long years in which we have been progressively left behind by other countries. Other countries, based on success, are openly proud of their industries, yet we still have the brains, the character and the inventions; and we now have the right attitudes on both sides of industry, created in a record short time. We have the attitudes once more to apply our own inventions and skills to our own products rather than watching them being applied to other people's.
Nothing now can stop our industrial recovery except gross misunderstanding of the history of the last 25 to 30 years and a return to the kind of medicine which lost us half our markets in less than two decades. High unemployment was caused in the years of fool's paradise in the 1960s and 1970s, under Governments of both parties. Where would unemployment be now if we had dropped not from 20 per cent. of world markets to 8½, but to 12 per cent.?—a big enough fall. Our record, which in fact since the world recession started is not so un-comparable with that of European countries anyway, would be far above theirs and our unemployment problem far less. Of course, we would still have problems in the centres of our oldest industries. We can now start to re-create real jobs; and I believe that the policies which have borne the brunt of criticism in a world recession—coming at the end of a unique period of growth which hid the truth—can rebuild the wealth of this country and, behind it, our standard of living and other desirable things.
5.45 p.m.
Baroness Nicol: My Lords, I rise with some diffidence to follow the economic, industrial and political giants of this House, among whom I number my noble friend Lord Gallacher, who has made a most impressive maiden speech, and I do congratulate him on it. I think we may have had enough statistics for one day. The situation has been described in great detail by a number of speakers and I do not propose to go over all that detail again. We must admit that the 4 million jobs lost since 1966 have not all gone under this Government; but this Government must take the blame for accelerating the process by their blind pursuit of monetarist policies.
Ownership and control in industry is in fewer and fewer hands. Decisions of vital importance to workers and the communities in which they live are taken apparently without consultation and apparently without any regard for the local effect. Industry should be efficient, but that aim cannot be divided from the needs of society. It is not efficient to pay more for

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people not to work than to work, as the noble Lord, Lord Cledwyn, has pointed out. The current cost of keeping one unemployed person is of the order of £5,000 per annum when you take into account the loss of tax, the loss of contrubutions and the benefits that have to be paid.
When you consider the social cost of unemployment, the amount becomes incalculable. Workers and their families are being tested to destruction by economic pressures, by the tensions that grow between them and by the mounting psychological effects of rejection and boredom. Unemployed teenagers suffer boredom and disillusion, too, but they at least can remember more stable times and can still have hope. If recovery is not too long delayed they may be able to readjust to a better situation; but younger children are having their childhood destroyed by insecurity and, in many cases, hardship. We can never restore those lost years to them and, in terms of damage to their personalities, we are creating a time-bomb for the future that will be very difficult to defuse.
In a democracy, governments are elected to manage our resources. They cannot escape that responsibility; nor can they escape the blame for their mistakes and their omissions. There is no shortage of sound advice which could be taken now in order to redeem the present grim situation. Noble Lords who have already spoken, and especially the noble Lord. Lord Ezra, have pointed the way.
I wish to emphasise one area which has not received enough attention; that is the creation of worker co-operatives. Co-operatives take many forms but their basic requirements of democratic control and voluntary leadership should appeal to all political creeds in this country. The degree of job satisfaction enjoyed by workers in co-operatives is high and the days when such organisations were either failed enterprises or trendy alternative lifestyles are being left behind, although there will always be some of those on the co-operative scene.
The role of the Co-operative Development Agency is crucial to the further development of the co-operative sector, and it is essential that it should be well organised and sensibly funded. The present Co-operative Development Agency has performed miracles on a very low budget. There should be strong support for the formation of more local agencies to offer advice and information, and local authorities should be encouraged to take positive steps to make premises available.
The Co-operative Party has recently commissioned a report on co-operative opportunity. I commend it to the next government, whoever they may be. They will have a mammoth task to revive our shattered industrial base and co-operatives are a valuable aid to that end. We need a whole new approach to the problem of unemployment. Workers' resistance to change and to new technology can be overcome if they can see that the benefits will be shared with them and not simply added to the profits of the few while more and more of the workers join the dole queue. In the end, there is no permanent way to industrial peace and prosperity except by understanding and co-operation.

Future Business
5.50 p.m.
Lord Denham: My Lords, with the leave of the House, I should like to make a further announcement about the business tomorrow and on Friday. It has been agreed through the usual channels that all the Bills which remain to be considered should be taken tomorrow. This means that all stages of the Consolidated Fund (Appropriation) Bill and the Finance Bill, and consideration of Commons Amendments to the Health and Social Services and Social Security Adjudications Bill, will be brought forward from Friday to Thursday.
In addition, there are three Private Members' Bills which may complete their Commons stages tonight, in which case all stages of those Bills will be taken tomorrow.
The two Northern Ireland orders, which are at present on the Order Paper for Friday are not affected and will be taken on Friday as arranged.
Lord Ponsonby of Shulbrede: My Lords, may I thank the noble Lord for so promptly acquainting your Lordships with this change of business for tomorrow and Friday. I wonder whether he could tell your Lordships what are the three Private Members' Bills which may complete their Commons stages tonight.
Lord Denham: My Lords, I am most grateful for the help of the Opposition Chief Whip. I understand that the three Private Members' Bills are the National Audit Bill, the Road Traffic (Driving Licences) Bill, and the Broadcasting of Parliament (Annual Review) Bill.

Industrial Production
5.52 p.m.
Debate resumed.
Lord Molloy: My Lords, may I first apologise to the House, and to the noble Lord, Lord Ezra, and my noble friend Lord Gallacher, as, for the last seconds of the speech of the noble Lord, Lord Ezra, and the first few seconds of the speech of my noble friend Lord Gallacher, I was seized with a discomfiture which compelled me to leave the Chamber.
There is one thing about this Chamber, which is that, whatever the debate may be, one can only be impressed by some of the contributions and one can learn so much from them. I remember that in one of the post-Falklands debates I was not only deeply interested in the contribution by the noble Lord, Lord Thomas of Swynnerton, but so much compelled to read the report of his speech in the quiet hours and to inform myself of much that I did not know. There are a number of things which I hoped would happen in this debate today, but, alas, up to now, apart from my noble friend's contribution, there has not been a great deal and there has not been much information from those with vast experience who might have taught us something. The reason for that, I suppose, is the

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impending general election when all that we are parading—and I shall be as guilty as anyone—is our loyalty to our parties.
What I find amazing about some of the speeches from the Benches opposite are all the reasons why this country is in one of the most disastrous situations that it has been in since the end of the First World War. From the Benches opposite, these reasons have been listed—the world situation, the change in world economics, bad management, irresponsible trade unions and everything, except the fact that the real cause is the Conservative Government, which has the major responsibility.
I am bound to say—if I were a really unfeeling person I would not say it—that, despite the Gallup polls, this is one of the biggest laughs going on in the country. It is a joke in the clubs, it is a joke in the pubs, it is a joke among rugby players and it is a joke among soccer players. Blame everybody except yourself, as Mrs. Thatcher's Government do. We have had an example par excellence of that today.
This would not be so had if it were not so serious, because the Government are not even prepared to learn. The nation must understand quite clearly that the same bilious medicine that has caused so much disaster will be continued should the supreme disaster take place and the party opposite be returned to power. That will indeed be a black day for this country, and the country ought to note it, because we shall have the same policies which have caused this terrible problem.
Those of us who are just about young enough to remember the 'thirties can recall what happened then and can make a comparison. The comparison is this. The myopic attitude of Conservative Governments has always been to cross the river to fill the pail—and the journey there and the journey back can be risky and disastrous—when it can be filled on the side that we are on.
I listened to the remarkable speech by the noble Lord. Lord Thorneycroft. I remember listening to him when I was a very young councillor on Fulham Borough Council, and I used to think that one of the great assets of the Tory Party was that they seemed to have so many men of ability who could also put over a case. Perhaps the greatest ability of the Tory politicians of those days was the manner in which they put over a case, which enticed innocent people to think that they actually believed some of the things they were saying.
We had an example of it afterwards in the one famous Prime Minister with whom I think the noble Lord Lord Thorneycroft, had an occasional brush—Mr. Harold Macmillan. He "conned" the country. We all remember the phrase, and we are getting it today. The Tory Party has the audacity today to say what he said then and which won him his election—"You've never had it so good". But the noble Viscount, Lord Trenchard, told us a moment ago that that was the time when we started to behave in an appalling manner under Tory and Labour Governments. Yet there was the Prime Minister of the day telling us that we had never had it so good.
Viscount Trenchard: My Lords, what I said to the House was that our standard of living was not only maintained but improved, in spite of losing half our share of a doubled market.
Lord Molloy: My Lords, that is precisely what has been happening in the last three or four years, and I must acknowledge the courage of the noble Viscount to have said it. But we cannot swing it all the way back and say that the men who returned to this country in 1945, under the leadership of a Labour Government, who started to build the welfare state which became the envy of the world, who started to create the principle of full employment, who introduced a new deal on education and who introduced the National Health Service, within a few years of the most disastrous war in the history of mankind, did not do so well. I do not think that that is either a decent or an honest argument.
However, as the noble Lord, Lord Thorneycroft, said, perhaps one of the reasons for our demise in the past few years is that we have not matched our rivals. There is a great deal of truth in that. When one looks at the hard statistics and facts, this country has not done so very well in the past three or four years, and therefore the noble Lord, Lord Thorneycroft, was correct to say that we have not matched our rivals. One must then ask: why? The shortest possible answer is that it is because of the present Government's dreadful policies over the past few years.
The noble Lord, Lord Thorneycroft, also adumbrated the possibility, in defence of his party, for which I do not blame him, that when we have a Labour Government they may interfere with GATT. As the noble Lord honestly explained, the idea of the General Agreement on Tariffs and Trade was not very popular with the Government of which he was a member. However, as happens in all parties, the noble Lord was able to convince sufficient of his fellow Conservatives about the intelligent and sensible ideals which lie behind the General Agreement on Tariffs and Trade. It was a massive move forward for the Tory Party to acknowledge that they must discard, totally and absolutely, unfettered competition in return for sensible world co-operation. The noble Lord, Lord Thorneycroft, mentioned that imperial preference was at the time the high ideal of high Toryism. I am grateful that the noble Lord won the day. It seems that always we have to drag the Tory Party kicking and screaming into the next decade.
The noble Lord also quoted Winston Churchill, who said in the 1930s that if we went on as we were, half the nation would leave this country. Under the Tory Government of the 1930s, tens of thousands of our fellow countrymen found no hope in the policies of the then Tory Government. Those policies were very mild compared with what our fellow countrymen have to put up with today—4 million on the dole as a result of the past four years of the current Tory Administration.
The noble Lord, Lord Thorneycroft, pointed out the horror of the possibility of this country leaving the Common Market. Only a fortnight ago the Prime Minister was praised for having improved the rotten deal we are getting from Europe. She has said that she will fight as hard as possible for an even better deal if we stay in Europe. We cannot praise the Prime

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Minister for having fought for a better deal in the Common Market and then say a couple of minutes later that the best thing that ever happened to us was to join the Common Market. That is another quite remarkable statement.
I am sorry that the noble Lord, Lord Ezra, is no longer in the Chamber, for I wish to turn next to the excellent speech which he made. It was marred only by one remarkable statement. The noble Lord praised the Government for aiding the small businessman. The fact is that ever since records have been kept there has never been such a high level of bankruptcies among small businessmen as we have witnessed during the past two years. The Government need to give small businessmen a hand. I have mentioned many times in this House that the small businessman is vital to this country—also that when we refer to people who are on the dole we have to remember that during the past four years thousands of small businesses have gone down the Tory drain, causing anguish and anger. If they have any sense, the Tory Party will never take that risk again.
I was interested to hear the noble Lord, Lord Ezra, mention the current campaign, which the Government have just thought of, imploring everyone to buy British. I agree with both the noble Lord, Lord Ezra, and the Government that to buy British is a very good aim. However, I wish that the Prime Minister believed in it so far as the shipbuilding industry is concerned. We all know where the last big order went. It did not go to a British shipyard. There was no "Buy British" for the Prime Minister. Off that order went to Malta. These are the unchallengeable facts which the British people have got to appreciate.
It is right and proper to speak about the need for publicly owned industries to buy British. At the same time we have to appreciate that there are many hundreds of private firms which service the publicly owned industries; whether defence, the National Coal Board, the Central Electricity Generating Board, the British Gas Corporation, and also local government. They provide roads, lamps, traffic signals—all for the wickedly publicly owned sector. We ought to acknowledge not only that the publicly owned sector makes a massive contribution to the nation but that it provides a great deal of work for private entrepreneurs. Noble Lords who appreciate both sides of this massive co-operation and who do not listen too much to the glib nastiness of some of the Tory popular press know that very often the massive public corporations are the lifeblood of a myriad of small private enterprises. Therefore, it is important for British, publicly-owned industries at all times to endeavour to ensure that the private sector also purchases from Great Britain.
I listened with great interest to the speech of the noble Lord, Lord Harris of High Cross. I have already mentioned the few facts which he omitted about the economy of this country when our ex-servicemen came back here in 1945. By 1955 they had helped to create, under Governments of both parties, the largest housing programme that this country had ever seen. We all remember Mr. Harold Macmillan's 300,000 houses. He did not build them, but he had the idea. We have to recognise the contribution made by the
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bricklayers, the carpenters, the quantity surveyors. But the challenge was the record of the previous 40 years. It was dismal. Then it was raised to its highest level by Aneurin Bevan. That presented a challenge to the Conservative Party.
I am all for competition which is related to getting the best National Health Service, the best social security, the best education, the best housing programme. This is thoroughly satisfactory, and in a modern industrial society these are the beatitudes which we must not lose sight of in our industrial endeavour. To keep blaming one another is not good enough. The speech of the noble Lord, Lord Harris of High Cross, reminded me of the tens of thousands of people we see on the tanner banks at every soccer game. We find brilliant centre forwards by the tens of thousands, brilliant goalkeepers, brilliant strikers and brilliant halfbacks, all on the tanner bank. And some of them are on the Cross-Benches of this House.
There are many more points which I should like to make, but if I did so I do not suppose I would convert any noble Lord. Nevertheless, if we want something which will get us out of a mess we should look for some principle and policy that has succeeded. When there was a certain situation in the Western world in the 1930s, I happen to believe that it was the policies of Keynes and Galbraith with which Franklin D. Roosevelt created the New Deal that pulled America out of the soup and then pulled us out of the soup. It not only created a better industrial base, but permitted us to be in a better position to take out the unwholesomeness of European fascism. There is a need for intelligent co-operation on all sides of industry. I do not believe it helps for the TUC and the CBI to be at each other's throats all the time when there is a need for sensible collaboration.
I believe that we can restore a caring society, and a caring society is something that we must all accept as a fundamental belief. It is not industrial success by itself that matters, but what we do with that succes that will uplift our nation. This nation can show the way to a very disturbed world. When one looks at all the various theories of economics and "isms" which are abundant, one has to make a choice. In my lifetime, I have seen it proved beyond all peradventure—and I hope that the British people will see this as well in the weeks ahead—that the best system of all for giving a fair deal and a fair break is that which is embraced in the principles of democratic socialism.
Lord Rochester: My Lords, before the noble Lord, Lord Molloy, sits down, will he accept that when my noble friend Lord Ezra advocated, as he did, a policy of controlled expenditure on our infrastructure, and said that wherever possible purchasing should be achieved through British suppliers, he also made it very plain that this should in no sense be done at the expense of British competitiveness?
Lord Molloy: My Lords, I am sure that is correct. I only grieve, having listened to the speech of the noble Lord, Lord Ezra, that he did not stay to listen to mine.
6.12 p.m.
Lord Thomas of Swynnerton: My Lords, those who have heard this interesting debate will remember it,

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first, because of the lucid and moving defence made by my noble friend Lord Thorneycroft of the principles of free trade. They will also remember it for the invigorating and very encouraging estimate of the future of our country given by my noble friend Lord Trenchard, and I suspect also for the characteristically brilliant picture given by the noble Lord, Lord Harris of High Cross, of what I believe he would refer to as the "locust years". I was also impressed by the speech of the noble Baroness, Lady Nicol, and her interesting speculations on the possibilities of co-operatives playing a part in our national recovery in the future. Like other noble Lords, I should also like to congratulate the noble Lord, Lord Gallacher, on his powerful and balanced maiden speech.
Those of us who heard the speech of the noble Lord, Lord Cledwyn of Penrhos, when he introduced this debate will also remember his speech for the fact that he recognised—late, I thought, and a little grudgingly—that one of this Government's achievements was the control or conquest of inflation. I believe that the noble Lord, on thinking back, will acknowledge that his recognition was a little grudging, recalling the fact that many years ago, during the course of the "locust years", one of the leaders of his party made a firm statement about how important it was that the pound in one's pocket one week had the same value as the pound in one's pocket shortly after. I hope also that the noble Lord, Lord Molloy, will find that the remarks that I have to make about a country bordering on the North Atlantic are as enlightened as those he heard me make about a country bordering on the South Atlantic.
The world is undergoing a recession, largely but not entirely inspired by two major increases in oil prices. It is also going through a major transformation in technology. The chief mark of this transformation is surely a change towards high technology and electronics. These changes—the consequences of which will be enormous in the next 20 years—have been compared by some with the changes caused in the world by the Industrial Revolution. It is doubtful whether the changes will be anything like as significant as that, but one can say that the consequences will come faster, and that the 20 years between 1980 and the year 2000 will see far more changes than those seen between 1780 and the year 1800.
Nevertheless, recollection of what happened in the late 18th century is quite valuable for our purposes, for this reason: the changes at that time due to mechanisation were vigorously resisted by those whom history has come to refer to as the Luddites—yet the fact is, as historians testify, that the numbers employed increased steadily despite the machinery that was introduced and despite the very large increase in the population in all the countries which were experiencing the effect of mechanisation for the first time. That may be a helpful reminder to those who wonder about the consequences of automation or advanced mechanisation at the present time.
With all these changes—and the Industrial Revolution was no exception to this—some nations are left behind because of the consequences of the transformation. China was a very good example in the 18th century. To some of us it certainly appeared a
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possibility in the 1970s that Britain might have been just such a country. All the signs of decay were present. It seems to me that 1979 gave this country a chance of renewal and of adjustment to the changes that were necessary. I myself hope that that chance will be confirmed in 1983.
We heard from my noble friend Lord Trenchard some indications of increased international competitiveness and of increasingly encouraging signs from the economy. Some of the points he mentioned were certainly very impressive. Another figure that might interest your Lordships is the clear sign that in the past year or two—particularly in 1982—there has been in this country a substantial increase in productivity per man hour, second to none among OECD countries. In some months there was an increase in productivity higher than that of Japan. The question must be; can that increase in productivity be consolidated? And can the consequent benefits reinvigorate the entire economy and bring back into the active economy the 3 million unemployed? This is the main question we should be considering when preparing our minds for the general election.
I must just remind your Lordships that the picture of unemployment that has been given was interestingly corrected by my noble friend Lord Orr-Ewing when he pointed out that alongside the increase in jobs lost there has nevertheless been, over the past 12 months, a substantial increase in the number of new businesses. The figure he gave was 10,000 new businesses a month.
To return to the main theme of my speech, can we encourage or invigorate the economy so that the beneficial developments which are occurring in the advanced companies can affect the entire nation? There are two ways in which this can be done: first, by a tactical approach, and, secondly, by a strategic approach. The tactical approach is not one, I would suggest, which is the same as that put forward by the noble Lord, Lord Ezra. We have to think carefully about this—I quote from the noble Lord, Lord Gallacher—"sympathetic economic environment" in which small companies, indeed large companies if the small companies become such, can really thrive. That is what Sir Keith Joseph has referred to on many occasions as a climate of enterprise.
What is a climate of enterprise? There are many things which you would expect to find, and among them, it seems to me, are these. I do not put these in any particular order of priority. First of all, the chance of profit, the promise of prosperity if things do go well, and indeed, the chance of establishing yourself as a person of independent means. Surely that is a great contribution to society and to the climate of enterprise to which the noble Lord, Lord Gallacher, referred.
Secondly, companies should not be expected in the future to spend the kind of time they have had to spend, not so much in the recent past but in the 1970s and 1960s, in dealing with unproductive problems of labour. There are endless instances in the 1970s of companies whose executives spent something like 50 per cent., or even more, of their time dealing with labour disputes which had nothing to do with production. Another point to try to insist upon is that the shop floor must cease to be a place for class war, or class conflict. Of course, conflict, and competition,

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must play a part in all kinds of enterprise; I perfectly agree with that. But let the competition and the conflict be directed towards industrial or possibly international competitors.
Thirdly—and here the Government can play a part—everything should be done to make job mobility and, indeed, housing mobility, easier, and some of the measures introduced by the Government in the last four years have certainly helped in both directions. I think that a climate of enterprise must have—I say this in particular reference to the noble Lord, Lord Cledwyn—if not a zero rate of inflation, which perhaps in current circumstances is a dream, but at the very least a reasonable predictability in relation to their money. This is something which affects the fabric of society, it seems to me, just as much as employment. Simplification of tax is also extremely desirable. A day perhaps will come when companies will think once again, if they are taking on an extra director, whether he should be an accountant or somebody interested in the promotion of the product concerned, which certainly used to be the case in the past. Finally, of course, the climate of enterprise depends on that membership of an open trading international community, both through GATT and the European Community, to which the noble Lord, Lord Thorneycroft, referred with such eloquence.
This certainly is not the managed economy to which the noble Lord, Lord Jacques, referred as having been so successful in the years after the war. I would not say that everything done in the years immediately after the war should be rejected; of course, that would be absurd. But I think it is important to say, in relation to the speech made by the noble Lord, Lord Jacques, that in addition to the things of which he approves, those things to which the noble Lord, Lord Harris, referred are also important to recall; an era of the beginning of the British disease, of numerous restrictive practices, of decline of investment, of our declining share, as the noble Viscount, Lord Trenchard, put it, of the doubled world market, as it was; an era of increased imports; and, I should add a contribution of my own in this respect, an era in which there was a steady decline, it seemed to me, in the belief in the dignity of work itself. That is the tactical approach which I suggest is desirable to try to create this beneficial climate which the noble Lord, Lord Gallacher, demanded.
But there is a long-term approach, in which no doubt the Government and other sources of influence and communication can play a part. Not long ago I sat next to a Cambridge don in that university who told me that he had analysed the career records of his 500 pupils over the last 25 years. It must be said that he taught history. He discovered that out of those 500 pupils he could only find for certain that two had gone into business. This seems to me to be an indication of some of the prejudices which still continue in the nation against the idea of commercial activity. It anyone thinks this is a new development. I should refer him to a speech made some 70 years ago by the second Earl of Selborne, in which he said:
"When I was at Oxford the best brains at Oxford when they had a chance went into the Indian Civil Service. It was only the second best as a rule who went"—
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not to industry—
"to the Home Civil Service".
He added:
"The best men are all prepared to take the least risks".
I think, perhaps, it was to this defect in the appreciation of enterprise, to which my noble friend Lord Thorneycroft referred, not in his speech this evening but in a speech he made I think two years ago, when he pointed out that most people who have played a part in public life in the last 50 years had something to answer for. I think the main point is our attitude to enterprise and to business as such.
A very important point, which must occur to an historian working on this kind of theme, is that we have also become used over the last generation to a persistent neglect of the virtues of those who carried out the Industrial Revolution in the first place. It is very surprising that until the recent establishment of the admirable museum at Ironbridge, there was no museum in this country dedicated to those great men who started off the Industrial Revolution in the 18th century. I cannot help feeling, as an historian, that the recollection of the vigour of the past, communicated through schools, through the media, perhaps, dare I say, through the Churches, may be the best pointer to revival in the future.
6.29 p.m.
Lord McIntosh of Haringey: My Lords, I should like to open by giving a very brief summary of the economic achievements of an administration going to the country after four years in power; an administration in which real wages remained constant, in which employment—not unemployment—increased by 15 per cent., in which real gross national product increased by 20 per cent., in which labour productivity increased by 4 per cent.—all, I think your Lordships would agree, good measures of successful economic management of an economy over a period of four years.
Now I should like to give another example of an administration going to the country after four years in office; unemployment increased by 2 million, a record only worsened, as my noble friend Lord Cledwyn said, by Spain; production of wealth declined by 4 per cent. and with manufacturing production declining by 11 per cent. when the average for an industrialised country as a whole was only 3 per cent. Manufacturing investment—and this comes back to the points made by the noble Lord, Lord Ezra—declined by 36 per cent. For the first time in the history of the country concerned, manufacturing imports exceeded manufacturing exports and manufacturing exports declined in absolute terms by 3 per cent. over the period.
It will be no secret which is the second country to which I am referring, with a disastrous economic record. It is, of course, this country and the disastrous economic record of the present Government. The other country to which I referred, which I think your Lordships will agree has had a successful economic record, was not a monetarist Government. It was the administration of President Jimmy Carter, after the oil crisis to which the noble Lord, Lord Thomas of Swynnerton, referred. Everyone seems to think that

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that was a disaster which fell on all industrialised economies equally, and that that somehow excused the policies of the present Government, when the fact of the matter is that if any country had any chance whatever of gaining from the increase in the real price of oil it was the country which is a net exporter of oil compared with many of its industrial competitors who have done so much better over this period.
There can be no doubt at this stage of the debate about the economic facts of the past four years and, in particular, the facts of industrial production. If there were any doubts about it, those doubts are silenced by the attempts that the Government have made to cover up the economic position of this country. Last month, the National Economic Development Council published a rather gloomy report, in which it said there would be no increase in employment; not this year, not next year, but by the end of the decade. It pointed out that there was more difficulty in the United Kingdom than in other countries in establishing credibility for investment projects, particularly in manufacturing industry. It talked about the job losses in this country; not just in manufacturing industry as a whole. Several noble Lords referred to what I suppose is the inevitable decline in jobs in some of the old staple industries—the extracting industries, and so on—but there has been a job loss in the electronics industry in this country. This must be the only country in the Western world capable of achieving a job loss in the electronics industry. If we have an economy in which we are spending, or losing, £17 billion a year on benefits and lost taxes—£100 a week for every person unemployed—how in those circumstances can it be claimed that there is an economic defence to be made for the policies of the present Government?
That report was published by the National Economic Development Council in April of this year. It followed an earlier report made to the National Economic Development Council which was greeted by the members of the council at a meeting, the minutes of which have been leaked but which have never properly been made public. This report was very much worse, but was suppressed by the Chancellor of the Exchequer and by the CBI members of the National Economic Development Council. I challenge the Government, and the Minister in his reply, to deny that there was a report which was very much gloomier than the one I quoted and which has been suppressed.
If there was any doubt concerning the prognostications of improved economic conditions which several noble Lords have made, that doubt has been destroyed this week. There is no conceivable rational argument for the Government to go to the country now if they really believe that there is to be a significant economic improvement between now and the time when their natural term of office expires a year from now.
It is not enough, as several noble Lords have said, to attack the present Government. We have to think of what to do about the position. I profoundly agree with the noble Lord, Lord Ezra, that the real issue is that of industrial investment. Indeed, I referred to it earlier and I believe that his analysis of the situation is sound, but I believe it deserves a little further exploration. The issue is not that there are not enough funds available for investment in total. There are considerable funds
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available. Indeed, some City observers have described funds as "washing around the economy".
The problem is both negative and positive. The negative side is that there are much quicker profits to be gained from non-productive, non-manufacturing activities in this country such as finance and property and, of course, from the export of investment capital. I am not one of those who say that there should be no export of investment capital. We are a trading nation, as the noble Lord, Lord Thorneycroft, said, and long may we remain so. Incidentally, I thought that was a brilliant attack on protectionism which is not the policy of the Labour Party. We are a trading nation and, being so, that implies some freedom in the movement of capital. That is not to say that for all time all investment overseas is the wrong policy to pursue. But there are times when it has gone to excess and I believe that the last four years, since the scrapping of exchange controls, is one of those periods when it has been positively damaging to the manufacturing industry in this country.
The positive reason is, as several noble Lords have said, that there is not the climate in which people have any confidence to start off in private manufacturing industry. They are given no encouragement by any management whatsoever of Government expenditure. Here we come to one of those areas where dogma has taken the place of realism in Government policy. The noble Lord, Lord Ezra, referred to the need for investment in the infrastructure; what he called the fabric of our industrial society. He is right. To talk about the construction industry and the renewal of the fabric of our utilities is the right approach. I do not believe that anyone looking at it objectively could disagree with that argument. The problem is that the Conservative Party does not look at it objectively. The Conservative Party says that these elements of expenditure are necessarily public expenditure, that they affect the public sector borrowing requirement and, therefore, they are not acceptable and anathema to the believers in the pure market economy. Therefore, they reject by far the most readily available means of reviving industrial manufacturing production without any inflationary effects. There is no proven relationship between the size of the public sector borrowing requirement and inflation. If the noble Lord the Minister has evidence to the contrary, I shall be delighted to hear it.
So we have the position where an obvious starting point for industrial regeneration is rejected for dogmatic reasons by the Conservative Party. That is by far the most important single element in the policies we shall be pursuing. I am certainly not going to claim to expound Labour Party policy about industrial production. My noble friends, particularly my noble friend Lord Cledwyn of Penrhos, are far more qualified to do that than I am. But I would add to what I have said, and to what other noble Lords have said, one particular point which I believe to be of considerable importance and which I think should be considered by all parties and not on a party political basis. Reference has been made to the problems of unimaginative management. The noble Lord, Lord Harris of High Cross, made that reference, although I think he was unfortunate in choosing the example of Bill Allen in seeking to attack the trade unions. Bill

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Allen showed that by imaginative co-operation with the trade unions one can make successful progress.
There is one matter which is capable of legislative correction which could make industrial management in this country enormously more effective. I refer to the transferability of pensions. I believe that the risks for managers when changing jobs in mid-career are great because, to be frank, of the fraud which is practised upon them by the pensions system of receiving frozen pensions which cannot be transferred. Those risks actually deter innovation and enterprise in managers who have something to contribute from breaking out of a unitary career and doing something new for the benefit of themselves and of society.
I believe that it should be a priority of any Government elected on 9th June to remedy that serious drawback and problem from which managers in the private sector suffer. I am talking about the private sector of course; in the public sector there is either a lifetime career or transferability. I hope on that suitably non-controversial note I can conclude by saying that I support the Motion moved by my noble friend Lord Cledwyn of Penrhos.
6.40 p.m.
Lord Granville of Eye: My Lords, I should like briefly to add to the tributes paid to the Leader of the Opposition. The noble Lord, Lord Cledwyn of Penrhos, made a very able speech in introducing the Motion and drawing attention to the record of industrial production and growth. Most of the speeches have referred to that. It has certainly had the attention which the Motion requested. I also much enjoyed listening to the speech of the noble Lord, Lord Thorneycroft, who I thought made a very eloquent appeal, which I have no doubt will be listened to outside as well as in your Lordships' House.
But so far in the various speeches that have been made referring to the Government and the Opposition no noble Lord has mentioned what might happen if by any chance we get a hung Parliament. While listening to the debate and the various policies put forward, it seemed to me that it has all happened before. In 1931, we had a hung Parliament. The Prime Minister was Mr. Ramsay MacDonald and the Chancellor of the Exchequer was Mr. Philip Snowden. The Liberals had 59 seats and Labour had the largest party. The Liberal Party, under Mr. Lloyd George's aegis, spent a great deal of time, money and research on a policy which they called "We can conquer unemployment". It was very much concerned with some of the capital works which I think I recognise in the present policy of the Labour Party. What happened to it? Both Mr. Philip Snowden and the Prime Minister, Mr. Ramsay MacDonald, turned it down. I think it was the late Sir Dingle Foot who said it was turned down basically by Whitehall and the Treasury officials, who said that until the economy was put onto a sound footing—after Margaret Bondfield's 3 million unemployed—it would be wrong to go for large-scale capital investment and capital works.
The parallel with 1931, with 3 million unemployed and the world economic crisis, was referred to by Lord Thorneycroft. We had a great conference on it at the
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Imperial Museum, of 66 nations, including America and most of the other producing countries. When all the policies had been produced, the research had been done and all the exchanges with President Roosevelt had taken place, it all came down to one word, "confidence", which really began the revival of 1931ߝ32. The only public works that I can remember that we had in those days was the rearmament programme of Mr. Baldwin, which was worth about £1,500 million. But it seems to me that unless we, as an international trading nation, can get that confidence across to the people abroad who will buy our goods, the investors—as has been said in so many speeches this afternoon—and the IMF, we shall not get very far.
Reference has been made to subsidising capital works. At the moment we are subsidising the railways, the mines, British Leyland, steel, shipbuilding, and so on. At the end of the road, when you start spending money, is the IMF. I think it was Mr. Healey who had to get off the plane at Heathrow and come back because the IMF had said, "Stop". If you are an international trading nation in our position, at the end of this is the IMF. You either belong to it or you do not, though of course we could become an artisan island in the North Sea, with the lowest standard of living in Europe, build a wall around ourselves and say we are not concerned with international trade.
At this late hour, I should like briefly to refer to two points. One is the adverse balance of manufactured goods with the EEC. I wonder whether the Minister can give us any idea of the current figure? My recollection is that the adverse balance in manufactured goods with continental countries in the EEC is still a very large item. I think we really must do something about that. Of course we gave them an 11-month start before we went in. They had established their organisations, built up their distributive arrangements and got right into our markets. If you go into the shops of most large towns, you can still see Italian, German and French goods of all kinds.
Today it is entirely a question of whether we are competitive. A man who is running a group of stores or a shop within the Economic Community will buy the goods that are the best value. If we are not producing the goods, we are wasting our breath. We are wasting our breath with all the diatribes we can conceive unless we are competitive in selling our goods. In the so-called wages explosion of 1975ߝ76, I remember attending a costing meeting in a large factory. They were asking for a 16 per cent. increase in labour costs because of inflation. The 16 per cent. plus had to go on the cost. The result was that they lost orders and within a few months there were 90 redundancies.
Reference was made by the noble Lord, Lord Thomas of Swynnerton, and by the noble Baroness, Lady Nicol, to some kind of new arrangement in industry if we are to get into a competitive position so that we can restore full employment, such as workers mounting co-operatives, and so on. But we must be frank about this. The industrial climate is very important. We have industrial confrontation and two armies—unions and management—fighting with zeal an interminable battle resulting in all these strikes.

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One other matter has been referred to—the discouragement of middle management. I am not concerned with top management on the top salaries. It is middle management which is vital to the great industries of this country. They will not try any more if they are discouraged by taxation—if there is talk about making the pips squeak.
The other issue is the home market. Can any of your Lordships tell me why it is if you go into certain streets all you can see are foreign, and especially Japanese, cars? In this respect I understand that there is a proportion of 70 or 80 per cent. of cars are in the car fleets of commercial companies. These companies employ British workpeople, and they have to sell their goods. Do they buy British cars?
We are faced with another problem, which has been referred to several times; that of the microchip revolution. No party—not the Government, not the Opposition—has faced up to the problem of the vacuum which will result when the microchip, or electronic innovation, really becomes established in the great industries of this country.
Reference has been made to two nations, the North and the South. There will be two nations. There will be those who work in the factories, in the electronic microchip plants, producing goods for home consumption and for export. And the others? Who will employ them? Will they have to take in one another's washing, or engage in home trades? Or are we going to recognise the fact that we may be more than half way towards the age of leisure? We must realise that it is no good describing the situation as "overmanning". There are large numbers of people who go through the motions; they clock in, they clock out. It is not work; it is not like a machine shop; it is an occupation. We have had an interesting debate. It was certainly worthwhile the Opposition introducing it, but of course the answer will be found at the hustings.
6.52 p.m.
Lord Scanlon: My Lords, I suggest that this debate might prove to be something of an exercise in futility, in that if there is a change of Government, any remarks which I may make in replying this evening to our excellent discussion will prove to have been unnecessary, while if there is not a change of Government, my remarks will in the future be ignored with the same kind of zeal with which they have been ignored in the past. To that extent the debate can, I repeat, be seen as an exercise in futility. My noble friend Lord Gallacher, whom I must compliment on an excellent maiden speech, served a dual purpose in that, besides addressing the House, he, no doubt much to the delight of your Lordships, eliminated at least two pages of the notes which I had prepared for this reply.
In opening the debate, my noble friend Lord Cledwyn of Penrhos suggested that there was common ground between us, on the basis that, if we are to survive as an industrial nation, we all not only desire, but must have, an economic, viable manufacturing base. I believe that that has been the central theme throughout the debate. We had an excellent contribution from the noble Lord, Lord Thorneycroft, in which he gave his version of the manufacturing
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base, but I hope that I shall be forgiven for saying that I thought that it had little to do with the issue. I hope that perhaps there will be a future occasion on which we can debate the question of the Common Market. All I would say at this stage is that in or out of the Common Market, nobody is going to pull the chestnuts out of the fire for Britain. We will succeed by pulling ourselves up by our own bootlaces, or we will not succeed at all, either in or out of the Common Market.
What I believe is irrefutable is the fact that in the four years from January 1979 to January 1983 total national output—that is, the gross domestic product—fell by nearly 7 per cent. That is devastating in its own right. But if one looks at certain sections of our manufacturing base, one sees that the situation is truly horrific. There has been a 35 per cent. fall in ferrous metal production, a 31 per cent. fall in textiles, and a 29 per cent. fall in metal goods. Even in the so-called success sectors, which have increased output, the position has to be seen in perspective. A 2 per cent. increase in three years in the electrical and electronic sector is in fact a dismal record, given the opportunities we have had, given the extension of credit for consumer durables, et cetera. It is a dismal record, hearing in mind that it is meant to be one of the industries for the future.
Much has been said about productivity by most of your Lordships who have spoken in the debate. The point has been made—and I think we all agree—that British industry is now leaner. Is it fitter? That is the real question which has been asked. Again, the noble Lord, Lord Thorneycroft, had no difficulty or compunction in finding an affirmative answer to the question. But let us look at it in a little more depth. It is true that in manufacturing industry productivity is today slightly higher than it was in 1979. But there has been no productivity miracle. Yes, there was a steep rise in productivity in 1981, but it had been preceded by a very steep fall in 1980. Averaging out those figures, one sees that there has been no major increase in the long run in the growth rate of productivity.
I say to your Lordships in all seriousness that when one looks at the major factors contributing to productivity and tries to foresee the future, one finds that the outlook appears very grim indeed. I have no hesitation at all in referring to one of the major factors—that of investment. In manufacturing industry we are 33 per cent. below the investment level of 1979. That is bad enough. But then we have the noble Viscount, Lord Trenchard, saying why this is so. I want to put to the noble Viscount an alternative reason which I think is truer historically, and which goes back even farther than the reasons which he advanced. With a secure home market, bolstered by the possession of an Empire which provided not only the source of very cheap raw materials, but also a market for much of our manufactured goods, we did little, if anything, by way if investment for the future. That lack of investment in the past has now resulted in low returns; and low returns now in the maufacturing industry is the reason why we are not getting the investment today—
Viscount Trenchard: My Lords, I hope that the noble Lord will allow me to say that I entirely accept

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that the imperial preference situation, which favoured us for a long while, was certainly one of the major problems which the noble Lord, Lord Cledwyn, would rightly have said faced all post-war Governments. Undoubtedly, we had been living on that situation. But it does not alter the fact that we lost half of our markets in two decades, and that did not then show. It has shown only in recent times when world growth stopped.
Lord Scanlon: My Lords, I fully agree. But what has not been explained is why we lost those markets. I know that it is easy to blame restrictive practices on the trade unions, and so on. The real truth, I suggest, is that the lack of investment in the past still continues which means that our technological advance is way behind that of our industrial competitors.
Lord George-Brown: My Lords, I am reluctant to interrupt my colleague, but he is glossing over an important point. I think that he should face it honestly for the sake of himself as well as the House. When, in 1965 and 1966, we attached ourselves to investment in the future, he led a union, if I may say so with great respect, that was insistent upon retaining restrictive practices. As near as damn it, that was what lost us our markets. We can all change our minds. We can all grow up. We can all be different. I think, however, with great respect, that the noble Lord should perhaps simply say, "I did play a pretty lousy part at that time".
Lord Scanlon: My Lords, the noble Lord, Lord George-Brown, pre-empts me. I have never tried to argue that the trade union movement is somehow all clean on this issue and that it has not had restrictive practices. My argument relates to the major cause of the ineptness—I do not hesitate to use the word—of manufacturing industry in Britain.
If we must go back to other factors, I invite the House to consider the contributions that I have mentioned in your Lordships' House before. British industry in the 1970s had a deal that no other industry or Government has had in peacetime. I refer to the three periods of wage restraint when the people of these islands accepted wage reductions well below the level of inflation which contributed to bringing down inflation from 26 per cent. to single figures, but did not result in investment in British industry. This means that £10 billion in direct money and in portfolios goes towards investment in factories and shares abroad when it should be invested here. I repeat that I do not think that one can rely upon patriotism or voluntarism on the issue of investment. We had the National Enterprise Board to find the money if private capital was not available.
I should like to continue to deal with the other factors that give cause for alarm. There has been mention of the training of professional engineers, technicians and craftsmen who will come on stream in four years' time. I have a horrible feeling that we shall be short of these people in the future as we have been short of them in the past, due to short-sightedness in the training programme. In 1979, the total number of apprentice technicians and craftsmen was 100,000.
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Today, the figure is 40,000. In engineering, there were 27,000 apprentice craftsmen and technicians in 1979. Today, the figure is just below 9,000.
When it comes to research and development, the position is even more black. The recession itself is causing firms to cut back on this vital investment in the future. This affects not only basic research but also applied research and development. There is some hope. I must pay tribute, yes, to this Government. This non-interventionist Government have at last seen the light and have agreed upon the Alvey plan, under which they will invest £200 million in the future of communication technology and computers. That is very welcome, and all I can say is that it is long overdue.
Your Lordships will have the opportunity of debating your own Select Committee report on research and development sometime in July. I shall say no more about investment in research and development until that time. What is important is that productivity is not an end in itself. Nor is productivity the only aspect. It is production and productivity, not one or the other. Seen in that light, the real answer is that productivity has gone up because employment has fallen faster than output has fallen. I can perhaps use a cricketing metaphor. We may have improved the batting average of UK Limited but only by not sending in the last six batsmen. Cricket matches are won by the number of runs scored, not by the batting averages of those lucky enough to participate in the batting.
The key question must be; What will happen if and when—I have to say "if and when" and not that it will take place—the economy picks up? It is not difficult to keep down inflation with 3 or 4 million unemployed. If this is to be the pattern of the Government for the future, we know where we stand. But there has been no dramatic improvement in industrial relations. It is true that militancy has diminished. It would be surprising if that was not so with nearly 4 million unemployed. Is it, however, not the case—I have mentioned this before in your Lordships' House—that many managements are saying, "It is our turn now"? This new type of management will breed a backlash, when the upturn comes, of trade unions saying, "It is our turn now". This will go on and on, unless we grasp the nettle of what we are going to do in relationship with the trade unions.
Lord George-Brown: Vote for the SDP.
Lord Scanlon: That, if I may say so, would be the worst of all the alternatives, even worse than the present Government. The real question is: Are we going to develop an attitude of mind whereby Government, industry and trade unions work together instead of tearing each other apart? Unless we do something, there will be an inevitable backlash. My plea, especially if there is a return of the Conservative Government, is that some of the anticipated legislation should be dropped. Industrial relations are not encouraged by some of the more vitriolic remarks of Secretaries of State and Ministers who should know better than to poison the atmosphere as they are doing.
It would be equally wrong to talk as if there has been no world recession and that we have not suffered the aftermath and our fair share of it. I shall not bore your

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Lordships with comparisons of how the recession has hit us harder than the rest of the industrialised countries and whose fault that is. That has already been covered by the contributions of noble Lords, especially on this side of the House. But reports of the present recovery are, I suggest, much like Mark Twain's premature obituary notice; that is to say, much exaggerated.
The Government have been wrong before. We have been told about troughing out, turning the corner and recovery on the way. What real basis exists for believing that this is any more true now than it was? I know that the noble Lord the Minister has been asked to deal with producivity figures. This brings me to the CBI survey. It would be more correct to describe the CBI survey and its reaction as being rather less pessimistic than being more optimistic. Buried in the CBI report are some important caveats. Thirty-one per cent. of those asked think that the volume of new orders will go up in the next four months while 50 per cent. think that it will stay the same and 8 per cent. actually believe that it will fall.
Again, as my noble friend Lord McIntosh indicated, perhaps a much better barometer of the state of the economy in the future would be this report of the NEDO. As I understand it, it is based on the collective reports of 40 active working parties dealing with the various sectors of the manufacturing base; they are tripartite and if they cannot give an accurate picture of the state of the economy, I do not know who can. That may well be the reason why it has not been published, and I hope that today's meeting of the NEDO has at least agreed to publish it as soon as possible.
I have tried to say what the present position is and what the prospects are for the future. I now come to my final point; is there an alternative? Contrary to the much publicised statements, there is another way. It will be to give precedence to building our manufacturing base, to expanding our public commitments and expenditure and by so doing make a serious contribution—and a heavy contribution—to reducing this intolerable load on any economy of 3 million people anxious and willing to work and prevented from doing so by the very system under which we operate. That will cost money. Of that there can be no doubt. We must face this.
It has been said before that it can be financed by the amount of money that we are spending on unemployment and by the tax revenues that are lost thereby. In part it can be financed by borrowing—and which company does not borrow? What is wrong with borrowing if it is to invest in a sound, basic, viable manufacturing base? Nothing at all. There is everything to commend it.
Therefore, finally, I believe that there should be some control over this amount of British money, both real and in the form of shares in portfolios, that goes abroad, to the extent of £10 million in 1982. Those are ready-made finances which I believe could finance the type of programme that is envisaged and which the electorate will have the chance of determining in the coming election. But above all—and I make my plea on this—whichever party is returned to government, if that manufacturing base is to be built up on the grounds that many of your Lordships have tried to
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describe in this debate, it can only be done on the basis of consensus, not confrontation; on the idea that we shall work together—industry, Government and trade unions—in order to get that manufacturing base going and under way and producing the exports by which we shall increase our standard of living, and provide the hospitals, roads and so on which any caring society wants. That is the usefulness of this debate. I hope that that is the purpose of the coming general election.
Lord George-Brown: My Lords, they should have done it when they had the power.
7.13 p.m.
The Parliamentary Under-Secretary of State, Department of Health and Social Security (Lord Trefgarne): My Lords, this has indeed been a fascinating debate marked by a number of informed and interesting speeches, not least of course the maiden speech from the noble Lord, Lord Gallacher, which was a contribution which greatly enhanced the debate that we have had today, and has I hope been a foretaste of many more speeches from the noble Lord in the not too distant future. The House is indeed indebted to the noble Lord, Lord Cledwyn, for introducing this subject and for giving us a chance to express our views upon it.
The fall in industrial production that has occurred over the last few years is very regrettable. The unhappy consequences of this are evident to us all. What is perhaps less clear is that most other industrialised countries have been suffering from the same problems, as the world passes through the worst recession for 50 years. The universal nature of the recession is illustrated by the growth figures for the major OECD economies. These had averaged 5 per cent. a year in the late 1960s and early 1970s—that is, in the years before the first oil price explosion. Growth has now fallen to nil. Nearly all the industrialised countries have suffered from serious falls in industrial production, and high unemployment. In the United States, for example, industrial production fell by over 8 per cent. last year. In Canada the fall was around 11 per cent., while in Germany industrial production fell by nearly 3 per cent. in 1982. British industry has been affected by these developments more than in most countries because of the persistent problems accumulated over a decade or more—inefficiency, low productivity, poor competitiveness, and too many stoppages and strikes. We were slow to adjust to growing competition from the newly industrialised countries, which, on the one hand, had access to cheaper labour and raw materials, hut, on the other, did not suffer from our unhappy legacy of industrial strife. As a result, the United Kingdom's share of world trade declined from 17·9 per cent. in 1959 to 9·1 per cent. in 1979. These were the figures referred to by my noble friend Lord Trenchard and I am happy to confirm them.
This gradual decline in the United Kingdom's relative position in the world economy came to a head when our underlying weaknesses were coupled with the need for economic adjustment furthering a further surge in oil prices and rampant inflation or, to use the simile of my noble friend, when world growth declined to an extent that it no longer covered the inefficiences to which I have referred. This came at a time when the

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business cycle was in any case due to turn down, with industrial production reaching a cyclical peak in the first half of 1979.
The Government's basic strategy has been to create the right climate in which British industry can once again be internationally competitive, and in which a sustained recovery can be built. The cornerstone of this strategy has been the reduction of inflation. During the five years of labour rule preceding the last election inflation had averaged 15·4 per cent. Not only was this creating major social problems, but it also made it impossible for British industry to compete effectively in home and export markets.
Success in the fight against inflation was therefore essential to any lasting recovery. To this end the Government adopted the Medium-Term Financial Strategy. A central part of the strategy is to create, over a period of years, a stable financial framework in order to achieve enduring changes in attitudes and expectations. The MTFS has made an important contribution to reducing inflation to its lowest level for almost 15 years. Lower inflation means that for given monetary growth there is more room for recovery in real activity.
Within this basic strategy, the Government have done a great deal to cut industry's costs. Our success in reducing the public sector borrowing requirement as a percentage of GDP over a period of years has contributed in no small measure to the reduction in interest rates. Bank base rates are now 6 per cent. below their peak in October 1981. We have also cut the National Insurance surcharge—Labour's tax on jobs—by 2 per cent., with a further ½ per cent. reduction coming into effect from August. These reductions in NIS will put hack into private sector companies £2,000 million in a full year, while the lower interest rates to which I have referred have saved a similar sum. Moreover, measures taken by the Government to help industry adjust to higher world energy prices have led to savings in industry's energy costs of around £500 million over the last three years.
Though the main aim of fiscal policy has been to reduce Government borrowing, and the overall tax burden is higher than would have been wished, there has been room in both of the last Budgets for substantial tax reductions. Indeed, but for the position adopted by the Opposition, there would have been more in this present one. In these and previous Budgets the Government have sought within the continuing framework of the medium term financial strategy to restore incentives, thus providing scope for enterprise and initiative. The Chancellor of the Exchequer announced in the last Budget that the "small companies" rate of corporation tax is to be cut be 2 percentage points to 38 per cent., and the marginal rate limits substantially increased.
The Budget contained over 15 measures to help small firms start up and grow. These include a major extension of the Business Start-up Scheme which will be renamed the Business Expansion Scheme. This should greatly ease the provision of equity capital to qualifying unquoted trading companies. The Loan Guarantee Scheme is also to be extended. Since-1979 a total of over 100 measures have been introduced to
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help small firms start up and grow. Such measures are an important element of our strategy since many small firms will prove to be the nuclei of the great industrial concerns of tomorrow.
Lord Molloy: My Lords, would the noble Lord also read the figures of these hundreds of thousands of firms who are now going to be helped and resuscitated who were strangled a few years before under the same Government?
Lord Trefgarne: My Lords, for some time now the figures have indicated that the growth and the rate of growth, and the rate of birth to use a better expression, of small companies has significantly exceeded the number of closures. In our efforts to create the right climate for industrial growth, the Government have sought to remove obstacles to industrial development and the efficient use of resources. We have been pursuing policies to improve the "supply" performance of the economy by providing greater incentives for work and enterprise, and by improving the operation of markets. The Government have removed a whole host of damaging controls, which had been holding industry back. We have now abolished hire purchase controls, as well as pay, price, dividend and exchange controls. On the subject of exchange controls, one or two noble Lords suggested that we ought to control the outflow of capital from this country. But, of course, to do that would strangle at the same time the important inflow of capital which we are seeing at the present time.
Industrial development certificates and office development permits have been ended. The Government have alleviated the burden of the public sector on industry. Wherever possible we are returning state enterprises to the private sector. This represents by far the most effective means of extending market forces and improving efficiency. So far 10 major public corporations have been successfully privatised, including British Aerospace, Cable and Wireless, Britoil and the National Freight Corporation, which was returned to its employees. Nationalised industries which have enjoyed a monopoly position in the past are being subjected to the bracing wind of competition. For example, in February last year the Mercury consortium were given a licence to run an independent telecommunications network in competition with British Telecom.
The Government's supply side measures include the setting up of 24 enterprise zones. Indeed, my noble friend Lord Bellwin announced yesterday that three local authorities in Kent had been invited to submit plans for a further enterprise zone. A consultant's report on the progress of the original 11 zones shows that in general they appear to be succeeding in their primary purpose of bringing new life and investment to some very run-down areas. Freeports are to be introduced in a limited number of locations. The Government are also acting to reduce labour market rigidities, which have been an important constraint on the United Kingdom's performance. This matter was much in the mind of my noble friend Lord Thomas. These latter measures will help to ensure that, as recovery develops, growth will be sustained and permanent.

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My Lords, the Government recognises that we have also a more specific role to play in helping industry to adjust to new technologies, changes in demand patterns, increasing commercial risks and so on. We therefore provide selective help to industry. In 1983ߝ84 the Department of Industry will be spending around £1.6 billion. The balance of this expenditure is being moved away from nationalised industries and public sector companies towards schemes to promote innovation in the new technologies. The proportion of the Department of Industry budget spent on nationalised industries and publicly-owned companies will fall from around 70 per cent. in 1980ߝ81 to 40 per cent. in 1983ߝ84, while that spent on innovation will rise from around 6 per cent. to 19 per cent.
Innovation and the introduction of new technology are essential if British industry is to improve its competitiveness. With this in mind, my right honourable friend the Secretary of State for Industry announced on 17th March that the maximum level of grant under the Department's support for innovation programme would be maintained at 33½ per cent. (rather than at 25 per cent.) for a further year to May 1984. In cash terms, our support for industrial research and development under the Science and Technology Act 1965 has risen from £57 million in the last year of the Labour Government to £230 million in 1983ߝ84. In real terms this is an increase of 135 per cent.
The range of schemes available to help industry adopt the technologies vital to its competitiveness is wide. I shall mention a few major examples. The Microprocessor Applications Project will allocate £85 million to a programme to increase awareness of the advantages and applications of microelectronics. £10 million has been allocated to help firms develop, install and manufacture robots. The Flexible Manufacturing Systems scheme will provide £35 million to accelerate the introduction by industry of computerised methods of production control. £40 million has been allocated to assist the development by United Kingdom industry of a wide range of optoelectronics technologies. In the field of software products a further £15 million has been allocated to assist the development of innovative software products by British industry—a field of fundamental importance with the increasing adoption of computerised systems.
My Lords, it is important to recognise that the Government are not just supporting new industries. Many of these schemes are designed to help existing industries become more efficient and productive. In addition to the existing programmes, my right honourable friend also announced on 15th March that a further £185 million was being added to the support for innovation programme over three years. This will be allocated particularly to a number of new schemes. For example the Small Engineering Firms Investment Scheme, which operated until the middle of last year, has proved so successful that we have reintroduced it. A new Innovation-Linked Investment Scheme will help firms improve their expertise in bringing into production, and marketing, new products.
A second major new initiative, referred to by the noble Lord, Lord Scanlon, which I recently announced to your Lordships, concerned advanced
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information technology. Following the publication of the Alvey Report, around £200 million is to be allocated for the support of a major collaborative research programme by companies, Government research establishments and academic institutions.
My Lords, at this point I owe your Lordships an apology. When I repeated that Statement to your Lordships, I said inadvertently that the TUC, when asked to express their views on the Alvey report, had not done so. I find that I am quite mistaken on that. They had indeed responded to the Alvey report quite positively, and I apologise both to the noble Lord, Lord Bruce of Donington, and to the TUC for that inadvertent error. I have, of course, written to both.
Of course, the Secretary of State for Industry's longstanding powers under the Industry Act 1972—now continued under Sections 7 and 8 of the Industrial Development Act 1982—are still used to support industrial projects in regions of particularly high unemployment and/or projects making a major contribution to the national economic interest. Payments of grant by the department under Section 7 during the last financial year totalled around £100 million on regional selective assistance: since 1st May 1979 payments of automatic regional development grant have amounted to around £2,000 million. And since July 1979 £30 million of assistance has been offered for 59 industrial projects in the national interest. It is therefore quite wrong to suggest that this Government have disregarded the needs of industry in cases where it has been in the public interest for the Government to help.
In the context of regional policy, I would particularly emphasise the problems which the West Midlands have been facing during the recession. More than one noble Lord referred to that particular area. The Government are conscious of the difficulties of this region, and, with this in mind have established a "Team for Innovation": my honourable friend the Parliamentary Under-Secretary of State, Mr. Butcher, will take charge of the work of the team which will encourage firms to make the fullest use of all the national schemes of support for industry. The reintroduction of the Small Engineering Firms Investment Scheme, SEFIS 2 as it is called, to which £100 million has been allocated, and to which I referred a moment ago, should be of major benefit to the West Midlands, where there are so many small engineering firms.
I shall now deal with one or two of the points that have been put to me this evening. First, in his opening remarks the noble Lord, Lord Cledwyn of Penrhos, asked about the surplus of trade on manufactures in 1982. Indeed, he suggested that there was a deficit on that account. That is not the case. I agree that these figures are very complex and it is a question of whether shipping charges are included on imports, and nice points like that. But the noble Lord is mistaken in thinking that there is a deficit on the account of manufactured trade during 1982. If I may, I shall write to the noble Lord to give him some detail.
I referred already in response to the intervention by the noble Lord, Lord Molloy, to the position of small firms. While it is true that insolvencies have run at a distressingly high rate recently, nonetheless the

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number of births of small firms is also running at a record high level and the number of new firms now being brought into existence substantially exceeds the number of firms closing down.
The noble Lord, Lord Ezra, mentioned public purchasing. I think that was in the mind of the noble Lord, Lord Molloy, as well. I agree that this can and should be applied in an enlightened way to encourage competitiveness. The Government acknowledge this and have pressed the importance of this approach on the nationalised industries and public bodies. I have no doubt that the noble Lord was the recipient of some of this pressure when he was the distinguished chairman of the Coal Board.
We think that this is an enlightened policy, but at the same time we want to be careful not to embark on an indiscriminate "buy British" policy, although the Government are in a number of ways supporting the introduction of new products through public purchasing. For example there are over 20 pilot office automation schemes in the public sector which are being assisted in this way. I should sound a small note of warning about this approach and that is that under the GATT agreements and the terms of our membership of the EEC we are obliged to ensure that we do not impose any barriers upon overseas firms tendering for the work of our public bodies.
Lord Ezra: My Lords, if I may, I should like to comment on that point. I am conscious of the need to ensure that we keep to our international obligations. The whole purpose of the purchasing policy that I was proposing was that we would be purchasing from home sources because they were competitive with overseas sources.
Lord Trefgarne: My Lords, I wholly accept that point and entirely agree.
A number of noble Lords, indeed most noble Lords who have spoken, and the noble Baroness, Lady Nicol, who spoke with particular eloquence, referred to the problems of alleviating the worst effects of unemployment. Some 621,000 people are covered by special employment and training measures, although the effect on the unemployment register is rather less than that. The Government spent £1½, billion in 1982ߝ83, 40 per cent. more than in 1981ߝ82, on special employment and training measures and £2 billion has been allocated for 1983ߝ84. The new community programme designed to provide up to 130,000 places for the long-term unemployed began in October last year and the new job-splitting subsidy scheme began in January to encourage extension of part-time work and to provide additional opportunities for productive jobs for unemployed people.
In the autumn the youth training scheme will begin at a cost of some £950 million a year. The new scheme will provide a foundation year of occupational and industrially relevant training for all 16-year-old school-leavers and 17-year-old unemployed school-leavers and will also apply to some employed young people. It was announced in the Budget that from 1st October the job release scheme will include a new scheme for part-time job release for up to 40,000 more
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people, and from 1st August enterprise allowances will be available throughout the country within an overall cash limit of £25 million in 1983ߝ84.
Baroness Gaitskell: My Lords, may I ask a very short question? In his interesting speech the noble Lord has made no reference to our oil and the difference that can make to the whole situation.
Lord Trefgarne: My Lords, I should be misleading your Lordships if I were to suggest that the oil were anything other than of the greatest benefit to our present economy. However, the oil industry does not form part of the manufacturing industry which is the essence of our debate this evening.
Baroness Seear: My Lords, I may have misheard and I am sure the noble Lord the Minister would not want to mislead the House, but did he not imply that the scheme was for unemployed 16-year-olds in the main? I thought it was to apply to all 16-year-olds who were to benefit from the youth training scheme? Surely the point of the scheme is that it is not to be confined to the unemployed.
Lord Trefgarne: That is exactly so, my Lords. I said that it would apply to the people that the noble Baroness is hoping and expecting it will apply to.
There are now clear signs that industry is responding to the new climate we are creating. Productivity—that is, output per head—in manufacturing has risen about 16 per cent. since the end of 1980. It is now about 9 per cent. above the average for 1979. Pay settlements are now being reached at much lower levels. As a result, manufacturers' unit wage and salary costs rose by only about 3½ per cent. in the three months to February compared with a year earlier. This compares favourably with our major competitors overseas. The cost competitiveness of manufacturing industry has improved by around 20 per cent. since early 1981.
Last year British exporters of manufactured goods succeeded in at least checking the decline in their share of world export markets. There are also growing signs that the improved performance is beginning to feed through into increased output. Industrial production rose by 1½per cent. in the three months to February, compared with the previous three months, and manufacturing output rose by 1 per cent. Gross domestic product has recovered by 2 per cent. since its trough in the spring of 1981.
Indeed, there are now a large number of indicators pointing to a more general economic recovery. Total housing starts in the three months to February were up 33 per cent. compared with the previous three months. For the first time ever new car sales have topped half a million in the three months to March. Registrations during the first four months of this year were 16·6 per cent. up on the corresponding period for 1982. Consumer expenditure and retail sales are also running strongly. The Central Statistical Office's index of leading cyclical indicators points to a continued upswing in the business cycle.
For three months in succession the CBI Industrial Trends Survey indicates that the number of manufacturers who see signs of improvement

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outnumber these who do not. The April Quarterly Trends Survey showed encouraging improvements in orderbooks and output expectations, a slowdown in destocking and job shedding, and improved investment intentions. The response to the overall business optimism question has been bettered on only three occasions in the last 25 years.
Although there is still a long way to go, recovery has begun—of that there is no doubt. In the past there have been signs of recovery which have not been sustained because the world economy turned down. Now, however, there are clear signs of growth particularly in those countries which have been successful in the fight against inflation. In the United States, for example, industrial production has risen for four months in a row. That Administration has revised from 3 per cent. to 4½ per cent. its estimate of growth this year. In West Germany, industrial production in the two months to February rose by 1·5 per cent. on the previous two months. The continued restraint in wage bargaining means that British industry is in a position to take full and permanent advantage of this international upturn. The prospect now is for a growth in GDP of about 2 per cent. in 1983, with continuing improvement in profitability.
The Government have done a great deal to create the conditions in which industry can achieve sustained recovery and prosperity. The process of adjustment has been painful but there was no alternative to it, given our poor industrial performance, which had been getting worse over a long period of time. The reduction of inflation and improved competitiveness represent the only route to the sustained economic and industrial recovery which we all wish to see. Increased Government expenditure on the scale which some have called for in order to boost demand is the route to higher inflation, and hence to lower real output and fewer jobs. It would certainly not bring the sustained industrial recovery to which this Government are committed.
Lord Cledwyn of Penrhos: My Lords, it is my pleasant task at this time, bearing in mind that there is another debate to follow, to thank all those who have taken part in what I think has been an interesting and, indeed, important debate. I should like to thank particularly my noble friend Lord Gallacher for what all noble Lords will agree was a most thoughtful contribution which has whetted our appetites for further contributions from him. I should like also to thank my noble friend Lord Scanlon for his powerful winding-up speech and the noble Lord, Lord Trefgarne, for telling us what the Government feel about industrial production. I think that, on the whole, that was the triumph of hope over experience, but I am extremely grateful to everyone. I beg leave to withdraw my Motion for papers.
Motion for Papers, by leave, withdrawn.

Charities Bill
7.42 p.m.
Lord Renton: My Lords, I beg to move that this Bill be now read a second time. The Bill started as a Private Member's Bill in another place, where it was piloted by my right honourable friend Sir Angus Maude, who
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for 28 years has been a much respected Member of another place. Except when he was in the Government, he always entered the ballot for Private Members' Bills, as most of us did. Although he balloted no less than 26 times it was only in this last Session of his last Parliament that he both won a place in the ballot and got his Bill through all its stages in another place. The Bill got a Second Reading on the nod but it was fully discussed in Committee and on Third Reading—and especially on Third Reading. Throughout its passage in another place, not a single Member of any party either voted or spoke against it. Indeed, there was one honourable Member who suggested that it did not go far enough and that the £1,000 limit that it contained should be perhaps £1,500 or £2,000.
As stated in the Long Title, the Bill's purpose is to enable property of certain small charities to be expended without regard to restrictions contained in their trust instruments distinguishing between capital and income. The Bill in another place had the support of the Government and, I assume, will have it here. The Bill amends and slightly enlarges the powers contained in the Charities Act 1960; and does so not by making any drastic changes in the powers and duties contained in that Act but by adding a modest, new section to it with some minor consequentials. I should disclose that I helped with the preparation of the Charities Act 1960 and was responsible for piloting it through its Committee and Report stages—and, looking back, a very strenuous exercise it was! I had the valuable help in another place at that time of the noble and learned Lord, Lord Simon of Glaisdale, who was then Solicitor-General.
Last Friday, in the debate on the Second Reading of the Parochial Charities Neighbourhood Trust Bill introduced by my noble friend Lady Faithfull, the noble Lord, Lord Prys-Davies, on the Opposition Benches, was good enough to say that the passing of the Charities Act 1960 was a monumental achievement. Indeed, at the time it was regarded as the most far-reaching measure on the subject of charities since the Act of Queen Elizabeth I. Although it contained wide powers to vary, amalgamate and transfer charitable trusts, I never thought, speaking for myself, that 22 years would pass before any serious attempt was made to improve or strengthen it or to widen the powers that it gave. However, in this Session we have had two such attempts. One, by my noble friend, we discussed last Friday, and now we have this Bill.
Before I describe the Bill's effects in law, perhaps I may briefly describe the situation with which it is designed to deal. Of the 140,000 or so charities registered with the Charities Commission, more than half have an annual income of less than £100 and the Chief Custodian of Charities estimates that, in 1980, a dividend of less than £1 was paid out on at least 7,000 holdings of land held by charitable trusts.
As your Lordships will know, most small charities are parochial ones with limited objects. The cost of administering them often exceeds their annual income. Many examples could be given of the frustration experienced by their trustees, but let me give your Lordships one example which, I suggest, fairly illustrates the problem with which trustees are faced. This example which I am going to give could be

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multiplied with variations many times. There is a 19th-century village clock tower and charity trustees are required to maintain it by using an income of £ 18 a year, being the rent from a small piece of land worth about £400. The tower needs urgent repair which would cost at least £400. What are they to do? Are they to let the clock tower fall to pieces because they say that, in accordance with the trust deed, they must not spend more than £18 a year on it? Surely, it is obviously right that they should apply—as they can already do—to the Charity Commissioners for permission to sell the land and it is also right to use the proceeds of the sale—and they are capital—for repairing the clock tower. But, under the law as it now stands, they cannot use the proceeds of the sale if it is capital. So this Bill would enable them to use the proceeds for that purpose. That is but one example.
The Bill does not oblige trustees—there is nothing compulsory about it—to use capital to fulfil the objects of the trust. The Bill leaves it to the discretion of the trustees except that, as I say, they must get the consent of the Charity Commissioners if they need to sell land, and they need to do that already.
My Lords, the point I want to stress, which is at the heart of the Bill and which has been the subject of so much misunderstanding, is that they can use the proceeds of sale only for fulfilling the objects of the trust. Inevitably, that may mean bringing the trust to an end. In the case that I gave of the clock tower, it would bring the trust to an end. But surely it is better to use the capital and bring the trust to an end than to defeat the objects of the trust altogether by merely relying upon a minimal useless income which may not even be enough to pay the costs of administration.
I suggest that it is not an entirely new thing to bring a trust to an end. For centuries the courts have had power to sanction the winding up of charitable trusts whose objects have failed or which could not fulfil their function, or which could not be performed. But that power on the part of the courts has always been subject to the application of the cy-prés doctrine which requires the trustees, on the direction of the court, to apply the trust property if there is any left, but the cy-prés doctrine applies only when there is a genuine charitable intent. I have also fairly to concede that a genuine charitable intent can very often be inferred, but I make the point about the powers that already exist merely to reassure those who think it is wrong ever to bring a charitable trust to an end. I suggest that, in the circumstances which the Bill envisages, it may be the only sensible thing to do. It may be inevitable.
That is the broad purpose of the Bill. It applies only to trusts which are 40 years old. The reason why 40 years was chosen by my right honourable friend Sir Angus Maude and approved in the other place, was that they are the ones which have been affected by inflation in the post-war years. The maximum sum specified in the Bill is not more than £1,000 of capital, but under the Bill the Home Secretary has power to increase that amount and might in future, in view of inflation, have to do so. But before he can do that, he has to lay an order before both Houses and the consent of both Houses would be required.
My Lords, the Bill applies only to England and Wales because, as my noble friend Lord Drumalbyn
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knows—and I am pleased to see him in his place—the law of Scotland is slightly different with regard to charities. The Bill follows the recommendations made by both the Expenditure Committee in another place which considered the matter in 1975, and the Committee of the noble Lord, Lord Goodman, on the Law of Charity in 1976. To me it is most surprising that this Bill should have been criticised in the way it has been. I can only assume that those noble Lords who did criticise it could not have understood how necessary are its modest purpose and scope.
In the nature of things at this late stage of this Parliament, neither this Bill nor that of my noble friend Lady Faithfull can reach the Statute Book, but I hope our short debate tonight might lead to a better understanding of this important and sometimes difficult subject. Your Lordships will have noticed that on the Order Paper today we find that:
"In the event of the Bill being read a Second time, the Baroness Faithfull to move, That the Bill be committed to the Select Committee to which the Parochial Charities (Neighbourhood Trusts) Bill [H.L.] has been committed."
My Lords, I have discussed this matter with my noble friend Lady Faithfull. I have an open mind as to the best way to handle this, but it is her wish and that of others that I should at the end of my reply to this debate withdraw my Motion for Second Reading, and then there will be no question of her Motion having to be put. Therefore, my Lords, that is all I have to say for the moment, and I beg to move.
Moved, That the Bill be now read a second time.—(Lord Renton.)
7.56 p.m.
Baroness Faithfull: My Lords, may I thank my noble friend Lord Renton for explaining the Charities Bill which had its Third Reading in the other place last Friday. May I also join with my noble friend in paying tribute to his noble friend Sir Angus Maude for his 28 years' service in the other place.
Several noble Lords: Hear, hear!
Baroness Faithfull: My Lords. I think we all know of the great service he has given, and it is a little sad that in 28 years it is possible only to draw in the ballot twice. Therefore, it gives me particular sorrow in feeling and thinking that I cannot support the Charities Bill. I would say to my noble friend Lord Renton that I do understand it, but I still do not agree with it.
My Lords, I will not detain your Lordships long, but I think I should say that I cannot agree that charities with a capital of £1,000 or less should be dissipated. Each of these brings in a small amount, but if amalgamated into neighbourhood trusts as recommended in the Parochial Charities (Neighbourhood Trusts) Bill which we debated last week in your Lordships' House, then a greater contribution in the way of income could be made along the lines of the original bequest.
My Lords, may I say to my noble friend Lord Renton, that it is astonishing how near and yet how far are the two Bills, because if the neighbourhood trusts were to amalgamate the income of the trusts in one area, then his clock would still be repaired under the neighbourhood trusts. If trustees are willing to give away capital, then surely they would not object to the

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capital and income being given to a neighbourhood trust. My Lords, I repeat—is there such a wide gap?
Secondly, as I understand the recommendations of the Nathan Committee, the Select Committee and the Goodman Committee, allowance was made as stated by my noble friend for the destruction of small charities, but all three committees made further recommendations that it was infinitely preferable for them to be amalgamated into neighbourhood trusts. Indeed, this policy was agreed by the Charity Commission itself long ago.
Thirdly, for many of us the Charities Bill offends the basic principle of charity law on which donors have relied; namely, that a charitable trust cannot be allowed to fail unless it is absolutely necessary. The Bill does not define what is meant by "a value not exceeding £1,000". Does it mean the nominal value of investments or the market value? The difference between the nominal and market values obviously has important effects both on the number of charities which can be destroyed and the amount of income which would be lost.
The noble Lord, Lord Renton, has said that he will withdraw his Motion and, as he has stated, he and I have agreed on this. Naturally, therefore, I shall not move my motion on the Order Paper. Suffice it to say that in the future a common-sense approach must surely be taken. I believe that a common-sense approach dictates that we should have not two charity Bills but one, and that the Charities Bill and Parochial Charities and Neighbourhood Trusts Bill should together be referred to a Select Committee of your Lordships' House.
8.1 p.m.
Lord Mishcon: My Lords, I am sure the House will be indebted to both the noble Lord, Lord Renton, and the noble Baroness, Lady Faithfull, for their contributions in regard to this Bill which has come to us from the other place. When we were discussing the Bill brought forward with such eloquence by the noble Baroness, Lady Faithfull, I think the House felt that we were dealing with a very complex issue in regard to parochial trusts and the whole question of their being converted into neighbourhood trusts.
Some of us felt that there was something very sound in the principle of the noble Baroness's Bill but, again, some of us were a little reluctant to agree to the terms as they stood—although obviously we wanted to give it a Second Reading—without having the data before us which apparently the Charity Commissioners could not supply, and without seeing really what was involved regarding the administration of the Bill when certain burdens were cast upon local authorities and also indeed upon the Charity Commissioners. Therefore we were very happy with the idea of the matter being referred to a Select Committee of your Lordships' House which would look into the whole question of parochial trusts. We all came to that conclusion in good faith and we felt that we were doing something which was very valuable for charity law and administration in the future. We felt we were possibly getting rid of all the waste and the difficult duties of trustees in regard to small trusts, which were mentioned by the noble Lord, Lord Renton, in his speech.
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What we also wanted to do—this was, I know, very much in the mind of the noble Baroness, Lady Faithfull—was to see that we made no decisions which were likely to be nullified by what might happen to another Bill which was also dealing with small charities. Therefore, we thought we were entitled to ask the noble Lord, Lord Elton, who, with his usual ability, was dealing with the Neighbourhood Trusts Bill, what the Government's attitude was to another Bill about which some of us had doubts. That was indeed the Charities Bill, to which the noble Lord, Lord Renton, drew our attention. As he very movingly said, that Bill had been sponsored in another place by a right honourable gentleman who has the admiration of everybody engaged in public life, on whichever Benches they might sit. Therefore, it was felt to be only right that the Minister of State in the Home Office in another place should pay him a warm tribute when this matter came before that House. Of course, that happened on the very day that we were debating the Bill brought forward by the noble Baroness, Lady Faithfull.
I do not think any of us would concede that the fact that you succeed in a ballot on only two occasions and that you have led such a meritorious life in Parliament, necessarily means that a Bill you might sponsor has to be passed. If I may say so, it is adapting charity in the wrong way, although of course one would always want to be gracious in dealing with a Bill which came from another place and from such a source.
We were anxious because, as your Lordships will realise, this Bill deals with small charities and if it were to come into effect and be put on the statute book, and if the Bill of the noble Baroness, Lady Faithfull, were to be delayed by reference to the deliberations of a Select Committee, many small charities might go by the board before they had any chance, if the noble Baroness's Bill were passed, of coming within the purview of neighbourhood trusts. The noble Lord, Lord Renton, quite correctly, said that many of these small charities did indeed come within parochial trusts; and so obviously it would be a great disadvantage if that Bill became law while the other Bill was being delayed.
Some of us also had doubts about the so-called voluntary nature of the Bill now before the House, as against the compulsory nature, as it was described, of the Bill brought forward by the noble Baroness, Lady Faithfull. It did not seem to some of us that it was entirely a voluntary measure with the full acquiescence of the settlor, when this was a power given to his trustees and when the settlor might himself have had very different views. And, after all, it might be that the remaining trustees, after 40 years, who succeeded upon other trustees, would feel that once this Bill was passed they could ask: "Why not get rid of our obligations, because they are an awful nuisance?" So we were extremely keen to see that the two Bills ran together, if I might put it in that way, so that they could be considered by a Select Committee and then in due course your Lordships would be able to see what the recommendations of the Select Committee might be.
In the course of the questions we put to the noble Lord, Lord Elton, on that occasion, I find that we came across an amazing constitutional point—or it

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may be a traditional point—of procedure. Presumably, the noble Lord the Minister was adhering faithfully to that constitutional point and that procedure in the answers that he gave to the House. But I think he would be the first person to say that if you follow that constitutional procedure you are not giving the House an opportunity—I understand that he could not help himself—of knowing what the true position really was.
I am going to tell your Lordships what the true position is and, if I may say so, I am not now speaking on behalf of my Front Bench but merely talking individually as someone dealing with this Bill and with this problem. In fact, by 12.30 last Friday afternoon in another place, the Bill which is now before your Lordships had received a Third Reading and had been passed. The right honourable gentleman the Minister of State at the Home Office in another place—I am reminded by the noble Lord, Lord Renton, that it was the Under-Secretary of State, and I am grateful to him—announced very definitely that the Bill now before your Lordships had full Government support and approval. It would have been of great assistance to you Lordships in knowing what to do in regard to the Select Committee, and the way in which it was dealing with the Bill of the noble Baroness, Lady Faithfull, if you had known that that was the position; that the other Bill had already been passed and had Government support.
If the questions put in your Lordships' House by the noble Lord, Lord Campbell of Alloway, the noble Lord, Lord Allen, and myself, had been answered on the basis that this Bill in another place had Government support and had been passed, we would then have known where we stood and I think we would have said various things in regard to the Select Committee, and so on. As I said, those questions were put an hour and a half after the Bill was passed in another place on 6th May, but the Bill now before your Lordships reached this House, as a matter of technicality, only on 9th May.
Therefore, presumably, if I have correctly understood the tradition of both Houses and the constitutional position, it was not open to the noble Lord the Minister to tell us that that had happened. If that be so, I merely say, as a humble Member of your Lordships' House, that that appears to be a very undesirable position, because your Lordships were taking decisions without knowing what had happened an hour and a half earlier in regard to this very Bill. But, as I said, the position has been frankly discussed with me and the noble Lord the Minister had no alternative but to do what he did and say what he said. In those—
Lord Denham: My Lords, I am most grateful to the noble Lord, Lord Mishcon, for giving way. But I am amazed by the noble Lord's amazement at this. We have this position where, by a strange coincidence, there were two separate Bills, each of them suggesting a diametrically opposed alternative to solve the same problem, coming up in the two Houses of Parliament on the same day. My honourable friend in another place, having heard the arguments in another place, gave his support and the support of the Government to
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that Bill. My noble friend Lord Elton, who was listening to our consideration of the Bill of my noble friend Lady Faithfull in this House, having heard the arguments in this House agreed that that Bill should be sent to a Select Committee. These were the two positions in the two Houses on the same day.
Government's have often been accused of not listening, and on this occasion in another place they listened to the arguments on the Bill that my noble friend is presenting today, and they decided that that Bill should have their support. In your Lordships' House, on the same day, they listened to the arguments on the Bill of my noble friend Lady Faithfull and they decided on the Select Committee issue. Having looked at the two positions together, it became apparent that the two things were incompatible. Therefore, Her Majesty's Government have obviously changed their minds on my noble friend's Bill, because of the arguments that were put in both places on the same day. If there is anything reprehensible in that, I hope that any Government that I have anything to do with will be reprehensible in this way.
Lord Renton: My Lords, before the noble Lord, Lord Mishcon, resumes, I think that he would wish to be corrected on the timing. He rose at 11.47 a.m. in your Lordships' House and, I would estimate, started to put his questions at about 12 noon. The Third Reading in another place was not completed until 12.30 p.m., and my noble friend Lord Elton rose to make his contribution to the debate at 13 minutes past one. So there was not an interval of an hour and a half, or anything like it.
Lord Mishcon: My Lords, before the noble Lord, Lord Denham, acclaims the contribution that has just been made by the noble Lord, Lord Renton, I had better refer the noble Lord, Lord Renton, to a debate which took place in your Lordships' House on the question of opticians and their monopoly, and the examination of eyes, because I have before me in the Official Report exactly when it was that I put my questions to the noble Lord, Lord Elton. I put them in the course of his speech, which started at 1.13 p.m.—and I refer him to column 300—and certainly not at 11 o'clock. The debate—and I think that is what the noble Lord is possibly referring to—commenced earlier, but I am talking about the questions that were put and the time when I, the noble Lord, Lord Campbell of Alloway, and others, put them.
Lord Renton: My Lords, I was naturally drawing attention to the very short time between the conclusion of the proceedings in another place, and the moment when my noble friend Lord Elton rose to make his contribution to our debate—a time of only 43 minutes.
Lord Mishcon: My Lords, if the noble Lord reads the Official Report tomorrow, he will find that he was making the point against me that there was every good reason why what occurred should have occurred, because I made my contribution and asked these questions at 11.30 a.m., which was something like an hour before the Bill was passed in another place. However, may I just deal with the point which the noble Lord, Lord Denham, made? As I said, I am in no position to make any representations on behalf of the Opposition Front Bench or anything of that kind in

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regard to procedure. I was merely making a personal point, But, with great respect, his point is not very well taken, if he will allow me to say so.
I say that for this reason. Quite obviously, there was a position where the Government had taken a definite stand, not after the long debate on the other Bill; it was taken immediately. There was not a long debate and there were only four contributions. There was no Second Reading discussion at all in another place on the Bill. The point that was made, which is contrary to the one that the noble Lord, Lord Denham, was making, was that there was nothing inconsistent between the two Bills. The noble Baroness is nodding her head in agreement. That was the great point. There was nothing inconsistent between them. Therefore, while it was perfectly consistent for one Bill to go to a Select Committee, it was perfectly in order for the other Bill, which was not inconsistent with the Bill of the noble Baroness, to be passed through all its stages in another place.
If the Government have had second thoughts and realise, as the noble Lord, Lord Denham, said, that the two Bills are inconsistent in the way that they are trying to deal with the same problem, then one would expect that in another Parliament, when this matter comes again before the House, the Government will agree that both Bills will go to a Select Committee or that we shall have the benefit of a Select Committee before we make a decision.
Lord Denham: My Lords, I think this is true. But, if I may say so, I think that the noble Lord, Lord Mishcon, is less than gracious in not accepting the fact that Her Majesty's Government, have, in these two Houses of Parliament, heard the debates on these two separate Bills, have listened to the arguments, and have come to what I think is a fairly fair decision in regard to both of them.
Lord Mishcon: My Lords, I hope that I am always gracious and I should have thought that the noble Lord, Lord Denham, in the circumstances of this case, would have paid tribute to the gracious way in which I tried to deal with a certain situation. I am equally surprised that he did not, in fact, pay that tribute in view of what has transpired. Having said that, I hope that the discussion upon procedure and tradition, and what happened in another place, can be terminated and I turn—I promise very briefly—to the provisions of this Bill.
The Bill must be looked at very carefully. It is not so simple as the noble Lord, Lord Renton, made it out to be. He has the great art of making complicated matters sound simple to himself and to others. But he was not quite right; for example, the Goodman Committee approved the principle of the Bill which is before the House without imposing conditions. I quote from col. 573 of the proceedings of 6th May in another place. The Minister, Mr. David Mellor, said:
"The Goodman committee endorsed this view"—
that is, the principle of the Bill—
"and recommended that power to expend capital should be given, subject to appropriate consent by the local committee. It had in mind a permanent local committee to be established under the chairmanship of a representative of the Charity Commissioners to look after the continuing process of co-ordination between endowed charities and welfare services".
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No such condition is imposed by the Bill. No such procedure is suggested in it.
The second point which one has to consider is the failure of charities. Failure is completely inconsistent with the charity law as we know it, one of its distinctive features being that a charity is not allowed to fail. Third, it appears that one has to consider the idea of small charities being wound up. May I use an argument which was employed by the Government against the Bill of the noble Baroness, Lady Faithfull. One has to allow for the situation that settlors may decide that they are not going to create fresh charitable trusts if there is the possibility of those trusts being wound up. If that is an argument which can be used against the Bill of the noble Baroness, Lady Faithfull, it is an argument which can also be used against this Bill.
These matters have very rightly been brought before Parliament. Much work has to be done on the charity law, charity administration and parochial trusts. If we are spared to sit in this Chamber after the eventful days ahead of us—though sitting, I hope, precisely opposite to where we are sitting now—I trust that we shall agree to deal with the charity law and parochial trusts by means of a Bill similar to the meritorious Bill of the noble Baroness, Lady Faithfull, and the equally meritorious Bill of Sir Angus Maude, having the benefit of the deliberations of a Select Committee which ought to be appointed. I am sure that your Lordships will ensure that it is appointed.
8.23 p.m.
Lord Campbell of Alloway: My Lords, I thank my noble friend Lord Renton for his explanation of the Bill. May I also be allowed to pay my tribute to my right honourable friend Sir Angus Maude who, just over four months ago, presented this Bill in another place, Although there are areas of controversy which could inhibit its Second Reading, its humanitarian basic purpose affords a most cogent testament to the long and distinguished dedication of my right honourable friend to the cause of whatever is good.
It was common ground last Friday that we must unlock these dead funds so that they may be put to a useful charitable purpose. The only controversy is how best this may be done. The substance of this controversy relates to the method by which we prise open these locks to release the funds. Here, as some of us believe, the means proposed by the Parochial Charities Bill and this Bill lie in irreconcilable conflict or, to use the more colourful expression of my noble friend Lord Denham, they are diametrically opposed alternatives, or are incompatible.
During the Second Reading of the Parochial Charities Bill it became all too apparent that on this issue of conflict there were two irreconcilable views: the view of noble Lords who favour the neighbourhood trust method and the lone ministerial view, voiced by my noble friend the Minister, who favours the method proposed by the Charities Bill. This is not the time when anybody would wish to hear detailed argument. I agree with my noble friend Lady Faithfull that the clock illustration takes the matter no further. The Charities Bill was passed by another place with the support of the Government. So be it. However, it became clear last Friday in your Lordships' House that there is a genuine and serious area of controversy.

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As that Bill is to a certain extent being discussed today, perhaps I may be permitted to seek to lay two ghosts in the argument. The first is that this Bill is to be preferred to the Parochial Charities Bill because it favours the voluntary principle. That view was expressed on Friday at col. 305 by my noble friend the Minister. The right reverend Prelate the Bishop of London reflected the views of other noble Lords who took part in the debate when he opined that the policy of this Bill was based upon the destruction not only of parochial charities but also of the important voluntary interest—contrary, I have to confess, to the views expressed today by my noble friend Lord Renton.
The second argument is that whatever may be the constitutional position—such matters are beyond me; I would not seek to venture upon that kind of ground—it is inconceivable that after the committal of the Parochial Charities Bill to a Select Committee it could ever be consistent with such a decision to allow the Charities Bill to proceed further in your Lordships' House for any other purpose than committal to a Select Committee, having regard to the irreconcilable conflict or the diametrically opposed alternatives to which reference has been made.
Lord Mishcon: My Lords, if I may be allowed to interrupt the noble Lord, perhaps I should warn him that if he continues on that course he may be accused of being ungracious to the Government. I was so accused, although I was speaking just as courteously as the noble Lord, Lord Campbell of Alloway.
Lord Denham: My Lords, on this point my noble friend has been totally gracious to the Government.
Lord Campbell of Alloway: My Lords, I am obliged to the noble Lord, Lord Mishcon, and I am even more obliged to my noble friend Lord Denham for what he has just said. I am not trying to be controversial—I am trying to avoid being controversial and I hope that I am succeeding. I am dealing with a point that was touched upon by the noble Lord, Lord Mishcon, but I am not putting it forward in quite the same way.
Of course there is general consensus among all your Lordships and in another place that something must be done about the situation described by my noble friend Lord Renton. The problem is that there is no unanimity as to what should be done, and there is no unanimity in your Lordships' House, as to the method by which these funds should be released for a charitable purpose. Hence, as was recognised on Friday, the inestimable value of the report of a Select Committee which may in due course be constituted. If I may be allowed to express a purely personal opinion, I hope that it will be—and perhaps the sooner the better.
In conclusion, as the Motion to set up the Select Committee has not been implemented—because if it had been implemented that Select Committee would have been all but stillborn—there appears to be no good purpose in any Second Reading. I am most grateful, as always, to my noble friend Lord Renton for his intimations in this regard.
8.32 p.m.
The Parliamentary Under-Secretary of State, Home Office (Lord Elton): My Lords, as a preliminary to welcoming my noble friend's Bill into this House, I should like to endorse his decision not to take it beyond Second Reading today. It would not be right to put the Bill of my noble friend Lady Faithfull into a Select Committee as though it were a sort of siding and then to signal the Bill of my noble friend Lord Renton past it on the fast track at high speed.
The noble Lord, Lord Mishcon, was kind enough and gracious enough to telephone me earlier today to warn me that he would be raising this matter. I received that warning with all the anxious attention and gratitude which one gives to a dentist when he says, "This may hurt a little". If I have a cavity, I apologise for it. But I should like to say one further word to set the record straight: then I shall be done, because your Lordships have spent some entertaining time on it already.
Your Lordships made it very clear last week that you view my noble friend's proposed measure with a great deal of sympathetic interest and I blessed its remission to a Select Committee. I was prevented by the conventions of this House from predicting how we would favour the Bill when it came here. The fine points about timing need not concern us too much because, as I understand the convention, it is not until the Bill reaches this House that one records one's attitude to it. That may be irksome to your Lordships, but it was at least as irksome to me last week. It then became clear to us that in those circumstances, if we were to assist the Bill of my noble friend Lord Renton through all its stages in one day, your Lordships could properly claim that we had sought to go behind your backs. That was in no way our intention and we therefore thought it right not to pursue that aim.
None the less, having expressed last week the considerable doubts and reservations which the Government feel about parts of the Bill of my noble friend Lady Faithfull—and in particular about the vigorous strain of compulsion which runs through it—I must also make clear the reasons we have for regarding the Bill of my noble friend Lord Renton as a welcome measure.
The trustees of small charities face very real problems. All of us recognise that. All of us wish to help them to resolve them and to do so in a way consistent both with the wishes of the trustees in so far as they can be met and with the more effective use of such money as is at their disposal. Two Bills have been brought before this House. One is very much more far-reaching than the other, but both have this particular aim in view, and both embody a principle that is exactly the same. That principle is, that the smallest of charities shall be capable of being wound up. In the Bill, the test of smallness is in Clause 1; that the capital value shall he under £1,000. In Clause 6 of the Bill we considered last week, the test is also there; that the annual income shall be under £10. There is a difference of magnitude between them, but there is no difference of principle. My two noble friends are friends also to each other in this, and I support them.
To preserve intact a principle that charities shall never fail is to fly in the face of the practical effects of

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not allowing them to cease. There are cases where the expenditure of capital is certainly the best and possibly the only way of meeting both the needs of the beneficiaries and the wishes of the benefactor. My noble friend Lord Renton referred to a clock tower. I have dreamed up the roof of a memorial hall in a hamlet which is suddenly dissolved with dry rot. If that were to happen, £1,000 or even £500 now will be of practical use while the promise of £40, £90 or even £100 a year for a decade will not start to keep the rain out. The doctrine of the stitch in time seems to us to be as ancient and valid as the doctrine of cy-prés and we ought not to neglect either of them.
The principle that lies at the foundation of the Bill—that is, to enable a charity better to serve its purposes when circumstances would otherwise render that impracticable—is no new thing. It has already been put forward in two important reports. In 1975 the Expenditure Committee was looking at the accountability of the Charity Commissioners, and the commissioners suggested to the committee that the trustees of charities with a total capital value of less than £50 should be empowered, with the consent of the trustees, to spend their capital. The Expenditure Committee accepted this recommendation. The committee thought that such changes should normally be made with the consent of the trustees but then contemplated some departure from that principle by recommending in addition that there should be reserve powers to act without their consent.
The following year, this proposal was echoed in the report of the Goodman Committee on Charity Law and Voluntary Organisations. This committee, under the chairmanship of Lord Goodman (who must be one of the more frequently quoted Members of your Lordships' House) had been set up by the National Council for Social Service. They, too, recommended that small charities should be allowed to spend their capital, and this principle is again incorporated in the Bill we discussed last week. But, while the principle is the same, there are important differences from some aspects of the earlier proposals. Unlike the proposals of the Expenditure Committee, the Bill of my noble friend Lord Renton does not, first of all, permit the capital to be expended without the consent of the trustees. Indeed, it will be the trustees who initiate the action, if any, which the Bill would permit if it were to be enacted—and we have no way of knowing how many trustees will take the opportunity so afforded to them.
Secondly, the trustees will not need the consent of the Charity Commissioners in order to expend their capital. Like my noble friend, we think that the trustees must be the best judges of the most fitting use of their small capital. If many of them were to want to take advantage of what his Bill proposes, the involvement of the commissioners in every case would enormously hamper their work and produce little, if anything, in the way of benefit. But any trust of which the value of the permanent endowment exceeded the figure set in the Bill would, of course, be protected with exactly the same vigour as is now the case. The expenditure of their trust capital against the terms of the trust will attract the same sanctions as at present.
I look forward to seeing this measure before your Lordships in the next Parliament—I hope from this
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side of the House. On reflection, your Lordships may see it as being not irreconcilable—in the words of my noble friend Lord Campbell of Alloway—with that brought in last week by my other noble friend. I hope, therefore, that your Lordships will do something then to soften the disappointment that my right honourable friend—indeed my thrice honourable friend—Sir Angus Maude must inevitably feel this day, that he cannot bring in this as the coping stone to a long and admirable career. But, for the reasons I have given, I think it ought not to complete its journey through this House in a single day as at one time seemed appropriate. I am grateful to my noble friend for his lucid explanation of what he has in mind. I ought to say in conclusion that I take in good part everything the noble Lord, Lord Mishcon, has said; I think there is no rancour.
8.40 p.m.
Lord Renton: My Lords, I express my thanks to all those noble Lords who have taken part in this debate. I am sure that whatever failings may have been laid at the feet of my noble friend Lord Elton last Friday can now be taken away; he has indeed atoned for any shortcomings on that occasion by his lucid explanation tonight of the Government's attitude towards this Bill.
I should like to join in the tributes which have been paid to my right honourable friend Sir Angus Maude. I served with him in another place, and indeed knew him right back in the 1920s at Oxford—that is a confession to make! I always had the highest regard for him and must share the disappointment that he feels. Indeed, when he invited me to take on this Bill in your Lordships' House, there was an air of enthusiasm that he exuded that he would at last have got his Bill on the Statute Book. It may be some consolation to him that he has been much luckier than I was, because I was 34 years in the other place and always balloted when I was not in the Government, and never once drew a place in the draw.
I was brought up to believe, in the words of the poet, that:
"In faith and hope the world may disagree
But all mankind's concern is charity."
There was an implication there that we would all be in agreement about charity and its purposes, and how they might he changed, and what might happen if they failed. But, alas, this short debate tonight has somehow disabused me of that ancient thought, and we have to accept that this is a difficult subject and strangely controversial, as I know from previous experience.
I will, if I may, reply very briefly to my noble friend Lady Faithfull and my noble friend Lord Campbell of Alloway, each of whom said, in relation to the clock tower example I gave, "Ah, but if only we had neighbourhood trusts the problem could not arise." I beg to disagree with them, because the neighbourhood trust does have its limitations; not all trusts are suitable for bringing into a neighbourhood trust scheme, as the Charity Commissioners have already found on a number of occasions. Indeed, one can have isolated parishes such as were in my old constituency, where it is just not feasible to bring them into a neighbourhood trust—small villages which have to stand on their own.

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I can well imagine that the provisions of this Bill would solve problems with which the trustees were frustratedly faced in such circumstances. So I am afraid I simply do not accept the view expressed on that quite relevant point.
My Lords, the only other point I would make is this. On the face of it, the noble Lord, Lord Mishcon, made a good point when he referred to the fact that the Goodman Committee attached a condition to the acceptance of its recommendation, the condition being that there should be local committees to supervise any changes that might be made. However, that does not invalidate the recommendation that they made that there should be something done about these very small trusts, and that is what the Bill seeks to achieve. I am deeply grateful, and I am sure that my right honourable friend Sir Angus Maude will also he grateful, to your Lordships, and in view of what has passed, I now beg leave to withdraw my Motion for Second Reading.
Motion for Second Reading, by leave, withdrawn.

Dentists Bill [H.L.]
The Bill was returned from the Commons earlier this day agreed to with amendments: the amendments were printed pursuant to Standing Order 47.
Mental Health (Amendment) (Scotland) Bill [H.L.]
The Bill was returned from the Commons earlier this day agreed to with amendments; the amendments were printed pursuant to Standing Order 47.
Marriage Bill [H.L.]
Returned from the Commons agreed to.
Car Tax Bill [H.L.]
Reported from the Joint Committee with an amendment, and recommitted to a Committee of the Whole House.

Value Added Tax Bill [H.L.]
Reported from the Joint Committee with amendments, and recommitted to a Committee of the Whole House.
House adjourned at a quarter before nine o'clock.